180 FS Fixing Projects When Projects Go Wrong

00:00 0:55:34
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02:54 - How do you know when a project has gone wrong?

07:52 - Setting Expectations

  • Risks and Assumptions

13:22 - Client Relationships and Improving Communication

17:16 - Horror Stories

  • Lawsuits

35:37 - Rescuing a Project (After Things Have Gone Wrong…)

37:42 - Scope, Rescoping

Crossing the Chasm, 3rd Edition: Marketing and Selling Disruptive Products to Mainstream Customers (Collins Business Essentials) by Geoffrey A. Moore (Philip)Jonathan Stark: First Do No Harm (Jonathan)Creative Class Contract (Jonathan)Facebook Ads Manual: Everything You Need to Know to Get Started by Mojca Mars (Reuven)

Transcript

[This episode is sponsored by Hired.com. Hired.com is offering a new freelancing and contracting offering. They have multiple companies that will provide you with contract opportunities. They cover all the tracking, reporting and billing for you, they handle all the collections and prefund your paycheck, they offer legal and accounting and tax support, and they’ll give you a $2,000 when you’ve been on a contract for 90 days. But with this link, they’ll double it to $4,000 instead. Go sign up at Hired.com/freelancersshow.]**[This episode is sponsored by Nird.us. Do you wish that somebody else would handle all of those operation details when it comes to hosting your client’s web applications? Nird.us is a Ruby on Rails managed hosting designed to make your life easy. They migrate everything for you, and new sign ups referrals come with a $100 discount or referral fee. To sign up, go to freelancersshow.com/nird, and enter ‘freelancer’ into the contact form for a discount.]**[If you're someone who runs your own service-based business, then spending less time on pesky admin tasks means having more time to focus on your clients’ work which is why you need to give FreshBooks a try. FreshBooks is the invoicing solution that makes it incredibly simple to create and send invoices, track your time and manage your expenses. It allows you to quickly see and track the status of your invoice expenses and projects, and allows you to keep track of your expense sheets in FreshBooks. For your free 30-day trial, go to Freshbooks.com/freelancers and enter the Freelancers’ Show in the ‘How did you hear about us’ section when signing up.]**[This week’s episode of the Freelancers’ Show is brought to you by Earth Class Mail. Earth Class Mail moves your snail mail into the cloud giving you instant access 24/7 and integrates with the tools and services you use everyday. It’s crazy that we’ve moved everything we do for the business over to the digital world but still need to pick up, sort and manage physical mail. With earth class mail, you can get all your mails scanned and accessible online 24/7. You can search your mail, send invoices over to your accounting software, sync important documents into cloud storage, deposits checks and really just make running your business a whole lot easier. You also get real professional address to share publicly with customers, business partners and investors, and you’ll never need to worry about someone showing up at your door if you run your business from home. Visit freelancersshow.com/mail and you’ll get your first month of service free when you sign up.] **REUVEN: Hi everyone and welcome to episode 180 of The Freelancers’ Show. This week on our panel we have Jonathan Stark. JONATHAN: Hello. REUVEN: And Philip Morgan. PHILIP: Hi there. REUVEN: And I’m Reuven Lerner. And this week, we are going to be talking about when projects go wrong. Who here has ever had their project go wrong? [Inaudible][chuckles] PHILIP:   Yup. I’m going to be raising my hand there, too. REUVEN: [Chuckles] yeah, it’s inevitable. JONATHAN: So how do you know when a project has gone wrong? Philip, when you’ve said you’ve had a project gone wrong, was it you just had this sinking feeling that you knew it was off the rails or going off the rails, or was the client just like – I don’t know – where it hit you with a freak out email or something? PHILIP: For me, I would say 9 times out of 10, it’s kind of how I’m wired. I’m a little bit more on the emotional side of things so I feel myself not wanting to talk to the client because I feel some shame about how some things are going. That’s like my early warning detection system for a project gone wrong. JONATHAN: Does it turn out to be true usually, though, or is it just in your head? PHILIP: You know, I would say that it’s true much less than a hundred percent of the time. I’m not systematic about tracking this stuff, so – but let’s say it’s true maybe half of the time. Maybe half of the time, my emotional seismograph is saying ‘yeah, there's something not quite right here’. And if I am not eager to hop on the phone with a client, something’s less than it should be. And then the other half of the time, it’s just that I have higher standards towards things than my client does. It tends to boil down to that. So that’s how it works for me. I’m curious for you guys how you know things are headed off the rails. JONATHAN: I've got a similar early detection system. I don’t – maybe it doesn’t bug me as much, but I notice it. And I can remember the times when I've been on a retainer, a long time retainer gig, or if somebody’s paying me five figures per month to do X, Y and Z, mostly just jumping on phone calls and stuff, and just being like ‘they're going to tell me on this phone call that this is the last month, I’m sure of it; like they're going to fire me this month, for sure. It’s been 3 years, I don’t feel like – there's no way I can be delivering the same value 3 years into a project because all of the low-hanging fruit’s gone, the incremental benefit of the things that I’m offering is lower’, and it’s almost – [inaudible] on the farm like ‘wow, I can’t believe they didn’t fire me’. But then, it triggers in me ‘well, maybe I should fire myself because I don’t feel like I’m delivering as much value. They still seem to be getting a value out of it, so maybe we should have a conversation about it’. And I actually have done that because it is that it’s an uncomfortable feeling to feel like you're delivering less value than you were, even if the customer is still totally happy with the ROI. But if we’re talking about like a software project, for me, when something goes wrong, it’s usually that the project is going long and that there were some deadline, real or imagined, or tentative or [inaudible] or whatever, and we’re way past that. And for me, it’s never been a huge problem because I don’t bill by the hour, so going past the deadline hurts only me and the clients, generally, are pretty cool with it. There have been some rare exceptions where a little ways into a project, maybe 20-40 hours in, I've been like ‘this is not going to work’ and I just give them their money back, basically. PHILIP: Yeah. It seems like there's an object of quality to this idea of whether a project is going well or not, and then a more subjective part of it. So maybe we should keep that in mind as we go through the discussion on this. REUVEN: First of all, I think that if I feel bad about a project or if I don’t want to talk to them on the phone, then I know in my heart of hearts that it’s not going well. And yet, sometimes I’ll be in sort of denial and be like ‘well, I’m sure it’s ok’ and ‘well, I’ll just get it done soon’, and then they’ll be happy, right? But probably, if I’m not feeling good about it, then they're feeling even worse. But there are times when I’m surprised in both directions. There are times when I – just recently, I remember meeting with a client and helping him with something, and thinking to myself ‘really? They paid me for that?’ I didn’t really offer them that much, but their response was they were overwhelmingly delighted. And I think that to some degree, that’s a matter of being an expert, you lose track of what value you are bringing and you don’t realize how much something that’s very banal for you and very everyday for you is really useful for them. But then, sometimes people will totally come [inaudible] left feeling surprised me saying they're completely dissatisfied, where the most extreme versions of that was I gave the first day of the course, and I walked out and I got a call saying ‘that’s also the last day of the course’ [chuckles]. I was like ‘what do you mean? What happened?’ and they said ‘well, we did come to you at lunch and say it would be nice if you went a little faster’. I was like ‘yeah’, and they said ‘and you didn’t go faster, and so we’re canceling the rest of the course’. So they were just a little crazy. But usually, there's a little more communication than that. And usually, you can feel what's going on. And then hopefully – I guess we’ll talk about this in a little bit – take steps to improve it and fix it. PHILIP: To me, this whole points to that setting expectations at the beginning of the project. And I wonder if every project that goes off the rails doesn’t, [inaudible] of that going off the rails aren’t at the beginning of the project in terms of how expectations are set. So I think that’s a question for the group is: how do you set expectations at the outset? JONATHAN: Yeah, that’s great. That’s a great point. And I think that two things come to mind. One is since I don’t bill by the hour when I’m doing software stuff, I am forced to come up with some other metric to gauge progress, and that can be something in the website analytics or it could be people just generally be happy. Having weekly design meetings to make sure that we’re on track with the original goals or whatever it is, it needs to be explicit in the proposal. And then on top of that, once you have the explicit measures for progress toward the goal, you need to be very communicative. So, I typically say that I touch every customer once a day – sorry, at least one customer a day, and I don’t have that many customers. So if I've got three customers, 3 active customers, I make sure to be in touch with them one way or the other, at least one of them per day. And I guess if I had a lot of customers, I would make sure that talking – not talk to, but either update Basecamp or send an email or update Slack. At least once a day would be great if you’ve got the bandwidth so you didn’t actually code, but you need to be in touch with people a lot more than, I think, most of the developers feel like they want to; like they just want to go on the basement and code, and on the weekly review, they’ll show up and demo what they’ve done, and that’s not enough. It needs to be multiple times throughout the week at the least, I think. REUVEN: I think you're totally spot on there. Additional communication and constant communication makes such, such, such a difference. Not in just that they know you're alive and working on their thing, but first of all, because they’ll going to feel more open to talk to you. They’ll say ‘oh well, how about, how about, how about’ and they’ll see the communication line open, and if and when something goes wrong – and now, of course, I’m thinking about this project that I’m on now, which is dragging out and which I feel bad about and so on and so forth – but if something goes wrong and you have to apologize, they’ll be like ‘oh, that’s ok. We understand you’ve been working on it. You need to take a break now’, as opposed to ‘what? You haven’t talked to us for 3 weeks, and now you're also telling us you're going to be late?’ JONATHAN: Right. There's another thing in the expectations that you just triggered is that in my proposals all put a section on risks and assumptions, and what that does is it list out all the things that are still squishy and historically, just in my experience, are problematic. And what I’ll do – it could be anything from doing a database migration to getting SSL set up on a web server and all the follow on effects from that – and I’ll just list them out and sometimes, it’ll be as – it could be as many as 20 things. And what that does is that when one of those things does crop up, or maybe more than one of them, then you can say ‘well, we knew this was a risk, and it did crop up, and we’ll do it’ as opposed to just like ‘oops, the SSL certificate broke the whatever – the shopping cart or the preview in the iframe’ and then it looks like – it makes you look like less an expert and it probably makes the – I think it’s safe to say it makes the customer feel like you're less in control and  less of an expert than they thought they hired. So I think calling out the things that could blow out in your face makes it a lot less damaging when they do blow up in your face. REUVEN: Jonathan, when you say that you're in touch with a client, like say, one a day, what does that mean? Does it just mean – does it mean an update in what you're doing? Does it mean a question to them? Does it mean you want to set a meeting? Could it be any of those? JONATHAN: It could be any of those. Usually, it’s a – I manage all my software projects in Basecamp, so usually it’s just going into Basecamp at least. Yeah, if I have a project that requires Basecamp, I’m going to go in there pretty much everyday, maybe depending on my schedule if I have speaking gigs or something maybe it’s once every two days, at the least, once every 3 days, go in and respond to any questions that have come up, if somebody used – loaded a bunch of To Do’s in there, I will let them know that I, at least, saw the To Do. I’ll either move it to a – into from an inbox to a dev list, or I’ll ask some question about it to clarify. But you want them to feel like – even though I’m not billing by the hour and they don’t have to wonder if the meter is running, if the clock’s ticking, they still want to feel like you're engaged and this is like any other relationship, I suppose, because that’s what it is; it’s a relationship. You need to – whatever communication channel you chose, you need to be relatively active in there; otherwise, they're going to feel like you went dark. We all know what it feels like when a client goes dark. Nobody likes it and you don’t want to do the same thing, even though you know you're working. Your project contact might be – his boss might be calling him everyday and be like ‘how’s the project going?’ ‘I don’t know. Reuven hasn’t updated Basecamp. I have no idea’. And that’s uncomfortable for everyone. REUVEN: Philip, how about you? How do you contact people and when? PHILIP: I've been on both extremes of the continuum. I started out as a generalist. I started out with just fumbling my way through projects, and so I did exactly what Jonathan was identifying as the anti-pattern you want to avoid. So I was doing hourly projects, and the project would start out with high fives and celebrations all around, and ‘oh yeah, we think this will take 3 months’, and then things start to slip, and you get into the middle of the project and everyone is – it’s pretty bleak, and – so I've done that and I’m not proud to say it, but I have done that where I’m just like ‘ugh, god, I don’t want to talk to this client because I don’t have any good news for them’ [chuckles]. And that’s what’s going on inside my head when I’m in that place. And so since then, I've moved away from hourly billing and now, just bill a flat rate for a week’s worth of effort on a project, which sounds like a bigger time unit, but we don’t talk hours so it doesn’t feel like hourly billing, anyway. And I have meet up – stand-ups everyday with whatever client I’m working with, so I’ll work with one client at a time and we’ll have a – we’ll schedule for 15 minutes – sometimes, it goes longer – everyday of the week. And that has been a wonderful discipline for me because it’s forced me out of a personal bad habit, which is – and I think I said it actually pretty well there. I feel like if I don’t have any good news, I don’t – that’s the feeling. It’s like it’s either all sunshine and unicorns or I don’t want to have the conversation. And I think a lot of people are like that. So having a daily meeting on the calendar and having that ritual and that discipline actually, for me, has dramatically improved communication. And it just forces me to say ‘well, yesterday we didn’t go so well and here’s why. And here’s what I’m doing about that’. And guess what, nothing bad happens, and in fact, it’s made a really significant improvement in the quality of my client relationships. So that’s been my experience on both ends of the spectrum. Not that you have to do that daily stand-up thing, but boy, does it force you to communicate with your client, whether you're so inclined in your personality or not. REUVEN: Absolutely. I've often described those sorts of meetings as forcing functions, like you know that you're going to have to report to them and say you did something. And so, you're going to – you're more likely to do something, and even if you haven’t done something, then you'll have a thoroughly researched well-described reason for not moving ahead, and you can ask them ‘well, I need X and Y and Z in order to move ahead’. But you also know that if 3 or 4 days in a row you say ‘oh, I would’ve gotten something done, but I’m waiting for –’, then you're going to feel bad and then hopefully, it’ll get you to do something. I like to have that sort of pressure on myself. PHILIP: And I've found that if there's a problem to be solved, it – this client is jumping in there and trying to help me solve it, so it’s not what I imagined in the fearful thinking that springs up when you isolate yourself from your client. And you think ‘oh, they're just going to blame me for this’ or ‘they're going to lose confidence’, but it actually, in my experience, has facilitated a more joint problem solving approach that also is very good. REUVEN: Very true, very true. There's definitely a sense of ‘oh, they don’t want to hear bad news’, but actually, they want to solve their problems. And if you can say ‘I have this problem’, or ‘we have this problem, let’s try to solve it together’, they're often going to be very positive about it. PHILIP: Yeah. That’s been my experience. JONATHAN: Yeah, same here. Does anybody have a total horror story? I can think of a couple that probably sounds like horror stories, but really weren’t that bad. [Crosstalk] PHILIP: Well, why don’t you go first while I think of mine? REUVEN: Yeah, I’m thinking of mine too [chuckles]. JONATHAN: So people will probably freak out when they hear this one, which is that when I first went solo, which was almost 10 years ago, one of my first clients came with me from the previous employer. We worked out a deal where we, more or less, split the money. I got the client, but we split the money for X number of – so everybody’s happy. And we had a project on the books that I did; it was one of my early fix – my early attempts at a non-hourly fixed bid, value-based project, and I underestimated it by a year [chuckles]. And I continued working on that thing for an extra year. So we thought it was going to take one year; it took two years. And we had great – I was – they were great. It was a great client. I’m still friends with the people and we send Christmas presents and everything. They were like – I have travelled down to visit them on multiple occasions. They were the most fun – just great. And the communication was really good, they were totally reasonable about the surprises that come up, and we just kept working and working, and we finally got it done. And it was – obviously, my effective hourly rate went down, but it wasn’t horrible. It was still amount of money that I could live on. And since it wasn’t blowing their budget, just the fact that I blew the estimate by an entire year, since that wasn’t screwing up their finances in any way, then they were cool with it, and they respected the fact that I was sticking to my word about not charging them another dime over the fixed bid. Obviously, they have some lost opportunity cost and they were hoping to deliver some of these features to their – it was an internal system, but it still – it wasn’t going to affect their ability to service their customers. So they would’ve rather had it done sooner, but they felt like – everybody was cool with it. And so if that have been billed by the hour, that would’ve been a one of long – so that was probably my biggest – because it was so early, I estimated it low – but that was probably something that people would consider a disaster. And then I've had some smaller ones that were basically much shorter engagements where at the end, it was like ‘you know what, I just didn’t – this didn’t work. We had an idea of what was going to happen, and based on whatever past experience expertise and all that, and it just didn’t work. You could see that it didn’t work. We had goals for the outcome, and I just [inaudible] them up, and it was like one of the benefits of having a price is that you know what it is and you can act like it’s a lamp. You can – they can return it, basically [chuckles]. So I've written my – I've written at least two $5,000 checks that I've returned to clients and a couple of $10,000 checks that I've returned, although those were, in those cases, I think it was before the project really started because something came up that I realized – at the last second, I realized it was going to be a