Up at 6 AM. Checked emails. Email from Germany from M…. I read it. It affects me for the whole – pretty much toilets the day.
Here is the story and insights:
When I left Germany, M… and T… we had gone over all the project issues. We jointly reviewed the MOU. No pricing issues, no cost issues, no ROI issues. We even model P&L together. Was told the MOU would be translated into Germany and we would be moving forward. Huge relief.
Not so much in working the project, but relief of knowing which path to take – having now the ability to chart out the next 2 years. Knowing that we can move fast and the executive is capable of making fast decisions.
The email from M… changed that. In the process of getting the document translate via their lawyer – slow down came – there was two more needs – a Bank Guarantee and a JV formed in Europe. From the sales point of view (if I wanted to be a sales man) – basically this is nothing – easy to explain, get around, put those or other safety measures in place.
BUT, what this requested had pointed out to me was this:
- 1. The risk profiles between our two companies are very different
- 2. The speed which we move are black and white – or turtle and hawk.
- 2. The client is not familiar with IT based projects
- 3. The trust I had though we had wasn’t there
So, bottom line, this move, this one email just just increased the risk for me on this project by a factor of two or maybe 3. Yep, one email. Maybe it was always there, and I didn’t (or didn’t want to) see it – but its there.
So, the project profile that Genie has now is this:
- 1. Very risk averse customer (before I would have said risk, not is very)
- 2. Slow moving project – with likely many, many delays in execution – 6 months could easily turn into years
- 3. Low motivation from German side to get this project up (a pet project – not a strategic project) –
- 4. A project that will require handholding along every step of the way (translates into high internal costs)
I had some great conversation with Buzz at Valmet back in 2000’s. The words that keep ringing in my head are these “One of the best things the company could have done for its bottom line is by NOT taking the bad projects” Another words, if the project is not right – it can drag, suck and kill the P&L for years – and could even kill a business.
So, as in one of my posters “Confront Brutal Truth” – and I think that is why this day was toileted for me – the brutal truth is that this project is not going to be the project that I saw us doing. It will not be a 6 months sprint, we will not launch in January, etc, etc. Its a grinder project that will be slow, long.
So, reached out to my Advisory Board to get further perspective – and the various input was good.
I WANTED this project, but I didn’t NEED this project – so this gave me two options:
- 1. Walk Away
- 2. Move Forward
So, actually Walk Away option is the safe option – the project risk profile has just double for me with this last email – I have plenty of other projects that are waiting. Walking away give me clarity in what I’m doing, I have no dependency on anyone but me and my team (i.e.. we shape our destiny)
From the economic side, I have put put into this at least 200-300 hours – never mind the rest of the crew. I value my time at $500/hour – so this means that I have spend $150K+team_travel+– so basically, my opportunity cost to get this far is about $250K.
Its now becomes a sales project, where I need to ‘overcome’ objections, etc, etc. – all the stuff I did before and really don’t want to be doing again. I didn’t like the up and downs of sales – they where very mentally tasking – and so – on a personal level – I don’t need to do this.
So, I think yesterday was my day of confronting the brutal truth.
To be honest a feel a little silly – I have got my staff mobilized and told everyone that Genie is a go. I have shared the ‘go’ news with my friends at EO and others. I certainly know the rule of ‘don’t do anything till you get the signature’ – but when leaving Germany I was 100% sure that it was a done deal. 100%. I was wrong.
So, what next.
I see two options:
- 1. Walk away (my favorite option right now)
- 2. If M… and T… are interested, restructure the whole deal. As is right now, I am WAY, WAY to exposed for a slow moving project – if the project takes 12 months to finish instead of 6 months – I could be wiping us out.
When I’m back on Monday, I will be stopping all work on Genie. Stop the hiring, recruiting, office expansion (except for internal expansion we need for current growth), etc. I will have wasted 3 months of our company’s time – $250K USD in opportunity cost. Its hard – but it is what it is.
I now also know that I CANNOT take on Genie under the terms that are there right now. Never mind the request from M… and T…. about the Bank Guarantees and JV. Small issues. But, if I’m to consider this project, I have to restructure it to be a ‘grinder’ project.
I could see it being more like this (perhaps this is more traditional German style?):
- 1. No schedule deadline
- 2. Establish price list for all work at profit level (not cost)
- 3. Bill for all hours worked (including mine)
The thing is, when you price out a project of this size at market level pricing – it becomes a $2.5MM USD project or more. Probably still 1/2 of what it take to do it in Germany – but now from what I see it becomes a show stopper for M…. and T…. And, I’m not a consulting business, so even getting paid $500/hour in my eyes is a waste of time for me. Ahhh – as much as I WANT this project, I’m really struggling to take in onboard.
So, when I look at this – as much as I WANT this project (and I really WANTed it, because it was hellishly interesting and challenging) – given the evolution of things, the last email was really what had made me face the brutal truth.
As much as I don’t want to walk away, I have yet to be able to figure out a way on NOT to. Maybe it will come to me but until then, my decision is to Walk away from Genie. The risk is too high for me.
On a different note, San Fran was great – coltish weather – but very beautiful. I ended up in Embassy Suites – I actually thought it was a Hilton property – but it turns out its a Hilton sub-brand – that caters towards the Geriatrics crowd. So NOT a business hotel – but well located. Went for a bit of a walk on the bay – great – always like SF – cool vibe, cool city.
BTW – this post is written on the 14th – I needed a day to process through the scenarios and gain clarity of though on what was going on. Had I written it yesterday, it would have been much more focused on the ‘shock’ of the things being asked for, etc, etc. So, to be honest, this post is ‘well thought out ‘ and does not 100% convey the emotions of the day – the emotions where of being quite, quite ticked off. It took my a while to find the root of that, and that it was rooted in disappointment that the project never was what I wanted it to be! Facing the brutal truth. Not easy – but necessary.
Flew today from LA to SF. This segment was in economy – my god! The check in process was hell. Hell. Enough said.
Did a mind map of the options for Genie on the way from LA to SF. Worked on it later into the day.