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My Realizations about Software Consulting

I consume a lot of audio books.  Most recently, this habit led me to listen to a book by Allen Weiss, called Million Dollar Consulting.  The title yields the book’s premise in deceptively simple fashion: a guide to building a seven-figure-per-year solo consulting practice.  Sound crazy?  Two and a half years ago, when I went into business for myself full time, I would have thought so.  Now, it sounds pretty doable to me, if that’s your thing.

BigPileOfMoney

This isn’t to say that have a million plus dollar per year consulting practice — just that I understand how someone could achieve what he’s talking about in a way that I couldn’t have back then.  Listening to this book gave me cause to reflect on my free agent journey, so I thought I’d write about that today.  (I know there are some who’ve wanted more of these posts anyway)

When I first took the free agent plunge, I had a fairly vivid picture of how it would work.  I was leaving a job running an IT department, and what I sought was a practice where I helped solve targeted technical problems for a portfolio of clients, rather than solving all sorts of organizational problems for a single entity.  I wanted both to diversify and to become more project-focused.

The Neophyte Techie Free Agent

Beyond that, I didn’t really have a firm grasp of the path to growing profit.  At the time, I assumed that technical consultants did what members of app dev groups did, but for much higher pay (due to transience and achieving better results).  That is, I might do a mixture of application development, architectural consulting, training, mentoring, troubleshooting, etc.

I’d start out charging, say, $100 per hour and then let supply and demand drive up my rates as I pleased more and more clients.  This, I reasoned, was the path to bill rates exceeding $250 per hour.  And, why not?  That seems to be how so-called app dev consultancies work, offering blended rates and billing out their principals and super-awesome-folks at $250/hour.

At the time, I remember chatting with John Sonmez of Simple Programmer.  He and I knew each other through the blogging community and through Pluralsight.  He’d made a similar career play a year or two earlier than I had, so I picked his brain about his journey.  He told me something quite memorable, in that it proved prescient, but was inconceivable to me at the time.  “I want to get away from trading hours for dollars.”  Huh.

Realizations

What I now understand, two and a half years later, is that the bridge from 9-5 life to what I do now (and he did then) requires as toll a total overhaul in thinking.  Since I can still remember my thinking then and have a good grasp on how it has changed, I’m hoping I can help you along the bridge, if you’re interested.

Bear in mind that “if you’re interested” acts as more than a polite qualifier here.  For the rest of this post, I’ll cover two realizations that I have had and how I arrived at them.  If my style of professional life interests you, then pay attention.  If my path doesn’t appeal, then perhaps just read with passing curiosity.  I offer insight into my own preferences — not universal truths about how everyone should make choices.

I should also note that I didn’t wake up one morning, sit bolt upright in bed, and realize that enlightenment had struck.  Rather, I came to these realizations gradually, through trial and error, experience, introspection, and some amount of dumb luck.  Insight isn’t always the result of careful deliberation.

Freelance Programming Establishes Low Status

As a neophyte free agent, I thought the free agent hustle involved getting people to pay you a lot to code.  Now I realize that writing code by the hour puts an unyielding governor on your income.  I speak to this anomaly extensively in part 4 of Developer Hegemony, but suffice it to say that the world views programming more as labor than knowledge work.  And people don’t pay the highest rates to laboring grunts.

Over the years, I’ve seen countless proposals and statements of work for software development.  Invariably, the actual software development commands the lowest hourly rate.  Planning the project, creating the “architecture,” plotting organizational strategy, training people, and creating user experiences all apparently command more market value than the mundane business of cranking out code.  Thus project managers, architects, managers/management consultants, trainers, and UX folks all command higher rates for low hour activities that exist at the periphery of the core development effort.

To make matters worse, economics drive perception.  It isn’t just that developer activity being more common and lower wage results in smaller payouts.  It also results in lower regard.  Developers know where to put for loops and little else — if you want intelligent people to help your company make or save money, that’s an upsell.

