By Andrew Neitlich

How Three Web Developers Lost a Six-Figure Project

By Andrew Neitlich

I’m involved in a funded technology venture as one of the lead partners. Our most recent milestone was to identify a web development firm to help us design, architect, and build our application. We interviewed a bunch of web development firms, showing them our specifications, and going through an intensive set of questions/dialogue. The firms we chose to interview during this process had good track records and came highly recommended.

Guess what? No one made the final cut! Here’s why:

– None of them offered a “full solution.” In all cases, none provided all of the expertise we needed to get the job done, including QA, usability, and the full range of applications we needed. Nor did any of them take the trouble to include those functions in their estimate as sub-contractors. So we had a difficult time understanding what they would, and wouldn’t provide, and estimating the complete cost of a final product.

– None instilled the trust we needed to be confident that they would be around for revisions and improvements later on, and that if we had to switch vendors, the code would be well documented.

– None took the point of view of a strategic partner, able to brainstorm with us about strategic issues. All of them approached the project with what felt like a mercenary, task (vs. results) orientation.

– Almost none of the firms had a flexible, iterative, agile approach, the kind of approach required in a new (albeit well-funded) venture.

– The attitude of many of these firms was a bit pompous, as if they were doing us a favor by proposing for the job.

– Many of the firms were unprofessional in how they handled meetings — late, missing team members, etc.

So none of them got the work. Instead, we will manage the project ourselves, hiring individual sub-contractors to do the work. It will take us more time and effort, but save us hassle and money down the road.

Essentially, because these firms acted like vendors instead of strategic advisors that we could trust, we opted to cut them out alltogether and hire a team of independent contractors that we manage on our own.

There a lesson here somewhere for some of you….

(NOTE: PLEASE do not email me asking to bid on the project. This blog is for illustrative purposes only and not a solicitation for bids from readers who are sure they can do it better.)

  • George Schlossnagle

    Sounds like you solicited bids from the wrong folks. There are certainly good companies out there that don’t suffer from the range of problems your solicitors do. If your complaint had been that you found a couple decent solicitations but their price was off the mark, I might have found this complaint a bit more credible (good work tends to cost good money, and many folks (not necessarily you) fail to appreciate that).

    My question back to you is: what do you think it was about your solicitation process that failed to generate any good bids?

  • I feel there are 2 perspective or let’s call 2 way of development company thinking.
    1. Company who want to do the job on lowest possible price. Usually this company doesn’t care about quality, code commenting, usability, revisions etc. They want to get the job, finish it and show to customer that the job is done and software is working. Of course price will show quality… (unfortunately price will be important for 90% of customers).

    2. Companies who care about all you described, but they are fighting with companies from point 1. Unfortunately if they will bid double the price for example, even if they are trustful, even if they code well, even all requirements are OK, customer will choose company from point 1. Of course this is in 90% of case, not 100%.
    The problem is that companies from point 2 after 10-20 bids on freelancers site will try to lower the bid, go lower, go lower and finally will lose probably quality.
    This is happening in most cases.
    I can say that we are a case study for this … We bided a price for a project recently, then we talked with customer and we find that our timeline is double (2 months instead 1) and price is almost double. Customer of course choose company 1 but I convinced to keep me as consultant. After 3 month the job is not done, they still code messy, they still are on half of the project etc. Now client want to switch to us, but we cannot continue from company 1 work and he spent time and money.

    So my final statement, only companies are responsible for this situation or customers as well, to get a cheap job. How can I know from a bid on an Elance site if that customer want or not quality when I bid?

    Thank you for your time.
    Valics Lehel

  • Valics:

    You said: “Now client want to switch to us, but we cannot continue from company 1 work and he spent time and money.”

    My question is this: If they want to switch to your company, why can’t you “continue from company 1 work.” Assuming that the client is someone you really want to work with, it may be worth your effort to continue on from the existing code-base and simply refactor where necessary and as time allows.

    Developers who are willing and able to take on existing projects with messy code and can preserve what the client’s initial investment are a valuable find.

  • Thank you for the post.

    I especially associated with the statement, “these firms acted like vendors instead of strategic advisors”.

    When I first meet with a prospect I always try to offer a new way of looking at the problem and suggest other possible solutions before I even submit the proposal. The proposal is where all the details of the project should be known and shown. It’s crazy to hear that these other firms, bidding on a six figure job, would be so lax.

