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 : )
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.
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.
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.
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.
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.
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?
It can get complex poptels structure took a 5 page document and a hour or so to explain to members as we took VC funding.
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:
Also, in about four weeks visit us at:
You can also contact me directly at kahunamoore at the domain listed above.
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/
Not all coops have flat pay structures either your mistaking profit share with pay.
I should say there is normally a probation period for new employees before they become members
Profits are trickier because there are a range of factors (more than just revenue) that contribute to it.
This seems like a legitimate point at which to stop and reflect on what market you want to be in :-)
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 :-)
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 : )
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). We haven't really dove into the start-up/MVP scene very much, though.
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?
Love the idea! Looking forward to seeing how it pans out.