
The co-op consultancy - j4pe
http://j4p3.com/the-co-op-consultancy
======
j4pe
Whoa!

For some context, I've spent the last ~2 years doing the digital nomad
freelancing lifestyle, and it seemed a) unfair and b) like a really great
market opportunity that so many senior 20x-type devs in different parts of the
world are stuck outsourcing on crummy gigs while geographically privileged
junior (and senior) devs pull down crazy-high rates. The market's not really
solving the problem, everybody just seems to operate an outsourcing pipeline
and vacuum value out.

I moved back to the States a while ago and got in touch with some friends to
set this up - unqualified.io

Obviously it's still very early days : )

~~~
Kalium
One of the generally underappreciated things is that there is a great deal of
value in geographic proximity. It's not just privilege.

~~~
j4pe
Definitely not just privilege. The remote thing doesn't work unless somebody
really, really good is doing the alchemy of transforming the client/user's
intentions into architecture & design.

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warcher
I'll be the first to admit that I didn't really get the upshot of this
article, but it seemed like they were trying to figure out a way to get more
consultants into the startup business.

As somebody who does a lot of startup stuff, and enough consulting to have an
opinion or two about it, the risk/reward matrix for consultants messing with
risky entrepreneurial ventures (presumably with founders you do not know very,
very well) is something to be feared. Startups are almost by definition broke
and on the edge of survival at all times, which makes them super, super bad
clients. Give me somebody with real customers who needs to make the pain stop
all day long.

~~~
j4pe
I'd been looking at things from the developer side of the table so long, I
wanted to explore the problem that people who need contractors face.

Good point re: risk/reward. Guess I just decided to use a founder as my
example and then ran with it. But I agree - clients paying you with revenue
(or at least investment) are preferable.

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blatherard
"But does demand for software projects actually fall off a cliff between the
20k and 100k price point?"

Having worked in software consulting for a long while, my sense is that
generally 50K clients are going to have all the hoops to jump through of the
100K+ clients, but without the margins required to make them profitable,
accounting for the sales time.

~~~
zacharycohn
Came here to say this. I love the idea, but as someone who runs a
consultancy... There is a minimum threshold of dollars a project needs to be
for me to consider it. Not because I run a Deloitte, but because:

A) closing a small project is close to the same amount of work as closing a
big project.

B) you'd need to be closing, and finishing, $20k projects at a pace of one
every two weeks to support OP's hypothetical team. If you can do this, 1)
teach me, 2) start closing $50k deals.

Also, there seems like an unbalanced payout. Developer gets $/hours worked.
But as management, I'm still working hourly to bring in these $20k projects?
If I manage to unlock the secret to closing a deal every two weeks, I'm either
working a HUGE.amount (eating up a lot of the money I'm bringing in), or I'm
barely working at all (classic problem with hourly billing - I get paid less
because I'm good at my job).

Also, watch out for overhead costs. As a two person consultancy, I am
constantly amazed at how expensive it is to run a business.

~~~
j4pe
Had a similar conversation with the guy who runs Raizlabs, and an original
member of Pivotal, over the last few weeks. I definitely concede that there's
a reason the market looks the way it does, and that it's not economically
feasible to run a consultancy on gigs below a certain threshold, whether
you're shelling out for Aeron chairs and massages or no.

We do call it a consultancy, and some clients certainly come in that
centralized way, but it's also a resource for freelancers. Freelancers already
have their own dealflow. We want to enable them to do more my offloading to
folks they trust, not make them into de facto employees of some management
team. That team is as small as it can be to keep things running, and in
addition to hourly rates it's supported by the same commission that any job
referrer would get for bringing in jobs.

For example, management right now consists mostly of me. Most of my income
comes from coding on projects. But if a new job comes in through 'official'
co-op channels managed by me, and I spend time screening & onboarding the
client, I bill the co-op for that time.

With no office, no fulltime employees, and nobody who doesn't have billable
hours, there's not a lot of overhead to worry about. The trick is keeping
client experience and quality high while doing that, which isn't too terribly
hard when you only have experienced, successful freelancers on board.

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jawns
I'm a huge fan of cooperatives -- or at least the idea of them. I know that in
practice there are many obstacles to their being done right. A few questions:

1) Is your consultancy actually formally organized as a co-op, or are you just
using cooperative principles?

2) I imagine many consultancies are organized as limited liability companies.
From a legal standpoint, does being organized as a co-op put you at greater
liability?

