It took me a little while, but I launched rykorp.com yesterday. The site's launch was a long time coming and was really the culmination of talking to a lot of different people about my vision for rykorp, as well as some research into a lot of existing companies. 

What was interesting about the approach I took to this website was to start first with the content. Normally I work backwards - I have the website look & feel in my head, build the logo to reflect that, and then build out the copy at the end. 

But with the logo being done weeks ago by the incredibly talented Miguel Vega, I decided that the website design would be as minimalist as possible, so I focused on writing all the content first. 

In case you haven't read the site, my long-term vision is to serve small businesses (<$25 million in revenue, cash flow positive) as their product and engineering arms. These customers do not have technical backgrounds (or even perhaps more than a vague understand of how the Internet can serve their needs). 

This is an incredibly tough problem: these are customers who are fragmented across different industries, and oftentimes need to be educated about their needs. A salesperson's worst nightmare. But it's not a situation that I'm unfamiliar with - MT also faced (and continues to face) the same problems. 

While customer acquisition is tough (to be honest, I don't have a strong strategy for repeatable, scalable customer acquisition right now), the upside is that once a good relationship is made, the revenue is very consistent and the margins are higher. 

After going through a consulting phase in college, I have absolutely no interest in serving the low-end of the market: the one-and-done website projects. I only will take those on if they're part of a broader strategy of the company, or if I feel they'll be a foot in the door for long-term application development. 

So why small businesses? Honestly, I think the market for them will be huge in the next two years. Growing up in the Internet age, the trends and models that are "disruptive" (cloud, social) are all very natural to me - Facebook is merely a reflection of our cultural mindsets. These models are being brought to the enterprise (which is what MT is all about) at a blisteringly slow pace. I do think there will be some maturity in that market - at least two social enterprise companies will IPO by the end of the 2010 and that market will get crowded incredibly fast. I have no interest in getting back into that space right now. 

The consumer market is basically owned by Facebook, and any continued innovation will be on top of the FB platform, or in conjunction with it. 

Governments - well, they're even slower than enterprises, and I frankly don't have the connections to play there. 

That leaves the hardest market to target: small businesses. 

The seminal moment when I realized this is where I wanted to focus my efforts in this space was watching the success of GroupOn. GroupOn is known by everybody, and is the (arguably) most successful tech company of the past five years (FB excluded, and yes, I'm including Twitter in that list). 

And they have NO technology differentiation. None. This is clear by the low barrier to entry and everybody trying to get in on the "Deal of the Day" market. (And of course, the next wave are the deal aggregators). 

I realized that technology and the methodologies for developing software had become commoditized. Forget even the development being outsourced - the whole process is now commoditized. And guess what? Most small businesses don't need revolutionary software - all the pieces they need are already available as open source libraries. 

What you need is the product background to assemble these open source tools and be able to communicate them to a distributed team to build out. 

The cost of developing a customized web-based applications (that don't get too crazy) is probably around $20,000. That is insane. And the costs are coming down aggressively. 

I am betting that within the next year or two, as more companies come online, bricks-and-mortars businesses will realize that they NEED customized software to compete and to become more efficient. And when they do, they'll look for a business like rykorp to build out their technical arm. 

And the cost is reasonable. An in-house US developer will cost you at least $50,000, and that's WITHOUT oversight. If you want an experienced developer who can also handle project management - you're looking at $85,000. And that's taking a risk that the developer can put together UIs and understand market needs. (My business model utilizes these numbers and assumes that recurring business per client will average around $6,500/month)

Currently, there are two types of companies that serve this market: interactive agencies that "do web development" and outsourced teams via Elance.com, VWorker.com, etc.

Interactive agencies will do a great job of hiring an outsourced team to cobble together something, but do they have the enterprise software development background to ensure high-quality code development? Or are they designers who are simply putting lipstick on a pig? 

Outsourced teams have another set of problem: requirements gathering and execution. Using an outsourced team requires constant communication and some level of technical understanding on the clients' part. Now, a good outsourced team will have solid technical project manager who can speak three languages: the clients', the technology, and the product (perceived outbound perception by users). These types of companies are few and far in-between. 

That's where rykorp fits in. I bring enterprise software development background (development, project management, market understanding) with the "product management" experience - the secret sauce that rykorp brings to differentiate itself from the outsourced firms. (The ambiguity of "product management" at the SMB and consumer level will probably not be commoditized for some time)

I feel I'm ahead of the market on this one (like I had been with Tabulas/Audiomatch/Lightbox7). (To a large degree, I think MT was a few years ahead of its time, and had it been more patient on certain roadmap directions, things would be very different). This time, I have the experience and patience to wait until the market matures more. 

But we'll see how it goes.