    When you say, “We interviewed a bunch of web development firms”, did you submit an RFP? Do you think this would have helped the development companies have a clearer picture of your needs?

  • aneitlich

    Reply to first comment, suggesting a problem with our companyy’s solicitation process:

    The solicitation process we used was fine, and the web developers that made it to the final cut are all good firms. The bullet point issues raised are an amalgam of what we experienced from the various firms, such that each bullet does not apply to each firm.

    Put another way, any of the firms could have done the work at a price that fell within our six-figure budget. However, none of them instilled us with the confidence and sense of leadership/trust that we needed to see to invest in a relationship with them. The bullets listed in the blog are some of the reasons why. Without that intangible ingredient, we figured we would rather do the work of subcontracting talent on our own.

    For me the key takeaway for web developers is: How can you do what you need to do to establish trust and credibility with your prospects, so that they view you as a potential partner and strategic relationship in the work — not just another vendor?

    And to the other points about price: We’re more than willing to pay for good work. Having said that, we know that there is not a straight line relationship between price and quality. Some web developers are excellent but suffer from “pricing low self-esteem.” Those are the people any smart enterpreneur wants to find and keep happy. (Although if you fall into that category, you probably want to find a way to raise your “self-esteem” so that you price in line with comparable firms).

  • This is interesting, because it shows the perspective of the buyer instead of the seller which is very unusual for this blog.

    I spend much more time buying then selling, since I am essentially a clearinghouse for technology services, and sub-contract jobs for a group of clients on an ongoing basis. So, while I am working to improve my new-business skills, I spend most of the time identifying vendors and placing jobs. For me, taking all of the management in-house is not an option, since we outsource so much work.

    It seems that if you are convinced that none of the vendors were up to your standards, perhaps your buying process is in question.

    To me, your report of your buying experience makes you sound like a fairly difficult client, in some ways.

    A six-figure client is great, but what’s better is a client who doesn’t expect a single vendor to be everything they have ever wanted, and doesn’t think they know better then every single vendor who bid on the job is even better.

    If you have the skills to manage the project, why woudn’t you do that in the first place? To me, a client who thinks they could do it better themselves is probably not going to be fun. Also, it’s inconsistent with your stated desire to find a firm who would act as a strategic advisor, since you clearly think that don’t require those skills in the first place.

    That said, it’s always possible you were just dealing with a bad batch of candidates. Sample error.

    Just my 2c.
    Good luck!

  • It is unfortunate that you didn’t contact a firm with the necessary skills, insight, and long-term thinking to meet your project requirements. I am curious what your criteria was for picking a pool of firms to compete for the project? Was it by word-of-mouth or did you use an industry report such as Forester or Jupiter?

  • aneitlich

    Andrew Neitlich here again, in response to dhecker’s post above.

    First, great reply! You are right that we are difficult clients, and probably aren’t much fun until people deliver (although we are respectful, professional, and collegial). After all, we are investing our own money, along with angels’ money, and building an enterprise that we want to be worth millions. So I believe that we have every right to be difficult; this is business and our reputation is on the line.

    That said, please understand that we are not looking for someone who can do it all, and we certainly did not come to the table with the attitude that we could do it better than the vendors we selected to interview. We were well aware of their talents, and were open and honest about what we thought they could bring to the table that we couldn’t.

    It was the intangibles that were missing: professionalism in the quality of the proposal and approach to dialogue; thought leadership in being able to switch perspectives between technology, business requirements, and strategy; and the overall ability to inspire our confidence and desire to have a long term relationship with any of the vendors we interviewed (not to mention confidence that the vendors would be around long term to support us).

    The sample of web developers we chose was fine, and representative. I’ve interviewed and hired (and fired) dozens of IT professionals over the past decade. My expectations are very high. And at the same time I notice that something is often missing from the too many IT professionals: ability to think about a complete business solution (vs. technical solution); a certain leadership ability; and in many cases (sad but true) basic professionalism.

    Maybe I’m being too tough. Maybe some of you want to believe what one consultant calls “beautiful lies” about your industry and own company rather than the “ugly truth.” The research on customer satisfaction in most IT professions supports my experience.

    Sorry to be confrontational and maybe even defensive…Hopefully someone is reading this and taking it as constructive (if tough) advice that can improve the level of service out there in the industry, rather than anything else.