~~~
j4pe
Me too! At the moment it's an LLC run according to co-op rules through my
PayPal account. Obviously this won't scale : )

~~~
teacup50
You should chat with [http://brierwoodapps.com/about-
us/](http://brierwoodapps.com/about-us/) and
[https://plausible.coop/about](https://plausible.coop/about)

------
kahunamoore
We are currently prototyping a Co-operative community that works a lot like
OSS projects. It includes a parent Co-operative that helps fund individual
projects.

Key to the idea is the Co-op Source software license. Shaped by cooperative
principles, it benefits the community like typical OSS licenses do for the
open source community. We also plan to give a percentage of revenue to OSS
projects as voted upon by our members.

I've been following assembly when they crossed my radar a while back but my
ideas predate them by 15 years. I have simply been waiting for reality to set
in wrt OSS business models. I love their collaboration but their choice of
license is a fatal flaw, IMHO.

I have been watching the sentiments of many in the OSS community and many key
contributors are growing frustrated that so many people take, take, and demand
more and more of them. They have bills to pay and families to feed.

My hope is that we can find a way to create a sustainable community that pays
you to work on your muse...

If you are interested in joining/helping us see:

[https://groups.google.com/d/forum/coopsource](https://groups.google.com/d/forum/coopsource)

Also, in about four weeks visit us at:

[https://www.coopsource.org](https://www.coopsource.org)

You can also contact me directly at kahunamoore at the domain listed above.

Alan

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mbesto
I agreed with everything up until this: _" Profits are distributed directly to
developers on a quarterly basis, weighted by dollar-hours contributed."_

The problem is, one hour of my time, regardless of my seniority, might have a
variably higher output (or "contribution") towards the profit of the business
than someone else. Until there is a way to directly translate every hour of
dev time to profit (as a proponent of revenue or cost), this model quickly
breaks down.

I hate to be a pessimist on this subject, but I don't see any rational way to
solve this problem. The closest model to this I can see working is
[https://assembly.com/](https://assembly.com/)

~~~
warcher
Professional services partnerships have been around a long time. This is
pretty well trod ground for law firms and medical practices. I don't
understand why we'd need to reinvent the wheel here.

~~~
walshemj
Limited liability and with a coop everyone is a member not just the few
partners at the top.

I should say there is normally a probation period for new employees before
they become members

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mmatants
I saw the "design thinkers" dig, and even though I get that it's a jab at
folks who put on the ostentatious display of agency fluff, I feel the need to
mention that actual design thinking (in the general sense of caring for good
UX, etc) should be just a basic cultural attribute of any good team member -
dev, PM, designer, etc.

~~~
j4pe
You're right : )

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lukego
> We’re going to ignore the corporate market because price isn’t really a
> deciding point for them. They’re not trying to minimize cost, they’re trying
> to minimize risk.

This seems like a legitimate point at which to stop and reflect on what market
you want to be in :-)

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tootie
As someone who works at a Sapient-like organization, this idea is very
compelling. I'd be awfully concerned about the total lack of structure though.
As much as clients don't want to pay for a PM, they are there to manage scope
and timelines. I've seen PM-less projects meander towards a death spiral where
everyone is working and nothing gets delivered. You'd need a special breed of
developers who are not only good coders, but know how to manage projects and
deal with people. A lot of good developers suck at those.

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ukigumo
On any given day, the chances of success for a startup are tiny, infinitesimal
even, but I think this co-op idea could actually be viable.

It needs, however, to add something else to the mix other than just an easily
readable manifesto. It needs to have a portfolio, and it needs to offer
governance and evidence of good financial and operational conduct, which is
what corps look for when assessing risk and on-boarding a new specialist
supplier.

The fact that you are only looking for developers makes me think there is much
you haven't thought about yet :-)

~~~
j4pe
Who says we want to be a startup? We want management costs to be as low as
possible. The trust network should be a free resource to make freelancing
better for everybody, the co-op just houses it.

We're only looking for devs at the moment for the same reason everybody else
is - we've got way, way more work than we can handle!

All surplus value to the creators of value : )

~~~
ukigumo
Good to hear that you have a plan because it's going to be costly to do pre-
screenings, code quality assurance, process design, lead generation, payment
and account handling, project and resource management, etc. And architects,
you need architects :-)

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mjewkes
Super cool!

We've been running a worker owned, profit sharing contracting company out of
Halifax, Canada for about 5 years now.
([http://twistedoakstudios.com/about.php](http://twistedoakstudios.com/about.php)).
We haven't really dove into the start-up/MVP scene very much, though.

~~~
antiuniverse
I thought that studio name sounded familiar: I watched your talk about
extending coroutines in Unity - good stuff, thanks for that!

Something I've been struggling with lately is that in my heart of hearts I'm
still a game developer, but as a freelancer, it seems to be so much easier to
find work doing just about anything entirely unlike game development.

I'm curious whether you would you be able to go into any more detail about how
Twisted Oak is structured, or perhaps point to an example of a similarly
structured company I could read more about the nitty gritty details of?

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fra
Typo on the front page: "[...] my repu _tata_ tion as a developer is tied to
post-project feedback from everyone involved"

Love the idea! Looking forward to seeing how it pans out.

