Curt Doolittle

Category: Business, Organization, and Management

  • ON NEGOTIATION : LESSONS LEARNED FROM A LIFETIME OF DEALS ADVICE: —— 1) Have

    ON NEGOTIATION : LESSONS LEARNED FROM A LIFETIME OF DEALS

    ADVICE:

    ——

    1) Have something of value to trade. (Surprising that this should need be said. But it does.)

    2) Do exhaustive research before hand. Try to figure out how to make the other side successful in ways that it does not cost you cash.

    3) Be brutally honest at all times. DO NOT BE CUNNING. Be smart. Be Moral. Education tends to make men cunning, but wisdom makes them moral.

    4) Try very hard to understand the other side, and show that you understand them, and that you agree with them. If you find through this process that they are unethical, then walk. (I do that a lot.)

    5) Work creatively and hard to solve their problems for them. See if they reciprocate, or if they try to take advantage of it. If the former, thank them. If the latter, document it and keep a nice little collection of their sins for use later.

    6) Find out who the decision makers are and what their price points are. That is the ONLY EMPIRICAL value of any purchase. I can’t tell you how laughable most M&A books are. The value of any company is the amount it will take to get the decision makers to flip.

    7) Make very few promises. Hold every one of them. No matter what. Let the environment and their own fantasies mislead them. But never mislead them with your words. This actually puts you in extraordinary control of the situation.

    8 ) Always maintain walkaway power. This is your only real control.

    9) You must sleep in the bed you make. Do not soil it. Maintain personal relations. And do not make a deal that they other side can’t live with if you have to live with them. Trust matters.

    10) Maintain the moral high ground. Get others to do the dirty work. Let the lawyers fuck it up. They always do. But it won’t be your fault. Build trust by coming in and being reasonable, saving the day.

    11) Leave a deal-killer issue open until the last minute that they don’t care about but the BELIEVE that you do. If they play nickel and dime games, accuse them of being unethical over the single point and withdraw. Wait until they offer sufficient rewards to bring you back to the table.

    12) It is OK to have a reputation for being smart and ruthless, but you cannot have one for being a scumbag and a liar. (Unless you are an investment banker. Selling money does not require trust or virtue. You can be as big a scumbag as you want. Most are. Sorry. It’s true. )

    13) Never negotiate for what you really want. Never let them understand what you really want. It makes you vulnerable. I actually retreat very quickly. The purpose of this strategy is actually to avoid being manipulated by ‘cunning fools’, and focusing on mutually beneficial value creation. I cant count on the other side for that, so I just force the issue.

    14) Be very wary of stupid people no matter how profitable it might be. Stupid and cunning, versus moral and wise. Pick the latter. Good people tend to do good things and bad people don’t. Shitty people build shitty companies unless they have phenomenal amounts of money to erase the moral stench.

    15) The corporation and the shareholder thing is a total lie. Management owns the business, and shareholders are just high risk debtors. Anyone who tells you otherwise is lying to you.

    16) Lawyers have this incredible desire to feel they add value. By and large they don’t. Make sure they do the minimum possible, and that they write in plain language that can be understood by all parties. Make them draw a map of all the documents and what they mean. And summarize the key points. Realistically if you can’t lay it out in plain language by typing it in a text file, then the deal won’t hold up anyway.

    17) Avoid democracy. I write my own shareholders agreements. And I structure them as a dictatorship. And I do it on purpose. And if people don’t like it they can do something else. Democracy is a stupid damned idea no matter what the form of governance. Both private and public boards I have been on fall into the category of members who provide ‘money raising value’ otherwise they’re entirely dead weight. Your board should be owners and investors that you get approval from for taking capital risks. Otherwise they’re too ignorant to make decisions about anything material.

    18) You aren’t important. Everyone else is. The deal isn’t important. The quality of the deal is. The investment in the deal isn’t important. The consequences of the deal are. I find it pretty easy to maintain objectivity. Most people can’t. your ego doesn’t matter. Celebrate if and only if you made a quality deal with positive consequences.

    19) Build a LOT OF RELATIONSHIPS at ALL LEVELS as SOON AS YOU CAN. This removes all the freaking stress of a merger or acquisition. I usually try to get a couple people from every role in the business from the bottom to the top to go visit and have a party with the other side right away.

