Wake Up and Smell the Crisis | Hacker News Reader

Wake Up and Smell the Crisis

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55 pointsjmalter15 comments

Nick Mehta (LiveOps, Accel) tells the true story of how LiveOps nearly went under and what he didn't realize.

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.

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.

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 :)

very insightful article about how to deal with crisis.

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

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).

Thanks for being so open about this. I've worked from the IT side with a lot of different accounting folks, and I can't imagine any of them sitting in on meetings in which changes of this sort were discussed without pitching a fit. I've tried and failed to get much smaller changes approved. (E.g., a change to G/L journaling configuration in our customer billing application that would have made absolutely no change to output but would have made supporting new products MUCH easier.) I would have thought that a business large enough to have a controller (and an ex-controller!) would have someone defending the billing process. I guess you became that person...

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

> We used to pre-bill a customer

I am firmly convinced that cash-up-front is the best way to bill your customers.

If your customers need credit because they don't have cash on hand to buy your product, that's their bankers' or investors' job.

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

i was thinking the same thing. its really just sound advice on how to 1- admit to yourself there is a crisis, and 2- focus to solve it. definitely taking notes and using these strategies in everyday life!!

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.

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

Why do you say that?

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.

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