Something spooky is going on. This project is going too well. Clearly I’ve turned into the brain-in-a-jar from Mars Attacks.

Seriously, our technical teams have jumped ahead of schedule on infrastructure and user system design. The documentation guys have finished two pieces that aren’t due until next week. Project stuff is not supposed to go well towards the end of the project.

The backoffice team has completed moving our bank, changing our payment gateway, and changing our internet merchant account. Nobody fixes banking stuff the in the days before thanksgiving. (I figure we’ll save around $100K because of the work they’ve done over the last few months to ‘fix’ our rates. Nice! Money for old rope indeed.)

Our database guy and our lead technical architect got together and figured out an easy way to bring a V/2 feature into launch. I told them to stop because we didn’t need the risk and they laughed at me and told me that it was easier to build it in now because it made several other features almost free. Then they made fun of me for being staid and boring. Then they practically skipped out of the room.

These guys look like trolls with masters degrees and generally walk around muttering big-L libertarian curses against the system and cracking complicated Tolkein puns. They do not hop around the office grinning at how smart they are.

So clearly someone has sprinkled some weird anti-tryptophan laced fairy dust on my team.

I love startups. Complete rebellion in the ranks due to over-performance on stretch goals.

Happy thanksgiving everyone. Spare a thought for our guys in the sandbox.

Not that you should actually let your mom invest in your startup, but if she insists that she wants to be in on the “A-Round” she’s going to get crushed on the professional B-Round.

We talked earlier about VC term sheets and about how you can’t really negotiate your term sheet much at all. So what does that mean for your Angels who bought in an A at $5M pre-money?

Better hope they are as unqualified as your lawyer let them be for SEC purposes. Because they’ll just look at the $10M pre-money and think they doubled their investment. Given the grind, warrants, and preferences the VC’s will insist on it’s more like they have 10% as much juice. If the company is *really* worth $10M pre-money now that’s cool and it was almost certainly not worth $5M before, so it’s hard to say if they now finally have an ownership stake in something real or not.

There is another interesting issue in here - how much money *did* you raise? There is this mantra that people have: look for money early. And it is true. But you still don’t get the money until you’re basically broke anyway. Think about it from the VC’s point of view - would you give you money before you really needed it?

Wrong answer. Remember, they want a business that will sign the worst possible term sheet. When will you do that? When you have to make payroll off your home equity line. At that point you’ll really sign anything.

So I would suggest raising a small(ish) amount of money during your angel round (if you raise at all) so that your burn rate stays as low as possible No need to take a bigger hunk of your life’s savings (remember, you’ve already burned Mom and her bridge club) than necessary to make payroll and rent.

The other good part about being broke is that it teaches you to be cheap. Copier? Stupid, get a cheap fax machine. Coffee service? Mr. Coffee from Wally World and Sams Club blend. Desk from the supply guy? Hello, used furniture or Sams/Costco. All this will be good training for when you’re running tight on cash.

This has been a bit rambling, but it’s all linked in my head. Take money from Angels with the idea of getting pro money and you’re screwing them. If you have a lot of money you’ll just spend it faster. Cheap is good. I see the thread, do you?

When you start your first company you have some advantages - youth, energy, and a good credit rating. (Probably you also have hair and can see your feet while standing.)

If your business fails you probably wouldn’t really expect to exit with good credit. I mean, there is no doubt that there will be business and personal bills piling up while you Slim Pickins your bomb on down. And good on ya, nothing wrong with that. And since you made that choice, I’ll buy you a drink, slap you on the back, and commiserate with you.

But if you get VC money you would expect to come out of a failure pretty well unscathed. I mean, after all, they are the majority owners, they have control, they have all the money.

Let me wipe off these tears of laughter, m’kay?

Do not for a second think that you can present your final expense report to the VC’s and get it paid. “But they said to come out to San Fran for a critical meeting!” Right. Tell them to get you a pre-paid ticket and you’ll see how important it is.

