2011 was a big year for me and since it represented a lot of what it means to be a Big Swinging anything I felt a post was in order. To be clear, “big” doesn’t always mean “good”. 2011 was rough. The startup that I had been working on for months vaporized in a matter of days. I had the worst job of my development career. I had clients who didn’t pay for months. At the other end of the spectrum, I got to work a lot with one of the most talented developers I know. I got coached by the most successful person I know. Finally, I ended the year with an ideal client portfolio which should set up 2012 to be even bigger, and definitely better, than 2011. Here are some things that I learned.
Give As Much As You Can, Then Stop
The year started with me wrapping up a contract that I had been on for more than a year and jumping back into the startup world. I had been working on the startup during off-hours for a couple of months and had picked up some great new skills (MongoDB, IronPython, ASP.NET MVC 3, etc.) I had negotiated my ideal combination of great salary and good equity stake and was ready to work on the company full-time. I had no problem working for free for several months and paying some travel expenses because I really wanted to make the deal happen. Then, it all unravelled in the course of a few days. The partner on the business side decided that the salary I was asking was too high. This was months after I thought we had agreed and after this partner had told our only investor that he wasn’t needed. In the past, I probably would have compromised to make it work since I had already invested a bunch of time and effort, but I’ve matured since then. The combination of recognizing sunk costs and having an unwavering requirement that I trust my partners led me to withdraw. It was hard (and somewhat scary) to abandon the path that I had committed myself to for many months, but I had given all that I was willing to and once I was asked for more it was time for me to stop. Since I had set a “if I don’t have signed paperwork by this date then I’m out” deadline, it was clear that it was time for me to leave even though it wasn’t easy. Know what you’re willing to give, but be honest enough about it that if you’re asked for more then you stop.
It’s Hypocritical To Not Get An Outside Perspective
After leaving the startup path, I needed to figure out what was next. Quickly. The nervousness of not having work lined up really drove me. Crazy. The problem with being both driven and crazy at the same time is that you thrash. You end up expending incredible amounts of effort for near-zero progress . . . or worse. I was fortunate in that one of my business partners is an incredible coach and he made it clear that we needed to talk. I don’t remember anything we discussed during the hour except him saying, “With options comes power.” My problem was less about not knowing what to do and more about *needing* to do something. I took his overall advice of “get a few clients who will pay so you’re not dependent on any of them” and started working on my client portfolio. After I got things back on track I realized how hypocritical it was for me to not seek an outside perspective from the beginning: That’s a big part of what I sell!
Find Enough Clients Who Can Pay
For the rest of my career, I am likely to have at least 2 clients. An ideal number for now is 3 or 4, but it takes at least 2 in order to have options, and therefore power. One of my clients is a startup and startups sometimes run out of money. There’s a big difference between a client who is unwilling to pay and a client who is unable to pay. If they’re unwilling to pay, the relationship has probably been destroyed and things quickly turn into strictly business decisions. If a client is unable to pay, however, things are a little different. It is in the nature of startups to reach beyond their grasp and sometimes they fall. I happen to really like this particular client so I checked in with them once a month, but never in a mean or threatening manner. Because I had other clients who *could* (and did) pay, I had the option of waiting. It took a good 3 or 4 months, but they raised another round of funding, sent me a check, and we’re back to working together. If I had been demanding or unpleasant during their inability to pay, we probably wouldn’t be working together now AND it wouldn’t have changed the fact that they couldn’t pay. If you have enough clients who can pay, you have the option of working with some who may not . . . and they’re often the most enjoyable.
The Happiest People I Know Are Where They Put Themselves
I read a lot of blogs and talk to a lot of people about their work and their lives. One thing that really crystallized this year is that people who are in a place intentionally are much happier than those who have “ended up” someplace. And it’s not just the rich ones who started something that became big, it’s also the folks who decided what they wanted to do with their lives and set themselves up around that. This is sort of an extension or evolution of, “Do what you love and the money will follow” because I think that that phrase needs a bit of updating. I’ve seen plenty of people who love technology or software development, but are f’ing miserable because they’re in a situation not entirely of their choosing. Chances are you know someone like this. He liked computers and software and learned to code. He found a job somewhere because he needed a job and things were somewhere between fine and great in the beginning. Over time, he got worn down by the company environment until he ended up with a position he would have never consciously chosen. But he’s stuck. He’s afraid to go somewhere else and now he’s just kind of “ended up” doing what he’s doing. Contrast that with someone who has created her own position to do work she enjoys, even if it doesn’t pay a lot (as long as it’s “enough”). She’s invested in making things work. She’s set up her work to integrate with her life. And she has options. If things don’t work the way she thought, she can always redesign and renegotiate the position. She’s there by choice and since she chooses to do what’s she’s doing she’s better at it and happier overall. When I find myself in a job because I need it, it’s not very long until it starts to wear on me. When I’m working on a project that I helped create, however, I’m committed to it and energized by it. I’m not suggesting that choosing your work is the answer to all your problems or the one true path to happiness, but I have observed (and lived) that people who consciously choose their work are happier than those who don’t.
