This transcription belongs to Episode #37: Mark Herschberg’s fiery client-horror-story introduced here for us by Our Beloved Host, Morgan Friedman. Please watch the complete episode here!
Morgan Friedman (Host): Hey, everyone! Welcome to the latest episode of Client Horror Stories, and today, we have a very good story and some very good names that we’re not allowed to use, fully anonymized, and I’m excited to have my friend of many friends of mine, Mark Herschberg, with me. Welcome!
Mark Herschberg (Interviewee): Thanks for having me on the show. It’s a pleasure to be here.
Morgan Friedman (Host): Yeah, it is fun. And if I’m distracted while we talk, it’s because of your incandescent light bulb behind you. I’m still angry at George Bush for having made the incandescent light bulb illegal.
But let’s jump right into today’s horror story. I’m excited to hear what’s going to happen.
Mark Herschberg (Interviewee): Sure. Now, I am primarily a CTO, a Chief Technology Officer. Sometimes, I will do it full time at a startup company, sometimes I’ll work as a fractional CTO, or sometimes I’ll go in for a short period of time as almost a consultant, and that’s either to help get something started or to turn around a problem.
So I’ve been to lots of companies. Greenfield is fun. Brownfield tends to pay a lot more. That’s where people really feel the desperation because Greenfield is like, “Oh, we can do it.” We haven’t screwed it up yet, but Brownfield, yeah, that’s where, “boy, we are in trouble.” And this client was in trouble.
Now, I’m gonna call them Evil Corp because we have to keep the name anonymous, and I am a fan of Mr. Robot, and anyone who’s seen Mr. Robot knows he replaced the name of the company with Evil Corp, and this particular company certainly, while they were once known as a wonderful premier US company, as we look back through history, definitely, the bloom is off the rose, and we’ve seen a whole bunch of horrible things they’ve done. There’s a recent book about them, in fact.
So I was brought into a particular business unit of Evil Corp, and what we were trying to do, or what they were trying to do originally, is create a new type of video service. The idea is that this is around 2006 or 2007, so relatively early. YouTube was big, and this was a company that had a lot of content, premier content. You watch their content regularly.
And they said, “Well, here’s the problem. Our content winds up on YouTube, and Google makes all the money, and we don’t. We wanna do something about that.” So they had this very interesting idea of creating a video marketplace, taking content from themselves and the other players in the space, think big movie studios and television stations saying, “Look, we’re gonna take all the content, all the clips, and we’re going to give them out to people under controlled access.”
So here’s an example. I’m a Star Trek fan. If I was writing a Star Trek blog, I might say, “You know what? I want a clip of the new movie. That would be really cool to show. But Paramount’s not gonna return my phone call.” So instead, I can go to this marketplace and say, “Oh, I want the clip.” And, of course, I’ve clicked the terms and conditions, and there are constraints, and I get the clip, and I get the little 60-second clip I put on my blog, and when it goes on my page, it comes with a pre-roll ad.
And that ad revenue, I get a piece, Paramount will get a piece, and the marketplace will get a piece. It’s good business model.
Morgan Friedman (Host): Clearly a pre-Netflix business model.
Mark Herschberg (Interviewee): It was a pre-Netflix. This is pre-Netflix online. Certainly, you could get the DVDs in the mail, and yeah, it was a good idea. I still think there’s probably some value to this idea.
Now, Evil Corp, being a big company, decided to put a press release and talk about this wonderful project long before they actually built it. So they put out the press release, said, “Okay, we’re going to release on this day.”
Morgan Friedman (Host): Were you involved in the project at this point? Was it before…
Mark Herschberg (Interviewee): I’m not yet. This is all before me.
Morgan Friedman (Host): Okay.
Mark Herschberg (Interviewee): Now, Evil Corp, unfortunately, wasn’t very good at doing a project like this. They went, and they quickly said, “Well, we need to find a vendor. It’s not really our expertise,” and that’s reasonable. But the vendor they found, honestly, I still to this day don’t know what that vendor does. I’ve literally asked them, “What is your business model? What do you do?” And they said, “Oh, you know, it’s funny you ask. We’re actually in the process of kind of figuring that out ourselves,” and this is a company that had been around for at least 10 years and was worth billions of dollars.
So, they got this first vendor, and the first vendor said to ’em, “Oh, of course, we can do that. By the way, we wanna bring in some of these other vendors we like to work with.” And it was the other vendors who really had the technology that Evil Corp needed. So now you have three vendors instead of just one.
So what’s interesting about this? I don’t even know what happens after this, but I’m already seeing one red flag, which is when there’s like the end buyer and like you, and then there’s like all these levels of middlemen.
It turns out… you remember the children’s game of telephone?
Morgan Friedman (Host): Yep.
So, part of the purpose of this podcast and this series is to teach younger versions of ourselves. And I think there’s already a good before anything happens in your story, already a good lesson, which is company hires a company who hires a company who hires a company. Like, it’s hard for anyone to emerge from that situation looking good.
