You know, when a tanker full of eggs hits a rail car of charcoal and they roll into the propane factory? You don't get omlettes for Lubbock, you just get a stinky mess.

Digg Is Not A Stinky Mess

Well, it's a fascinating mess, some sort of mixture of socialism run amuck and web bubble captitalism.

By socialism I mean that people profess to want to "do good" while gaming the system like mad, pretending money doesn't matter and not understanding the tragedy of the commons.

(Capitalists would profess to being efficient, game the system like mad, say money is just a score counter, and sell you a share in the commons. More for a share on the golf course side.)

In any case, it's a chaotic system with Ron Paul screeds fighting with lolcats for front page attention by 10M readers. You have ardent wikipedia like zealots burying anything sniffing of SEO or SPAM or just not-what-we-like. You even have an entire sub-industry of people selling tools and techniques and Amazonian Mechanical Turks to game the system.

I liked the grand Bazaar in Istanbul too.

So Digg Went Down. Again.

Surfing over to Digg in the morning is my personal equivalent of choosing the long supermarket checkout lane so I can finish The Enquirer. So what do I see first thing this morning:

No, you're down because your servers crashed like, well, like that egg truck earlier. It may well have been because your engineers made an excusable mistake - we've all been there. But I think it is because of bad management.

Hubris, Look It Up

Kevin Rose, who I admit bugs me, said in Amsterdam recently:

Moreover, the Digg-founder told me that the company is large enough now - 55 employees - for things to happen on their own. He used to panic when the servers crashed, now he has a team to take care of a crisis like that.

Kevin, dude, get a team that prevents crisis. Better yet, and I know this is going to sound strange to a 30 year old, hire some guys in their late 40's and early 50's who've run data centers and development teams bigger than your current company. Ask them to put some process in place.

I will quote your own words back at you:

Interviewer: So the first question that comes to everybody's mind is: how can you handle three start-ups at the same time?

Rose: "It's a matter of getting the right management in place".

Ok, so you've clearly got the wrong management in place. Not because your system went down (though that really shouldn't happen) but because it happens often enough that nobody was surprised.

Moving Forward

I dunno what to say. I've heard the same rumors as everyone else - "Digg for sale at $200M" or "$400M Buyout of Digg Rumored."

I will say that if I were giving Kevin some advice I'd tell him to pick one company and pay 100% attention to it. I'd pick Digg over Pownce or MyBlogLog or whatever else he's got going on.

And if he didn't listen I'd pick up the phone and start calling friends who had tens (or hundreds) of millions in stock from Webvan, Pets.com, Scient, etc, etc.

Seth Godin had an interesting article, Managing Urgencies. Here's one of many money quotes:

The problem, of course, is that most organizations are on fire, most of the time....Add up enough urgencies and you don't get a fire, you get a career. A career putting out fires never leads to the goal you had in mind all along.

Several years ago one of my employees imparted this nugget: "You are always living in the long term." Even though all of the pressures in a normal job tend to be focussed on the immediate, to quote BSG Razor "You make your choices and you live with them. In the end, you are your choices."

The fires you face today are usually the result of decisions you made months or even years ago. Here's an example. I did a consulting project for a software company that found itself mired by failing projects. Years ago, they had made some fairly poor choices, such as hiring people that weren't quite up to the job and not instituting standard practices such as source control, release management, and code reviews. They had 30 different customers with 30 completely different sets of source code, and were fixing the same bugs (with different people) at every project. The CEO asked me to come in and do a "health check" on their processes. I was to present my findings at a board of directors meeting.

I did my presentation to the board. I explained what the problems were and basically suggested that since they had 30 projects that were going to miss their delivery dates by an order of magnitude, the best thing they could do was 1) Clean house and get rid of some poor managers, 2) Start using best practices, and 3) Stop all work and concentrate on building a single branch of their source code that would be relatively bug free that they could then branch out to their projects. All pretty standard recommendations for software projects in trouble.

This approach didn't seem revolutionary to me, but it wasn't at all what the CEO had in mind. I had totally misread the situation. He was looking for outside validation that everything was ok. Or maybe he just wanted some improved firefighting equipment or techniques. Perhaps he should have spoken to me before I went in front of the board, but he was busy putting out fires. In fact, the entire company was built on a culture of fire fighting. Employees that went to extraordinary lengths to fix situations that simply should not have existed were lauded as heros, and the few technical people that were pushing for change were just "negative." Years later, the company was sold at a "fire sale" (how fitting) and almost no one from those days is now with the new company.

It's very easy to get trapped into just looking at the current fire that needs to be put out. After all, when the house is on fire it's pretty tough to be thinking about installing the smoke detectors.

But merely moving from fire to fire is not leadership. A leader is someone that can guide change even while dealing with the day-to-day. If you find yourself unable to deal with anything more than the minutiae of your business, then where will you be in 5 years? I'll give you a hint: Even if you manage to stomp out these fires, unless you're proactive you'll just be fighting another set of fires.

I admit it, I am a conspicuous consumer who reflexively buys the latest tech, but I still like to read Consumer Reports and Affiliate Confessions. I really appreciate this guy's pound-it-out style of making a living from the internet. And while his lifestyle is so very different than mine, I think we share the same desire to learn from mistakes and the willingness to share them with others.

