The Price of Everything

It was a tough demo. But after the stress of the demo is gone, there’s time to debrief and polish up any aspects that went awry.  Demo in haste, repent in leisure.  And this is how software gets good.

I worked with Ivan and Sergey and realized that our numbers were right. The bank had been locking in 12 month CDs at 4%, but treasury rates have recently plummeted close to 3%. This brings loans from the wholesale market down to about 3.5% - and all of the 4% CDs were earning negative interest.

It takes 12 months for all of these CDs to be replaced at a lower rate. Also, the shape of the yield curve indicates it will be a while before rates come up again.

But even with the calculations working out, I still got pretty sweaty during the demo. It might not be all that different for a user looking at the same information.

We made a few subtle changes that should block surprises from this particular gremlin:

1. Added a note to the user when the wholesale market changes drastically. Drastic changes only happen every few years - and the user may not easily remember the effect on profits and optimal rates.
2. Displayed negative profits (instead of just cutting off the graph at zero). This leaves a constant reminder of deposit profits during the last low rate environment in 2004.

Note that both changes are so subtle you can barely notice them. But the problem disappears and the fix doesn’t create more issues. The last thing we want is software bearing the weight of a thousand error messages and menu choices.

While these changes are pretty minor, it starts adding up after a while. We’ve completed nearly 5,000 cases like this. And the gremlins are getting spread pretty far apart.

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In real life, you never get a do-over.   But software inhabits a cartoon world  where stressing the system and watching for mistakes makes the product better and better.  Do it enough times and you get something really smooth.

I often demo with a version that has not gone through the testing checks applied to software for customers.  This lets me exercise the latest features and also works quality control a little harder.

I demoed SmartRate to a prospect the other day over the net.  We ran into a few glitches with GoToMeeting.  And then the software (seemed to) hit a major bug. CD profits in the demo displayed as negative.

In case you’ve never demoed software as part of a sales call, the experience can be intense. I’d liken it to asking a girl out while drag racing. Adrenalin is coursing through your body and it’s only compounded by your reluctance to visibly break a sweat.

I knew I couldn’t think clearly, but negative profits seemed obviously wrong. Unless Crazy Eddie is running the bank, they probably aren’t losing money by paying out too much on interest.

I latched on to demo rule number one (move past the bugs). Unfortunately, this was right in the heart of the demo, so there was a large portion of the software which I never showed.

Turns out there’s a good reason for negative profits. Wholesale rates have been diving with the subprime mess. This means that CDs which were locked in months ago at pretty high rates are no longer making money (because the bank could get money at lower rates from the wholesale market). Today’s negative profits are a different kettle of fish (to be explained in a different post).

Even though SmartRate worked properly, there was still a problem. If I was flustered during the demo by negative profits, imagine the user hitting this issue during a presentation to the CFO. Good software should not make you sweat. Even if it’s complex.

When gremlins attack, part II

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