The Entrepreneurial Business of Software

Software has a relatively low cost of development, manufacture, and distribution. At the same time, the ability of software to embody complex algorithms and processes gives software-based companies the capability to create sustainable barriers to competition. As a result, software is an ideal medium for entrepreneurs.

When I taught this class in the fall of 2003, a team of two MBA students, two EECS students, and a student from the I School created an outstanding class project. The computer-science researchers on the team were aware of a recently published technology that could find critical bugs in software, particularly possible security violations. To further realize the potential of the technology, a seed-stage company of four individuals had already been formed. Members of the class project initiated contact with the founders. The project team studied this seed-stage company, evaluated the opportunity, and developed a business plan around it. Today, that seed-stage company has grown into a high-growth and profitable start-up named Coverity (www.coverity.com).

Retrospectively, I would consider this project a model for the class. The engineers identified a technology at a stage that was far below the radar of the business world. The business students helped the team to articulate the market potential. That the technology itself was not developed at Berkeley but at a university a bit to the south may seem like a flaw or even a sham. On the contrary, it drives home an important business lesson: In the business world, the ability to recognize value is at least as important as the ability to create it.

My goal for the class is very simple. I'd like project teams of about five individuals representing a mixture of backgrounds to create high quality and actionable business plans focused on software-based business opportunities. I'd like those plans to win competitions (we'll be coordinating with the business plan competition), to get funded, but most of all to lead to successful software companies. I am very confident that Berkeley students have the right set of skills to make this happen. I will do my best to mentor those skills and I have enlisted a group of successful entrepreneurs and venture capitalists to serve as mentors for the class as well.

See the MOT site for details.