Right now everyone is talking about facebook, social software, and what have you. But most of these sites aren't making any money, and they never will. It's basically a really crowded market with no clear income model unless you're really big.

Find a niche that hasn't been exploited and create software that solves a problem in that niche. B2B is probably the best place to look - if you can come up with a piece of siftware that can either save a company money or make them money they will be happy to pay.

If you have ever seen SAP's implementations of ERP systems you will know that the B2B software out there is totally crap, and that it should be possible to come up with something better. And there are real companies willing to pay real money for your software.

There are plenty of people and companies and people that want and will pay for useful software, you just don't read about them on digg or reddit because they aren't sexy and cool.

Our market is nonprofits and state and local governments, and the other surprising factor has been the sheer length of the sales cycle. Sales that come in at less than a year are the quick ones.

For anyone not all that familiar with "B2B", reread mixmax's post again. Every word. It's going onto my bulletin board.

The demand so outstrips the supply, that anyone writing good software has tremendous opportunities here. Thanks, mixmax, for reminding us of what is so easily forgotten these days.

Unfortunately the techno-babble on these enterprise systems sounds pseudo intelligent. To see through all the buzz words and fads you need to work with these systems for a while. But to do that you almost have to drink the Kool Aid. The trick is to stop drinking once you can see the better solution. For many people here, I suspect the hardest part is swallowing the Kool Aid (at least that's the hard part for me).

But then as you go to build your better system, you need to realize that you are going to try to sell this to people who have been consuming this stuff for a very long time. They need SCA, BPM, SOA, UML, and just about every other combination of three letter characters. They don't know any other way. It's unfathomable to them that there could be an easier, simpler solution to their woes. It's like trying to describe a 3D world to a denizen of 2D space.

Any how just my 2 cents.

UPDATE:

May I recommend for your first glass of KoolAid: http://publib-b.boulder.ibm.com/abstracts/sg247234.html?Open

(not that this is good or authoritative, more so a random sample of what's ahead of you).

   1) WSJ

   2) Economist

   1) Wikipedia: What GOOG, AAPL, MSFT, CSCO, and ORCL have bought in the past 10 years

   2) sequoiacap.com (and other VC firms):What they're investing in. It's often pretty boring

   3) bloomberg.com

I do try to speak to people in other industries from time to time to get ideas, but have got none so far :(

All we need is a 'social site' that non IT types can post their frustrations with the tools of their trade on to give us ideas - only problem is how we get non IT types to use it :-)

The stuff making real money just has relatively very low visibility from the web. Most of these companies are small, private, and almost entirely owned by, like, three people. The founders come from industry and have zero interest in keeping a blog or writing articles relating their business experiences. Often they have legitimate industrial espionage concerns and prefer to keep a low profile except with regard to their handful of customers.

People who think really hard about facebook are living in an alternate reality that's distorted by spending so much time on the web.

the issue is that "we" has been moving, fairly quickly, from the techies or business workers that used to primarily use the internet to, basically, everyone from soccer moms to preteens/teens to grandmas.

grandma doesn't need your totally sweet amazon ec3 backup tool, she wants to keep in touch with the family and look at their pictures and such. teenagers mostly want to keep up with their friends and be social.

there's still tons of people out there that need useful software, and useful software is a great cash cow. now that population, that niche that needs your software, while still probably sizable, no longer makes up a measurable segment of the internet.

i'm building an app that will be marketed to a group of maybe 50k-100k people. thats a negligible percentage of the internet-users at-large, but its still way more than enough to (hopefully someday) make me a nice income stream.

edited to add: social aspects of apps are how applications have been moving to monetize themselves while maintaining free-to-use cost. people need to return and view ads frequently for bills to be paid, if the users aren't dishing out the money themselves.

What, Grandma thinks disk crashes can't happen to her? Grandma's wrong.

Or, as JWZ put it: "How will this software get my users laid?"

http://www.jwz.org/doc/groupware.html

They're not. It's just that's what happens to be taking the #1 and #2 spots in each field and getting most of the mindshare. There's still lots of room down the tail; just less people are talking about it (this is what makes it rich, fertile ground to mine.. 90% of the people are only chasing 10% of the pie!).

It's funny you use 'a simple web-based address book' as an example, since an address book is kind of a useless tool if it didn't have a purpose: social contacts. In a world where 'everyone' is 'connected' it's only natural to start looking beyond that and look for way of directly connecting the addresses to the actual social contact.