All those corporate cards your sales guys have? All those desperate last minute trips to clients to close a deal, any deal? Guess who is gonna get stuck with the bill when the company goes down?

Remember, once you declare bankruptcy you don’t have a ton of freedom in how you spend your money. I’m not a lawyer so I’m not going to give you the definitive answer, but I will tell you that employee expense accounts (in my state) are treated as unsecured debt and are paid well after secured creditors. At best they’ll get pennies on the dollar. The courts in my state can also claw back payments made up to 60 days before bankruptcy. And they do.

So it’s not just you, it’s your employees too.

Why am I picking on the VC’s CFO? It may not be really fair, but my experience, and the people I know report the same thing: when money gets tight you can count on the VC’s that control your board to start making changes. And one of them is often to take control of the remaining cash. Reasonably enough. (And they boot people, also reasonably enough.)

And the CFO is gonna drag their feet on paying certain bills. You can’t kite checks, but you can pay slow. Really, really, really slooooooowwwwwww.

So if expenses are getting paid slow and the company is in a death spiral, you might want to consider how to ameliorate the damage to your credit rating as you simultaneously lose salary, healthcare, and inherit a big credit card bill.

Good luck - it can be done. Or at least you can be prepared.

=====

Bump and update. Someone sent me a funny email, started with “Bitter, table for one!” I’m actually not bitter because I did it to myself the first time and the second time I was protecting three of my sales guys. I’m just putting it out there for you to ponder.

Update 2: someone pointed out in comments that I had confused Slim Pickins and Tex Ritter. Oops. Fixed.

Well, not actually eat since there wouldn’t have been an receipt for an expense report, but they did try to hire them.

I’ve talked to other entrepreneurs and they have reported similar experiences. You go in and do your pitch. You know the drill - polite interest, somewhat random questions from the recent MBA grads gunning for a partner slot, promises to call, etc, etc. You pretty much know the next stop is the closest place you can purchase alcohol based numbness. Then one of the older guys takes you aside.

“Have you ever seen a grown man naked, Timmy?”

Sorry, that was Peter Graves in Airplane. What he says is: Do you think you’d be open to looking at one of our other portfolio companies?

I swear to god, the first time that happened I thought they wanted me to do some consulting. So I said “Sure” and was horrified when I figured he wanted me and my tech team (but not my co-founder) to dump our current company (and investors!) and go fix some POC company that simply couldn’t deliver. I was horrified, and offended, and felt stupid because I just didn’t get it at first. I still remember the stupid feeling, actually.

This happened several times. It also happened after an on-site Dog And Pony when one of the VC’s made a move on my technical team. They all forwarded the emails to me - they wanted to know if they could flame the sender. I told them go-ahead and they spent a happy few hours using the thesaurus to find high falutin words that meant: jerk.

The last time that happened to me was in England and I just blurted out: This is some kind of test, isn’t it? They assured me that no, it wasn’t - it was just an easy way to recruit management.

We’ve talked about the risks of taking venture money and the difficulty of negotiating your term sheet. I guess you can add the worry of losing key staff during the run up to taking the money!

Why should Don have all the fun riding roughshod over VC’s and their attempts to have non-consensual intercourse with your company? Herein is my tale of negotiating term sheets - I’ve done three and closed one, which is actually a fair bit of experience. For a poor guy, anyway.

(Guy has a great post on how less knowledge is better, and it’s worth a read. Though I don’t agree with him, but maybe I would if I were a VC.

My first term sheet was with Angel investors. Not your mamma or your MBA prof, but guys from the Valley who’d been in on early VC deals - first wave hard tech silicon guys and later 90’s infrastructure guys. Savvy guys, rich-rich ($50M or so) but not RICH-RICH like we have today. Back then, Bill and Larry were merely barely billionaires.

It was not terribly difficult, nor was it adversarial. There was a LOT of negotiating around the valuation of the company, as well as some push from them to take more money. (That is another post.) But it was pretty straightforward and in six weeks or so I’d raised about a million bucks. I think I spent $20K on legal fees to get the revised versions out and saved, etc, etc.

