Before AGILE there was, well, agile

November 2019 marked the publication of a memoir by Ameritrade CEO and Founder, Joe Ricketts, The Harder You Work, The Luckier You Get. I led the internet initiative at Ameritrade to the internet and spent many hours being interviewed for this book. Chapter 10 (page 245) highlights some of that story. Following is some more detail.

Like many software development teams in the 90s, we were struggling to keep up, as the internet – rather than floppy disks – became the data delivery method of choice and previously successful development models began to break down. This new paradigm was powerful because we could just update all our clients’ software at the flip of a switch. But it was also fraught with danger as it became very inexpensive and easy to launch new code without appropriate quality control. 

The Egyptians were not Agile

 In the olden days, almost all projects were delivered following a waterfall project management process. Even the pyramids likely started with some sort of primitive blueprint which included every thought and idea that the hoping-to-be-immortalized king might have in his head. As challenges to designing crept-up during construction, they were dealt with via design compromises. As a result, end projects were almost always something less than they were initially intended – even if nonetheless cool.

As people got better at building skyscrapers, ships, and bridges, they got better at estimating the time a project would take. Estimates were created based on the average of past projects scaled up or down to match the one at hand. We can imagine the thinking of an engineer in 1890:

That last bridge took 2 years and was a mile long. This new one is 20% longer so it should take about 29 months.

As our society of builders approached the middle of the 20th century, waterfall project management was very nearly perfected for capital projects. Engineers were aware of the details, pitfalls, and requirements of their projects. They were good enough that we were able to put a man on the moon!

Old practices didn’t fit new products

But around the time of Apollo 11, a new generation was coming of age who would challenge the time-tested results of waterfall concerning software development. Capital projects had been physical-resource-based. Metal, factory space, rivets, steel, and labor had gone into building the monuments of the previous two millennia. The new monuments were to be made of information, communication protocol, mental horsepower, and electricity. They deserved a new method of project management that matched their intangible materials.

Taking cues from Japanese manufacturing, their own experiences, and the changing relationship between programmers and users, computer engineers began to advocate for smaller production cycles that were more flexible. They sought to replace the heavy process of waterfall with something lighter. They promised to increase their accountability and transparency in return for a seat at the planning table and the opportunity to honestly manage executive expectations. Enter Agile.

There is a romantic notion within the software development community that in 2001, a group of 17 computer scientists got together in Utah and invented Agile software development. But that is really not what happened. In truth, engineers all over the world had been wrestling with the problems of building software in executive-driven environments and by the 1990s were coming up with similar solutions. The birth of the internet, and the explosion of users demands, really kicked the discussion into high gear.

Ameritrade

I was in Omaha Nebraska in the 1990s. Omaha might not have much of a silicon reputation, but due to its central proximity and favorable demographics, it was an early hub for military, communications, and technology providers. My company was Ameritrade even though it was called TransTerra at the time. Our technology team was part of the greater Omaha tech community. We knew each other, met regularly to discuss issues and share a beer and traveled to the same conferences. You can always spot a traveler from Nebraska because invariably they will be wearing red or have the state name emblazoned across their chest. It helps when they get lost.

 As TransTerra changed its name to Ameritrade and its number of clients grew from thousands to millions, we were under unprecedented pressure to revamp the way we built software. At the time Amazon first bragged about $1 million days, we were already seeing $100 million days. Our development cycles were built around exploding demand, for which our capacity increasing releases were regularly inadequate. And every day we were learning how better to present our interfaces. Clearly, long, waterfall development cycles were not going to work anymore.

In the spring of 1998, following the crush of a few 80-hour/week development cycles, we put a stop to the treadmill and took a step backward. For nearly three weeks, the development team and I locked the doors, sat together, and wrote what was to be Ameritrade’s new software development process. We called it the Cooperative Software Design Process.

I wish I still had a copy of that original document, but it is long gone. What I do have is a PowerPoint simplification, dated a year later (1999), that was presented to executives and new management as part of an initiative I worked on with my buddy, Ronny Gal from Boston Consulting Group (BCG). It is interesting to review and note how many similarities there are to what we now all know as Agile.

I have attached one particularly interesting slide from that deck. Much of it will feel familiar.