Having a reputation for writing code thus limits not only a free agent’s effective hourly rate but also his credibility.  Even for highly specialized, highly niche developers, the same dynamic holds at a higher rate.  As a former CIO and IT management/strategy consultant, CIOs, dev managers, and boards don’t bat an eye at engaging me as a peer.  As a freelance software developer, they’d tell some line-level architect to give me a coding test and probably never talk directly to me.

Realization: I Avoid Being Paid to Code

“Sometimes, I think about giving it all up and going back to coding.”  Managers and tech executives say this almost as often as they talk about having trouble finding free time in their Outlook calendars.  I think of it as a half-honest, half-signaling activity in the same way that a 35-year-old with four children and a minivan reminisces about hard drinking nights in college.

For me, though, getting back to full time programming is a legitimate career goal.  The catch?  I won’t do it for a wage or hourly contract.  When I make it back to full time programming, it will be in the pursuit of building my own products or when money is no longer important and I’m in it for the love of the game.

DreamJob

I often hear developers wrestle with the conundrum, “how do we know when quality is good enough to ship, and when we’re just being perfectionists?”  If you’re a wage laborer writing software, that’s a legitimate question of professional ethics.  If you’re building your own empire, the question reduces to a simpler consideration: “can I afford financially to prioritize my pride?”

Setting aside images of future bliss, however, the outlook on wage programming remains clear to me.  Writing code on someone else’s hourly dime is a doubly losing proposition.  It establishes you as a low-status, tactical thinker and it caps your potential earnings.  I don’t believe this will always be true (indeed, Developer Hegemony is about how to change this dynamic), but until it ceases to be true, I will generally avoid hourly coding.

Lack of Measurable Goals Establishes Pseudo-Employment

It took a long time for me to realize (sadly) how important it is to avoid being pigeon-holed into development.  (Ironically, it’s doubly hard to avoid status erosion if you’re good at programming).  It likewise took me a similar amount of time to arrive at realization number two.

When you dive into the world of being a free agent, you have visions of never finding a client.  I remember sending emails to a whole bunch of people in my network saying, “hey, I’m going to be doing freelance stuff now, so let me know if you need anything!”  I heard crickets (and deservedly so, since this was an obtuse thing to do — if you’re interested in better ways to find work, I can write about that separately).  As a result, when I did find work, I tended to seize onto it like a drowning victim to a life preserver.

In these early days, I imagined that ultimate freelance success would be to find, say, four clients for whom I did 10 hours per week of work, and to have those arrangements stand in perpetuity.  In this fashion, I’d have both stability and steady work, indefinitely.  (I failed to recognize that this differed little from being a remote employee but with more paperwork.)

At this point, I would have viewed a two-month engagement toward some goal as a consolation prize.  Sure, I would have work, but at the end of the engagement, I’d be right back at square one, having to start all over.  No, I reasoned, the best thing was to engage in open-ended contracts.

Realization: I Don’t Take Projects without Predefined Success States

Looking back now, I still get it.  Until you’ve secured work a bunch of times, your default state will be to think that work is hard to secure.  Two and a half years later, I’ve found a lot of work.  I have the benefit of hindsight to show me that one can have a measure of security even with limited duration engagements.

In fact, I now avoid open ended engagements.  Why?  Well, because open-ended contracts become indistinguishable from wage labor, and I got out of that game for a reason.

Most trivially, consider the 40-hour-per-week, open-ended contract.  The only thing that separates this ‘consultant’ from a wage laborer is the name of the tax document.  But even with fewer hours or more flexible agreements, the open ended arrangement translates to “come do some work for us indefinitely, finding ways to be awesome and help us out.”  That’s the charter of an employee.

I now refuse engagements that smell like open-ended arrangements.  In order for it to make sense, my clients and I need to come to agreement on a simple mad lib: “We will both know and agree that the engagement has ended successfully when ___________ is true.”

This could apply to me coming to do two weeks of onsite training or some other fixed duration concern.  Likewise, it could be fixed duration, but with a goal, like helping a client hire three new developers and an architect.  But in all cases, we talk up front about how we know it’s done.

I’ve come to the opinion that this outlook is table stakes for calling yourself a consultant.  Consultants come, help clients fix problems, and then go.  They don’t show up and hang around looking for problems to solve until someone boots them out.