Mark Herschberg (Interviewee): Yes. Well, and the other red flag, of course, is announcing the release date before you have picked your technology and thought about what’s the timeline.
Morgan Friedman (Host): So actually, let’s dive into that because just two days ago, a friend of mine made that same point to me, but in the opposite. It was like part of Tesla’s amazingness is that Elon Musk said we’re going to do these things, like build batteries that do this, this, this, this, and that inspired everyone to like, “Wow, they said that they have to do that,” and he created Tesla. So that’s like the argument for announcing it ahead. What do you think?
Mark Herschberg (Interviewee): As is often with business, it depends. So then, it goes back to Sun Tzu, who said, ‘When I would invade a foreign country, I will burn my ships.” So my army knows you’ve got two choices. Win or be killed cuz you ain’t going home. And that strategy can work, and I use that sometimes. That’s a negotiation tactic sometimes, but it can also backfire. If your army is not gonna win and you burn your ships, you’re not gonna have a great time. Yeah. And in fact…
Morgan Friedman (Host): I had never heard that quote before, but it’s going into my quote book.
Mark Herschberg (Interviewee): There was a great book in the early eighties by Edward Jordan called Death March, and he talked about software projects from the 1970s and early eighties where it would be that death march. It would be that “Hey, we’re delivering in two years because we promised, we committed, and we’re going to do it.”
And I remember there’s a passage in the book where he overhears two managers talking, and they’re talking about, “Well, you know, I had my employees working 60-hour weeks. And sure, by the end, half of them quit, and I had a divorce. And so the other one said, “Oh, well, you know, I had two divorces on my team, and we did that,” and they’re bragging about how burned out their teams got, how hard they had to march to get there, and how much they were just killing their teams. And sure, when Elon Musk says, “Okay, we’re doing this, and here’s the date.” well, who do you think puts in all the work? Who do you think is doing those late nights?
And that might have been okay for something when Kennedy said, “By the end of this decade, we will be on the moon.” And we said, “Okay, national pride,” and we’re doing this, and there are scientific advancements, and no one’s working at NASA for stock options.
But when it comes to Tesla, you’re making him rich. Yeah, you have stock options, but for most people, when you do the math, when you calculate how much extra money you might make versus the extra time you get, the damage you do to your personal life, your family, it is not worth it.
Morgan Friedman (Host): I love the analysis, and I, well, I’m gonna add that book. In fact these sorts of projects gone wrong sounds like a great book to get very consistent with the whole theme of this podcast.
Mark Herschberg (Interviewee): Well, two other things I’ll just mention on that note.
Morgan Friedman (Host): Oh, please, please.
One is 20 years of… In Search of Stupidity: Over Twenty Years of High Tech Marketing Disasters. And it goes from VHS versus Betamax through the Pentium chip and how tech companies kept making bad strategic marketing decisions and picking the wrong technology or marking it the wrong way, or handling a problem in the wrong way. It’s a really fun read. One of my other favorite shows is Engineering Disasters, which I think is on the History Channel, and they’ll look at things we’ve screwed up in the past and why did that happen.
And what we typically find, and this lesson comes from a great book called Peopleware by Tom DeMarco and Timothy Lister, what we find is often with engineering problems, particularly in our companies, it’s not that we couldn’t do the math. We have that capability, often for the software I did.
You don’t need a Ph.D. to do this. A 14-year-old can follow the flow of, “Okay, put the items in the cart, go to check out, make sure it gets delivered, make sure you charge. It’s that we have some miscommunications, we have confusion, we have edge case issues. And it goes back to that game of telephone. It goes back to the, “Wait. I thought you meant this, not that,” and that’s what causes the problem. It’s not that we can’t do the math.
Morgan Friedman (Host): Yeah. Love it. Love it. I personally have three definitions of success, and one of my definitions is not failing. To me, perhaps I’m not that smart. It feels like a subtle point because if you eliminate the really, really likely reasons why you’ll probably fail, you’re kind of left with nothing but success, which is why I love these sorts of disaster stories. You’ve filled up my next week of reading.
So that we’re not here all night long, let’s get back on track with the story.
Mark Herschberg (Interviewee): So, back to Evil Corp. They picked this one company, and they said, “Well, we’re gonna pick a few other companies to help us out.”
Now, here’s the best way I can explain it. The other companies were not optimized for this. It would be as if I said, “Hey, I have to move my apartment from New York to San Francisco, and I have this many cubic feet of stuff to move. And they say, “Oh, we can provide transportation for that many cubic feet. We have a fleet of hatchback, compact cars.”
And yes, okay, you do have the capacity, but really, you should have gotten a single tractor-trailer and not a bunch of small cars or vice versa. And so for what we needed for the architecture, we needed the big tractor-trailer, and they were optimized for a bunch of small cars.
Morgan Friedman (Host): By the way, I feel the euphemisms as you say that.