  • Cooperative acknowledges that the stakeholders were part of the process.
  • Concurrent iterations allowed us to deliver features more quickly.
  • The overlapping snail-shell arrow that has come to define Agile diagrams
  • That spinning idea generator up front was our version of ongoing backlog tasks
  • The little note in the bottom of the call-out box “smaller is better”

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We missed a lot of important Agile components too. We didn’t think of time boxing, completed software instead of status reports, or daily stand-ups, but those things probably weren’t appropriate to Ameritrade at the time. We were creating a process that allowed our business units – and subsequently the end-users – to understand that they were in control of what we were doing. In retrospect, it was quite appropriate.

The emergence of the internet changed a lot of things in the mid-90s. Companies that didn’t embrace it went away and those that did were forced to re-evaluate the way they did business. Few companies were as shaken and shaped as much as Ameritrade. Every element of the company was put into flux – but nowhere greater than what became the internet development team. We were pioneers out of necessity and lucky that the pre-Agile discussion was one of which we could be a part. These concepts helped our team progress to maturity and paved the road for Ameritrade’s growth and eventual position as one of the largest brokerages in the country.

Additional posts in this series:

Perspective.

The S&P has been rocked over the last week with value off nearly 20% as of this morning. But how far has this put the market back? The answer may surprise you.

August 26th last year.

That’s it. We have only given up the gains of the last six months. How much better or worse off were you at the end of August? I’m guessing that your answer is “pretty much the same.” Keep that in mind.

The Corona Virus is very dangerous, but not because dozens of people will die from it. Thousands of people die from the regular old flu each year. The danger is that fear of the Corona Virus will make people stay home from work, provide an excuse to skip that conference they kind of didn’t want to go to anyway, postpone starting a new deal, etc. All these seemingly one-off, innocuous, changes in behavior will add up until people start losing their jobs, their retirement savings, and their homes.

So if you want to protect yourself and your community from the real dangers of the Corona Virus, do your job, pursue opportunities, walk to Starbucks – do everything exactly like you were doing last August.

#coronavirus #markets #perspective #fear #flu 

The harder you work, the luckier you get!

Click for more info

Today marks the drop of Joe Ricketts’ memoir, The Harder You Work, The Luckier You Get, a book to which I contributed and within which I am portrayed.

Joe Ricketts is the founder of Ameritrade, and he was my boss. I was initially hired to run marketing but was quickly moved to the more historically interesting job of leading the company to the Internet (with a capital I, because back then it was spelled that way). During the creation of this book, I was interviewed several times and it’s hard to remember everything I said, but I do think the following story will be new.

In the fall of 1995, we launched the world’s first internet trading site under the brand, Aufhauser. Aufhauser was a scrappy New York based brokerage which we had recently purchased – I think largely to provide us some NY street cred which as Omaha “bumpkins”, we were in desperate need. Aufhauser had been uniquely using the internet as a platform for messaging between clients and brokers.

Understand that at this time, no one had ever traded stocks on the internet. In fact, No one had ever paid a bill on the internet, transferred money on the internet, or even viewed a statement on the internet. We were the absolute first financial services company to have a functioning website! We may have been the first to have any website, but I am not certain of that.

From a technical perspective, it wasn’t that difficult. We already had a call-and-response system (an API) created for our touch-tone phone application so we could get the information to the client’s web page. The real challenge was navigating the unexpected objections of just about everyone!

One of my favorite brouhahas from the period involved the exchanges (The New York Stock Exchange and NASDAQ), the regulators, and our compliance team. They all hated me, and I like to think Arthur Levitt, Chairman of the SEC at the time, may have even known my name (but he probably did not). The issue, which has been thoroughly eliminated since, was real-time verses delayed stock quotes.

Randolph and Mortimer Duke. Old-timey Brokers.

You see, the exchanges did not want regular-guy investors to have access to real-time stock quotes. Old-timey stockbrokers (think: Randolph and Mortimer Duke, left) were big clients of the exchanges and access to real-time quotes was one of the reasons people had brokers. Every time that phone rang, the broker had a chance to push another transaction and trade commissions were hundreds or even thousands of dollars per trade. As a result, financial service companies who wanted to share stock prices electronically did so by delaying the quotes by 20 minutes.

But the regulators – the people from the executive branch of the government who enforce laws – required that every trade be preceded by the presentation of a real-time quote. Even if an investor wanted to buy a stock and hold it for 20 years, he had to see the actual price at the time of purchase.

Previous electronic systems such as Ameritrade’s touch-tone trading and clunky Accutrade for Windows had located a compromise wherein real-time prices would be delivered at trade-time and delayed prices would be used everywhere else. This was the model we were following when we launched. Business was slow at first, but within a few months people started to take notice, and I got a call from compliance.

