Steady as she goes …..
Q2 – done! And, the good news is, done successfully! Sales growth year-on-year is currently running at about 10%. This may initially seem disappointing but there is plenty of upside and we have several really excellent prospects. With a few projects cancelled for budgetary reasons (see my last post) we are benefiting from the strength and depth of the prospect list.
However, we are not satisfied with 10% year-on-year growth and expect the growth over the whole year to be much higher. The reality is that, despite what people would have you believe, sales do not come in with a perfect linear progression showing the ‘ideal’ quarter on quarter growth. Sales are more like buses. Just when you are wondering whether any will turn up several all come along at once.
I believe that almost every deal has its own symmetry and will come in ‘when it’s ready’. I almost never try and ‘rush’ sales through an organisation. Once it’s in progress its in progress – it will pop out of the process eventually. Sometimes sooner than expected, sometimes later than expected.
We have a couple of orders ‘stuck in the pipeline’. The sale is ‘made’ in so far as the purchase process has been started by the client side. However, the order has got stuck/become lost/whatever in the purchasing/legal/IT/whatever department in the client company. But we have no control over the process and can do little but gently prod and wait it out.
In fact, one of the main benefits of being a private business with no investors is that we are not beholden to a Board of Directors and constantly having to justify ourselves. When you take venture capital investment you gain Board Directors and it from that point you can do no right. If you meet the targets the Board considers them to have been insufficiently ambitious and simply raises them. If you fail to meet the target because it was overly ambitious then you have failed – no excuses! It’s that simple.
Being beholden to no-one other than ourselves we can take a longer term view and ‘go with the flow’. There is no point in trying to ‘bring sales forward’ to meet some spurious end of quarter or end of year target. We can judge each sales situation on its own specific circumstances and make decision on that basis. I treat the end of quarter sales figures as an interesting historical report.
From the business perspective, cash flow is the one to watch. We simply need to be able to meet our commitments. As such, we closely monitor cash cover. In other words, if we sold nothing more, how long before the cash runs out? In fact, we monitor two forms of cash cover. One position is actual cash in the bank and the other cash in the bank and monies owed to us. As a conservatively run business we like to see 6 months cash cover at any given time. This gives you time to react to events if need be.
Talking of reacting to events, I recently read an interview in the Sunday Times with Nassim Nicholas Taleb the author of “THE BLACK SWAN, The Impact of the Highly Improbable” (read the interview here). This was my first introduction to Taleb’s thinking and it immediately struck a cord. His basic message is ‘expect the unexpected’. He claims to have correctly predicted the credit crunch by noting in his book published in May 2007 that, according to the above reference interview, “most economists, and almost all bankers, are subhuman and very, very dangerous. They live in a fantasy world in which the future can be controlled by sophisticated mathematical models and elaborate risk-management systems”. His point was, of course, that reality is not like that and stuff comes in from ‘left field’.
I believe the same about business and business planning. In my December 2007 posting I mention that one of my ‘certainties in life’ is “No plan survives the first encounter with the enemy”. This is the same philosophy – expect the unexpected.
This quarter ‘the enemy’ came in the form of the v3.5 release. It fought back. Despite being ‘code complete’ at the end of March, the release didn’t happen until mid-June. In order to achieve that we had to cut some of the functionality as we simply couldn’t get it to work reliably. We also have more published ‘known issues’ that we would like in the release code. However, life is like that. You have to draw a line in the sand, make tough decisions and get the release out. If you don’t it continues to suck resources and you simply don’t move forward.
Reliability is, of course, the reason why we test the software. We actually test it comprehensively. Many of our users are ‘power users’ with some very complicated Word documents. There is no point in putting out something that works with simple documents and falls over with something more advanced. It’s a simple equation. If we can’t get it working reliably on ‘complicated’ (aka horrible) documents then we will not release it. This is not purely altruistic! A quality product reduces support costs and provides a stable long term platform for growth.
So v3.5 was three months late. In our defence, Tim Robinson, our CTO, reckons the v3.5 release was probably the most complex development we have undertaken since the initial development of the product. I think we are all surprised and a little disappointed at the outcome.
The question is “if we had investors, would be have (i) released it earlier when we weren’t happy with the quality, or (ii) released it at the same time and taken the punishment from the Board”? Either way would have been painful.
