Founders at Work.pdf

Joel Spolsky 349
Although it was my grandmother’s apartment, we were paying rent, and we
were using it solely as an office. So we were paying, let’s say, below-market rent
for a below-market-quality office space.
Livingston: Was it in Manhattan?
Spolsky: Yeah, it was a brownstone in Manhattan. Two floors, with a garden out
back. It was quite a pleasant place to go work. Nobody was living in there, but it
had a kitchen.
So we shipped another product, CityDesk. There are all kinds of reasons
why it was not a successful product. We misinterpreted some things, and that
product was not a big hit. But FogBugz just kept growing and growing and
growing. Every time we did a new release, we would double our sales. We just
sort of sat there and watched this little geometric growth occur—which has
been happening in the last 5 years to this day. This application is getting bigger
and bigger and selling more and more copies every month.
We had to raise the price a couple of times. We didn’t have to, but raising
the price actually increased the number of units that we sold. I guess because it
looked more legitimate with the more realistic price.
Livingston: If people have to pay more, they take the product more seriously?
Spolsky: Definitely. There was a five-user license that was like $199, and that
just feels like shareware, practically. But today, when you say that a ten-user
license is $999, it starts to feel like a more substantial product. In that market, it
still is actually a good deal. But you really have to have a price point that conveys
what you think the product positioning should be. Many people will judge
where your product fits in the market based on its price.
So we increased the price a couple of times, and both times it increased the
number of units we sold. We launched new versions, kept adding more and
more features. It’s become this gigantic monster. It’s also a whole customer
email management system. Your customers email bugs, it spam filters it automatically,
it sorts them into areas, it assigns them to people, you can keep track
of them, you can set due dates, you can automatically reply to a customer with
a nice little message that gives them a link that they can click on to see the
status of their message. We use it for handling all our incoming company email
and make sure that it gets handled by the appropriate person.
Livingston: Would you consider when you released this product one of your
major turning points?
Spolsky: Yeah, although it didn’t feel like “Let’s have a celebration.” At the
time, we thought, “Hey, we have this product. We don’t know what else to do.
Let’s just ship it and see what happens.” We had no idea. At the time, you could
have told me that this thing was going to sell zero copies, and I would have
believed you. You could have also told me it was going to sell $50,000 a month’s
worth of copies—an equally unrealistic number—and I would have believed
that too.
Now I have enough experience to know that almost everything you launch
is going to sell $2,000 to 3,000 in the first month, and that’s the way the first