Software giant fires last developer capable of servicing $25M contract in short-sighted cost-cutting measure, he successfully negotiates $1M/yr consulting fees:'Never fire the last legacy knowledge guy...'

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Brad Dickson • Managing Editor
Oct 1, 2024 12:00 PM EDT

It's been increasingly common for companies, driven by the pursuit of continuous exponential profit, to cut costs in areas that seem expensive on paper but are really essential to basic operations that would be far more expensive were they to go sideways. Spurned on by the promise of larger bonuses, executives and their fellow bean counters will cut and cut until they finally make one incision near-comical disaster. 

Of course, although it seems that this behavior has been prevalent in recent memory, as in this story that this worker shared from earlier days of their career…

This employee worked in the contracts department of a major software company, which they refer to as "MidSoft Inc." Continual foolish decisions that thought of nothing but the bottom line and cost-cutting measures, driven by the ravenous interests of private equity investors,  reduced the company's senior development team from 12 to one soldier, "Sam." While the ledger might have looked better for a time, the immeasurable loss of institutional knowledge and literal lifetimes of experience would go unaccounted for.

That was until Sam was also sent packing right before the company acquired a major new contract. However, when they started looking around, wondering who was able to handle the integration necessary for the deal, soon the realization dawned that Sam had been the last remaining developer with the necessary expertise for this particular and essential task. What unfolded was quite predictable: they needed Sam back, and Sam was going to make them pay… Teaching them a lesson in hubris—in the most corporate sense.

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    "Never fire the last legacy knowledge guy..." Cash Flow Tatal income Ex Total Cash
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    Image does not depict the actual subjects of the story. Image is for illustration only and subjects are models.