There are almost no advantages to being the son of a world renowned economist. One thing that keeps it from being a total wash, however, is that I got introduced to the concept of optionality at an early age. I honestly don’t remember when I became aware of it, although I can remember thinking the term “synthetic puts” sounded cool when I was 12 or so. Even though I didn’t understand the underlying math until much later, I grew up with at least a subconscious realization that the ability to choose was worth something.
In my early 20s, I started trading stock options online.
I was horrible at it.
I was buying options, which meant I was paying someone for the ability to make a choice.
I was in my early 20s, which meant that I made really bad choices.
So there I was, paying someone to let me make bad choices. I stopped in my mid 20s after I grew tired of losing money. The concept of optionality stuck with me, however, and I’ve incorporated it into my approach to both software and clients.
On the software side, this often means decoupling. I don’t favor decoupling because it’s cool, I favor it because I’m wrong a lot and want to be able to fix my mistakes as quickly and easily as possible. Decoupling gives you options because it reduces the impact of changes, meaning that you can make more changes. Particularly in business software (and espectially in large enterprise systems), you can bet that change is coming. Requirements change. Systems that need to be integrated change. Business processes change. If your system can keep up with this change, it's a lot more valuable than one that can't.
On the client side, I sell a wide array of options and clients like it even if they don’t realize that that's what it is. Instead of saying, “Here’s the deal: You pay me X and I’ll deliver Y” I almost always offer choices. The actual choices aren't important here, the important thing is that no matter what they choose the work they need will get done. Sometimes that means paying for my own hardware, software, hosting, etc. Other times it means travelling to be on-site with them or their clients. The point is, that by offering them the option(s) to do things their way, I get to charge a premium over someone who simply sells billable hours sitting in front of a screen.
If you can provide optionality that's valuable, you can sell it and collect the premium.
As a bookend to the previous mention of options trading, I returned to it recently for a bit (now in my mid-to-late 30s) and did pretty well. The difference? Instead of buying options, I sold them through credit spreads since I now realize that my value is in providing optionality rather than using it.
If you're unfamiliar with Reflector and its history, you can catch up in under a minute with the bulleted list in my previous post. Since the announcement, I've read every tweet that had "redgate" in it. I read the Red-Gate forum posts. I read the links that are in the tweets and the forum posts. And, I read all of the 132 comments that I received after offering to buy 10 licenses at $35 per (which Red-Gate then matched with 100 more and bumped them up to the $95 Pro version).
As I mentioned in the previous post, there is a lot of information surrounding this event that is valuable to any entrepreneur, executive, marketing person, or product manager. Here are some of the lessons that I've learned from the experience:
Free Is Unlike Any Other Price
I had read that "free" is a unique price in Predictably Irrational by Dan Ariely, but there's a big difference between reading about it in a book and watching people freak out over it. Almost all of the negative posts that I read centered around "Red-Gate said it would stay free and now it's not". I'm guessing that there wouldn't be as much noise if the situation had been "Red-Gate said that it would stay affordable and now it's a little less so" . . . it just doesn't have the same punch, does it? To be clear, I understand that "free" does have some unique properties: zero risk, zero acquisition friction, etc. and I'm not suggesting that people shouldn't feel they way they feel. The lesson learned here is that "free" needs to be treated differently and that it's risky to price anything as free that can't stay that way.
All Information Gaps Will Be Filled
If you've read most of what's been written about this event, you'll notice 2 things about the information:
It's incomplete.
People will fill in the gaps with their own beliefs.
I read everything from "since Lutz got paid" and "Lutz may not have done the deal if it wasn't going to remain free" to "Reflector should go back to being open source" and "Red-Gate installed a timebomb in it". To the best of my knowledge, the details of the deal were never made public. That means that unless you're Red-Gate or Lutz, you don't know the details. As for the open sourceness and timebomb: Plenty of people have pointed out that it was never open source and the timebomb had been there for years before Red-Gate acquired it. The lesson learned here is that any information gap will be filled by someone, at some point and that you might want to consider a defensive move of laying out relevant facts when it's time to announce an unpopular decision.
