Unleashing Software Profitability: Insights from Douglas Squirrel

The Squirrel's Guide to Software Profitability

Douglas Squirrel, founder of Squirrel Squared, discussing innovative software profitability strategies.
Discover the innovative approach to software profitability shared by Douglas Squirrel, founder of Squirrel Squared.

In the ever-evolving world of technology, where innovation is the currency, one name stands out: Douglas Squirrel. As the founder of Squirrel Squared, a renowned technology consulting firm, Squirrel has worked with over 300 organizations worldwide, helping them unlock the secrets to making their software insanely profitable.

In an exclusive interview on the Software Spotlight podcast, hosted by Michael Bernzweig of Software Oasis, Squirrel shared his unique perspectives and strategies for maximizing software profitability, leveraging AI for research, and addressing cybersecurity challenges.

Marking to Market: The Key to Software Profitability

One of the core concepts Squirrel emphasized was the importance of “marking to market” – a term borrowed from the finance world. He explained, “You have something like a house, right? And your house is worth a certain amount, but you don't know that unless you go and test it in the market.”

Squirrel stressed that software teams often forget to validate their work by gauging customer demand and satisfaction. “The trick is that the engineers know how to do this. They know how to mark to market every day. The problem is nobody asks them to do it, and they don't believe you when you ask them.”

By regularly testing their software with end-users and gathering feedback, teams can ensure they're building features that truly meet customer needs, maximizing the return on investment.

Listen And Share This Software Spotlight Podcast

Watch And Share This Software Spotlight Podcast

In an exclusive interview, Douglas Squirrel, founder of Squirrel Squared, unveils his innovative approach to making technology insanely profitable. From “marking to market” to leveraging AI for research and addressing cybersecurity risks, Squirrel shares invaluable insights for software teams and organizations seeking to maximize profitability.

Leveraging AI for Research: A Game-Changer

While Squirrel cautioned against relying on AI for safety-critical or high-consequence tasks, he highlighted the immense value AI can bring to research and data analysis. “You can use these tools tremendously for research,” he said, citing companies like Zenfetch that leverage AI to sift through vast amounts of data and provide relevant insights.

Squirrel shared an example of how AI could be used to research and update existing content, saying, “You can ask questions like, out of all the articles I've written over the last 10 years, which one is really ripe for an update? What could I put in this periodical to update this topic?”

Addressing Cybersecurity Challenges: A Pressing Concern

On the topic of cybersecurity, Squirrel acknowledged the tendency of organizations to underestimate the risks of cyber threats, likening it to the human inability to properly assess low-probability, high-impact events like asteroid strikes.

“Humans are very bad at estimating and taking action on small probability terrible events,” he said. “And that's exactly what cybersecurity is.”

Squirrel stressed the importance of proactive cybersecurity measures, urging organizations to prioritize this often-overlooked aspect of their operations. He warned about the potential risks associated with AI, such as hallucinations and supply chain vulnerabilities, emphasizing the need for human oversight and rigorous security measures.


What is “marking to market” in software development?

“Marking to market” refers to the practice of regularly testing software with end-users and gathering feedback to ensure that the features being developed meet customer needs and provide a return on investment.

How can AI be effectively used in software development?

AI can be tremendously valuable for research and data analysis, helping teams sift through vast amounts of information and provide relevant insights. However, it should not be relied upon for safety-critical or high-consequence tasks without human oversight.

Why is cybersecurity often overlooked by organizations?

Humans tend to underestimate low-probability, high-impact events like cyber attacks, as they are not immediate or visible threats. However, the consequences of a successful cyber attack can be catastrophic for an organization.

What are the potential risks associated with AI in software development?

AI systems can sometimes “hallucinate” or provide inaccurate information, and there are also supply chain vulnerabilities to consider, where malicious actors could introduce backdoors or errors into the software.

How can organizations assess if they need external help with their software teams?

Douglas Squirrel's “Tech Radar” technique provides a framework for assessing a technology team's strengths and weaknesses across six axes, such as operations, management skill, and process, helping organizations identify areas where external expertise may be needed.

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