recipe for failure. If you're – I've counseled a couple of people – I can think of two occasions when people were like these client’s freaking out, they’ve mentioned lawyers, blah blah blah, and I’m like ‘just send them the money back, dude. You're going to – it’s going to hurt at this second – this second you send that check, you're going to feel like a million bucks – you're going to feel like a load of bricks has been lifted off your back’. And it works every time. If you just – it’s like not worth – if we’re talking 5 10,000 bucks, it’s not worth it; it’s not worth going on a court; it’s not worth even having that emotional distress. It’s like take the hit and go find a – just redouble your efforts to go find an awesome client instead of crap ones that’s litigious. REUVEN: Boy. I don’t know if I have any horror stories that quite match that or any of those [chuckles]. There's the one that the course that I mentioned earlier where I finished the first day and they told me ‘don’t come back’. JONATHAN: Didn’t you have one where you helped somebody with their database? REUVEN: Oohhh. Oh, that was a – oh yeah, that’s a good horror story [laughter]. Oh, now you reminded me. But that was like the guy was just a crook, but it’s a great story anyway where I got a call – I was heading out to a meeting, and I get a call – ‘is this Reuven Lerner?’ ‘Yes.’ ‘Do you know about Linux?’ ‘Yes.’ ‘Listen, my servers are in such a bad state. I need your help’. I was like ‘look, I’m going out to a meeting’. ‘Please, please, please, can you come to me?’ So it turns out he was pretty close to where I was having my meeting. So afterwards, after the meeting, I went there. I had an employee at the time who came with me, and the guy said ‘look, [inaudible] was 2 weeks or 3 weeks ago. We’re so stuck. Our servers aren’t working. Can you help us?’ So we worked on it for 2 or 3 hours. My employee went home, I kept working, I pulled an all-nighter, I got his system up and running in 6 in the morning. By the way, hint to those of you who ever do this, tell your wife where you are; enough said. Anyway [laughter], I was like ‘I’ll finish soon. I’ll finish soon. And then I’ll tell her’ – bad idea, bad idea. Anyway, so I get home at 7 in the morning exhausted, but so happy that I managed to help this guy. And then, of course, it comes time to invoice him. And I keep helping him a little bit more, [inaudible] a little bit more, and I had a business manager at the time who contacted him and said ‘listen, you guys need to pay’. And he said ‘oh, we’re sending something by fax right now, so [inaudible] a little bit’, and the – we got a [inaudible] of the fax saying ‘Reuven Lerner is a fraud and a charlatan. He claimed to help us with our servers, but did not. He ruined them, and it was only because the CEO was there watching over him like a hawk and managed to make sure that he didn’t destroy our systems more than he did. And it was by the skin of our teeth that we manage to get things up and running. And not only are we not paying you, we’re going to sue you for’ – I guess they called in about $10,000 – ‘for damages to our system’. So you can imagine, I was shaking when I've seen [chuckles] this and I was so upset. And I actually went to a lawyer, and we decided after a little bit of investigation that this guy is just – this guy is a fraud and a crook, and probably, the reason he didn’t have a system history to it anymore was because he had played all sorts of games with that guy or with some chain of previous people, and they just found some new sucker to work with him until they can get rid of them. So I figured, well, he’s not going to sue me, and I [inaudible] sue him, and it was just before I went to the US to do the PhD so I just gave up on it. But yeah, that was a real shock to my system, because until then, and even since then, even though I have contracts with my clients, it’s really just a formality. I think, Jonathan, you said you only want to work with people with whom you could go out and have a drink or have fun or spend – want to spend time with, and for the most part of my clients are totally like that. I love spending time with them, especially the training ones. That is great. And this guy, I should’ve gotten the vibe from the beginning, but I totally didn’t. And then there was just one more and then I’ll let Philip tell his horror stories, too. So there was one where this, again, a non-profit that seem to be like – by the way, I’m sure there are good wonderful non-profit [inaudible] that I haven’t worked with some of them, but for whatever reason in Israel, at least, the non-profits tend to be very poorly run and run on a shoestring budget, which means I should really not work with them so much [inaudible]. So this non-profit wanted me to set up a forum system. It was like an educational place; [inaudible] teachers and curriculum developers to set it up. And I said ‘oh, that’s fine’, and the head of the non-profit wanted his wife to be the graphic designer. And that should’ve set off alarm bells because basically, this was like, again, 10, 15 years ago, and I said ‘oh, you want to be using Hebrew, Arabic and English. We’ll have to use Unicode’, and she was like ‘I have no idea what you're talking about. I don’t think I can work on this’. And basically, so that was bad where she was against everything I was doing. And I did the standard thing of I went dark on them. I set it up, I figured everything was great, didn’t hear from them, obviously, it’s peachy if I haven’t heard from them. And then a month and a half later, two months later, I get a call saying ‘where the hell are you? This is terrible’ [chuckles]. And it was such a terrible feeling because I wanted to help them, I wanted things to be good, and of course, if I’d known that things are bad, I would’ve fixed them. But because I hadn’t said anything or done anything, they assume I didn’t care, I assumed everything was great, and the miscommunication was basically fatal to the relationship. PHILIP: Yeah. Reuven, you know you're a seasoned freelancer when you can even remember all your horror stories [laughter]. Two come to mind for me. One was an hourly project some time back. It was like a $200 project, and I made some pretty significant tactical errors on my end that involved a subcontractor who chewed up a month of time and did not deliver on anything in that time and yada yada. So I ended up doing a hundred hours of free work, which doesn’t sound that dramatic compared to Jonathan’s year of free work. But it was compressed into a short period of time so it was a very memorable painful hundred hours of free work. To me, that’s two things. I pointed out the flaw in hourly billing where the freelancer screws up and the client pays for it. That’s not what happened into this story I’m describing, but I ate it, essentially, which is kind of how it should be, actually. But I can imagine somebody else saying ‘well, sorry this happened and this is going to take extra time and so your project’s going to go to 33% over-budget or 50% over-budget and add another hundred hours’. So that’s a really memorable