Interesting – I hadn’t set out to discuss investors in this blog entry. In fact, I hadn’t set out with a plan at all. I just wrote. The investment or no investment debate must be playing on my mind :~).
So where does that leave us? Well obviously v4.0 is delayed or is reduced in scope – or both. In addition, it’s looking like we are going to have to have a v3.6 release for commercial reasons. One significant prospective client wants some specific enhancements and that will require a release in the October timeframe. However, I don’t want all the development effort averted to the v3.6 release and want to keep part of the development team focused on v4.0. No question, it’s going to be balancing act.
From a marketing perspective, we have been to three conferences since early April. The ACRP conference in Boston in late April was extremely disappointing. A good conference with lots of people – just no-one interested in what we had to offer - a simple case of the wrong conference. Never mind – it’s another one on the ‘we won’t do that conference again’ list.
We then attended The Better Software conference in early June in Las Vegas. This was our first pro-active foray into the non Life Sciences market. We have received considerable interest in PleaseReview from the software development community and, at one client’s behest, have added support for source code review into v3.5. So this was our chance to get out and be pro-active. It went well and we have already booked out place for next year!
The other conference we attended in June was the main DIA conference in Boston - an excellent conference. A great mix of clients, prospects and new leads and we were almost constantly busy. Another one we have already re-booked.
It was at this conference that it came home to us how, over the last year, the client base and especially the number of users has expanded considerably. For the 1st time we had users turning up at our booth and telling us how wonderful PleaseReview is and how it has transformed the way they work. It’s great news, not only because the best marketing is still ‘word of mouth’ but also because it validates our approach and what we are doing. It also makes us smile.
From a longer term perspective we have begun raising our ‘heads over the parapet’ and started talking with and presenting to the analysts. I suspect this will bring some interesting times and we have already had one or two venture capital companies wanting to chat. At this stage we are politely declining the opportunity to open a dialogue.
Finally, I can’t believe that I’ve written a couple of blog entries without mentioning our new office (opened in January) in the historic market town of Malmesbury. There is something quite reassuring about being at the forefront of information technology development in the shadow of an abbey which is about 900 years old. I think it gives a sense of perspective and provides a constant reminder that some things operate on a completely different time line. Which, I guess, takes us back to the fact that every deal has its own time line.
However, we are not satisfied with 10% year-on-year growth and expect the growth over the whole year to be much higher. The reality is that, despite what people would have you believe, sales do not come in with a perfect linear progression showing the ‘ideal’ quarter on quarter growth. Sales are more like buses. Just when you are wondering whether any will turn up several all come along at once.
I believe that almost every deal has its own symmetry and will come in ‘when it’s ready’. I almost never try and ‘rush’ sales through an organisation. Once it’s in progress its in progress – it will pop out of the process eventually. Sometimes sooner than expected, sometimes later than expected.
We have a couple of orders ‘stuck in the pipeline’. The sale is ‘made’ in so far as the purchase process has been started by the client side. However, the order has got stuck/become lost/whatever in the purchasing/legal/IT/whatever department in the client company. But we have no control over the process and can do little but gently prod and wait it out.
In fact, one of the main benefits of being a private business with no investors is that we are not beholden to a Board of Directors and constantly having to justify ourselves. When you take venture capital investment you gain Board Directors and it from that point you can do no right. If you meet the targets the Board considers them to have been insufficiently ambitious and simply raises them. If you fail to meet the target because it was overly ambitious then you have failed – no excuses! It’s that simple.
Being beholden to no-one other than ourselves we can take a longer term view and ‘go with the flow’. There is no point in trying to ‘bring sales forward’ to meet some spurious end of quarter or end of year target. We can judge each sales situation on its own specific circumstances and make decision on that basis. I treat the end of quarter sales figures as an interesting historical report.
From the business perspective, cash flow is the one to watch. We simply need to be able to meet our commitments. As such, we closely monitor cash cover. In other words, if we sold nothing more, how long before the cash runs out? In fact, we monitor two forms of cash cover. One position is actual cash in the bank and the other cash in the bank and monies owed to us. As a conservatively run business we like to see 6 months cash cover at any given time. This gives you time to react to events if need be.
