

Ask YC: Part-time consulting while working on a startup, good idea? - richesh

My business partner and I have been working on our startup for sometime now. We do not have funding yet and have been bootstrapping it. I work full-time as a technical architecture consultant, while my business partner is 1 day a week on his job and rest on the startup.<p>I made a decision to quit my current contract and go full-time on my startup so that we can get it to market fast. Once I notified my client, I was offered an option to work 10 hours per week on the current project and have the rest of the time for my startup.<p>What are the pros/cons of doing or not doing this? Is this advisable? Should I just put 100% on startup for 3 months?<p>Thanks for all opinions/advice in advance.
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tptacek
So, this is exactly what we've done. Briefly:

(1) The comments saying that it's hard-to-impossible to transition from
consulting to product are correct. Two problems: (a) it takes more than just
discipline to walk away from money --- it takes reckless speculation, and
that's painful; (b) consulting hours don't bucket neatly, and don't schedule
neatly, and so you're constantly being disrupted.

(2) That said, we now have multiple full-time people working on product, which
we're launching soon. The classic consulting model is a pyramid scheme, where
people claw their way to "partner" and get fat off profit sharing. In the
product-consulting model, instead of setting aside money for partners, you pay
full-time devs. This appears to work.

If I had to choose between VC and consulting, and my consulting practice was
lucrative (ours is: software security billable hours are expensive), I'd do
consulting again, even though it cost us a year. Reasons:

* I'll trade a year for control over my own destiny.

* The year is a false economy, since, for _most companies_ , getting funding takes many speculative months.

* There are things about running a consultancy as a business that translate to running a product business, and running a business is a valuable skill.

* The networking and customer face time you get from consulting is hugely valuable.

* Time to market is simply overrated.

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melvinram
Q1) Do you have the resources to survive if it takes 6 to 8 months instead of
3 months? Being done with a product in month 3 doesn't mean sales will start
rolling on month 3, day 1. Think revenue date, not launch date.

Q2) Do you have the mental self-discipline to focus on one thing at time...
even when you have two things on your plate or are you more productive when
you only have one thing on your plate?

Q3) Have you started talking with your future customers yet? If not, talk to
them first. Confirm they need what you're building. Do they need it bad and
now? Assumptions can hurt.

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mattjung
Two little stories: A friend of mine has been trying since 10 years to
transform his consulting company into a product company - without success. The
projects he has implemented were too expensive in terms of development and
maintenance to have enough time apart. And none of the projects was general
enough to produce a code-base that could serve as a product for several
customers. Another friend implemented a little access-based niche-domain tool
during an internship for a big enterprise that he was able to resell to
several competitors and even several times within the same enterprise. He is
working around 5 hours per week and makes a confort living. Honestly, I think
the first story gives the more likely scenario.

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tptacek
I'm biased to the security software market, but note that it's a market where
companies have constantly tried to play the "productize-the-service" card.
What I've observed is, this almost never works.

In fact, taking a consulting approach to product development (working closely
with a first customer) also slowed us down drastically, and our product
actually has very little to do with our service (what we're launching has
nothing to do with reverse engineering software).

There are also some high-profile failures behind our strategy: building a
straight-up consultancy to "fund" a full time product group.

But then again, who knows? Building a business is hard. It is not like
applying to college, where you clear some "acceptance" hurdle and then you do
your homework and everything works out. With the best people, the most
credible strategy, and even the right market timing, circumstances can still
screw you over.

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ecommercematt
I can only think of two good reasons to do consulting while you're working on
your startup:

1) You don't have enough money to survive without the income from consulting.
2) Your consulting gig will help with sales in your startup (specifically, you
think the company you're consulting for will buy your product once it is
built).

Even if reasons 1 and/or 2 are at play, it still is a distraction. I do
consulting for reason 1, but I plan to outmode that with an upcoming angel
round. I am not doing all that much consulting these days anyway, but I still
feel like it is a hindrance. See a semi-recent blog post about it here:

<http://blog.jabbik.com/2008/03/momentum.html>

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mchang16
I can think of one other good reason to consult when you're working on a
start-up ---- the consulting project that you're working on is something that
will teach you something that you need to know in order to make your start-up
successful. There's nothing better than learning on someone else's dime.
Especially if the company for which you're consulting has some particuarly
smart people or cutting-edge resources that you wouldn't have access to
otherwise.

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tonystubblebine
Contract work can be a great way to bootstrap the business if you're careful
about it. I chose projects that we're high paying and easy to walk away from
(corporate training, wrote a second edition of a book, strange enterprise
documentation gigs).