project-gone-wrong story, and part of what made me say ‘never again, man. Never again am I going to make those kinds of mistakes’. And then, more recently, with this subscription service that I provided called My Content Sherpa, I got into an issue that was caused by my inability to scale the service, which really needed the scale to make enough money and really function a way it was supposed to. It needed to be run like a virtual agency. And that was a different situation where instead of one big failure that caused a big blow out in the project, it was a bunch of little failures that added up. And so I was in a living hell for 3 months trying to deliver a backlog of work that had slowly accumulated, kind of like credit card debt tends to do [chuckles]. So, yeah. One of the things that has come up that I’d love for us to talk about – maybe covering some old grounds here is the idea – there's this perception that contracts are what's going to make those problems not happen. Or it’s going to be the club that you can beat your client with if things do go wrong. And I bet we all have a somewhat different view on that than the conventional view that a contract is going to protect you against a project gone wrong. JONATHAN: Yeah. This has come up a couple of times in the past, but I don’t think it’s been from this angle. I’m not as [inaudible]; I’m not a big fan of – I’m especially not a big fan of contracts because the contract is like – contract is something you do with someone you don’t trust. And it’s like a pre-nup, and it’s just an indication that the relationship isn’t ready, to me. And I realized that I've virtually – I'm literally the only person I know of my colleagues that is as non-contract focused as in this field. But the flipside of it is – the nice thing about contracts is that the – if they're written in plain English, they do a good job of getting everybody’s expectations in the right place. But I try and put that in the quote. So I do all that getting people in the same page stuff in the quote and it’s just in agreement that they sign. There's no – I don’t know – terms of service or any of that stuff that so often also sent. I just find that it just triggers the lawyers. Even if the client’s like ‘oh, we need to review this’ and then you go back and forth and the ‘geez, maybe I should show this to my lawyer’, and like ‘come on, let’s just do this. Get it done. And if you don’t like it, I’ll give you your money back’. It’s not like I am going to – I am so much smaller from a business standpoint than the vast majority of my clients that I would just immediately go bankrupt if any of them sued me, even if I won. It’s like Samsung; am I going to beat Samsung in a lawsuit? No. REUVEN: [Chuckles] They might have slightly more and better lawyers than you. JONATHAN: It’s possible. Yes, it is possible. So I’m not going to – I’m just not going to – I just don’t care. It’s like – I’ll just be like ‘look, if you guys want to sue me out of existence, the contract’s not going to protect me because just defending it would destroy my cash flow. I’d rather just fold the business immediately and start a new one. PHILIP: Adding on to that, I was involved in a very small lawsuit that the cost of hiring a lawyer was very low, and the amount of money [inaudible] was very low. But it was literally a year of changing the court date around to fit various people’s schedules, and in a way, it was like a year of non-stop stress on me. So there's not just the dollars and cents cost, but there's an emotional and psychological cost too. Even going there, even imaging in that you would something out of suing somebody, I should’ve just – in retrospect, I should’ve said ‘you know what, you guys win. Let’s work out a payment plan for this dispute’. JONATHAN: Yeah. I've been in 2 or 3 lawsuits, depending on how you want to quantify my divorce [chuckles], but I've been in 2 business lawsuits. And if you haven’t been in one, it is hard to explain how much stress it adds to your life. Even if you know you're right, it doesn’t matter. It’s this constant anger; it eats you alive. I would just be like ‘you guys, you're seriously going to sue me?’ and I would probably just – I would be just ‘alright, you win’. I’ll just totally roll over and either declare bankruptcy or if I could afford to give them the money back, give them the money back and then just redouble my efforts elsewhere to make up for it. Anyway, we’re totally down a rabbit hole here, but I don’t see how a contract – the nice thing about a contract is that it’s a document that you can refer to 3 months later after people have forgotten the high fives and the kick-off meeting to remember what they said, remember what they agreed to. I think a document like that needs to exist; it needs to be notarized and signed by a lawyer, approved by a lawyer, not in my opinion, but I know that I’m in a vast minority there. REUVEN: I have a contract that I use with my clients. Actually, I should say with all of my teaching, that’s a totally different kettle of fish, because all these big companies – Jonathan, you definitely know this better than I do – they have PO’s. A PO is basically like a contract. So when I’m going to do a course for [inaudible] something like, they send me a purchase order and I’m not going to sign on my dinky little contract saying ‘you will pay me’. I have this piece of paper that if and when they don’t pay, and that’s not just going to happen, then I can go to them and demand it. But I have [inaudible] from my consulting stuff for a number of years now, and it’s really short. And I purposely kept it as ridiculously short as possible. It basically says: I do the work, you pay me, I will give you a receipt, you own everything except for the open source stuff. And people have been surprised that this is a page and a half total. People have been very, very surprised by how short it is. And I think Chuck had an episode [inaudible] the show before I joined, they had – it was a different one – but they had a lawyer talking about ‘well, you really need to have this and this and this and what happens’ – and I remember hearing that episode and thinking ‘oh my god, I’m going to be sued out of existence’. But it’s just like something will go wrong; but even when things have gone wrong –. I had this client where I did this – they wanted me to translate a system they’d done in .Net and SQL server into Java and Postgres. This was when I actually thought I could be a Java developer. But fine, so I did it. Actually, the thing totally worked, but I was really under the weather when testing it. It was a mobile app, back when mobile apps meant it dealt with SMS like text messages. And I went to take a nap because I was feeling so horrible, and I accidentally sent out some crazy number of SMS during that hour. And they were like ‘so you know, you cost us a few thousand dollars here in SMS fees’. And I said ‘oops’, and they said ‘do you have insurance?’ and I said no. And we basically agreed just – I had undercharged them [inaudible] and we just called it a draw on that. But I don’t think –I think it was the closest I ever came to actually being sued by anyone real. That crazy guy was never really going to sue me. And then, would a contract really help me? No, not really. [Crosstalk] JONATHAN: I had a friend accidentally spin up the wrong size [inaudible] for a client and it cost him 5,000 bucks for the month and he didn’t realize it until the end of the month when their $50 bill was 5,000 [chuckles]. Stuff like that happens. ‘Oh yeah, I nuked your database. Where’s the backup?’ ‘We don’t have one’. ‘Ok, there’s going to be a problem there’. But barring negligence and – that stuff doesn’t really happen that often, I suppose, for people who are actually diligent and not clowns, I guess. REUVEN: It’s rare for a company. If you have a contract, if they don’t want to pay you, call you up and saying ‘hey, we have a contract. You should pay me’; that’s not going to change it. They're just going to be jerks. PHILIP: Jonathan, also, is someone who now explicitly avoid using the contract wherever possible. I just – it’s typically seen as a way to deal with risks and I just deal with risks by splitting a project up into smaller pieces, which I accomplish as a same thing without saying ‘ok, here’s a gun on the table between us and whoever gets to it first is going to win’ because that’s just a terrible, terrible precedent for any kind of relationship. I think we should maybe spend some time talking about what to do after things have gone wrong. Are there ways that you guys have seen to rescue a project that’s off the rails? REUVEN: Communication. Any kind of communication is –. [Crosstalk] JONATHAN: [Inaudible] responsibility. REUVEN: Yeah. I had a project – [inaudible] a client that I’m working with still where I brought in a graphic designer who I worked with in the past and was really nice, and she was just terrible in that particular project. She was going through a divorce, and she was not feeling so well. All that might be true, but she just did a bad job. And I was the one who had brought her in and it was really looking bad, and I even was in a dicey situation with the client, as a result. And basically, I just put it all out there and said ‘listen guys, I love working with you and your company. I want to keep doing it. I totally screwed things up here. That won’t happen again’. And because we had a good relationship before then, because I think I was so communicative, we kept it going and we have a good relationship to this day. But I was really nervous. JONATHAN: Yeah. [Inaudible] again, it goes back to working with people who you like and have a mutual trust. And I think, no reasonable person expects anyone else to be perfect, but they do expect people to own it when they screw up. And it’s exactly like Reuven just said; it’s like ‘oh man, I just totally screwed up, and this is the steps – I've fixed it, and these are the steps I've taken to make sure that it’s not going to happen again’. Totally huge apology, and if there's anything else – just whatever, you just fall on your sword and own it, and any reasonable person is just going to be like ‘dude, that’s totally cool’. It will flip around the other way, too. I've had long term clients who were supposed to pay me monthly and then something gets screwed up one month and the money doesn’t come through, or they do something they say they're going to do it, or they say they're going to do something then they don’t do it, and – people make mistakes, obviously. So I think just having a lot of communication and not hiding from it when you screw up makes – it just makes a better relationship all the way around. PHILIP: Do you guys ever had to approach a re-scoping situation? Say you started out on a project and the expectations are whatever, and you just get into it and you're like ‘this is not going to happen for whatever reason’; maybe it’s not even your fault. It’s the limitation of the technology, or something changes and you need to re-scope. Are there ways of approaching that that are helpful get a better outcome? JONATHAN: For me, those are the cases when I've given back the 5,000 bucks where it’s like ‘oh yeah, I thought this was feasible, but now that I'm into it, it’s not, and here’s your money back’. There are other times when I've – but those are – $5,000 project is very small, and if a situation crops up, the way that I've seen that situation crop up most in the past is where I've done a bad job identifying what the desired outcome is, and we’ve focused too much on the features. And somebody gets to be in there about halfway through once they start to see the system coming together and they're like ‘oh, you know what we should’ve ask for? This thing. And this thing is new, wild rainbows and unicorn thing was what we really need. This is the real thing that we should’ve asked for, and that’s what you have to do now’. And that is a – there is a little bit of a balancing act you have to do there because they might be right. And you might – it might turn out that the 2 months of development you’ve done turned out to be R&D, which helped them realize what they really need to offer to their clients. And so you say ‘alright, look, I don’t want to let you just be – if we keep shifting scope, you're never going to ship anything, so I don’t want to let you do that, because then all the money you spend with me is going to be wasted. So let’s decide: is this new feature really the thing or is the original thing that we’ve all been talking about for 3 months actually more important? So let’s have that value conversation that we really should’ve had at the beginning, figure that out’, and if they say ‘well, we kind of need all of it, but this – the magic feature that we've suddenly realized we need is more important’. Then I say ‘ok, this is what we’ll do. We can pause the existing project and work on the sexy thing, the new thing. I’ll give you a quote for that, we’ll spin that up, we’ll do that, we’ll make that work, and then we’ll revisit the project that's paused and we’ll continue where we left off; or we’ll realize’ – and this is what usually happens is that we realize that the sexy feature that everybody’s all excited about was really just a sugar rush, and 2 days later, in the light of day, they were like ‘yeah, I don’t know. It sounded good in the meeting and the sales manager pitches on it, but we did a little research in asking around; it’s probably not that big of a deal. We can save it for v2’. And the thing I will not let them do is – or I've never failed to prevent them from doing is to do both projects – it’s basically just add a bunch of stuff to the existing project because that’s just a recipe for them – it’s a scope nightmare for you, but it’s also a recipe for them never shipping. So I always pitch it like ‘you guys are never going to ship if you keep changing your mind. So how are we going to ensure that you ship?’ So that’s what works for me. And it hasn’t come up that – maybe 3 times that’s happened to me in 10 or 15 years. I've put everyone to sleep. REUVEN: No, no, no, no. I’m just trying to think if I – I’m just trying to think if I – good stories [inaudible] along these lines, and I can’t think of anything else to talk on my end. JONATHAN: You kind of owe it to your customers to keep the scope under control. It’s not just bad for you if it creeps all over; it’s bad for them too. They're not getting free work out of it. They're losing opportunity cost because they're not shipping. So if you pitch it like that, if you're talking to a business owner or someone who’s – I don’t want to say business owner; I don’t necessarily mean the owner owner – it’s someone who’s a business person who’s invested in the project – if you're talking to that person, they're going to recognize that this could go on forever and ever if they don’t have some discipline on their end of the fence. REUVEN: Sometimes I've talked with a potential client or clients about a software project, and they say ‘oh, there's just so many things we want to do’, and I say ‘right, that will never change. You will always have way more things you want to do and way more ideas than time to actually do them. So you're always going to have to prioritize if you're always going to have to put some things in the back burner. And that’s part of what my role is to try to help you figure out – well, we could  do X and it will take 6 months, or we could do Y and it’ll take 2 weeks; is X really so burningly important that is worth taking 6 months to do it, or can we chop it off?’ and so forth. And that perspective definitely, I think, helps them to come to grips with this and then make the decisions. JONATHAN: Yeah, absolutely. That’s a huge, huge source of value for someone – to get someone to come in from the outside because they're not really emotionally invested in any of it. So it’s like ‘hey, you're going to pay me a ton of money, so let’s focus on the high ROI stuff, like the low-hanging fruit first. And yeah, that feature that you're thinking of is amazing, but it’s going to be very expensive, too, so let’s not forget that’. PHILIP: For me, the ability to do that with a client, to come to a client and say ‘I hear you saying you want this, but maybe that’s not a great idea; here are the reasons why’, that was a huge mindset shift and it wasn’t something that just happened overnight or I said I'm going to start thinking differently was a little bit of a progression. But sure, that is – to me, that’s like the secret sauce on being able to fix things is come to your client and not just say ‘well, what do you want to do? That’ll be another 50 hours’. But to be able to say ‘here’s what's going wrong, here’s how I think we can fix it, feel free to contribute your ideas as well, and we’re going to figure this out together’, that seems like maybe the key mindset difference at the heart of having fewer projects that go off the rails. REUVEN: I have something just a few months ago, maybe like 8 months ago at this point, where I had these people call me and say ‘oh, we saw that you're a Ruby expert. Would you be able to take on the maintenance of our Ruby software or our Rails software?’ I looked it over, my employee looked it over, and we’re like ‘yeah, yeah, we can definitely work on this’. And they were constrained in terms of budget and we said ‘fine, fine, that means you have to constrain your scope’, and we agreed that we’d do a monthly retainer. Every month, we sort of chip away of what was necessary. And it all sounded good, and of course, they came and said ‘oh, we have so many things we want to do’. I said ‘ok, again, it’s true for everyone; have to prioritize, what is the most important thing you have to do?’ And so they gave me only like half a thousand things as opposed to a thousand things’. I said ‘ok, we’re going to have to work on this, guys’, but we actually had a meeting to start to prioritize, and maybe about 10 minutes since the meeting, they started demonstrating it to us, and they said ’yeah, and here’s where we can go in, and if the customer has a problem, we go in and we see their credit card number’, and I was like ‘what?’ and they said ‘oh yes, we can go in and check people’s credit card numbers to see if they're actually accurate’. I said ‘are you telling me that you store people’s credit card numbers in cleartext?’ They said ‘yes, is this a problem?’ I said ‘ok, we've now found the top priority to fix. We will be fixing this first’. And they were like ‘why?’ I said ‘because otherwise, your credit card companies will shut you down’. And so they very reluctantly agreed that we can work on this. And we worked on it for the first month, [inaudible] number of hours that we’d agreed for the retainer, and we came back to them and said ‘ok, we fixed this. Can we get our second month’s retainer? You haven’t paid yet.’ They were like ‘what do you mean? You haven’t done any work’, and we said ‘we fixed your credit card problem’. [Inaudible] ‘Oh, well, that was something that you thought was a priority. It wasn’t a thing that we thought was a priority. So we’re not going to pay you, and why don’t you show us something that we actually think is important, then we’ll pay you’. And that was where it ended. And it was such a mismatch of expectations, but also, I thought by changing this priorities, it was clear that we were on board that we want to make sure that the business survives and isn't sued out of existence or charged for fraud or what-not. I guess I didn’t do a good job at explaining it or they just didn’t care, and I’m guessing it’s B actually. JONATHAN: You should have just taken one of the credit card numbers [laughter]. That’s a great example of something I talk about sometimes. I think I have an article on it called First Do No Harm where it’s easy for people who are software developers and have that efficiency automation mindset to go into a client situation, maybe walk a manufacturing floor or walks through the office and see people putting out emails to fax into someone else, and seeing these inefficiencies everywhere, but if they aren’t the things that the client – if they are not problems that the client recognizes, telling the client about the problems is almost always fruitless because they just don’t care. So in the situation that you're in, if I were in a situation like that, I’m not sure what I would – I think what I would have done was been like – when I discovered that, I would be like ‘I’m not comfortable working on this system until this is fixed. So you can either make it a priority or not, but I’m out of here if you don’t make it a priority’ because I won’t even work on the system where someone could come back later and be like ‘oh, you had access to 150,000 credit card numbers for 6 months’. Yeah, I just don’t want it. It’s like a travesty, so if they – it’s a great example actually of like if the client doesn’t care, the client doesn’t care. [Crosstalk] PHILIP: I can see your hand trembling there, Jonathan [chuckles]. JONATHAN: God, if I saw that. PHILIP: You know, but that’s – I won’t go down this rabbit hole, but that is a tangent onto a huge discussion about how do you create a value proposition that actually makes sense to your clients because – Amy Hoy’s term for this is pilling the dog [chuckles]. It’s like ‘here’s the