Games aside, we are only now starting to look beyond the mere useful and productive when it comes to software, it's a new and exciting field, with lots yet to be discovered. And as an added bonus it's actually already proving to be useful too.

Maybe the 'social' is being overemphasized right now, but that's only natural. For a lot of software uses there is no real hard separation between the useful and the social, it just wasn't possible to make that direct connection until now.

No offence, but I kind of agree with 'that guy', if the software has a natural social aspect, it isn't really complete without it. It's like a webshop that doesn't allow you to order stuff, just make a printout and take it to the store.

However, the reason everything has been about productivity is because that is the nature of computers, to automate tasks that would be tedious otherwise. This fact hasn't changed, but it seems like no one's addressing the simpler needs before tackling some crazy "It's like facebook, but with movies" startup.

For my address book example, there are always practical matters to consider. Privacy makes the 'social address book' a very tricky proposition. However, the 'address book with a nice interface' just hasn't really been nailed down (to my satisfaction, anyway). It would be hard to argue that such a thing isn't useful or desirable.

Just so there's no pussyfooting here, I'll clarify what my software does, so you can decide whether or not a social aspect is really necessary. It's a web tool that clones the functionality of 'Delicious Library'. It's basically personal inventory software for your media (games, books, movies, etc) and keeping track of who you loan your stuff to. While the capability to browse the libraries of your friends is a given, generalizing that to things like, 'see who else reads the same books' or 'form communities around specific authors' seems a bit of a stretch. Not that they're bad ideas (I wish I had the time to make them happen), but they're really a separate application.

But it certainly does not have an equivalent revenue share. Put the PROJECTED revenue in 2009 of all "social" apps/platforms together and still you would still be at far less than $10bn.

You certainly can make a lot of money by building useful non-social software. It just wont be as visible or talked about.

Precisely. The original submitter's friend is thinking one of two things, alone or in combination:

1. "If I take this useful app and add some social networking, it will help to market itself, which means it will sell more copies faster. Maybe it will even go viral and I can quit my day job!"

2. "Given the choice between building an app that is useful but obscure and being visible and talked about, I'd rather be notorious."

Point 1 is sometimes right, but often wrong. There are lots of tools that require a more traditional style of sales and marketing... and that have no use for tacked-on social networking features.

Point 2, while not exactly wrong, is a different objective than simply making money or improving people's lives.

Consumer websites have one of the lowest barriers to entry in the history of business. You don't have to know anyone, don't have to get a permit, don't have to do anything at all besides make your website and put it online. That's why they are popular to start and stories about them generate so much hype.

Consider this from another perspective for a moment, possibly your friend's perspective. Someone you know made something that you think is really cool and useful, but it probably isn't going to go anywhere. Trying to sell the "B2B" route requires connections, years of industry experience and nice suits. Odds are that neither of you have any of those things (or else I'd assume you'd be using them)

But what you can do is build a consumer app and hope the "social" side gains popularity. The very small chance of it becoming "the next facebook" (or insert ridiculously lofty goal inspired by dhh here) is probably about equal to the odds you'll be able to develop the B2B connections you need to do a good job of selling the product. Business relationships and reputation generally take years to develop and B2B customers are very demanding. It's theoretically possible (but unlikely) that a consumer app will be an "overnight sensation". That almost never, ever happens with B2B apps.

Lastly, we all want useful software. We just tend to talk about consumer software here on hackernews because that's the game we've chosen to play. I'm sure there are far, far less interesting sites out there devoted to B2B software hacking if you look for them.

No seriously, you're just seeing the hype from SV, which is the same hype that existed 10 years ago, and built basically on the same foundation of sand. There are people out there building useful software, they just don't get the attention they deserve because the niches they fill aren't new, splashy, or "the next wave".

Twitter seems to take some people a lot longer than others to "get" (myself included). But I think that's because we're thinking of it in terms of the latter scenario, i.e. what is its use besides socializing? But socializing is a use in itself too, which we tend to forget (us stereotypically anti-social hacker types... ;).

As an aside, the stereotype of the hacker as anti-social is quite a contradiction to the idea of a hacker founder, since the founder is a leader, front of the crowd. Us hackers these days seem to be turning that one on its head :)