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I've had this same thought, and have a pet theory about it. I think the answer is something like momentum is so unbelievably useful in business that having it i
by CPLX 7y ago
I've had this same thought, and have a pet theory about it. I think the answer is something like momentum is so unbelievably useful in business that having it is enough to be immensely wealthy and successful.
As someone who recently created yet another startup, I am reminded daily that literally everything I do has to be done for the first time. It's like molasses covering every part of the machine. When a client needs a proposal you have to write one from scratch, when someone wants payment terms or to negotiate a contract adjustment you have to figure out contract language. You don't have expense reimbursement forms, you don't have job descriptions, you don't have anything to use as a starting point or template for anything you do.
Big companies have all that. They have clients that are planning on using them again this year. They have meetings they took two years ago that are about to be a sale. They have a guy on the third floor that has seen this problem they're about to have once and knows how to avoid it. People instinctively trust them, so they don't have to explain themselves as much. People instinctively fear them, so their contracts get upheld. People that used to work for them now work at potential customers and call them up.
And on and on and on. Having a slightly busted software development process is, in fact, peanuts compared to all this.
Or, perhaps another way to say it is that there's a lot of different kinds of "software" besides the digital ones-and-zeroes kind we think about here. A group of humans all organized around a business purpose with tons of experience and momentum is a high functioning machine as well.
- rossdavidh 7y agoThis theory, by the way, explains why efforts to turn around failing large companies are so rarely successful. Once that momentum is a bunch of bad decisions, etc. the momentum is working against you. But, up until that point, it is extremely powerful.
- linuxftw 7y agoGood analysis. I think for software sales, this type of thing is slowly fading as it becomes more and more commoditization. For all but the largest of businesses, you go to AWS and pay the market price for compute and other services, there's not much need for contracts and negotiations and meetings, the price is the price. Going to a competitor or doing business the old way simply costs much more. Eventually, businesses align on consuming commodities as commodities, the spending slowly moves from CapEX to OpEX. AWS is the power company now. You agree to their terms, and you pay their bill. Unless you're doing a major industrial facility that requires mega-watts of power, you don't need to interact with their sales staff; same applies to AWS (and ironically, you can probably use power as a proxy to relative deal size here, too). 100 years from now, all the conceivable software is going to exist that could exist, at least for 'business processes.' If your business is selling potatoes as a farmer to distributor, the software you need to participate efficiently in that market will already exist.
- nullwasamistake 7y agoThe upper end of the market is still contracts all the way down. My company has around 250 employees and every single service we use, software and otherwise, is a negotiated old school contract. The market price isn't what most companies pay. If you pay significant amounts to Amazon (maybe 1 employee salary worth) you're screwing yourself if you don't negotiate lower rates Edit: Just asked the corporate overlords. It's actually against our finance rules to pay for any recurring service charge without a negotiated contract.
- luckydata 7y agoYou're still paying market price, just not the published one. Negotiating b2b deals is a little like ordering from the secret menu at in&out. Doing tons of that lately and it's quite the mechanical endeavor. The only really annoying part of it is deals move only as quickly as the sales drones want it to. I have to sit through their "sales process" even if I know exactly what I want, I know what I can spend and ultimately the deal will be done on my terms. It's funny to think that some guy got high fived to death for selling me a contract for about 35% the original quote.
- ErikAugust 7y agoHe’s being high-fived because you could have got it for 10% of the original quote.
- madhadron 7y ago> It's actually against our finance rules to pay for any recurring service charge without a negotiated contract. Your company probably also employs a professional shark whose job it is to squeeze the blood out of every stone he is pointed towards. With even a modest number of sizeable contracts, such a person would pay for themselves very easily.
- mruts 7y agoAt my old company we were paying millions for contracts and software we didn't use or really didn't mean. One of the analysts volunteered to be the "undertaker" and renegotiate. After a year of screaming at people on the phone (I sat next to him), he managed to save us around a million dollars, which was around a 60% savings. He pocketed maybe 30% of the money saved that year. Not bad for a year of being a dick.
- deleted 7y ago[deleted]
- tmaly 7y agoThis idea of momentum reminds me of Jim Collins Flywheel Effect https://www.jimcollins.com/concepts/the-flywheel.html https://www.jimcollins.com/concepts/the-flywheel.html I have to disagree with the broad statement that a busted software development process is peanuts. In highly regulated industries like finance, bad software can cost you billions in fines from regulators. In these industries, they have to invest in technology and good processes if they want to stay in business.