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    Never fire the last legacy knowledge guy Early in my career I worked in the legal/contracts department for a software company that produced "middle man" SaaS solution (MidSoftInc). Think software that is licensed by LARGE companies and also licensed by small companies/independent owner- operator businesses. Said
    via smares21
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    software allows the small businesses to interface their more modern business software with the back-end Pascal/Fortran/COBOL interfaces that are still used by multiple LARGE companies. Not very many companies compete with MidSoftInc because, well, Pascal, Fortran, COBOL - you get the idea. To be fair to MidSoftInc,
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    their product was pretty good and made life pretty easy for both the small companies and the large companies; for the "low low cost" of $$$$$$$$$$$$$$$$$$$. The main way that MidSoftInc drove growth was by going to a large company and getting them set up on the software interface. Then, that company would recognize the cost savings and simplicity of only having 1 vendor handle all communications with their partner/customer
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    businesses and they would mandate usage of MidSoftInc interface to the smaller companies. MidSoftInc works hard on 1 big sale (anywhere from $5-15M/yr ACV) and then gets an additional 2,000-4,000 customers on the small business connector at $1,000/month. The biggest challenge after the big sale is doing the initial integration with the large customer. Why? Well, because they're primarily using Pascal, Fortran, COBOL....
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    Ok, so lets get into the ProRevenge part of our story. MidSoftInc was owned by private equity, and like private equity does, they wanted to maximize profits. So, illegal or not, they went through and found the most highly paid developers in the company and began to force them out. In this case, highly paid = years of service with the = company legacy knowledge. In
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    a matter of months, they let go around a dozen extra super senior developers (both in atomic age and tenure). IIRC, the guy with the LEAST tenure at the company was >35yrs. Beyond this group, there was a chasm down to the next group of 10- 15yr tenure guys. For every one of these layoffs, those that knew objected fiercely, as the tribal knowledge that was being lost
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    was irreplaceable and the monetary savings to the company was negligible (12 developers who were making around $200k/each at the time + overhead costs = ~$3.5M/yr at a nearly $1B/yr business). Enter Giant Dog Sam (GDS) - his reference will make sense shortly.
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    GDS was the last man on the island. He was finishing up a project and was told that his time was wrapping up. Despite the objections of Sr. Engineering Leadership, Sr. Sales Leadership, and Sr. Legal Leadership (my boss), the decision was made. GDS was in his early 60's and was able to comfortably retire but was not ready to do so. He was understandably upset at the news that he would be let go at
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    the end of his project, but as the consummate professional, he completed his work before being given a going away party appropriate for someone who was well-liked by everyone at the company for decades.
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    It had been around 3 weeks since GDS had been let go and MidSoftInc closed the largest deal in company history. It was a 3+ year sales cycle but this deal was for $25M/yr with a 5 year term + a software mandate to almost 10,000 connected small businesses. The integration team got the assignment to get started and had only a few months to build the integration and get it
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    "shipped" before EOY so that the revenue could get booked (read: so the execs could get their fat bonus for hitting/exceeding numbers). Cool cool. Who was going to head the integration into the customer's 40+ year old mainframe environment? If you answered "One of the 12 guys that they fired over the previous 6 months - but most specifically Giant Dog Sam," you'd be right, because there was NOBODY left at the company who knew how to build the integration.
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    Queue war room meetings with HR/Legal/Sr Leadership and frantic phone calls to GDS with escalating offers to re-hire him. The last offer that passed through my desk was at $350k/yr + back pay for the time since he was laid off + resumption of his tenure and benefits + remote work whenever he wanted (this was wayyyyy before that was commonplace). GDS quickly rejected every offer until the company just decided to turn and grovel and ask him EXACTLY what it would take to get him back.
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    Well, ladies and gentlemen of ProRevenge, as the person who was ultimately responsible in the legal department to interface with HR and implement GDS' new contract in the system, I can tell you PRECISELY what it took to get GDS back at MidSoftInc. After a brief negotiation with GDS' son (who happened to be an attorney and reminded the company that this deal that they
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    had announced publicly was in real jeopardy without an integration leader), he came back as a 1099 consultant. His hourly rate was $1000/hr. He was guaranteed a minimum of 80hrs/month. The initial term lasted for 36 months. The contract had automatic renewals for 12 more months after the initial term. The company had to give him 9 months notice to cancel the automatic renewal.
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    The contract stated that he was responsible for development and documentation of client engagements - he would NOT provide training of his replacement(s). In the end, his nearly $1m/yr consulting fees didn't make a dent in the company's bottom line and allowed them to continue selling massive deals so that execs could buy their 3rd homes in Big Sky, Wyoming, but GIANT dog Sam most certainly got his pro level revenge for being fired.
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    (I hadn't thought about this story for a while, so I looked up Sam on Facebook. He seems to be still alive and appears to be in decent health for his age, so good on him).
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    ejrhonda79 . 7h ago. Good for GDS. Well played. I've seen this happen with increasing frequency over the last few years. PE firm buys the company then systematically all the value out of the company until things hit a tipping point. Then long fired employes with the tribal knowledge are brought back on their own terms. PE firm ends
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    up eating into their profits to pay for the mistake of letting knowledgeable people go. The worst part is it will keep happening because PE firms will never learn. Worse this lesson will never be taught in MBA schools.
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    Marrsvolta • 7h ago I hope his new pay came out of someone's bonus
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    aloic • 7h ago . Beware those old legacy software guys. They have seen enough to know exactly how to get them where it hurts. Glorious!
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    pm1966 .7h ago • I worked with one of those legacy guys on a project once. We had built a new system, and it interacted with a company's backend financial system, which was some COBOL mainframe monstrosity. Legacy guy was an absolute moron. I wouldn't hire him on my team to code HTML. But...
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    He knew COBOL. Well. And he knew the legacy system well enough to be basically indespensible. So this idiot was probably earning 3x what anyone on my team was making, easy. Nice enough guy. Hope he rode -train into retirement. that
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    • Ok_Afternoon_110 6h ago • We had a situation like this where management had to beg back an employee that was laid off. His monetary demands were steep, and then his final request: he wanted his former supervisor and the VP of HR terminated. There was a flurry. His supervisor burst out of the meeting screaming she was going home to get her gun and
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    paint the office walls with his brains. She was turned over to the local authorities and charged. The Veep was damned if he was going anywhere and began spilling corporate secrets. He murdered two colleague's careers. End of the day the project was completed. There were a bunch of improper dismissal suits that were successfully defended.
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    TomTheNurse ⚫ . 5h ago. My dad got his computer science degree in the early 60's. When Y2K started to become an issue he became a hot commodity. Not a lot of people were versed in the ancient computer program like COBAL and Fortran. He got a contractor job where he was essentially leased out to giant organizations, Boeing, the IRS and the Social Security administration updating their software. For the last couple of years he sometimes made $1,500+/hr.
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    He was close to retirement age at that point. Because of Y2K he went from a modest, settle down and do crosswords retirement to a travel the world with first class travel retirement. I was so happy for him.
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    PN_Guin .7h ago • If you are looking for people. that cost the company without adding much value, it's far better to look in the executive level, than among those making the product you are selling. Especially if they provide unique skills and knowledge.
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    Rog... . • 6h ago Edited 5h ago • So cool he negotiated an amazing contract for himself. All too often with these guys (particularly the well liked ones) they roll over when the company makes a couple of flattering comments about how important they are. I'd almost bet this was part of management's strategy, figuring they could just make a couple of nice comments, maybe throw in a few thousand more, and all would be forgiven.
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    There's also a certain level of schadenfreude to doing it to private equity, which only understands money.
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    breakable_bacon • 6h ago I've had this exact same scenario happen at one of my jobs. I was a mid level software dev at the time, the layoff cut deep into the senior staff yet I got to keep my job, because I was cheaper. One of the principle devs was laid off and he was THE principle dev.
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    A few weeks later he came back. When I asked him about it, he had a smirk and only said "they made me an offer I couldn't refuse". I hope he got a deal as sweet as GDS. This is very common in corporate America. But this GDS-style glorious comeback isn't as common, but does. happen from time to time.
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    NHRADeuce 7h ago • • It was a 3+ year sales cycle but this deal was for $25M/yr with a 5 year term + a software mandate to almost 10,000 connected small businesses. And this is when they knew they'd fod up. This is also when I figured out why you called him GDS.
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    prove it 6h ago I wish he had stipulated that he would only return if the company fired the group of people that made the bone- headed decision to fire their legacy engineers in the first place.
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    theinfernumflame 5h ago • • Great to see GDS getting what he was owed, but I don't like the fact that the executives were probably still patting. themselves on the back for saving money overall by overpaying one guy instead of paying for 12.
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