I thought I learned a lot. I did. It was the wrong stuff though.

I will tell you one thing I learned for free - do NOT let your lawyers convince you that they should clear all the investor checks through their escrow accounts. I’m not saying that they were likely to steal any money. On the contrary, you know to know where something is to steal it. Try to imagine losing track of a $150K check. Twice. I’d rather give a check to a blind Jehova’s witness using a monkey for GPS than to let a lawyer handle it.

The next round of term sheets was with a boutique VC firm on the East Coast. They specialized in our area of technology/business. It was a good experience - they really got what we did, they asked some good questions, and they made us rethink some assumptions and come up with better plans. I’d have paid to have someone do that, frankly. During the end of the second round of beauty contest meetings they gave me the “standard draft” of “what all our portfolio companies sign.” “Don’t worry, it’s all standard stuff.”

I saw everything that Don saw, and a bit more about work restrictions, and when I brought up my list of things that bothered me, they dropped me like a rock.

Because, you see, whatever you do there is someone doing something fundamentally similar (from the perspective of building a portfolio of companies). So, ceteris paribus, they will always invest in the management team that is willing to sign the worst contract.

How do you feel about your termsheet now?

“Oh,” you say, “but they spent so much time with me, they have an investment.” Uh, no. They get paid to talk. They collect between 1% and 3% a year from their fund to find companies for their portfolio. And what are you going to talk about in partners meetings if you don’t meet with companies? Plus then they have business plans to share with their portfolio companies. It’s all good. For them.

That was two. I thought I was ready.

At this point the tech boom was, er, de-booming. So our next investor was a fund-of-fund group in London. I hauled myself over there several times (off the plane, on the tube, into the office, demo, to the hotel, collapse, up to pub with investors, to bed, on plane, home, get flu!) and we got well into the due diligence. Then they gave me the Investment Heads of Agreement. (Which is posh Brit for termsheet.) I spent four or five very expensive hours with our English attorneys and then went back the next day to negotiate.

Being that we were in England and it was after 10am, one of the partners took me to a wine bar and bought me some really expensive sherry. (I don’t like sherry by the way, but it was lovely.) I then proceeded to go through the document for two hours, point by point, and tried to negotiate better terms somewhere. He was very patient, but wouldn’t move off the dime (farthing?), wouldn’t let me bundle options together, wouldn’t defer, nothing. I swear I went through every negotiating process I knew. Nothing.

Finally, after many trips to the bar for more sherry, he leaned over and said something I’ll never forget:

You should stop trying to change this. It’s what you’ll sign if you want the money. You see, we have it and you need it. And I know you need it because I have your books. And you don’t have leverage because I know all about your company and you know nothing about mine, including where I am in negotiations with your direct competitor, X.

Wow. Then I got it. I saw that they OWN you. I wasn’t up for that.

So we walked away and sold the company to a competitor.

If you’re a pretty-boy A-list stunt CEO for the VC world, you can stop reading here. I got nothing of wisdom for you, I just hope you enjoyed the story.

If you’re a regular Joe and you’ve decided to take VC money, then I guess my take-home is that you should realize that you are not going to negotiate. If I were to take VC again I’d just try to do the transaction with as little angst as possible and get on with it.

I would also perform a 90% haircut on the value of my dreams. Just to be prepared.

Many entrepreneurs view their first round of funding as the end game for their startup. They’re so excited by the prospect of “big money” that they don’t look at the long term implications of selling their soul. This article will show excerpts of an actual venture capital term sheet (which I signed, btw) and what these terms actually turn out to mean in the long term.

There are situations where using venture capital can be a Good Thing. There are also times when it can be an absolute disaster for the company. The problem is that venture capitalists tend to look for and invest in deals where it doesn’t make sense for the company. Make no mistake – this is an adversarial process. There’s a reason both sides lawyer up to do the deal. No matter what they say, the VC is not your friend. Their responsibility is to their investors, not some higher principle of “doing good.”