- w0utert 7y agoHigh-tech is similar. Where I work there are literally 100s of insanely bright people with backgrounds in math, physics, etc. who struggle for years to get their ideas into results and (ultimately) products. Usually things get stuck on simple software tasks like connecting things together, driving them in a feedback loop, or just identifying that all the parts are already there, scattered around the company, and someone just needs to write a framework to put them together. I honestly think huge business opportunities are lost because of inefficient software development processes. In a sense, this lends credence to the theory that once you’re big and powerful and have lots of clients, you can afford to lose these opportunities. But I still think that you would have a huge competitor advantage without all the molasses.
- PhasmaFelis 7y agoWhat is a "comparison company" in that article?
- tmaly 7y agoIn that context, a comparison company, would be a company that tries one big push to move the flywheel. This is not enough to build momentum. You need repeated effort to build the momentum.
- rossdavidh 7y agoIt is incredibly important in those industries, BUT...it is also for those same reasons more change-averse. Most (granted, not all) of the time, using the same software that worked just ok last year, is far safer than getting new software made. The safest decision, 99% (but not 100%) of the time, is to cancel that software project before it goes to production, because if you've been successful up to now, by definition you have software that is Good Enough (if not good). So, in highly regulated industries, changing your software may very well be an unwise decision. Not least because, if it's the same software the regulators were ok with last year, they probably won't fine you billions for using it this year. Caveat to all of the above: "probably". But the chance of new software getting you into trouble is still higher.
- amelius 7y agoIt's not just momentum in that sense; it's also the fact that wealth begets wealth. (Which you could also call momentum in a way.)
- thfuran 7y agoThat seems to be begging the question.
- 317070 7y agoI think this is indeed nailing it. Companies are inefficient, but they get away with it because the market is even more inefficient.
- tarsinge 7y agoI got more involved in the sales aspect recently and I find the part about trust especially true. Company size and references has a disproportionate effect compared to the reality of their reliability. A lot of big service companies fail to deliver, yet it doesn't seem to have an impact on future buyers. We all heard the phrase "nobody ever go fired for buying <market leader>" but only recently it started to resonate for me, and experiencing first-hand that when you are buying software in a bureaucratic environment you are not incentived to buy the best solution, but to minimize your responsibility in case of failure.
- HillRat 7y agoWeirdly enough, one little-stated aspect of that dynamic is that as a client you can sue a major consulting or services firm for delivery failure and expect to get something out of it, whereas that option is rarely available for smaller firms that can’t absorb the cost of a single lawsuit.
- eldavido 7y agoIt's worth thinking about how companies become #1 in their respective industries. A local restaurant becomes #1 by having the best food and/or location, and providing it at a price people are willing to pay. A car dealership probably succeeds by having the best prices on cars and the best customer service. Most banks compete on customer service and some amount of product differentiation. Insurance is some combination of customer service, market share, and correctly pricing things. To the extent that better software contributes to these core "capabilities", companies will invest in it. Investment means it gets management attention, willingness to spend, willingness to hire annoying top-shelf talent that demands flexible working arrangements and huge salaries. Many -- maybe most -- business don't have competitive dynamics that software enhances. A hotel is a great example: it's location, price, service, and cost control. The software they use at the front desk has approximately zero importance to whether the place will stay in business, or fold. Owners are right to invest as little as possible in it and move on to something more important, like building a brand.
- pergadad 7y agoI think you're far too optimistic about why certain companies succeed and others don't. It's much more random than that. Why does the restaurant succeed? Rugby review at the right time, a big regular corporate client, a good cook that works for less than she'd usually take because her mother lives right next door, ...
- sanderjd 7y agoHaving recently transitioned from small companies and start ups to a big successful corporation, this all seems right to me. A lot of things are way easier because they were just figured out already. A lot of stuff (both technical and non-technical) has already been in the pipeline for a few years and will be ready pretty soon. A related thing is that because of that pipeline thing, it's a lot easier to start thinking about things that may well take two or three years to come to fruition. These are all enormous advantages. On the other hand, there are entire markets, even quite large ones, that you can't pursue because they're way too small. That's what I'd look for if I were thinking about starting a new business.