    Traveling through Monday; have a good weekend!

  • Hmmmm…
    I take this blog more as a Lessons Learned for all of us. Yeah sure, I believe anyone of us could have probably done a better job, but who knows? We could’ve missed a bullet point or two that in the client’s perspective is a must have for you to get the job. After all, clients are clients. Let’s take this positively. It’s not often that we take client feedback that is not directed in our face.

  • George Schlossnagle

    Firstly, your article was interesting and I hope that it prompts people to look into their own organization and proposal process, identify internal issues like the ones you highlight and try to improve on them. As a small business owner, I’ve kept ‘being a technology partner’ as a core business value. And it works – we have a strong and loyal customer base.

    That having been said, if your went into your solicitation process hoping to find a company to service you and you failed to find anyone that met your requirements, then one of two things had to have happened:

    1) no adequate candidates exist anywhere
    2) they exist, but your process failed to attract them

    Occam’s Razor suggests that 2 is more likely; so why did your process fail to attract the sort of candidates you wanted? I realize wasn’t the focus of the article, but I think it’s an equally important question.

  • Let me first just say that your response was certainly not taken as anything but constructive, and this kind of dialog is very interesting to me. It’s rare to have a transparent view into the world of the buyer and the seller.

    I would be very interested to learn more about the process by which you solitcited the proposals/meetings you had, just out of interest. Were there certain firms that you targeted that did not respond to the degree that you had anticipated? How many RFP’s did you send out?

    Also, keep in mind that every client’s business and reputation is on the line, every time. Every client’s project is equally important to them. So, when I hear a client express such a notion it suggests that the client might be difficult to deal with as a result of their perspective with regards to the importance and uniqueness of their project. This is not to say that some projects are more critical than others, but everyone’s dollars are worth the same amount at the bank.

    Reading back, I guess the two themes worth exploring are your interesting in finding a vendor who will (1) be able to take a strategy/business perspective and use that perspective to better service your project, and (2) find a vendor who will be around for the forseeable future.

    The first criteria is fairly easy to quantify, and I’m guessing that in a single interview you are able to determine if the vendor understands tech only, or tech + the realities of the business world as it pertains to clients. What were your findings for the second criteria, though? Were you seeking a firm with a minimum age, team size? I know that boutique web firms (my target market) abound, and so many of them don’t even have a full business structure around them, etc. But, there are so many that do that I’m curious why you would have trouble finding a company with a legit structure, paper trail, a D&B number, stable management, and at least have been born in the 90s!

  • joe

    You said they acted as if they were doing you a favor. Actually they were but they should not have done so. You both lost because they did.

    Using an RFQ to identify and qualify and select a source is lazy and unproductive. What you attracted were people who were foolish enough to quote on someone else’s specifications and at their own expense.

    The far more productive method, all around, would have started with distributing a well constructed questionnaire to a limited list of potential suppliers, with questions that reflected the experience and depth appropriate to the project, then winnowing the promising responses down to those you wish to interview, followed by those interviews and culminating in identifying the three (or so) most qualified candidates.

    At that point, ask each for a formal proposal and pay them a reasonable compensation for their time and energy in preparing it. If you have done due diligence at each of the previous steps, each candidate will likely submit very similar proposals as regards technical specifications, performance metrics, etc. – and the prices should not be all that far off either.

    From those submitted proposals, you probably will be able to choose one or, to clarify any of issues that may have popped up in the proposals, re-interview each candidate.

    But writing specs for a quotation from which you will identify a creative and consistent resource is bass-akwards. Sensible responsible developers won’t waste their time.

    Here’s a real live example.

    At this very moment there is a 6-figure web development project sitting on a potential client’s table. I have known her for years. We are neighbors and friends. When I went into the Army as a kid, my Dad sold our then empty house to her family. She, being at least 20 years younger than me, grew up in what had been my bedroom. In January of 1994 she attended the first “What is the Internet” seminar I ever presented.

    When she got a grant for a substantial project, it came with a prepackaged web development project that was written by a university a few hundred miles away. A lawyer also had a hand in it (need I say more on that?). Everything was in it. I mean it had more details than a Victorian living room – most of them just as superfluous. And bids were to be accompanied by a non-refundable $100 fee.