The best situation to use venture capital is when you have very little time or money invested in your startup and the startup requires large amounts of capital in order to achieve any results. Being able to leverage capital to achieve your goals can be a wonderful thing. These are the only kinds of deals that entrepreneurs should do.

Unfortunately, most VCs aren’t interested in these kinds of deals because their standard benchmark is that they want to see market acceptance of the concept before they invest. Will the dogs eat the dog food? “Come to us when you’ve got $1M in revenue” is a common phrase. Of course, at that point, you’ve made a serious investment in time or your own money to get that far. And since you’ve been living lean, by definition you probably have a profitable business that you can support at that level.

The worst situation to use venture capital is when you have a on-going, profitable business. Many entrepreneurs think that they can take an infusion of capital to “get to the next level.” You may very well be able to use the capital to grow the business, but it will no longer be your business.

Let’s take a look at an actual term sheet. I’m not a lawyer, nor do I play one on TV. My lawyers looked at this term sheet, explained the downsides to me, and then asked me if I really, really needed the money. The answer was Yes, so we signed it.

The first nasty term is the lock-up during negotiations:

The company covenants and agrees that neither it, nor any of its officers, directors, employees, agents or representatives will, directly or indirectly solicit or initiate inquiries, offers or proposals from, or participate in any discussions or negotiations with, any person or entity (other than the Investor or their respective officers, directors, employees, agents or representatives) concerning any Transaction.

What they’re doing here is taking your deal off the market. Their big fear is that you’ll get a bidding war going during the negotiations and they might have to pay a market price. You’re in a bidding war for their attention since they’re not agreeing not to look at other deals at the same time, so this is a one-way provision.

Your big problem is that no VC wants to do a deal that someone else did due diligence on and then turned down. If they pass on the deal, you’ll find it very hard to do another deal, even though they promised not to disclose anything about your deal. These guys all have lunch together and cooperate pretty heavily, so a black ball from one is enough to destroy your chances for a deal in an entire area.

The lesson to learn is that you shouldn’t accept a term sheet unless the deal is exactly the way you want it. Once you accept the term sheet, you’re committed to either completing a deal with this particular VC, or pretty much starting over.

Another standard term is a preferred dividend for the investors:

The Series A will receive an annual cumulative dividend, initially equal to 10% of the Series A Purchase Price, payable quarterly, which shall compound and accrue quarterly unless paid in cash. Quarterly cash dividend payments shall be required after three years.

How to read this: This isn’t really an investment, they’re loaning you money at 10% plus they’re getting a huge kicker if you end up being successful. And you’ve got a ticking time bomb, because in 3 years you’ve either got to be able to make the quarterly cash payments, or they can foreclose on the company.

How about when the company has an exit?

Upon a Liquidity Event, the holders of the Series A shall be entitled to receive in preference to the holders of the common stock an amount equal to the Aggregate Purchase Price plus the Cumulative Dividend. Any remaining proceeds shall be allocated between the holders of the common stock and the Series A on a pro rata basis, treating the Series A on an as-converted basis.

If no Liquidity Event has occurred by the fourth anniversary of the closing, each of the holders of the Series A will have the option to redeem their holdings for an amount equal to three times the Aggregate Purchase Price (subject to appropriate adjustment in the event of any stock dividends, stock splits, combinations or other similar recapitalizations affecting such shares) plus the Cumulative Dividend (including any accrued but unpaid dividends). This amount (the “Redemption Amount”) shall be paid in two equal installments at the dates of the sixth and seventh anniversaries of the initial closing.

This keeps with the concept of they’re not really making an investment. When you cash out the company, they get their investment plus dividends back first, then you split the proceeds with them according to their percentage.

Let’s take an example. Let’s say you’ve got a successful consulting company that’s doing $1M/year in revenue. A VC comes along and offers to help you build your company to the next level and gives you a cash infusion of $1M. They give you a pre-money valuation of $9M, so post money of $10M they own 10% of the company. OMG, your company is worth $10M! You’re rich!