    20) Never buy anyone more than 20% of your size. It’s like ‘diversity’ in politics. Sounds good to idiots. But really, its a freaking disaster. You cannot assimilate someone that you are not at least 5x the size of, and do it successfully in one year. Most of the time it takes three years. Most of the time the anticipated gains in efficiency are lost by the three year assimilation period.

    (eh… I wanted twenty and I got there. 🙂 )

    TACTICS

    My favorite negotiating Tactics:

    —————————–

    1) Most unreasonable man. (Kissinger)

    2) Pursue A, and discount or ignore B when it’s B that you really want. (Distraction)

    3) Hint at money then lose interest, and let them come to you. (Seed of Greed)

    4) Plant a seed. Wait for ‘their bad day’. (Seed of Savior)

    5) Leak information at three degrees of separation. (Inception)

    6) Get them to spend the money in their heads. After that you have loss aversion on your side and they will lose every time.

    THE GOOD, THE BAD AND CONTEXT

    Now you’ve got to remember that I’ve built a lot of my career using little or no cash to buy small and distressed businesses, rolling them up, bringing in operations, talent and sales, and then selling the business. So I’ve actually bought a couple of hundred companies. (Really.) Although most are in the sub 10M range and no more than the 25M range. If they get bigger than that they have lots of useless management overhead that you can’t do much with.

    BAD STUFF: I did a deal in my twenties where I bought a business at an incredible rate, invested less than 1/4M in it and turned it into a cash machine. The owner got about 1/4M for the business, and we were making that in net about every quarter. He died after six months. And He died of sadness. I might be an Aspie but that f__king bothered me, and it still does – although I really didn’t know better at the time. I was, maybe 24 or 25 years old. A decent person doesn’t want that kind of shit in his head. And I care a lot about it. If you don’t care, then, honestly, I hope someone does the same to you some day because the world is better off without you. Really.

    UNCOMFORTABLE STUFF: I did a deal in the past ten years where I misjudged the ability of the owner and that person really wasn’t able to make a go of it as part of our organization. And would have been fine keeping the small business. That person didn’t make anywhere near the net he should have. I view this as my mistake because I should know better.

    FRUSTRATING STUFF: I did a deal, a big one, about 40M changing hands and like six law firms, and I trusted the investor, and the guy fucked me, fucked the company I bought, and fucked Microsoft. I never give up control any more. Ever.

    OK STUFF: I did a deal where guys make a couple of million each, but could have made more. The reason was that they did damage on the way out. I don’t feel bad about them.

    GOOD STUFF: It’s pretty easy to turn around weak companies actually. The issue is usually that the management consumes too much of the revenue and underinvests in sales. We invest in sales. The other is that unless you’re a certain size you can’t hire top talent. We fixe that most of the time. But the fact is that people still blame me for rescuing their business even if it didn’t end up rosy for them. Those people I think are silly. Fact is that most small business are small because that is the limit of the capacity of the owner’s ability.

    FUNNY: I think that most people assume I play the “Most unreasonable man” card a little too frequently. But it tends to cut through the bullshit and force real issues out onto the table. I have absolutely no problem with hostile argument. ‘Cause I’m an aspie and I generally don’t feel anything other than frustration with the other side’s illogical or deceptive arguments. So over time, I probably have used it too much.

    Source date (UTC): 2013-10-30 15:50:00 UTC

  • MOST HOSTILE BOARD MEETING EVER (Scumbaggery and stupidity are apparently board

    MOST HOSTILE BOARD MEETING EVER

    (Scumbaggery and stupidity are apparently board qualification.)

    Source date (UTC): 2013-10-30 14:37:00 UTC

  • TO BE MARRIED TO AN ENTREPRENEUR Great advice. “We are a team”. (Eh….I had one

    http://johnmichaelmorgan.com/how-to-be-married-to-an-entrepreneur/HOW TO BE MARRIED TO AN ENTREPRENEUR

    Great advice. “We are a team”.

    (Eh….I had one of these priceless women and we screwed it up. But ever onward.)

    Source date (UTC): 2013-10-30 04:21:00 UTC

  • IT’S THE CUSTOMER, STUPID In my (many) years of experience, building companies u

    IT’S THE CUSTOMER, STUPID

    In my (many) years of experience, building companies up to 100M in the space, the failure of technology projects is due to the following causes:

    1) Irresponsible incompetence on the part of the customer management team: 90% of failures.