I've also been enjoying reading his ongoing series of posts about Build a Niche Ebay Store. Building and running a niche/thin site is not something that fits in our business model, but it there are a lot of things about it that are very interesting to us from the standpoint of business strategy and what we call "small idea" software development.

When Bad Things Happen To Good Sites

Apparently the Niche Store guys got hacked and their website went down. Oops. And it's still down. And up. And down. Dang.

I can relate to the frustration they must be feeling right now.

I wrote earlier about our Cari.net issues - and they're still not really resolved - there are corrupted DNS entries out there that are preventing regular readers from getting to our sites. (Note: FeedBurner is still working fine, which is very interesting.)

And while we hate to lose readers, that is an order of magnitude less painful than losing buying customers during a product launch.

The Downside of Outsourcing Hosting?

Well, it's the downside of hosting, no matter who is doing it, you or some hiking boot clad short wearing dude in a data center. It would be nice to have a contingency plan full of backup servers at different data centers, but I'm not sure it's worth it for small business units. It's not like your local brick-and-mortar organic grocery has a contingency plan for an ice storm. Other than to make sure they have insurance and a financial buffer to replace the spoiled Brussels sprouts.

It's that time of year - tax time for business.  March 15, or, as I refer to it: the day when all that expensive record keeping culminates in an expensive session with your accountant.

Record Keeping

We are pretty careful to keep good records so that we don't have any problem breaking an invoice down, six months later, between $235K in billable work and $95K in reimbursed expenses. Likewise, meals and entertainment are separate from other travel expenses.

We don't spend a fortune on software, and you don't need something super fancy.  A thousand years ago when SAP roamed the earth, destroying everything in its path, I worked for a 250 person consultancy.  We managed a $30M/year organization on Quickbooks plus some custom reporting in Access.  Amazing.

I know a guy who owns a 200 person manufacturing company and he keeps his books 100% on paper.  The only time his information goes digital is when his accountant files his taxes.

I think the trick is to capture everything that happens, as soon as it happens, and then file the source materials away with sufficient notes. 

Planning Ahead

Once there are more than one or two people in the company you need operationally managed finances.  Are you going into a new line of business, such as moving from custom development to selling semi-custom software?  When you were doing your operational planning, did you consider the revenue and tax implications?

Are you taking on a remote employee?  Do you then luck into filing taxes in a different locale?  Are there different record keeping requirements?

The Cost of Lazy

You simply have to keep track of the details as they occur or you will absolutely pay a penalty at tax time.  The penalty may be confusion, or panic, or worse, but there will be a penalty.  Like forgetting your anniversary - you'll certainly pay for it.

It's a cliche imaged image - a guy shows up at the accountant with a shoebox full of receipts.  What is not funny is what happens when you play the game that way.  If you just figure that you'll figure it out this is what is going to happen:

• You will pay your accountant more.  A whole lot more.
• You will pay the wrong taxable amount.  If you have a good accountant, you'll pay more taxes.  Otherwise you'll just owe taxes ... until the IRS figures it out.  Then you get penalties.

Let's say you do $2.5M in revenue and pay $400K in various taxes.  If you accountant has to make a 10% mistake on the upside to protect you that is $40K in extra taxes.  If your operating margin is 25% that means you  need an extra $200K in sales to cover the cost of sloppy book keeping.  Oh, wait, you have to pay taxe on that, so call it $250K.

$250K in extra sales, not to mention the $40K that doesn't go into the bonus pool, is enough to make me plan ahead, keep good records, and have a good accountant.

You would think that with 120+ years of experience we'd do a better job at the inflection point - where you start moving test into restricted production.

Or, based on personal experience, you wouldn't.

Well, I did.

Let me count the problems:

1. Blog disaster - posts lost, URL's not found, etc
2. Template dysfunction - widget A breaks, but widget B breaks on A fix
3. DNS error - that one was my fault and I don't want to talk about it
4. Check-in-Dilbertiasim - like it was supposed to all render in IE?

I was once involved in a $200M+ system implementation.  After almost 2 years of prep time my department's deliverables were totally complete.  And they weren't used.

I am actually a bit more frustrated today.  And our least favorite client called so I am gritting my teeth and working through issues of left column spacing.

Kill me now? 

Or, a tale of hubris and lack of attention to detail....

When we kicked off this project we spent a LOT of time worrying about the backend, the UI, the toolset, the future directions, etc, etc. All that necessary, dead-sexy, and boring-but important stuff.

Then we went out, grabbed a blogging component, tried it for a rigorous 20 seconds, and said, "meh."

Well, we put in our final Joomla template in preparation for the art guys to do their, er, art, and it broke the blog.

Bugger!

So we poked at it and walked around it looking all manly-like, and eventually decided we were throwing good money after bad AND taking our eyes off the ball at a critical point.

So we went out and did a rigorous 60 second perusal and installed a new blogging component. We'll pull the other posts in shortly and fix the URL changes.

But it's been a good lesson for us - even the small stuff ends up not being so small it shouldn't have been done right in the first place. Good to learn something new and not have it be too painful.