The Future of Software Consulting

As I said at the outset, I’m explaining realizations I’ve had about myself and how I prefer to work.  I’m not saying that there’s anything wrong with wage employment, coding for someone else, or open ended engagements.  That doesn’t work for me, but a healthy workforce requires diversity of preference.

Still, I realize that some of what I’m saying here might seem cynical — particularly the bit about programming as a low status endeavor.  And, I suppose that actually is cynical.  But I feel cynical not toward programming or the people who do it, but toward the workforce that treats it this way.

It’s 2016, and yet our corporate structures and practices largely hold over from the days of Frederick Taylor, 100 years ago.  Programmers do work that is regarded as low status not because the work should be regarded as such, but because we have yet to leverage our dominance of the economic climate to correct that view.  But don’t worry, that’s coming.

I earnestly believe that within 10-20 years, software developers will have seized substantial control over our own destinies when it comes to preferred modes of working.   So, stay tuned, and enjoy the ride.  It’s a bummer that things are the way they are, but they won’t be that way much longer.

  • Joseph N. Musser II

    I really enjoyed this one. Can you go into depth on why software developers should expect to have seized that control in 10-20 years? Or did I miss that post?

  • Glad you liked! And, you didn’t miss it. I only articulated the belief here in this post. The book I’m writing is where I will lay out my case for this in a lot more detail, mostly in the last (to be written) part of the book, including how I think it will happen and how we can accelerate it.

    I’ll also speak to it on the blog here sooner or later as well, though probably in more ad-hoc fashion and with less detail.

    One of the main drivers, I think, will be an exodus of developers from non-software companies. In other words, I think the days of software developers working on staff at companies that manufacture printers or provide services or whatever are limited. I think this trend, and rising salaries will contribute to the decline of layers and layers of people ‘above’ the developers and ‘managing’ them. That relationship will transition into client and vendor, instead.

  • Steven

    Very interesting. Everyone’s different. Personally, I shudder when I think of getting involved in large corporate environments, or as a shoe-horn to manage large projects already off the ground. I hate commuting, so that’s a deal-breaker.

    To me it’s about picking projects I can be passionate about. You know, the type that pulls you into it, thinking about it even when you’re not on the clock. Pay is secondary to all of that for me.

    Those are my priorities, but I can understand why another developer could have a different set of priorities.

    The most interesting aspect of your article is perception of status. The more I move forward in development I find myself concerned more with perception than concrete things like “will my .NET knowledge be relevant tomorrow.” Instead I think about how devs in their 40’s and 50’s aren’t expected to code because somehow that’s for younger people and if you have grey in your hair you should be talking more than doing.

    Do I want to create things? Do I want to just keep learning, whatever functional end that produces? Am a more of a natural teacher or a problem solver? How long do I want to keep searching for outside leads and keep track of my hours?

    Anyhow, I look forward to hearing your thoughts on those next 10-20 years. It might just factor in to how I look at answering these questions of my own.

  • Hi Erik, a little bit of off-topic. Do you have any plans to release your “Developer Hegemony” in an audio format?

  • Anon

    > if you’re interested in better ways to find work, I can write about that separately

    Yes, please.

  • Tim McCoy

    Great read! I’d definitely be interested in hearing your suggestions for making the next “leap”. I originally left W-2 work due to a mix of personal reasons that made it difficult to work away from home and being tired of trading more and more labor for a fixed amount. I’ve really enjoyed the independent route, and I’ve worked on some really interesting projects, but I still feel like I’m stuck in that cycle of X pay for X hours, typically in the open-ended format you mention. Much like you’ve described, I’d like to move towards tackling identifiable problems with an identifiable end goal in mind, providing more knowledge work, ultimately working towards being an authority on that process and domain. The issue I run into is that, for the most part, all of the work I’ve engaged in up until now was found on various online freelancing sites, with a few projects via word of mouth or a client reaching out personally. I imagine that networking certainly plays a part, but are there other avenues you used to find people that need help with a problem?

  • John Pazniokas

    Great stuff. Count me in the group that enjoys the career/consulting/free-agency posts.