medicine’. You know your client should take it, but they don’t want to take it [chuckles]. Good luck getting it down their throat. It’s just – it’s not – [crosstalk]. REUVEN: Where does the dog come into this? PHILIP: Ok, pilling the dog; you want to give your dogs some medicine, you don’t just give them the medicine. You wrap it in some food or piece of bacon or whatever. So you’ve got to make it appealing, but what you're really doing is trying to convince somebody to do something that they don’t want to do. They don’t see the value in it, so that’s not a very good way to create a value proposition for your services. Anyway, I won’t go any further down that rabbit hole, but it brings up an interesting point. JONATHAN: Yeah, that’s a good one. REUVEN: We should probably wrap up and move on to picks. You guys have any final suggestions, stories, words of advice – [crosstalk] – to avoid problems. JONATHAN: I know I’m always beating the horse on this one, but one thing I've noticed from the conversation is that the most painful, off-the-rails projects are always the hourly ones. If you're billing by the hour, that’s when it gets the most [inaudible] that is because you basically screwed the estimate, lost track of the – lost control of the scope, and the client is – they're into you for the full estimate and you're not even – and they’ve got nothing to show for it, and as far as you can tell, you're probably not even halfway done. So everybody’s just mad. And if this is a job that people – if you are a freelancer and you’ve left W2 job or you left a full-time employment with a regular type of gig, this is not what you wanted. You don’t want to go – owning your own business doesn’t have to mean you're constantly fighting with your customers. And I really think that shifting away from hourly billing solves a lot of these problems. It’s not trivial, but do, but it’s a source of a lot of the [inaudible]. REUVEN: I must admit that when you started talking about this, when we've first started talking, when you came on, I think, as a guest of the show, at some point, I was like ‘yeah, yeah, yeah. This guy was not hourly billing. I’m doing hourly billing and it’s working just great’. And overtime, I’m not doing the value-based so much. It’s more of like – mostly of projects consulting with the training, but it is such an emotional relief; massive – I’m not – [inaudible] I’m not keeping track of hours. We all know I go in, I teach a course, they are paying me a certain amount, that’s it. And you know what, if I end an hour early, or if I end an hour later, no one cares as long as everyone is satisfied. And it is such a relief. So yeah, I totally buy into it now. You were right. JONATHAN: Well, thank you. PHILIP: Feels good, doesn’t it? [Chuckles] JONATHAN: Every once in a while, yeah. PHILIP: Yeah. For me, the big take away is, both from my personal experience and what I’m hearing from you guys say, is the communication. And I know Jonathan, and I've remarked about this before offline that a lot of [inaudible] get into freelancing; a lot of lone wolf types and surprise, you get into a relationship business. The thing that makes relationships work is communication. And if you are putting off a difficult conversation with a client, it will not be as bad as you fear that it will, and it will probably relieve an amazing amount of stress which you were blaming your client for, but really, it was the situation. So you can’t have – you can’t talk too much and too frequently to your client. REUVEN: And the longer you wait to have that conversation, the worse it will get. So if you're like ‘we’re going to be talking to them now?’ Better talk to them now because a week from now, you'll feel even worse. And they might be angrier. PHILIP: Which just makes the conversation more tense and less likely to end well. REUVEN: Yeah. Excellent, excellent. So Philip, you got any picks for us this week? PHILIP: I have a pick. It’s a book called Crossing the Chasm by Geoffrey A. Moore. REUVEN: Ah. Ah, I love that book. PHILIP: It’s a book that’s meant for product people, but has some lessons that I think are so relevant for anyone in professional services. Most lessons are mostly about marketing and mostly about the how you do marketing in a way that maximizes the effectiveness of the word of mouth, which is like this little unpaid intern that’s out there bringing you business at all times if you can make effective use of it. And this particular book has just some great advice around that. REUVEN: Terrific. Jonathan. JONATHAN: Yes. I will point people to a post that I just mentioned called First Do No Harm. It’s at expensiveproblem.com/first-do-no-harm with dashes in between the words, so people can check that out. Also, second pick is – since we talked about contracts a little bit, I saw recently that Paul Jarvis, who we've had on the show, released a sort of a boiler plate contract for freelancers recently, which looked really, really good. I've a deep and abiding respect for Paul, so I’m sure it’s awesome. So if people are into contracts, then they can check that out. I can’t find the link so we’ll put it in the show notes. But yeah, you should definitely, at least, review that and see if it might suit your needs. REUVEN: Excellent. My pick is a new book that I've been using and working through, the Facebook Ads Manual by – and I’m sure I’m butchering her name – Mojca Mars. We’re going to try to have her on the show in the near future. I thought she was on already, and she said she wasn’t, so we’re going to try to book her. And I've been doing – I have a few products out, I’m working on a few new products, and I thought it will be fun to advertise on Facebook. And I spent a ton of money and got nowhere. And so I'm trying this book; I’m still ramping up and still learning how to do it, but it’s been very nicely pointing out how to do things, how to break down a problem. And for someone like me who uses Facebook but really didn’t understand how different parts of it work, it’s really been a very nice explainer. She’s been very responsive, and now I’m going to flood her with email, but she’s been very responsive to suggestions for how to improve the book and questions that I had about it, as well. So if you're interested in doing advertising online and you want to target very specific audiences, then Facebook seems to be a good way to go about that, and this book is a nice way to guide you. And that is our show for this week. So, thanks guys for joining us, for joining me, and thanks everyone for listening. Chuck will be back, hopefully in a week or two. His wife just gave birth to their fifth child, so we are very excited for him. And when he recovers, we’ll be happy to have him back [chuckles]. Anyway, we will hear – you will hear us all next week, hopefully. Thanks everyone.[Hosting and bandwidth is provided by the Blue Box Group. Check them out at BlueBox.net.]**[Bandwidth for this segment is provided by CacheFly, the world’s fastest CDN.  Deliver your content fast with CacheFly. Visit cachefly.com to learn more.]**

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