You write some blog posts about how the VC is going to help you really build the company. The business community fawns over your success. You have a great Christmas party.

Four years later you haven’t had the 100x increase in sales you were hoping for. $1M turned out to not be nearly as much as you thought it was. In fact, you only tripled your sales (which is pretty darn good for any company in four years). Now the quarterly dividends have kicked in and you’re feeling the cash crunch. The VC can sell the company out from under you because they can force the redemption. A big company comes along and offers you $3M cash for the company, which frankly is about how much you’re worth – consulting companies are worth their yearly revenue. If you think VCs don’t call their buddies at the big companies when there’s blood in the water, think again. Here’s how the math works:

Pay back the VC their original investment: $1M
Pay the VC their extra triple redemption: $2M
Pay the quarterly dividends for four years: $217K
Total Payments: $3.217M

Oops, there’s nothing left over for the other 90% of the shareholders of the company. The VC cashed out and you’ve got nothing but a chance at a job at the company who bought you. The VC tripled their money and you’re looking for a job. Those employees that trusted you to do the right thing got laid off by the buying company because their functions were duplicated.

The horror story continues:

All employees have entered and all new employees will enter into the Confidentiality and Intellectual Property Agreement, which includes 3-year post-employment non-competition terms.

The company that buys you also buys this agreement. So you’re not only unemployed if you don’t go to work for them, but you’re effectively cut out of working in your chosen field. Those employees that got laid off share the same fate. Imagine being a successful SEO consultant and not being able to work in SEO.

It gets worse. Here’s a dirty little secret: VCs under fund companies on purpose. They know the initial $1M investment won’t be enough, so they’ll give you any valuation you ask for. They could give you a $100M valuation for 1% of the company. It doesn’t matter, because they’re protected with anti-dilution:

In the event the Company issues or is deemed to have issued additional shares of stock, either common or preferred or otherwise, with the exception of shares issued pursuant to the option plan reserved at the time of the Series A investment, at a price per share less than the Applicable Conversion Price, then the Applicable Conversion Price shall be reduced to such lesser price.

So when you take a subsequent round of funding, the price they paid for their shares is adjusted if the next round would be a lower valuation. Let’s take our $1M investment example.

Series A was $1M with a valuation of $10M, for 10%.

Series B doesn’t do so well, so the valuation of the company is $5M. Series B puts in $2M for 40% of the company.

Series A is readjusted – instead of $1M buying 10% of the company, now it buys 20% of the company.

Instead of the founders owning 90% of the stock of the company, they now have 40%. The VCs now control the board and effectively own the company. And the VCs get paid first in the exit, so that 40% is as good as zero unless you make truly huge money on the exit.

VCs know this. They will actively encourage you to increase your burn rate, with promises that they can help you get additional rounds of funding as you need it. They talk about velocity and time to market being more important, since money is easy. They would like nothing better than for you to burn through your cash and be dependent upon future rounds.

Now that you’re working for someone else, you’d like to have a salary that’s at a market rate rather than the starvation salary you were working at to build the company.

The Board member representing the Series shall approve the initial establishment of and any changes to the compensation of the President, CEO and any other employee or consultant or vendor who is or becomes a holder of more than 5% of the Company’s common stock on a fully diluted basis.

In other words, your salary will stay the same. You’re faced with the choice of walking away from your baby and leaving your employees, or continue to slog it out, hoping for the big hit. Simply walking away isn’t really an option, because as an officer you’ve got a fiduciary responsibility to the shareholders. It’s a very tough spot to be in.

There are clearly situations where venture capital can really help a company. But if you’ve got an on-going, profitable business, taking an infusion of venture capital could be the worst decision you ever made. VCs invest on the idea that they’ll invest in 20 companies that fail in order to find one that hits the 100x return. If you’ve got a company that’s doing well, there’s absolutely no reason to rip it apart and make it a 20-1 long shot.