Once we had a product we could sell there was a temptation to push it on any
person with money. The problem with taking those kinds of customers is that it
ties down your product. Keeping an independent stream of income would have
given us more flexibility after we'd launched the product.

Also, some people say that having side projects makes it hard to focus on your
main project. I found the opposite, having a main project that I loved made it
very hard to focus on the side projects.

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dangoldin
It's a decision you have to make depending on your finances.

If you can work for 3 months on the startup without feeling any financial
burden I'd go with that but if these 10 hours of work a week translate into a
good chunk of money it may be worthwhile to do it.

A few questions to ask yourself:

1\. Could the 3 months potentially turn into more?

2\. Can you set the hours you will be working to accrue the 10 hours or will
the client be calling you whenever they have issues? The first scenario is
more preferable.

3\. If you do the 10 hour option you can try to do it the same day as your
partner so then you have more time together.

Just my thoughts..

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richesh
Thanks for everyone's input. To answer some questions and comments being
posted: 1\. I do have enough funds to last 6 to 8 months on my own if I had
to.

2\. I'm not sure if I'm going to learn much on the project I am on because now
my role is more advisory, but I will interact with potential service providers
for my startup.

3\. I do think that I have issues focusing on two projects at the same time
because I like to do a good job on whatever I'm doing. This also means that
there is a good possibility of me spending more than 10 hours a week on the
project.

4\. We have been talking to a small set of our future customers, and they
can't wait for it to launch. And it needs to launch now.

I've made the decision to go 100% on my startup, and not worry about
consulting. Someone reminded me how I worked through college and have always
regretted it, wishing I would've have just taken a loan and paid more
attention, had fun, etc. I don't want to look back at this and say "If I just
did it 100%"

Thanks for all your advice and opinions, it really did help.

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prakash
10 hours per week is not that much, stick with the current project, plus, its
good to have some cash flow for ramen :-).

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tptacek
10 hours billable --- 2 out of 5 work days --- can easily wind up being 20
hours of wall clock time, factoring in ramp-up, off-the-clock support,
documentation, non-billable research time, and then the overhead of dropping
in and out of your product.

Of our original 3-person founding team, excluding all the hires since then,
we've found that none of us can keep up with the FT devs, even when we work
out one-week scheduling bubbles. This is obviously a classic "flow" problem.

I'm from dev originally, not consulting, and I was surprised by how expensive
(timewise) services work is.

~~~
prakash
Services is expensive, but you should be billing for some of those things like
off-the-clock support, documentation, research, etc.

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tptacek
Depends on the customer, but we never bill for rustproofing. Get used to
bending over backwards for people who pay you now; good survival skill.
Truism: it's the perception of customer service that people appreciate, not
the execution of it.

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davidw
Not if you can help it, unless the consulting directly feeds into your
product. I find it's better, mentally, to focus on something 100%, rather than
worrying about both your product and your clients problems, unless the latter
is really something you can do on autopilot.

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tptacek
But you consult. Do you think you're making a mistake doing that? Or is your
web page just out of date?

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davidw
I said, "if you can help it", but unfortunately, I can't help it. I speak from
experience when I say that it's distracting, and that periods where I've been
able to focus 100% on something are vastly more productive.

~~~
tptacek
Hear that. If you could choose to take a typical predatory VC round, putting a
few mil in the bank and losing control of your board, would you trade
positions from where you are now?

~~~
davidw
Well, if we're talking about stuff that's not very likely, I'd be pretty happy
to go through the YC program, actually. Barring that, finding a niche product
that's sustainable, but not 'get rich quick' material would make me happy.

I saw the bad side of what VC's can be like at Linuxcare, and it's pretty
ugly.

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hooande
I would recommend putting 100% on the startup for 3 months. I find that I can
get a lot done if I put 100% of my time into anything for 3 months. You'll
probably get enough done that people will be able to get an idea about what
the product could become. By that time you'll either be able to find investors
or realize that it's time to move on (or go back to full time consulting).

There is a reason the yc session is 3 months long. That's probably about all
you'll need to prove your concept. Save up the bare minimum you need to
survive and go. Good luck either way!

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quellhorst
Its easy to get consumed by consulting and not make much progress on your own
products. With contracting, you must spend time finding new contracts,
accounting, and sometimes even legal issues.

I wasted years contracting instead of working on my own projects full time.
All my energy was drained by the clients I had.