    She emailed it to 143 web developers across the USA, me included. A few weeks after the bid was due I ran into her at a neighborhood gathering. She was surprised I had not tendered a bid. I explained to her why I do not bid on other people’s specs into which I have not had any input – and then she confessed that she has gotten a total of four (4) responses, none of them really complete.

    Sound familiar?

    I suggested she scrap the current bids, return the four bidding fees and start all over using the process I outlined above. I think she’s getting ready to do that. If I’m invited to participate in that kind of a process, I probably will. Otherwise, I have better things to do with my consulting time.

  • antonio romero

    This in response to “joe”… She expected companies bidding on the project to pay HER?!? I’m stunned that she even got four responses. That’s crazy talk… or am I completely out of step with reality?

  • With out some more details on the scope of the project it would be hard to comment fully on the matter but here goes.

    I am doing development for a 2 year old multi-million dollar company, and have learned a lot. One thing to keep in mind when bidding on “startup” projects. Since its a startup they have nothing setup.

    They may give you a proposal to develop there website, but what they are really asking most times is simple “We have a plan, we want to get it up and running”.

    This means a lot of things.. Very few proposals last to completion in these cases. Needs change, new ideas form, solutions to problems require adapting the proposal to fit the true needs.

    Where are they going to host? Do they have any idea how large the project is? Whats the expected server power required to run the website?

    You can go to any garage to get your car fixed, or get a super charger installed, but it takes more then the average mechanic to design a car from the ground up.

  • aneitlich

    Andrew Neitlich back again after a great trip to Chicago (one of the world’s best cities), for one last reply in this particular thread.

    In this reply I want to do two things: First, give you a metric to consider so you can decide whether the issues raised in this blog apply to you or not; and second, give some facts about the actual process we used, for those who asked and still wonder.

    To the first issue:

    It is up to you whether to pursue a project or not, depending on your business criteria. Many of you would have chosen not to work with my company, and that’s fine. In fact, a few vendors out of the many we talked to first did decline to work with us. One in particular didn’t want to work with a start-up, to cyberlot’s point.

    BUT — if you do decide to pursue a project, and have done what you need to do to qualify the opportunity as real and something you would like to do, then you want to maximize your odds of winning it. The best of the best win 75-90% of the projects they choose to pursue with potential new clients. If your numbers are below that range, then perhaps you should ask yourself what you can be doing better. I provided my personal reasons for rejecting some web developers in this blog, and each potential client has their own criteria.

    To the second issue, here is how we handled our process of identifying and screening potential vendors:

    1. We are well-connected in the industry (my business partner more than me), and came up with a list of 10 or so vendors we had worked with and wanted to approach about this job.

    2. We had preliminary discussions with all of them to assess mutual fit, and asked them what they wanted to do for next steps. All of the developers who wanted to move forward (some didn’t, because they were too busy or because our project was not in their “sweet spot”) requested our detailed specifications.

    3. We had a series of discussions to “level the playing field” and give everyone time to ask questions and understand our requirements. Again, a couple of potential vendors chose not to move forward (or we chose not to move forward with them).

    4. Eventually it came down to three, and their approaches were all valid but different. One wanted us to pay for a scoping study. One provided a detailed quote. One provided a ball park estimate and wanted to know if they were in range in terms of approach.

    We never issued an RFP.

  • I guess number 1 says it all.

  • Pat

    I know that when clients are looking for “cheap” labor, the scenario above happens. Try Earnst & Young, Dougherty Systems, etc., you will get a well outlined bid. If you are expecting to get contractors for under 100 per hour, you get what you pay for. We charge 3 digits per hour. We turned down a web project today because of the workload. We only hire the best. I have one lady I put on a job (she has her CPA and MBA along with programming experience) and I don’t need to talk to her for 3 months or so. The job – DONE! No baby sitting, no changing diapers, no excuses. JUST RESULTS!!! I try to read 2 hours everyday – text books, magazines, etc. A lot of people are lazy. My brother is at a company that only keeps people for no more than 2 weeks if they can’t get the job done. Yet he got 3 raises his first year (2 @ 12%). After working with the company for 12 years, they gave him a 25% increase in salary plus a 60,000 dollar bonus.

    POINT: clients need to beware of lazy contractors and contractors need to beware of cheap, indiotic clients!

  • sdsondhi

    would you still be open to considering a web-development company?
    I work for a company that has a very decent approach to web-designing and development of web-based applications which can get the job done …

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