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.

Ok, that is a broad statement, but ShutterFly has an MBA driven feature that has made me so mad I got up out of bed early on a Saturday to write about it: Once you load your pictures in you can’t get them back out.

It’s not like you don’t have a backup copy on your computer (or at least I hope you do!) but if you need a picture, well, Mr. Gullible Customer, here is an order form for a ridiculously profitable CD-ROM. Note, not a DVD, because that would hold more pictures.

Well, they can hold their breaths until they turn red and their mommies give them a lollipop and I’m not going to give them my Xmass card business this year.

Ok, I feel better now, especially as I’m going to spread this story around and chip off at least 0.000005% of their annual revenues.

But the reason I didn’t write about this on my personal blog (which is chock-full of ranting goodness) is because it made me wonder if we’d done anything MBA evil ™ in our business? I mean, I don’t think we did, if you define that as ‘deceiving customers for the purpose of increasing revenues.’ We do segment our products to maximize profit, but we try to do that in a way that our customers receive the maximum benefit from their spend.

Is this a perfect science? No. Take Cable TV pricing. It’s in tiers. You know all about that. It’s such a contentious thing that Congress (which apparently has nothing better to do!) has held hearings on it to make sure it is not “illegal bundling” whatever that is.

But you know, it works for me. My cable company offers six tiers, four sports packages, and six movie packages. We have two tiers and one movie package. And I’m perfectly satisfied. Oh, sure, I’d like to have HD movies without buying the HD tier, but I only miss that the once a month I pay-per-view a movie. So the Cable guys got it 99.9% right in my opinion. So I vote “No” on the MBA Evil index for cable tiers, in my case at least.

But last night, when steam was coming out my ears, I sent an email to fifteen or twenty people and asked them if they would be upset to have to pay their online photo vendor to get a high-resolution copy of their photo’s back. The responders results were interesting: 60% were outraged, 25% said it never occurred to them but they’d be outraged at the delay (I thought that was interesting), and 15% said they didn’t care.

Now, while the plural of anecdote is not data, that should give the ShutterFly (and other MBA Evil practitioners) some pause. Because that “feature” was not an accident.

So I’ve called an all-hands review on Monday to look at our feature set and stack rank the things that might annoy our customers - either now or when they run into some issue. Then we’ll have our prettiest phone voice call a few of our more voluble customers and ask them some questions.

Maybe, just maybe, the Evil ShutterFly denizens might have saved me some customers. I certainly hope they saved me from someone writing a post like this about my company!

It may seem very Ah-nold to manage a company that way, but killing a project is better than killing your company. From Valdocs (yes, I am that old) to the FAA’s almost killing us all with 12x over budget software - we all can tell stories, and we’ve all had a hand in real train wreck stuff.

What’s horrifying is that sometimes these are mission critical implementations. I saw a startup literally go out of business when they released Version/2 and killed all the popular Version/1 features for ‘improved’ stuff. They went from 25 or so high use customers to 12 in a week and then down to 1 in three months. When the renewal came up they got exactly 0. They *were* converting pipeline-to-customers at slightly more than 2/month but failed to convert a single customer with the new version.

They were also unable to rollback, but we’ll talk about disaster planning some other time.

So when do you terminate a project? There are some warning signs - over budget, late, harder than you thought, market seems to have moved during development, etc, etc. A lot of that can be avoided by reading my partner’s article on Only Try To Predict The Near Future. But sometimes you have things that are just bigger projects.

Here are my top 10 signs that something dreadful is going wrong:

1> Words have new meaning. Does “completed test case” now mean “sorta can do it?”

2> People get sick more often than before.

3> Regularly scheduled all-hands release meetings.

4> All the humor is dark.

5> Features that seemed innovative are, well, boring.

6> Daily status emails at every level.

7> Current revenue sources declining.

8> More experienced people are sending CYA emails to their managers.

9> You squeeze the budget to hire extra staff to “get some momentum”

10> Release features start moving to “post-release incremental” and/or you have (my favorite) Release 1, Release 1A, ….

So, what do you do? You have to take a good hard look at the project and decide if it should be saved. Not does it have to be saved, but can it be saved. It’s like the stock market - you may have bought it at $20 and now it is at $16. The question is not: can you get your money back, but is it a good stock to own at $16. If not, then sell.

So with a project. Not can you save it but right now is this the right project.

Look, I’ve seen a lot of projects that were saved because management decided that they would re-resource and re-plan and re-commit to the project. Probably only a third of them should have had that CPR.

Conversely, I don’t think I’ve ever seen a scuttled project that shouldn’t have been.

Would you like a personal example?

I once worked on a small team that built an object oriented database library. We were part of a startup using extensive OO tech (back when that was tricky). The entire development organization needed our library to work in order to go live with our production code. We were behind, working too hard, having too many emails, etc, etc. (See the above list - we got 6 of ‘em!) My manager at the time, took us offsite for two days (no computers, no email, no nothing) and we did exercises to see if there were any options, could we start over and delay the project launch for the whole company for three months, etc, etc. In conclusion we decided to do something much simpler and bring in another very good coder from the architecture team who was familiar with what we were doing. We ended up getting our stuff working 28 days after deadline. That was smart management.