    (Why did I hear Joey Knish from Rounders, for a second? “I was givin’ you a livin’, Mike… showin’ you the playbook I put together off my own beats…”)

  • Rodney Smith

    Awesome post. I am also part of the “some who’ve wanted more of these posts”.

  • I think prioritizing what you like is critically important. (And, as an aside, I have a limited tolerance for large, corporate environments, which is why I really need those types of engagements to be pretty limited in scope/duration — I do it, re-charge by doing something different, and then return to it). I’m in a similar boat when it comes to money not being at the top of my list. Probably for me what’s become tops is things that support the life of a lot of travel and experience that my wife and I enjoy.

  • It’s not something I’ve looked at. All things being equal, I’d love to (since I consume so many audio-books in particular), but I don’t really know how that would work. My wife is an (my) editor and knows a lot more than me about such things, so as the publication date nears, I’ll probably pick her brain about this. Stay tuned 🙂

  • I’ve added this to my “reader questions” backlog. I’ll try to work in more posts about this topic and similar, consulting ones going forward.

  • I’ve added a card to my blog post topics backlog about this, but there’s a definite line of thinking I can offer quickly in a comment. One of the biggest sources of leads for me tends to be blogging/book-writing/Pluralsight/community/social media presence. Basically, I get a lot of random inquiries from people through my site or other means as to whether I can help them with some problem or another.

    My approach to this has been sort of ad-hoc and it started before I was a fulltime independent. If you wanted to ramp this up in short order, I’d say the biggest thing to do would be to start producing content about a specific topic around which you have expertise and would want to be hired. “I’m the guy that can improve your site’s page load times by 50%.” Then you write posts about it or make an e-book or do a webinar or something. That type of activity generates an awful lot of conversations that can lead to engagement.

  • lol… I love that movie.

  • I’m definitely getting feedback along those lines, so I’ll make a point to talk more about this.

  • Tim McCoy

    Makes sense. I’ve kicked around the idea of “branding” myself and producing content for a few years now, but never really acted on it. Definitely think it’s time I give that a go.

    I picked up “Million Dollar Consulting” on audible, and I’m really enjoying it. Really opening my eyes to the fact that the hourly grind is the hourly grind whether your’re in a cubicle or on the beach in Hawaii.Thanks for sharing!

  • John McAlister

    I agree with your thesis – even though I am a former contractor who became a corporate wage earner. It was a deliberate decision, and I’m glad I did it – works for me, but I can also see how it might not be for others. If I ever decide to back to that way of life, things will be different – partly because of your insights.

    Your observation of open ended contracts leading to a lack of respect also seems to apply to contracts between companies. When a company provides a service to another company, and the contract is just paying “time and materials” for unspecified consulting services (“we just need a couple of your people to help us work with your product”), it becomes easy for the customer to start taking your company for granted (“what do you mean that’s outside scope – we pay you to provide some people to help us!”).

    I’m not talking about setting requirements up front that can’t change. Instead, it’s a well defined set of exit criteria – once we get to this point, we are done. Seems to me that the logical extension of this is fixed price based on selling value, and not hours. What do you think?

  • Greg Jorgensen

    Great article. Totally agree about relative status of programmers.

  • This is something that I’ve been contemplating a lot lately. I may write a post with more detail on these thoughts, but I kind of see a maturity continuum happening with billing strategy.

    At the low end of the spectrum is hourly billing. I think there’s a next logical step toward daily, weekly, or even monthly billing. This at least removes the nickel and dime/laborer aspect from the equation and starts to make the parties reason about things more at a project granularity. After that, I could see it moving to a fixed price of delivery (i.e. “we’ll do a 2 week sprint and give you these features, and we charge X for those features.”) And finally, I think the holy grail of value-based billing enters the picture.

    I really like the idea of value based billing because I think it’s the only model where you partner, rather than barter, with your clients. It’s the only model where you’re not adversaries about price. Then it’s, “let’s figure out together what profit/savings you’ll realize with what you’re asking for, and we’ll execute it and split the proceeds.”

  • Thanks — glad you liked!

  • Andy Bailey

    I too would like to learn more about this.