Non-Physical Products Are Different
People have a different view of non-physical products compared to physical products. If you buy milk from the store, you don't expect it to last forever. You know that it's an exhaustible resource that disappears as you use it. As a physical object, it can't be 2 places at the same time. Non-physical products have non of these limitations. Because of this, limitations built into a non-physical product are often seen as taking something away from the end user. DRM for music, games, and movies is a good example since it so clearly takes away capabilities from the non-physical product. People hate DRM for a variety of reasons, but one of the most common is that it makes the non-physical product behave in unexpected ways. All of a sudden you can't listen, play, or watch – not because your network connection went down but because someone made the media require a continuous connection. That was a limitation that was consciously built into the product. The timebomb in Reflector is similar. Except for trial software, most people don't expect software to expire. When the expiration comes, it's not only unexpected but it's clear that it was put there consciously which can lead to feelings of "you did this to me". The lesson learned here is that if you're going to do something unexpected, make sure people are aware of it and consent to it in order to avoid an emotional response down the road. As a point of clarity, "aware" means that they actually know what's going on which means it can't be buried in a EULA.
Developers Are Even Differenter
I lumped music, games, and movies together above when talking about non-physical products because they all have a similarity that separates them from software: most consumers can't create their equivalent. Once you get into the realm of software, then things get a little stickier . . . all of a sudden you're talking about things that could be created by the end user, although it's often impractical for them to do so. If you narrow things down to "developer utilities" then you're on really thin ice. You are actually targeting a market segment that is often qualified to create the thing you're selling them. Most of the time they'll be very rational about purchasing tools: "This will make me better. It would take longer to create this myself then the price divided by my salary/rate. I should buy this." If something happens to suppress the rationality (like messing with "free"), then they can quickly go into "I don't care what it takes, I'll build it myself!" mode. The lesson I learned is that when targeting developers as a market, it's important to avoid doing anything that might flip the rationality switch.
Conclusion
To cause the reaction we saw over the last two weeks, it's safe to say that Red-Gate made a mistake. What's not clear is exactly where the mistake was made and what should have been done differently. It's not clear because we don't have all of the information. Don't let this opportunity go to waste, though. There are some folks who paid steep tuition for the lessons that you can learn from this experience.
There's been A LOT of discussion about Red-Gate's decision to start charging for .NET Reflector. For those of you tuning in, here's a really compressed history:
Lutz Roeder created .NET Reflector many years ago (full history: http://en.wikipedia.org/wiki/.NET_Reflector)
I venture to guess that the majority of professional .NET developers use the tool.
Red-Gate bought Reflector in 2008 (I remember because I saw Neil Davidson at the Business of Software Conference in Boston and asked him about it).
Reflector has been free, or had a free version available for its life thusfar.
Red-Gate announced yesterday that they'd start charging for Reflector in March with no free version available (as far as I can tell). The price that replaces "free": $35.
Lots of people are going apeshit about a tool that used to be free no longer being free.
That brings us up to speed. For some fascinating reading, check out the Red-Gate Reflector Forum. I'm being serious here. It isn't often that you get to see so many diverse thoughts, opinions, and expressions of outrage in one place. ANY marketing person, product manager, executive, or entrepreneur would be wise to read the forum posts and comments for a mixture of warnings, lessons, and insight into the community/customer mind.
For my part, I don't have a strong opinion about whether Red-Gate is right or wrong on this matter and that's actually not what this post is about. This post (like many other posts) is about behavior and action. While I can't make Reflector free for everyone, I figure I can make it free for 10 people. I've made enough money doing development work and consulting while using Reflector that $350 seems like a reasonable price for me to pay. At the same time, I know that there are lots of folks out there doing good work that can't pay $35.
Post a comment about why you want a copy of Reflector by Sunday, Februrary 6th. I'll pick 10 and buy each a $35 license of Reflector 7 upon its release.
If Red-Gate (or anyone else) should decide to match the offer, then the freebies go up from there.
UPDATE: Just got off the phone with Red-Gate and they've offered to match with 50 licenses (I'm still paying for the first 10 so I now have a total of 60 to give away). As such, I'm extending the deadline through Friday, February 11th.
FINAL UPDATE: I was pleasantly surprised when Red Gate initially offered the additional 50 licenses, but I was blown away when I talked to them again and they offered another 50 for a total of 100. Not only that, but they said that rather than wait for V7 to be released that they are going to be giving Reflector Pro licenses (the $95 one), which will convert to the Reflector VS license when version 7 is released! I'll be emailing the folks who get a license on Saturday 2/12 and Sunday 2/13. Licenses should arrive on Monday 2/14 or Tuesday 2/15. Thanks to everyone who commented! BTW, if you missed the cutoff I see that Dan Maharry is giving away Reflector 7 licenses on his blog.