Unfortunately, most entrepreneurs that do VC deals are doing their first deal. The 20-somethings doing Web 2.0 startups are no match for VCs that have been playing the game since the 1980s.

And when you see that $1M check, there’s nothing anyone can tell you that will make you turn it down.

But you should. If you’re not the perfect situation for a VC investment, just say No!

Got a quarter? Flip it twelve times and call it every time. Get ‘em all? Then you can easily choose the successful startup when you interview. More seriously here are your options:

1> Know someone who has done a lot of successful startups. Follow them around.
2> see <1>

Really. At the end of the last boom I watched a telco equipment supplier emerge unscathed from the carnage. The did a D round (up!) for $125M when companies were selling themselves for less than cash on hand. They had key patents. Three major telco’s were putting their equipment in. Cisco was sniffing around. Two years later: money gone, E round (12:1 reverse) for $15M floundering, zombie staff. All that with a superstar CEO, Vince on the board, etc, etc. The people who ran that business and joined it did everything they could, even in hindsight.

The reason this is on my mind is that we’re interviewing for an open position and I am amazed at the questions people, especially junior people, just don’t ask. (We don’t hire new-grads very often. They’re not housebroken yet, we don’t have time to teach them manners and they have predictable bad behavior.) We’re a kind of a got-up startup (self funding, natch) and our risk is much lower than the average startup, but still, it’s not exactly like someone is joining GE capital.

Questions people have not asked me today:

A> How much is your run rate? How long will your reserves cover it?
B> What is the exit plan for this company?
C> Who holds the ownership?
D> Where did you work before this?
E> What is your ideal next job?

I got a lot of questions about health care (we got it), retirement plans (401K), and, amazingly, vacation. Hint: Don’t ask about vacation at the first interview. This is not Canada.

Anyway, here is my honest advice: do the best you can, but relax. Odds are that any startup you choose will fail. Since around 90% of all new businesses fail (US numbers) in 2 years and the numbers for tech startups are even more grim, well, you are not actually increasing the odds of succeeding, just increasing the odds of getting into the group that has a chance of succeeding.

Yep, that makes no sense at all, yet that is what you have to have to be successful in a small business. Eyes in the back of your head and the ability to predict your competitors moves in advance are handy too. But Focus is really the only thing you have the ability to develop - that other stuff is more art than craft. Like good poker, really.

Let me try to explain a bit about what I think Focus means. When I was a computer programmer I developed an ability to slip into problem solving mode in just a few minutes. You see, I was just “ok” in my ability to mentally solve a problem, so I decided I would write technically excellent code (easy to do if you practice) and I would be very very productive by having excellent focus on the problems I was solving.

Which was neat - I ended up working on much more interesting stuff than the much quicker and smarter guys. Because my stuff got done and it always, always worked. Then I pretty much stalled at the senior engineer level.

So I developed the ability to come out of focus on my particular problem and focus on the big picture: the project plan, the HR issues, management (mis) direction as implied, etc, etc. So then I’d alternate between those two states.

Which may sound schizo, but it turns out that this is exactly the skill you need to successfully run a startup. Doing a marketing plan? Concentrate like heck, but make sure you lift your head up frequently to check on the other balls in play. Out in the valley raising VC dough? (Never again!) Better make sure you make the daily call with the sales team. I once stepped out of a three hour second meeting (beauty contest, swimsuit edition, you know?) with a brand name VC to run my sales call. I’m not sure they “got” why that was so important, but the fatuousity of the inbred VC is another subject.

Why do I think of it as a Zen thing? Well, when I was doing karate my sensei used to tell me to shut off my mind and sense the right thing to do. Then he’d make us listen to all these koans (what is the sounds of one hand clapping?) and do kata with mirror glasses on to make the room seem upside down. I later realized that he was teaching us to learn to intuit the proper response when we were getting strange input.