Stupid management: A client, lo these many years ago, had a one year project that was in its second year. They brought me in “to get things moving again.” After three weeks of seeing 5 of the top 10 above, I took my client’s CIO aside and had a frank talk with him about the project. Frankly it was no longer required for the company and it was darn expensive. But it was less embarrassing to leave it running (without me, of course, I was replaced the next week) than to terminate it. The CIO was fired at the next budget cycle. Of course.

It’s even more important for a startup, because we don’t have the resources of a Dow ($2.3B ten year SAP implementation!) to have these kind of project issues. If you’re rolling out a new tool and it’s taking too long, or maintenance on existing tools is slipping, or your guys are in perma-grouse mode, or you’re suddenly having big-company style status meetings in a startup, then maybe you need to take a look at terminating the effort and re-focusing.

We started this project several months ago. It’s a complex software problem, and I’ll admit we didn’t think about mundane things like a domain name until September. We had a brainstorming session and came up with several options. Surprisingly, Promote-My-Site.com was available. We figured something like that should have already been taken, so we grabbed it.

The site has been up with minimal content since October. We started putting articles up at the beginning of November, and we’ve promoted them in the relevant social networks to drive some traffic and some link love. The site has been doing remarkably well on non-SERP traffic.

I pretty much expected that Google would index us in a few days. My experience has been that once you hit the social networks, the googlebot is not far behind.

We got zero love. Nadda. Zilch.

>>here

So we checked Yahoo! Site Explorer. Hmm, lots of incoming links there. But they’re all from Dave Naylor a Uk SEO. I’ve been a fan of Dave for a long time, but I couldn’t believe he was linking to us….

So we took a look at the wayback machine and we found that this was pretty much a sponsored listings page. Great. We bought a spam domain.

We’ve started the process with Google to ask them pretty please to consider us for the index because we’re the new domain owner and our site has real content now. Whether or not we’ll hit the SERPs in time for launch is anyones guess.

But I’ve got a question for the SEO Community. We’re building a toolset that will be useful for SEOs working with Web 2.0 promotion. You’re our target customer. We figure that our marketing message is pretty focused and that we can get to our potential customers without going through Google. The beauty of social networking is that you really don’t need the SERPs to get your word out.

On the other hand, I probably wouldn’t buy a suit from a tailor wearing cutoff jeans. It seems our options are to find a less memorable domain name and work from that, or to just gut it out and see if we get any Google love.

So here’s the question for you SEO experts: Assuming you like the product and think it’s a good value, would you do business with a company that couldn’t get its pages into the Google Index?

No, not daylight savings time (which I hate, but only because it messes up the kids sleep) but early in a project is the only time where you can put some time in the Oh Crap Bank & Trust. Really, you know it’s true.

It is not that we are lazy during the beginning part of a long project, it’s that we have not usually done the proper planning in the beginning (I am guilty of this too.) Or we’ve forgetton that we need to pay attention to the runway and not just the sound of the jet engines. (Ok, that was a strained metaphor - development as a jet engine. Nice visual inside my head anyway.)

No, the beginning of the project is the only time where you can toss features/functionality out of the lifeboat in order to get a clearer and more do-able timeline to complete the project.

We’ve all been on projects where, at the very end, things are slashed out of the project (”XML export? Version 2!”) but by that time a lot has happened. It’s been planned, spec’d, managed, partially programmed, etc, etc. So you pitch XMS export out a month before go-live, but you already spend a man-month on it. Oops. Can’t get that back.

So what we’ve done is the project version of best/expected/worst case for Promote-My-Site’s feature set. We laid out what we’d like to deliver in V1 if we had a ton of guys, all the time in the world, and money-unlimited. That was fun. Then we said, what can we get done if our primary business sucks back most of our management and technology time but we still want to launch early-2008. Depressing. Then we said: assume two guys quit, but otherwise everything goes as plans. Voila, we now have best, worst, and expected cases.

Then we took the features/functions in the expected case, and started looking at dependencies. Because if you have a lot of features that depend on one difficult pivot, then you have to be pretty wary of how much leeway you really have.

In the end we have a good map of functionality that we think will satisfy the market (for a V1 product with weak competition) and a vision for V2 and V3. And we know where our touchy spots are so if we run into issues we know what disappears.

Plus, because my business partner is really smart, we also have a candidate list of V2/V3 features that we can bring back in given some slack at the end, or things we could bring in to replace features that get thrown out.

But you can’t really do any of that very well when you hit the moment. Say that your bandwidth testing fails and you have to yank your “video editing stream” option. It’s a bit late to sit down and do all that dependency and version switching stuff. It’s not that you’re suddenly stupid, but you’re certainly under a lot of pressure, probably are tired, and there are angry programmers stomping around drinking Monster from the 2 gallon jug.