

Wake Up and Smell the Crisis - jmalter
http://founderdating.com/foundertalk-crisis/
Nick Mehta (LiveOps, Accel) tells the true story of how LiveOps nearly went under and what he didn't realize.
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sswaner
Great post. As a LiveOffice customer during the time Nick described (and
currently), we had no idea they were that kind of crisis. Had we known, it
could have prompted us to move our business elsewhere. The archiving that
LiveOffice provides is very important in meeting regulatory requirements. I
think a key requirement for a company in this situation is to not lose
credibility with your customers. For example, if Nick had called us and said
"You always wait to the last minute to pay, can you pay us today? We are
running out of cash." it would have immediately prompted us to re-evaluate our
contract.

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smirksirlot
Great post. Love the point about switching personas to deal with crisis
situations. How do you know when to switch though? Sounds like it'll be
exhausting to sustain a switch over a long period of time.

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nrmehta
That's a good question and thanks for reading it (I was the author). I don't
have a magic formula but I have concluded that when I decide to switch, the
switch needs to be binary not gradual. I do agree you can't sustain it for
long periods of time - I have another blog post in my head on that one related
to other crises :)

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zabbyz
very insightful article about how to deal with crisis.

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jjacobson
I'd be interested in knowing what the tweaks to the billing process were. It's
a great and terrifying story.

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nrmehta
Thanks (I'm the author). At a high level, the tweak was a big change but I
didn't realize it. We used to pre-bill a customer for the next period (e.g.,
quarter) based upon the previous period's usage. So if you go from 10 users to
20, then in the next period, we'd pre-bill for 20. This obviously is great in
that it captures maximize cash flow upfront but it's tricky in that you need
to use usage that you're getting right now to calculate future bills. In
addition, the variety of our billing plans and legacy customers made this more
complicated. Truth be told, I don't think I even fully understood the
complexity (my finance and engineering team could give the full story).

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lifeisstillgood
A company in the UK I used to work for underwent a similar transition - we had
an in-house system that billed upfront. Then brought in a outside product -
only half way through integration was it discovered to bill only in arrears.

Instead of running an overdraft for a year we tried to rewrite significant
parts of the billing system, tying up valuable expert talent, drawing focus
away from growing the business.

had you seen the problem before the switch would you have run the overdraft
solution? Or ?

Also - I would (now) treat even external systems as part of my eco-system and
so nned full testing. Your views

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ealeyner
Super interesting, and quite applicable to any crisis in a company.

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mcfazeli
I do think there are some specific considerations for cash flow related
crises. They can completely shutdown operations and it's not always straight
forward when you need to procure bridge loans to keep the lights on. All in
all, it's a great example of switching gears to handle a crisis.

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larrik
As soon as I saw "Zuora" I knew this would be a disaster...

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nrmehta
For what it's worth, the mistakes that happened were completely on our end
(actually I take full responsibility as they were under my watch). Zuora was
nothing but amazing in supporting us to get us back to health. Luckily, thanks
to Zuora and my team, we were able to get things going great. And the team
(even post-acquisition) still uses Zuora to this day.