Mark Herschberg (Interviewee): So we got to the time of launch, and the company launched because they had put out the press release, and they were a big enough company that people pay attention. I got brought in about six weeks after launch, and things were a disaster. So remember that the idea was…
Morgan Friedman (Host): So they made the announcement, they hired these companies, they built it, and they actually launched it on the date? Or…
Mark Herschberg (Interviewee): Here’s the thing, remember that the usage was, “Okay, I’m a blogger. Hey, I wanna go find the latest Star Trek video to put on my blog.”
Morgan Friedman (Host): Yes.
Mark Herschberg (Interviewee): Here’s how I do that. I’d call ’em up and say, “Hey, so I’m looking for Star Trek videos. Can you describe to me over the phone what kind of videos you have? Oh yeah. That sounds nice. Okay. You’ll send me an email link? Yeah, that sounds good. I’ll look for that link,” because people could not actually log into the system. So this is how it was running. It was all done by phone.
Morgan Friedman (Host): Literally by phone?
Mark Herschberg (Interviewee): Literally by phone. The administrative staff, the people who should have been looking at, “Oh, how many videos have we played today, and how are we doing?” They’re sitting there answering the phone and trying to do it all manually by hand and then manually go, “Okay, yeah, well, let me copy this. I’ll put it in the email. I’ll send you an email.”
Morgan Friedman (Host): By the way, I can totally imagine in my mind how that actually happened where, like, they started out with some super complex speck, and nothing happened cause Evil Corp is clearly a big bureaucracy, and then as the day gets closer and closer, they need to do something. “Okay, let’s just make it a phone number and…”
Mark Herschberg (Interviewee): Here’s an example of how big that bureaucracy is. At the startup I was at prior, I had just learned about Wiki. So I thought, “Oh, Wikis are good. This is a great way we can share information internally. Okay, let’s get Wiki set up.” So I went to all my junior developers. We figured out we’re gonna use, at the time, MediaWiki. I said, “Great, go set up a server. Get it configured.” An hour later, we had a Wiki to use. Now Evil Corp, when I said, you know, we’ve got coordination problems. To your point, it is a game of telephone.
In fact, before I showed up, I heard they had just a standing telephone call, 24 hours open call. I think they had to restart every 24 hours between all three of the companies and the internal team at Evil Corp, and that was just an open phone call in the conference room where there was someone always listening. So they go, “Hey, new problem. What do we do?” And they’ll pull in whoever’s needed.
Morgan Friedman (Host): Wow. I’ve never heard of a standing open 24-hour phone call before. That’s incredible. That’s another level.
Mark Herschberg (Interviewee): That was insane. So I said, “Okay. Hey Wiki, this will be great.” They said, “No problem. Here at Evil Corp, we have this great IT department that will do things like that for us.”
Okay, hey, that’s great. I’m not used to having that. So I opened a ticket with IT, and three days later, I thought, “Let me check on the status of the ticket,” and it was still in progress. I said, “When do you think we’ll get this?” “No, it’s gonna take about two months.” “What do you mean two months?” They said, “Well, we have to go out and look at different types of Wiki software, and we have to evaluate which one to use, and we pick it. Then once we select that, we then have to go get a server for it. So we have to figure out what type of server we need,” and this is in the days before the Cloud. “We have to then go and put out a bid to the vendors to see who gets what’s the server, and then we buy the server, it gets delivered, it gets configured, so it’ll be about two months.”
No, this is not acceptable. I canceled the ticket. I took a credit card. I think I opened an account on GoDaddy and just spun up a server and put up a Wiki. Now technically, I was violating certain rules of Evil Corp because now we had corporate data that was outside the firewall. In fact, there was no sensitive data. And this is just an example of why I don’t like bureaucracy and will rail against it when I just see stupid things.
So we got the Wiki going…
Morgan Friedman (Host): By the way, it’s incredible to me how everyone rails against bureaucracy. Even the bureaucrats, like some of the most bureaucratic people I’ve ever worked with, would like, give these speeches about how their bureaucracy is slowing them down while I listened to them thinking, “Wait, you’re the exact one that’s doing all this BS.”
So it’s funny, like said differently, Evil Corp doesn’t think it’s evil because no one sees themselves as the embodiment of all evil. So there’s some subtle subconscious processes happening in order to make it happen. But that might be a bit out of this scope for today’s episode.
Mark Herschberg (Interviewee): Well, here’s the thing, because I, compared to most technologists, probably am a bigger fan of meetings, of emails, than other people. Most people with my background, they say, “Leave me alone. Let me just write code. I don’t wanna deal with the rest.” I like those things because I understand how important communication is to the success of a product or project.
Here’s how to think about it. The essence of management is making sure the right people have the right conversations at the right time. That’s it.
Morgan Friedman (Host): It’s a good rule of thumb. I like that.