    2) Insufficient talent for the scope of the problem. 50% of failures.

    3) ‘Whoring’ on a predictable catastrophe for money 25% of the failures.

    I still couldn’t talk my partners out of one #3 at one point. And then we had a clown at Microsoft basically steal 2M from us by lying. Tried to get him fired. But he was too protected.

    WALK AWAY FROM BAD DEALS.

    Source date (UTC): 2013-10-30 03:34:00 UTC

  • COMPARISONS ; OVERSING VS ???? (biz) (markets) So, as you can see, our market is

    http://techcrunch.com/2013/10/13/atlassian-earned-150m-in-revenues-last-year-but-competition-intensifies-with-collaboration-providers/MARKET COMPARISONS ; OVERSING VS ????

    (biz) (markets)

    So, as you can see, our market is certainly above $10M, and probably above $50M. The number of organizations that use INTERNAL tools is larger than the number of organizations that bill by the hour. So we probably can’t hit the 150M mark as it stands. But it isn’t unreasonable to hit the 50M mark pretty conservatively, largely because we can serve the largest organizations.

    You CAN use oversing as a single site out of the box without modifying it much. But you can also organize a multinational corporation with it, over multiple jurisdictions with crazy reporting structures and business rules.

    What may not be obvious to the rest of the world is that the shift to iterative project management has passed critical mass and the mature tools on the market are the old school. Secondly, it probably isn’t obvious that the financial products let you analyze your business but not DRIVE IT.

    OVERSING DRIVES YOUR ENTIRE BUSINESS: sales, recruiting, and delivery by looking forward. You can control your business, You can control it going forward, not looking backward.

    BUT!!!! — The old guard isn’t really growing and the new agile systems are. SO there is an OPENING here in the market that isn’t getting filled. The empirical question is, how big is that market. And really we can do a lot of surveys (and the’re very positive) but that doesn’t mean much.

    THE FIELD

    -Microsoft Dynamix AX + Project Management- ??

    “…estimates that Microsoft’s ERP business grew 4% in 2012, “mainly driven by Microsoft Dynamics AX”. “Gartner puts Microsoft’s ERP revenue at $1.1 billion in 2012, up from $1 billion in 2011.”

    (Now, most organizations in our market use Dynamix. ANd those that don’t should. We designed Oversing with the intention that larger customers would use AX in finance and buy Oversing for running business operations (sales, delivery, recruiting). Nothing better really that you can do than that.)

    -Atlassian– $150M

    (Jira workflow, Confluence collab)

    http://techcrunch.com/2013/10/13/atlassian-earned-150m-in-revenues-last-year-but-competition-intensifies-with-collaboration-providers/

    Aging product. Not good architecture without major rewrite.

    -Github (collab and source)- ?? (but it’s profitable)

    http://www.forbes.com/sites/tomiogeron/2012/07/09/cash-for-code-github-raises-100-million-from-andreessen-horowitz/

    Good for devs. Does nothing for the business end.

    “GitHub Inc is a flat organization with no (middle) managers – or in other words, “everyone is a manager” (self-management). As at Valve Corporation, another flat organization, employees can choose to work on projects that interest them (open allocation). “

    –NetSuite– $92M

    “NetSuite reported a 32 percent jump in revenue to $91.6 million”

    (Favorite quote from their Q3 report: “These two divergent results show that as mission-critical software moves to the Cloud, it is far

    safer for customers to turn to committed leaders like NetSuite rather than bet on the PowerPoint presentations of last-generation providers like SAP, Microsoft and Sage.” (Customers have lost faith in the old line or products. And the new generation is shifting.)

    -CA Changepoint (IT Portfolio Management)- $48M

    “For FY ’12, Changepoint increased total revenues by more

    than 20 percent to $48 million, driven by growth with existing nameplates and adding new customers. 15 percent of this year’s

    software license billings were delivered via a SaaS model.

    -Tenrox- $10M?