Talking of reacting to events, I recently read an interview in the Sunday Times with Nassim Nicholas Taleb the author of “THE BLACK SWAN, The Impact of the Highly Improbable” (read the interview here). This was my first introduction to Taleb’s thinking and it immediately struck a cord. His basic message is ‘expect the unexpected’. He claims to have correctly predicted the credit crunch by noting in his book published in May 2007 that, according to the above reference interview, “most economists, and almost all bankers, are subhuman and very, very dangerous. They live in a fantasy world in which the future can be controlled by sophisticated mathematical models and elaborate risk-management systems”. His point was, of course, that reality is not like that and stuff comes in from ‘left field’.
I believe the same about business and business planning. In my December 2007 posting I mention that one of my ‘certainties in life’ is “No plan survives the first encounter with the enemy”. This is the same philosophy – expect the unexpected.
This quarter ‘the enemy’ came in the form of the v3.5 release. It fought back. Despite being ‘code complete’ at the end of March, the release didn’t happen until mid-June. In order to achieve that we had to cut some of the functionality as we simply couldn’t get it to work reliably. We also have more published ‘known issues’ that we would like in the release code. However, life is like that. You have to draw a line in the sand, make tough decisions and get the release out. If you don’t it continues to suck resources and you simply don’t move forward.
Reliability is, of course, the reason why we test the software. We actually test it comprehensively. Many of our users are ‘power users’ with some very complicated Word documents. There is no point in putting out something that works with simple documents and falls over with something more advanced. It’s a simple equation. If we can’t get it working reliably on ‘complicated’ (aka horrible) documents then we will not release it. This is not purely altruistic! A quality product reduces support costs and provides a stable long term platform for growth.
So v3.5 was three months late. In our defence, Tim Robinson, our CTO, reckons the v3.5 release was probably the most complex development we have undertaken since the initial development of the product. I think we are all surprised and a little disappointed at the outcome.
The question is “if we had investors, would be have (i) released it earlier when we weren’t happy with the quality, or (ii) released it at the same time and taken the punishment from the Board”? Either way would have been painful.
Interesting – I hadn’t set out to discuss investors in this blog entry. In fact, I hadn’t set out with a plan at all. I just wrote. The investment or no investment debate must be playing on my mind :~).
So where does that leave us? Well obviously v4.0 is delayed or is reduced in scope – or both. In addition, it’s looking like we are going to have to have a v3.6 release for commercial reasons. One significant prospective client wants some specific enhancements and that will require a release in the October timeframe. However, I don’t want all the development effort averted to the v3.6 release and want to keep part of the development team focused on v4.0. No question, it’s going to be balancing act.
From a marketing perspective, we have been to three conferences since early April. The ACRP conference in Boston in late April was extremely disappointing. A good conference with lots of people – just no-one interested in what we had to offer - a simple case of the wrong conference. Never mind – it’s another one on the ‘we won’t do that conference again’ list.
We then attended The Better Software conference in early June in Las Vegas. This was our first pro-active foray into the non Life Sciences market. We have received considerable interest in PleaseReview from the software development community and, at one client’s behest, have added support for source code review into v3.5. So this was our chance to get out and be pro-active. It went well and we have already booked out place for next year!
The other conference we attended in June was the main DIA conference in Boston - an excellent conference. A great mix of clients, prospects and new leads and we were almost constantly busy. Another one we have already re-booked.
It was at this conference that it came home to us how, over the last year, the client base and especially the number of users has expanded considerably. For the 1st time we had users turning up at our booth and telling us how wonderful PleaseReview is and how it has transformed the way they work. It’s great news, not only because the best marketing is still ‘word of mouth’ but also because it validates our approach and what we are doing. It also makes us smile.
From a longer term perspective we have begun raising our ‘heads over the parapet’ and started talking with and presenting to the analysts. I suspect this will bring some interesting times and we have already had one or two venture capital companies wanting to chat. At this stage we are politely declining the opportunity to open a dialogue.
Finally, I can’t believe that I’ve written a couple of blog entries without mentioning our new office (opened in January) in the historic market town of Malmesbury. There is something quite reassuring about being at the forefront of information technology development in the shadow of an abbey which is about 900 years old. I think it gives a sense of perspective and provides a constant reminder that some things operate on a completely different time line. Which, I guess, takes us back to the fact that every deal has its own time line.
posted by David Cornwell, PleaseTech Ltd at 4:56 PM
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