Mark Herschberg (Interviewee): That’s all there is to it. When I go into an organization, I think about what’s the communication flow that might be. We need a weekly team huddle. In technology, we have that daily huddle. We have the scrum where for 15 minutes, we just get together, but it’s very limited what we say. We don’t have open-ended discussions. That meeting is used for a certain purpose. We know we have emails that get triggered, “Hey, send an email to the team when this is done.” Or we send someone an email when they forget to put the cover on a TPS report.
We have rules about what we do when I, and as long as you…
Morgan Friedman (Host): Reference…
Mark Herschberg (Interviewee): As long as you think about what information needs to be communicated under what circumstances, whether it’s a regular cadence or this is an exceptional circumstance or an ad hoc circumstance if you get that right, things work efficiently.
It’s when you start to have extra communications, be it meetings or emails or anything else, that’s where you get bogged down. So, I think meetings are fine. Communication’s fine when it’s done intentionally.
Morgan Friedman (Host): By the way, also going into my quote book, your definition – the essence of management is making sure the right people have the right conversations at the right time. I’m definitely going to use that line.
Mark Herschberg (Interviewee): And when you feel we have too many meetings around here, step back and say, “Who needs to know what, when, and then does this meeting fulfill that? Should we do it by email?” The classic, this meeting could have been email. Maybe that email should have been a meeting, and that’s fine too.
But think about the flow, and if you get that right, things get a lot better. Okay, so…
Morgan Friedman (Host): Makes sense. Now, I love it’s love the tangents, but back to the story.
Mark Herschberg (Interviewee): At Evil Corp, I showed up, we got the Wiki, we had the former 24-hour phone call, and I’m trying to figure out what’s going on, and I’m having calls with the vendors, and internally, I’m just trying to figure things out, and it’s basically, it’s putting out fires. It’s putting out why is the server always crashing. Why is this so slow? Why is this taking forever? What can we do? The minimal amount of effort that gives us the maximum return. We might not be able to get the time. If it’s taking an hour to do something, we’d like it to be two seconds. Can we get down to 30 seconds because okay, that’s good.
And if 30 seconds we can do far cheaply, and the remaining 20 is expensive, I’ll at least take the 30. So that’s what I’m doing. I am fighting fires. And what I see over and over again when I’m brought in on a project like this, not just at Evil Corp, is I always get brought, in this case, it was the guys in charge of the project, and they said, we have all these fires, we have all these problems.
So my job’s, when I show up, I start pulling out the fires. What are the worst fires? What do I start with? And after I’ve put out a few fires, the next thing is you say, “How do you prevent forest fires?” Learned that from Smokey, the Bear. So I started to think about how do we prevent this from flaring up again.
And as I dug in, 9 times out of 10, it’s that the head of the project, the CEO, whoever it is, whoever brought me in, really likes playing with matches. All the time, I see ’em standing there with a can of gasoline because they’re the one saying, “Oh, I don’t care about getting it right. We need it by this deadline,” or “Stop spending so much money,” or “don’t do this. Just hit this one objective, this time, this feature, whatever. We’ll fix it later.” And later never comes. And so I saw decision-making that was causing these problems, which gets to be challenging.
Now, here’s something I had never seen before. We got to the end of our revenue period, and our revenue was supposed to be the ads, the pre-roll ads that come with these videos. Evil Corp’s a big enough corporation that they had no problem getting sponsors.
You look like you had a question.
Morgan Friedman (Host): Yeah. But then I’m gonna rewind about 30. Your story is awesome, and you’re going too fast. My brain’s a bit too slow. And so I think you made this fantastic point in person a moment ago.
So we’re gonna pause and get back to the revenue on how 9 times out of 10, the problem is that the big boss behind the project likes playing with matches. Cuz I think this is worth unwinding because in a common theme, in many of the previous episodes of Client Horror Stories and also just in my work, is communication.
And you’re talking about communication flows? No. We have to alert them to the problems, talk about it, and discuss the risk factors before it happens. But when the person you’re communicating with is a big boss, and the problem is the boss really likes taking grenades and throwing grenades, no amount of communication is going to, like, no. It’s a little bit dangerous to be throwing grenades. So this adds a really interesting spin to the general client horror story approach or general management approach if you want clear, better communication. But how do you deal with it?
Like at least on this abstract level, when the problem is the big boss and the big client just likes playing with matches.
Mark Herschberg (Interviewee): This is where… now I’m not an expert in these, so I’m gonna draw two analogies, and I don’t know how accurate they are. Historically, the King’s court jester, I don’t even know how accurate that is, but supposedly the jester was the one who could deliver the bad news to the king, who could point out things without losing his head.
In the mob, you have the consigliere, the one person who can, in private, save the mob boss. “Hey, this isn’t good. You’re doing something wrong here,” and that’s what every leader needs is someone. Ideally, your team should be able to tell you. In fact, one of the things I look for when I hire people are people who will tell me I’m wrong because I need that, and I’m pretty receptive. I don’t take it personally, but most people think, “Oh, of course, I can take criticism, and they can’t. And so it’s very important that you have that person you can turn to, the person who can tell you anything and give you the truth so you’re not blinded.