    Glendale CA / Private / 50-200 Employees

    -Workamajig- (creative workflow management)

    14021 NE 20th Avenue Suite 2208 Vancouver, WA 98686 United States / Privately Held / 1-10 employees (That number doesn’t make sense to me)

    $38/user

    -FunctionPoint-

    200-1622 West 7th Avenue Vancouver, BC V6J 1S5 Canada

    Privately Held / 11-50 employees

    (I can find 22 employees on linked in, so I guess the’re about 30. They won’t give me revenue numbers. If I play it out as 6000 users x $20, that’s not a lot of money. Maybe a 2M bottom and 30x100K/employee = 3M top. Although it sure looks like a 5M company to me.)

    “Over 6000 users”

    http://www.functionpoint.com

    15 / 20/ 30 per user.

    –BIgTime–

    Nice product. Light. Feature. Not PSA. Not our market.

    -Targetprocess-

    about 40 people. Russian. NY sales offices.

    No revenue numbers.

    Feature. Just a feature. Very nice board. Thats it.

    We tried to keep oversing away from the Targetprocess style of UI for a variety of reasons. MOst of them training and using spatial memory. We wanted to keep the ‘wall’ feeling. If you put Oversing on a projector or big touch screen it’d be awesome.

    — Wrike (new) — (trivial workflow) Yet they just raised 10M (ack!)

    Boring.

    Source date (UTC): 2013-10-29 16:36:00 UTC

  • OVERSING : STATE OF THINGS : THINKING OF VALUATION Right now, as it sits in its

    OVERSING : STATE OF THINGS : THINKING OF VALUATION

    Right now, as it sits in its current state of development, Oversing is about three times the scope of Jira’s functionality.

    It will have something like ten times its functionality when we are complete. Plus our Workflow interface and engine is, orders of magnitude better. Our Agile planning, and working boards are radically better. And it’s not difficult to make the UI better. Jira’s is…. terrible. Really. It’s a bug tracking system that grew into an agile development system because of Greenhopper. We used it. It was the best available. But that doesn’t mean we like it.

    So, that scale of 10x is just useful for putting our work in context.

    I think the closest product would be TenRox, which is probably the previous generation of software for this industry. But Tenrox is a bit antique in terms of project management features, and is traditional in its resource management. I mean, we couldn’t buy it for my company in the last decade, and we are already in a new one. Good product though.

    The product that’s customer base is quite large is Compuware’s Changepoint. Which, with some development work is pretty good for IT centric organizations in the old WBS model. We couldn’t make it work for us. Too much custom development would have been needed to get it to handle Oversing style of resourcing.

    FunctionPoint is a product I’ve always loved. It’s for smaller agencies and tech shops. But it has a good UI and most of the features you need for small firms.

    The most popular agency-ware I think is Workamajig, and it’s a bit old but it does most of what you want these products to do. I’m not sure about adding media buying to Oversing. I think maybe as a later add-on.

    Really, nothing at all has our feature set. Some products have pretty good agile boards (they are a dime a dozen now – the world has pretty much taken the agile method as the defacto workflow model. And if anyone in the world hasn’t they should. Our model collapses the two so that your agile is always sitting on top of a WBS that’s either visible or not, at your discretion, but allows you to meet contracts (WBS management) for delivery as well as manage your workflow in streams (kanban) or sprints (agile).

    And we have tried to keep it ‘creative friendly’ for the agency market. And that is something I hope to work into the product in ‘the win without pitching’ sort of way of thinking. And to push collaboration even harder.

    Oversing is sort of like Facebook with the option of working on stuff with your friends in agile or wbs format, for customer who is also on FB and where you can work together to get your projects done. While at the same time, there is someone in charge of those projects to drive them, and someone above that person to drive all of them.

    Microsoft Dynamics of course, is a full financial system. And Dynamics PSA is very powerful – the most powerful in my opinion. And the’re our sort of benchmark target. The problem is that most of us want something that works like FunctionPoint, that has the power of changepoint, and that integrates with financial packages as well as Dynamics PSA. And Dynamics is freaking hideous and painful to ask your staff to master.

    Oversing does not have the ability to add dynamic dimensions yet (which is what drives up development cost of any ERP system exponentially.) I wrestled with it. But that takes the product from one that can do almost everything except financial accounting, and sort of invades the turf of financial accounting, breaking the barrier between management accounting (how well we run the business) and financial accounting (how well we finance the business). And it takes it from a product that you spend some time configuring, into one that you spend a lot of time planning and installing. And, that jus doesn’t make sense to me. I think financial accounting is an art, and I think management accounting is an art, and neither should be compromised. If you bundle them together you start to get extraordinary compromises. And we have worked too hard to insulate the user from the sense that he’s in an accounting system to fall into that trap.