Um, yeah…

I don’t remember who worked in compliance or who called me, but over the years I have inserted Bill Lumbergh into my recounting of the story. “Um, yeah”, drawing out that second word as long as possible, “we are going to need you to stop using real-time quotes on the internet.”

Compliance was the organization in our company – any company – that ensures that laws are being followed down to the letter but also that contracts are being adhered to. They watched our every move and scrutinized every application we built. The internet was untested territory and, although I am speculating, our recent success had been noted by brokers who were pressuring the exchanges to keep professional tools out of the hands of retail investors. The exchanges were very clear that this violation put our service with them in jeopardy. In no uncertain terms: to continue would risk our access to real-time quotes altogether and threatened our ability to stay in business.

Adhering to their request required choosing between two untenable options. We could provide delayed quotes at trade time – and be in violation of the law, or we could stop allowing trades over the internet all together. I thought hard about this before going to Joe Ricketts with my thoughts. Joe and I had a great relationship at the time. I had shown him I was capable, I had made a positive impact, and he gave me more than enough rope to hang myself and the whole company.

I returned to my team with the news. “Fuck it, we are moving forward as is.” I expect that, at the same time, Joe was on the phone warning compliance to buckle up because the next week was a bull ride worthy of a rodeo. Compliance was fighting with exchanges, exchanges were fighting with regulators, and regulators were trying to figure out how they had gotten stuck in the middle of this. I took calls from all sides, received an earful, and was called an upstart (maybe more than once). But at my core I knew that efficiency always prevails over the objections of those profiting from that efficiency. Our business depended on exactly one outcome, and I was confident it would come.

And it did. The law won out, and the exchanges agreed to allow real-time quotes in certain situations and in return for a hefty sum every time one was presented.

I remember a year following this event, Amazon announced that for the first time, they had surpassed $1 million dollars in a single day. No one called us for that story, but we had been doing 100 times that for months. According to a recent story on NBC, TD Ameritrade now processes nearly 1 million trades (and an estimated total value of $1 billion) per day.

This story started off as a classical example of the exchanges’ channel conflict – one company profiting from two clients who had competing business models. In retrospect, the resolution was the moment when the new disrupted the old, the tipping point was reached, and the paradigm shifted. When that happened, every obstacle to internet trading had been eliminated, the industry was allowed to rush forward, and it did. I am proud to have been there.

Truman’s Cleans windows and Reduces Environmental Guilt (but not much else yet)

Also: The Simpsons!

I really love this concept but question its potential without some toothy legislation to support it. Truman’s sends cleaning supplies via Fedex or UPS in a cardboard box which you refill with concentrates that they also send you – via similar albeit smaller chipping containers. I heard the product described as “only slightly more expensive than the better cleaning products you get in the store.” I will add that they are also significantly less convenient.

If the question is feeling good about our personal footprint, these green (ish) but inconvenient products may allow us, affluent societally-conscious city-dwellers, to do something and send the right message to our children, but most Americans cannot afford to pay many times more than dollar-store prices, and jump through a bunch of hoops, to attain one-percenter benefits.

On the other hand, if the question is reducing the amount of waste society creates, the right answer is to support reusability with meaningful garbage collection fees calculated by usage – in other words, charge people for what they throw away. This would require an entirely new model for waste management. Garbage cans or trucks might need scales and geometric volume scanners for calculating each house’s waste. If you throw away a lot of stuff, you are going to pay a lot of money. If you reuse and repurpose everything (don’t get me started on recycling), you could pay close to nothing. Sounds like a fun home-ec game to play with the family, and it offers real cash prizes!

Of course there are the political obstacles. The exact same politicians who would hop all over the green elements of this concept would oppose its regressive taxation appearance. Regressive taxation is one that hurts poor people and is insignificant to rich people. But that too is manageable if collection rates vary by neighborhoods with lower rates in poor neighborhoods and exorbitant rates in rich neighborhoods (similar to property taxes). The program only works if everyone feels it when they don’t comply, so it would need to feel relatively expensive to everyone across the spectrum.

I am a firm believer that government should stay out of the way of self-interest. But where government is effective and needed is in preventing people from pursuing self-interest that harms others (that’s why we have police and courts for example). I think garbage creation – as necessary as it is – can fit this category. And who knew there were so many great Simpson’s GIFs about garbage!