Morgan Friedman (Host): By the way, that’s an interesting way of framing it. I think on each of those two examples on the humor example, as someone that thinks I’m funny myself, I think humor is a bit of a magic power because if you’re funny, you can get away with making really, really important points that you can never say seriously. And by the way, I do that all the time in like sensitive situations.
On the consigliere, I think there’s another important point there, which is step back. How come the world has become capitalist? Like we used to have monarchies and, like all communism, all these different systems. Now, capitalism rules the world. I have a theory on that, which is I think the secret power of capitalism is in this notion of the board of directors like the king just cuts off the head of people he disagrees with.
But the board of directors is basically saying, “Every leader needs to have this group of people that he has to listen to.” and what you’re basically arguing for is that, really, the way to solve these sort of client problems is to become this sort of board-like member, consigliere, to a trusted advisor of the CEO so that you can give them this sort of feedback.
Mark Herschberg (Interviewee): I would say that’s right. Now boards sometimes are too far above.
Morgan Friedman (Host): Yeah. Too far. Yeah. Yeah, yeah. Of course.
Mark Herschberg (Interviewee): We need people below. Although we also find boards, sometimes, it’s a little too insular. It’s the people who sit above the board, the free market, who says your product sucks. You’re making bad ideas, bad decisions. So we’re not gonna buy your product. Your stock tanks, they’re the ones you ultimately answer to.
And the board, in theory, should represent them the interest of the shareholders. And that means the interest of your customers who support the shares. But sometimes they don’t do it. But just like Richard Feynman said, “You can’t fool Mother Nature,” you can’t really fool the market. You can short term, but eventually, it catches up to you. The market says the emperor has no clothes, and your stock goes to hell.
Morgan Friedman (Host): Yeah, definitely, but I import it in this like metaphorical sense, like there’s no shit of like the big advisor. So, Evil Corp isn’t asking me to join their board, although I’m happy they’re not because then I have some moral and ethical dilemmas that I would rather not have.
Okay. Okay. So, but I think from the point of view of the listeners, this was actually a super important three minutes we spent because so often, like, just communicate better with a client, but sometimes the client is the problem and either find a way to become an advisor or run the other way.
Mark Herschberg (Interviewee): As I’ve gotten more experienced, there are times I see the flags, and I just say, “This isn’t gonna work for me. It’s not a fit,” because I know it’s not worth that pain. Even if they’ll pay me well, like, you know what? It’s not money that’s motivating me. Sure, I like it. My landlord seems to be really big on getting money, but that’s not why I work.
And if I feel you, yeah, great. I’m just gonna be putting out fires and watching you light more. This is not fun for me. And so I’ve walked away. Now I’m at a point in my career I can do that. I can be choosy about my projects. Not everyone can.
Morgan Friedman (Host): A thousand percent. Okay, so this was me going back. So now, you are about to get into the ad revenue. Let’s go.
Mark Herschberg (Interviewee): The company is going to make revenue from those ads. Now here’s the thing, evil Corp had no shortage of big companies. Brands, you know, say, “Oh yeah, we’d love to do… you’re doing something great. Here’s some money.” And if you haven’t worked in advertising, if you go to a big brand, a Procter & Gamble, a Coke, and you say, “Hey, listen, we’re another big brand, you know, a big advertiser. Can you give us $50,000 to try this out?”
Coke will do that. No problem. Yeah, yeah. Fine. What’s 50? Let’s give it a shot. That’s a 23-year-old spending $50,000 without much supervision at a company like Coke. So, you could easily get tens of thousands of dollars, and our revenue goal was low six figures. Now, here’s the problem. We did not have our bloggers. The people in the end who are using the content, they could barely get access to the content.
So we weren’t getting a lot of content out there. We weren’t getting a lot of ad impressions. We were not gonna hit a revenue target, but Evil Corp has a lot of different business units, and there were other units that were actually doing extremely well, and they were running ads on their web properties, but that wasn’t really what they were about.
So they were just running a lot of house ads, a lot of random things. We said, “Hey, um, If you’re not really using your ads, we’ve got some ads we can run.” And they said, “Yeah, sure, fine, whatever. Run your ads.” So what we would do is our business unit would go to an advertiser and say, “Yeah, you pay us, let’s say, $50,000, and we’ll run a certain number of ads,” and maybe we ran a few on our platform, but then we ran a whole bunch on the other web properties that weren’t ours.
But we said, “Look, hey, we just delivered $50,000 in ad revenue. Yay. Good for us.” Now, my first thinking was, okay, right on paper, yeah, you say that, but it’s really the other people. They did the work. They get maybe it’s passing through us. I will tell you what I have learned later about Evil Corp that they were discovered to have been over-counting revenue and lying about revenue, and playing all sorts of games. That’s what I thought was more philosophically, “Yeah, okay. Hey, we deliver these ads.” They may very well have literally double-counted the revenue. I mean, I thought, okay, the accountants at some point must have said, but you both say you brought in $50,000. That should be a hundred, but I only see 50 in the bank. But apparently the company sometimes would do things to say, “Yep, it’s a hundred.”