    Oversing can easily integrate with Dynamics (or SAP for that matter). But with Oversing and even a Peachtree product you would probably have every thing possible of value to your international business.

    My original take was that we could build oversing for 5M in the states if I was very careful, and we’d get no less than a 20M business out of it at 60%. So, 5M in, and no less than 4x, means 50M out. So that’s a good turn. 10x in under 5 years.

    But building it here, at 1/5 the cost, changed the multiplier a LOT by cutting the costs of development by 80% – Albeit I had to move here to make it happen.

    The thing is, that I think, it’s turned into a product with +50M in annual revenue potential just at the conservative end. And that market is there, pretty easily really. I mean, like anything, we can screw it up. But I think we probably hit the feature / functionality / price point / sweet spot. And we didn’t make crazy financial promises to worried investors. We just focus on the product. Which I gotta say, is a lot more interesting than focusing on managing the expectations of others.

    It will be pretty difficult to compete with Oversing. At least by V2.

    So it’s looking pretty good right now. Normal stuff. “This looks ugly this way”, and ” why are we making all those SQL calls here?” and “Did you think to TEST that before checking it in?”, and “You know, that might sound intelligent in russian but in english it means….” and “Um.. where is the currency selector on this form? Is it like dryers and socks? It was there yesterday!”.

    Like I said. Normal stuff. 🙂

    Source date (UTC): 2013-10-28 12:26:00 UTC

  • ANOTHER ONE OF THOSE CONVERSATIONS I’VE HAD A THOUSAND TIMES (funny) (software d

    ANOTHER ONE OF THOSE CONVERSATIONS I’VE HAD A THOUSAND TIMES

    (funny) (software development)

    Employee: Can we have coffee?

    Curt: Sure. I love coffee. 🙂

    … … …

    Employee: So, how come you keep adding features? We’ll never get done!

    Curt: You’re confused. It’s not that I add features. The feature list has been on the wall for a six months. It’s constant except for very minor changes.

    Employee: (curious expression)

    Curt: It’s just that I parcel them out one or two at a time. Lots of states of ‘done’ that way. And I can kill something early or try something else. It also stops ‘grand plans’ that take forever to implement.

    Employee: (awareness)

    Curt: The only feature I know that I added is the one you told me to. (teams) The only feature I postponed is the one you told me to (team estimating). In fact, I’m pretty sure you’ve added more features than I have. (various amazingly brilliant UI ideas.)

    (discussion)

    Curt: I have my own bias: Get to feature complete, then harden the app by refactoring it. But until you’re feature complete it’s all R&D, and the return isn’t there if you’re doing much more than getting to feature complete. Once you’re feature complete, it isn’t a matter of whether you’ll succeed or not. It’s just the cost of error reduction and user experience improvement until you decide to release.

    COMMENT

    Everyone has their own little bias. Mine is money. I want to know money is well spent at all times.

    If I produced this software in the states it would probably take a little longer. But it would cost me something under ten times as much. And that’s money that I don’t have to borrow, get from investors. But it’s also my money. And I’m very careful with my money. 🙂

    Get to feature complete. Prove the theory. If it works at feature complete, then the theory is pretty close. If it goes to market and sells, then the theory is confirmed. It can still be falsified. But at present, the theory tested true.

    But there isn’t a lot of POINT in investing in a theory, and that’s what an application *IS*, until you’ve tested that theory.

    Its just scientific after all..

    Source date (UTC): 2013-10-25 10:11:00 UTC

  • COMPANY / GREAT PRODUCT : SITECORE I have talked quite a bit about the amount of

    http://www.sitecore.net/GREAT COMPANY / GREAT PRODUCT : SITECORE

    I have talked quite a bit about the amount of money I invested in nCompass both before and after Microsoft Purchased it, turned it into Microsoft CMS, which I saw as, along with Microsoft CMS, the platform system that microsoft needed to compete in the application market in the middle tier. But, the envy of the office team, and their fascination with Sharepoint forced a bullet to be put into Microsoft CMS, and then foolishly killed it.