Last month we had a kind of a rolling blip of revenue (up one week, down the next, then back to normal) across a number of profit centers. In a smaller business you have to be careful not to hie thee off after every damsel in distress, but something about this was really really bothering me. We did some investigation (three people, a few hours) and found that our credit card company had switched our structured terms several times. Huh. So we got *that* $1,600 back (but did not give them back the $2,100 we saved - I’m not the Pope, ok?) after some paperwork.

And that was in the midst of all the work leading up to the launch of Promote-My-Site. Zen Focus - you just have to learn to de/re-focus when it’s right.

Ah, plans are wonderful things - if only reality were more sensitive towards the tender ego of the planner! In twenty five years of planning projects I’ve never had anything with a horizon longer than three months and three people actually work. (Don recently wrote a good post on that: Only Try To Predict The Near Future.)

So why have I been around 85% successful in delivering tricky software projects and complex operational systems? Well, I think that I have an innate talent for finding the critical path and a good hair-on-the-back-of-the-neck system for sensing when things are going horribly wrong. Plus I’ve been known to sandbag (cough cough) on my initial plans.

But mostly I replan pretty frequently.

“You mean you slip your dates?”

Nope, I replan.

Let’s take a real world example from when I was working as a consultant to an upstart telco that was working on their backoffice to reduce overhead. There were three consultants, eight client developers, a documentation person, a test person, and a client side business analyst. I had a month leadin time to build an executive level (read: PowerPoint) plan for buyin purposes.

I quickly categorized this as a very high risk project because of the length of the plan, the client’s culture, the mix of in-house and consulting resources, etc, etc. So I structured the plan as a series of overlapping projects so that we’d have successes surrounding any failure.

Then, at the midpoint of each project and right before any new project launch, we’d spend a few hours going over the plan, changing dependencies, removing/adding features, etc, etc. We also used this time to change dates and deliverable due to the business changing what they needed - 18 months being a fairly long time in the telco world.

We were on time with all but one section, so in the project management world that is pretty much sweeping the world series.

You’ll note that we did not do what most people think of when they hear replan: add people or slip dates. Replanning is much more than changing dates and resources - it is a fundamental re-examination of the project plan at that point in time!

IMHO if you just add some people in and slip the date, you’ve only put off the inevitable failure. I’ll go even farther: I’ve not seen that strategy work very well. I won’t say that I’ve never seen it work, but most of the projects where I’ve seen something that drastic were probably doomed even if they’d gotten Fred Books to come in and tell them what to do.

The other thing I’ve seen replanning do is actually to deliver more functionality over the same period of time at a lower cost. Which is horribly counter-intuitive, but sometimes you learn some pretty interesting stuff during the first part of a project.

For example, here at Promote-My-Site, we hit the halfway point in the project (it was actually the half-way point in our investment, but same diff) so we got everyone into a room and went through what we were doing from a plan perspective.

And what I mean by that is not “when will Widget_X be ready for testing?” but “Ok, Don, you should be around halfway through the backup and recovery plan at this point which means in two weeks you’ll be starting on marketing - that sound about right?”

Anyhow, we’re cutting up a bit and going through everything, and one of the guys says:
“You know, if we weren’t building Feature_X into the release, I’d be done tomorrow with the database design, and we could ditch the new pricing configurator, freeing up almost a month of work.” Hmmm. Cool. So we had a good go-round the room and talked through launch requirements. And we decided to remove an important, but not critical, feature from the launch and put it in V2. And we pulled in some small V2 features that had been moved out.

And then we re-planned the launch and decided we could launch in January(ish) instead of March/April. So we actually saved more than two months (testing was easier, etc).

So that means we will have:
-> 2+ more months of revenue from our new product
-> 2+ months less investment before go-live
-> V2 will be out more quickly
-> V2 can probably come out with customer suggested features

Look, that money saved and earned is not going into the Holy Payroll Lockbox or anything, but it’ll certainly pump up the bonuses even more on a good year - a seriously good thing for the group. It also means that Promote-My-Site will have a better chance in the marketplace, which is far more important to our company in the long run.

Replanning. It makes you look smart. Or at least less stupid.