Morgan Friedman (Host): Interesting moral point because complexity makes it very easy to hide bad intentions. When it’s a really, really dirty situation and things are so many moving parts, it’s so hard to figure out what’s happening that people are like, oh, whatever. It’s just like, it’s just complex and, but like to be able to say, oh, we can do this and this and this and this and this, it’s such a good cover, and it makes it very easy to get away with.
Mark Herschberg (Interviewee): This is why we need forensic accountants. This is why a lot of good financial scams do things like that. Whether we’re looking at what Enron did where they had all the shell corporations or when you look at, um, I forget the name of the guy. The movie was, I think, called Rogue Trader, about a trader in Singapore for a UK bank, and he would just hide things in certain accounts. Complexity allows you to hide things, and you really have to be on your game.
In fact, that company, I wanna say it was Barings Bank in London. I forget which one. 200-year-old bank. And what happened is this guy. He took some positions and went out on more of a limb than he was allowed to. And when the positions moved away, and he had to get more money to cover his margin, he kept waiting for, “Oh, the market will change, and eventually, this will all go away.”
It’s like being in the stock market and doubling down and doubling down each time you lose and saying, “Well, eventually, I’ll win and make it all back.” But of course, as you keep doubling down, you need a bigger bankroll until you win. And he kept having me go back to the home office and say, “Hey, I need more money. I need more money.” And what they said in the analysis is as he would talk to people, no one wanted to admit they didn’t understand what was happening. And so to me, they’re like, “Oh, okay. Yeah, okay. I guess so.” no one actually understood he was doing something incredibly risky, and no one said, “Wait a second, I don’t get this. Explain it to me because this doesn’t seem right.”
If someone had done that, they would’ve taken losses of at first millions, tens of millions, even hundreds of millions, but in the end, it was billions, and it took down the bank because no one stopped to say, “Excuse me, I don’t understand. Please explain it to me.”
Morgan Friedman (Host): Wow. Now, now I feel a bit better about myself for always saying, “I don’t understand. Explain it to me.”
Mark Herschberg (Interviewee): I always do. I learned this from one of the physics professors at MIT, who I think was a Nobel laureate, and he was known for asking some of the kind of dumbest questions at a talk. He’d be listening to a talk and say, “Oh, but what about this?” And it was kind of an obvious thing that he just would’ve forgotten or didn’t think about, and it’d quickly be explained away. Now, the guy was an MIT professor and, I think, a Nobel laureate, so no one thought he was stupid. And so it was okay to get away with asking stupid questions.
I’ve learned I will ask stupid questions because I’ll forget things, and I’m okay with them. I’m okay if people think that was a dumb question because, more often than not, it helped me understand something important or helped others do it too.
Morgan Friedman (Host): As a parenthetical, I’m like you, but I think I’m a little bit more Machiavellian than you because I think in almost any conversational situation, I have an advantage when the other people think I’m really stupid. So it’s like, when does it actually ever serve your purpose to have the other people that you’re dealing with think you’re really smart?
Cause when they don’t think that, they don’t see what’s coming, and they don’t see what’s happening. So, I like doing that.
Mark Herschberg (Interviewee): At this company, they’re double counting all the finance, and I thought, well, this is just a matter of time. I didn’t realize it was really a question of ethics within the company.
I thought sooner or later, someone’s gonna say, “Wait, the numbers don’t add up,” and the house of cards would collapse. So my advice to some of the senior people, of the two managers, one already left for another company. I think he knew this was a house of cards, and so he left before as a complete disaster and said, “Oh, look what I did at Evil Corp. I launched this cool thing. Okay. Yeah. Good luck to them. I’m off somewhere else.” I can tell you his next project never came to light at this other big company that’s not unlike Evil Corp.
The other one was still there, and he just thought everything was going fine. He didn’t see a problem with what was happening, but to the people right under him, my advice to them came from the classic musical, The Producers.
Now, for those who haven’t seen The Producers, spoiler alert for about a minute. So you might wanna cover your ears or mute it. I’ll raise my hand at the end so you can see on the video when we’re done with the spoiler. In the show The Producers, the hack producer has an accountant come to his office, and the accountant makes a comment about Broadway shows don’t make money.
The best way to make money is actually to have a flop is to get a bunch of people invest in your musical. Have it a flop because if it’s a flop, no one expects to get paid back. So no one checks if you pocketed all the money. And so he convinced this guy, you should create a flop, which is the basis of The Producers.
I won’t say the rest, but that’s the present producer.
Morgan Friedman (Host): That’s not giving away The Producers cuz that’s the first five minutes. It’s the foundational premise is these two guys going around trying to create a flop.
Mark Herschberg (Interviewee): Fair enough. Okay. Come back in if you just had muted. So, I said the same thing is true here. Right now, for Evil Corp, when you’re looking at six figures of revenue, if there’s a discrepancy, that’s not a big deal. It will get resolved somehow, but it’s not noticed by anyone. And so if at this moment you can get out of it, do so.
