Wednesday, March 5, 2008

Fix the Front Door and Ignore the Back

A friend of mine is thinking of selling his house and asked if I have some advice. You bet I do! It's a great opportunity to learn from my mistakes. And, while I'm at it, the lessons apply to software development too.

When we moved from California to Washington in 1998, we made a few huge mistakes in selling our house. We made enough mistakes that I could write a whole series of posts about it. But, I'm going to concentrate on one particularly expensive mistake here.

Our Realtor told us that we absolutely had to do a number of things to fix up the house to sell it. We believed her. We spent many thousands of dollars doing the work that she told us was essential. There was also a less obvious cost -- the opportunity cost. We were ready to sell and there were people who were interested in seeing the house. We delayed putting the house on the market for six weeks while we did the work. In six weeks, a market can change, and it did. Our house was no longer the only house on the market in our neighborhood. And other people (with less desirable houses) were priced lower. Some of those houses sold before we were even on the market!

So, what should we have done? I've developed a very simple rule of thumb:

  • If the front doorknob falls off, fix it.
  • If the back doorknob falls off, leave it.
  • Whatever you do, do it as quickly and cheaply as you can.
First impressions matter. When someone arrives to see your house, their first impression is your front door. If the doorknob falls off in their hands, they may turn around and walk away. But, by the time they get to the back door, they've already decided if they like the house. If they even notice the back doorknob, it becomes a point of negotiation. Suppose it would have cost you $100 to replace the doorknob. The most they can negotiate out of you is that $100. Everything else is upside for you.

Of course, it's important to not conceal any problems, but the only problems that you should do anything about are the ones that will make a difference in the decision to buy. This includes items that aren't fixes at all -- like removing clutter. I don't regret repainting our front door and the eaves above it, or fixing the handle of a sliding glass door to our atrium, or moving lots of clutter to boxes in the garage. I do regret having the fireplace cleaned, refinishing the bathtub, and lots of other things.

But what about software?

In the software world, we face the same issue every day. Right now, we're in ship mode and we have to decide what to fix and what to skip. Of course, we want to fix everything. But, there is an opportunity cost to delaying. Just like the housing market, things can change quickly and new competitors can crop up overnight. Those competitors may not be as good, but getting to market first makes a difference. So, every single day, we discuss priorities.

The top priorities are those things that make first impressions -- things that will make potential customers turn around and go elsewhere. A lot of our fixes right now go in the "fit & finish" category, so that does make our decisions easier. Below that, everything's a negotiation. Will it affect us being able to keep a customer? Will it affect customer satisfaction, which affects growth by word of mouth? And, what will it cost in comparison with other things we want to do? If we don't fix it today, how soon can we fix it?