    A very smart couple of very pragmatic guys picked up on the market opportunity and right now, they have what nCompass/Microsoft CMS should have been, and what Sharepoint never can be: the best .NET platform available.

    Microsoft ceded the app platform business to Oracle and IBM and open source leaving a career problem staring into the face of .NET developers, as potential candidates for COBOL level extinction.

    I’m not really a supporter of using Microsoft technology any longer for web development, until ASP, JS, PHP, and Python become are added to the core of Visual Studio, and Microsoft puts out a dedicated web server (if ever). Given the (terrible) quality of most IDE’s, and the problem debugging code on these platforms by comparison it doesn’t make sense.

    Maybe, someday, when there has been enough of a shakeup, someone in redmond will understand that this company is worth to Microsoft easily 10x revenues, if not higher.

    ‘Cause if someone (we know who) adds a windows emulator to their OS and sells cheap high quality desktops, and IBM, Oracle and Open source continue to squeeze Microsoft in the middle, the empire of RENT SEEKING on the NETWORK EFFECT of Windows that is the Redmond campus, will find itself without the ability to play IBM and retreat into ‘the money’. Left behind by gaming platforms. Left behind by phones. Left behind by tablets.

    Microsoft is a vast rent-seeker on the pc platform. And eventually the market punishes companies that hubris.

    SITECORE is one of the obvious ways back into credibility. Sitecore, CMS, Dynamics, .NET, and script friendly changes to the OS.

    Source date (UTC): 2013-10-22 10:33:00 UTC

  • TECHNOLOGY UNDERMINE THE UNIVERSITY SYSTEM? EDUCATION WILL REMAIN THE SAME Highe

    http://www.fee.org/the_freeman/arena/result/the-future-of-higher-education#comment-1091995003WILL TECHNOLOGY UNDERMINE THE UNIVERSITY SYSTEM?

    EDUCATION WILL REMAIN THE SAME

    Higher education filters us and produces signals. It does not teach us very much. And that’s just what the evidence says. There is very little chance that higher ed will be replaced by technology. Technology is not a high enough cost to perform any filtering, and if it was high enough cost, then people wouldn’t use it.

    THE EXAMPLE OF FLIGHT SIMULATORS

    Pilots joining the armed forces usually must have a considerable number of hours in at-home flight simulators to compete against their entry level peers. Technology may have the same effect on entry into those institutions. Technology may be the way we ACTUALLY LEARN SKILLS instead of are filtered and sorted, and stamped with approval for signalling purposes. But it is unlikely that without the high cost of education, the personal associations that form in educational institutions, the cultural conformity and behavior that comes from working in a college environment, meeting expectations of the professor, and cooperating with peers, that individuals would learn what businesses actually hire them for: not their knowledge, but their ability to understand, solve and execute problems regardless of industry in which those problems occur.

    UNIVERSITIES ARE VALUABLE FOR FILTERING NOT FOR TEACHING

    In that sense it matters very little what we learn at university. We are being schooled in the one thing that matters: problem solving and execution without supervision. Because, the human pay scale is determined by the degree of supervision, or lack of it, that is necessary to perform different levels of work given decreasing amounts of known information about how to do it.

    For these reasons, technology CANNOT REPLACE the classroom. It is not what we learn but how we learn and how hard the assignments are (from social sciences in the trivial, to computer science, economics, mathematics and physics at the difficult end).

    College is an obstacle course for testing and eliminating performance. It doesn’t teach you much, we don’t remember much, we don’t apply much, and we won’t even apply it if we have the opportunity to. (see Caplan)

    Source date (UTC): 2013-10-22 08:10:00 UTC

  • THE FIVE SECRETS TO BUSINESS PARTNERSHIP 1) You must have approximately the same

    THE FIVE SECRETS TO BUSINESS PARTNERSHIP

    1) You must have approximately the same ethical and moral code.

    2) You must have the same economic interests.

    3) You must each have your sphere of influence, and the ability to make the final decision in that sphere of influence.

    4) It must be more important to each of you to make the other happy than make yourself happy.

    5) Your relationship must be unbreakable by third parties.

    In effect, if it matters in marriage it matters in business.

    It turns out that this is a lot harder than it sounds.

    Source date (UTC): 2013-10-21 18:46:00 UTC