Now when Evil Corp had created this new project, they wanted to get others involved, other companies, other content producers, as like a cooperative, and the others walked away.
So now they did this, and they got some of the others back to the bargaining table. So my advice was, you need to, to the junior people, get off the bus quickly, and to the senior people, you need to get this deal done because if you get the deal done, then it’s kind of like in The Producer. You can say, “Oh yeah, we have this project. It doesn’t matter if we made money, lost money, six figures one way or another. Now we have this really big deal in this new initiative.” But if you keep going, eventually, it’s going to catch up to you. And I will say they did do that cooperative. Others came in, and I will simply say it changed the business model and is now a company everyone has heard of.
So son of Evil Corp and a few others, it’s something everyone knows, and many people use.
Morgan Friedman (Host): I’m excited to finish this podcast just so I can find out who the mysterious characters are. So what’s interesting is in your producer’s analogy, like, I thought it you were going to say that they would wanna purposely make it a flop. But instead, what it seems like happens is that they said, “Hey, we need to just change it into something else,” because if it changes into something else, then it’s small enough of an amount that it won’t cause any problems. Is that right?
Mark Herschberg (Interviewee): In some sense, the original version would be a flop or kind of shut down to a point where they say, “Well, that was a cost.” Certainly, the couple hundred thousand they made didn’t cover the cost of all those vendors and their people. And okay, we lost money, and whether they lost this much or a little more didn’t matter. So that was the key.
Morgan Friedman (Host): Okay, I see. So, what’s also interesting to me is you came in as a sort of fractional CTO type, but this sort of advice is like, well, out of the technical type of advice that I would’ve expected. And what’s interesting about this is as a consultant or a professional, what I find all the time is, like I’m hired to tell people with their marketing, but like I really become their psychologists or their consigliere.
So there’s this interesting part about how you help save the day and steer the ship in a less dangerous direction, in a way far, for a reason far away from what you were actually hired for.
Mark Herschberg (Interviewee): This, I think, is pretty common. At most of the companies, the key work I do, it’s not technical. The engineers typically know what they should be doing, but for whatever reason, they weren’t given the ability to do it cuz they were told, “Nope, you gotta hit this deadline. I don’t care if you’re just covering it up with duct tape. Sail the ship.” I go, okay, it’s not gonna be very seaworthy. And so I don’t have to go in.
In fact, as a consultant, I often ask people, what are the problems you see? And there’s 80% of my work is done for me. It’s not that I see things you don’t. I have the magical glasses that let me get insight. The things are there. It’s that the CEO likes playing with matches and then keeps saying, “Why do we have all these fires?” And no one’s able to tell ’em. No one’s able to say, “Hey, maybe if we just stop playing with fire for a week and put some things out, it won’t be so hot around here.”
And so often the work I do, nominally, yes, I’m overseeing the engineers and the product, but it really comes down to strategy and operations about are we doing the right thing the right way. And then that gives people a chance to do things.
I’ll use an analogy. When you are injured, your body needs time to heal. But if you are still out there being physical every day, you don’t heal. And if I can come in, say, “Hey, how about we spend two days resting up? How about we do this?” Which as an outsider, it’s almost easier. It’s like, “Oh, well, the outsider who we’re spending lots of money on, he must know what he is doing.” And then they get the rest. And everyone’s been saying, “We needed rest for weeks. Thank you for finally giving it to us.”
Morgan Friedman (Host): What I also like about your observation that 80% of your work is asking, well, like, what problems do you see is it ties into your earlier definition of what is management, where management is asking the right question, having the right people have the right conversations at the right time. And, like, it’s harder to think of a more important conversation than to be having than what are the matches that are being lit to burn down the house.
Mark Herschberg (Interviewee): The mistake is thinking I, as a consultant, or I, as an executive, need to come up with the answers myself. I need to have the answers, but I don’t have to generate them myself. And if someone else does the answer, great. Why am I gonna reinvent the wheel here?
So listen now, if I disagree with what they think is the problem, that’s where my experience and expertise come in, or if I hear about different problems, what is it really? Do we have to dig down? Do we have to prioritize? But other people, they’re not idiots. They’ve been around. They know what’s happening. They know where the buyers are buried. I’m going to use their knowledge to help solve these problems.
Morgan Friedman (Host): Okay, so now you told us that this client, that this project, changed into something else, and the son of Evil Corp is a platform that we know. What happened with your engagement? You advised this to the executive team, this to the lower level of people, and then did you…
Mark Herschberg (Interviewee): I moved on before the son of Evil Corp was born. In fact, they were in discussions. They called me up and said, “Hey, do you want some mid-level management role?” I will tell you that of the parentage of Son of Evil Corp, Evil Corp was given no senior leadership. They said, well, take your IP and the concept, and we’ll take some of your lower and mid-level people.
