In light of the news that the Sparrow guys got bought out by Google, there’s been a lot of hand-wringing.  Comments threads about this news have been full of people whinging about Sparrow “selling out”.  But here’s the thing: software costs money.  People who make software are a relatively rare breed — and I’m saying this from Silicon Valley, where we’ve got to have a higher concentration of software engineers than anywhere else in the world.

It used to be that you’d spend a hundred bucks or more on software.  This is still true in rare cases: Amazon says that the cheapest version of Office:Mac is $100 (the version with Outlook adds another $50), OmniGraffle costs $100 from the App Store.  Sparrow rang in at $10, or $3 for the iPhone version, and I saw plenty of people whinging about its high cost.

Software does not just magically occur.  Good software takes a lot of time and expertise.  If it were easy to create good software, there’d be a lot more of it out there, and I wouldn’t’ve burnt so much time trying to find a reasonable replacement for Quicken for Mac¹, or a desktop calendar app that supports CalDAV².  For software to be really good, you need the following:

• a software engineer or two
• a tester or two
• someone to write the documentation³
• someone to make sure that your application’s architecture supports future growth

Now, in some cases, you can get away with all of this being the same person.  But that’s a lot of work for a single person.  It’s a lot of work for multiple people if the app gets complex enough, and I’ll tell you from a lot of experience that a mail app like Sparrow is a lot more complex than is obvious on the outside⁴.

But let’s just assume that this is a single software engineer.  There’s two ways to go about this.  You can do it in addition to your day job, which means that you don’t have a lot of time to focus on your side project, and it also means that you’re giving up much of your personal life so that you can have this side project going.  Your day job pays your bills, your side project is something that you love and think is awesome, and that you really hope will take off enough one day so that you can quit your day job.  Or you can quit your day job and try to live off of savings for awhile (or your partner’s income, if applicable), and work full-time on this so that you can make it into something self-sustaining.

Neither case is sustainable unless the app really takes off.  And by “really takes off”, I mean “can pay your bills at least as well as your day job”.

The other thing is that consumer software sells in cycles.⁵  You’ve got two major events where most of your software is sold: one in the late summer as students prepare for the upcoming school year, and one late in the year for holiday shopping.⁶  You’ll get another spike for a new version, but most software doesn’t have a new version every year, and software vendors often try to time their new versions to line up with either the school or holiday shopping seasons to take advantage of the time when consumers are already in the shopping mood.  Smaller spikes occur, such as when you get some good press from a positive review, but usually reviews are clustered around release time.  So you make most of your money during those two spikes, and that money has to last throughout the whole year, plus help you make investments on the next version.

At some point, we as consumers stopped wanting to pay money for software.  Some of that is that our computers were bundled with a lot of software so that we didn’t have to pay for apps that we use every day, like mail apps and web browsers.  Some of that is that companies who don’t primarily make their money elsewhere (say, on selling you computers) started selling their software at a steep discount, which depressed the overall market.  Some of it is that some software is now supported by ads, which reduces the out-of-pocket expense for the consumer (although there’s obviously the cost of having to view ads all the time).  And some of it is just that we as consumers have become a lot of whiners who have come to think that software should just come to us magically, continue to work on any hardware that we buy, and get updated with new features regularly.

David Barnard at App Cubby wrote a great post about this called The Sparrow Problem, which discusses his own experiences in selling software via the App Store and includes his own back-of-an-envelope calculations about what it takes for an app to be sustainable for an indie developer.

I don’t blame Sparrow for accepting a Very Large Cheque from Google.  They hit the hard reality of software development: software costs money.  For the software developers, there are always bills to pay (both their own and those associated with making the software).  A good software engineer is never lacking for offers to go elsewhere, because good experienced engineers are hard to come by, and software recruiters are relentless⁷.  There’s always an opportunity cost associated with spending your time on something — you could be spending it on something else and, quite possibly, making more money in doing so.  When you’re not making enough money on your application to be self-sustaining, it’s not hard to understand why they would accept that Very Large Cheque.

And I say: good on ’em.  Gmail could use the talent of some smart IMAP and UI engineers.  Google made a good decision in buying them out, and I think that Sparrow made a good decision in accepting their offer.  I hope that Gmail improves because of it.