But no, the other people came in and said, “We’re putting the executives in there.” I don’t know if that was just their own we wanna be in charge or if they saw this was a screw-up. I suspect it was more of the former, and it was just a happy accident. But they offered me some, “Oh, come on full-time for some mill management position,” and I had no desire to do that, so I walked away.
Morgan Friedman (Host): Okay, so coming into a disastrous situation, it seems like it went the best way it possibly could have because, in a big old bureaucracy like Evil Corp, one man can’t come in as a consultant and save it. So like, the best you could hope for is to advise the key people in a healthier direction, and they took your advice and be like, “My advice is done. My role here is done. Off to the brother of Evil Corp.”
Mark Herschberg (Interviewee): Exactly.
Morgan Friedman (Host): Okay. So, this is an exciting story, and I’m excited to go use Evil Corp’s secret website at some point. Stepping back to wrap up, we got a whole bunch of lessons during this conversation.
The broken telephone one in the beginning. I think, perhaps in every episode, I always like to have one new lesson that hasn’t come up before, like the broken telephone, communication breakdowns is a very common theme in Client Horror Stories. But the new lesson here that hasn’t come before that I think is subtle and really important is what happens when the client likes playing with matches.
That has not come up as it’s, in a way, the hardest problem. Cause it’s like you can’t tell someone you are the problem. Like you can’t say those words. So, it’s a very powerful lesson.
Mark Herschberg (Interviewee): And you should do the due diligence phase, during the figuring out, can you help this client? You need to look for that. Or if you do a pilot phase, during the pilot phase, don’t just think about delivering for the client. Think about, “Let me get to know what’s happening in the organization and see what’s causing these problems.” Whether it is the CEO or whether it’s something else, understanding the root cause of the problems that brought you in is very helpful for two reasons.
First, if it’s not a problem you can fix. If you’re told, sit here in the value chain, problems come from here, so all you can do, you’re down here on the assembly line, and so you can just kind of deal with the problems that come to you, but you’ll never fix the root cause. You need to decide. Are you okay with that?
Maybe say, “Hey, that’s fine. As long as they pay me, I’m good with this.” Take the job. But if you don’t like putting out the same fire, say, “Well, this is a stressful part. It’s not worth it.” Recognize you’ll never be able to fix that root cause, but also understand the root cause. When you do so, you can say, “Hey, okay, I’m putting out these fires. By the way, I can do some more work for you over here,” Whether or not you tell them why you wanna do that, but you can potentially deliver more value and expand your engagement.
So it’s important to understand where problems come from and then recognize is that an opportunity is that a cause of pain. How is that going to impact the project and make the decision that’s right for you?
Morgan Friedman (Host): I really like that, and this is a good point to start wrapping up in. And it connects to both. Your book on the career toolkit, which I constantly happen to see behind you and my summer book beloved by clients, not making clients love working with you where there’s a lot of overlap between our books, but where it ties into what you said and the general theme of today’s conversation is often, really good professionals, you just really wanna help your client. You’re dedicated to putting out the fires, like in fact the ideal… the platonic ideal of the professional is the person who… it actually comes from the word profess. You profess a religion, you profess the belief in this ideological system of helping your client, and you’re so butted to helping them, you don’t really realize, wow, how good or bad is this for me personally and my career?
And it’s really powerful to be like, actually, when they’re playing with fires and grenades, and it’s this situation, you need to think about yourself. And I love that last one you made saying, maybe you could, like, if you can’t, if you’re not enjoying putting out the fires, you could tell the client, “Hey, I could contribute more value over here, not over there.” And word it in a way so that you’re helping yourself in the positive way and staying away from the fires that you’re not gonna be able to put out.
Mark Herschberg (Interviewee): And now, this is a challenge for a lot of independent professionals or a lot of small consulting firms when they think about their careers.
So my book, there are 10 chapters on different skills like networking, negotiating, and management. We took one of the tips from management, although I have a lot more in the book. Chapter one is on career planning. And so many people say, “Well, I run an agency” or “I’m an independent consultant.” I don’t need a career plan. I have my job. My title doesn’t change.
Well, that might be true. If you’re in a corporation, you might think, “How do I get bigger titles?” But no one’s saying, “I just want the title.” The title represents something. It certainly represents more money or compensation, but more work, more challenge, or work of a different nature. And that’s often what we seek. And so, as solo practitioners or as an owner of a company, you still have a career. Your title may not change, but the nature of your work, the nature of the problems that you want to solve, what you want to deal with, and your personal growth that is all part of your career plan, and you need to be intentional of that and not just say, “I got the title. I’m done. I’m gonna coast for 30 years.”
Morgan Friedman (Host): Yeah. I love it. And this is a great way to wrap up the episode on. Dude, this has been a fun conversation and a great story.
Mark Herschberg (Interviewee): Thank you.
Morgan Friedman (Host): And thank you for coming and everyone who made it to the end, I hope you enjoyed it as much as we did.
This transcription belongs to Episode #37, please watch the complete episode here!
