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
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.
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.
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.
"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.
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.
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.
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?
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...
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/
Correction: This model only breaks down if it's built around people who think like you. Not saying there's anything wrong with your line of thought, but it's not accurate to assume because you specifically are concerned with "who's providing what value" that others would be too.
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.
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.
> 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 :-)
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.
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 :-)
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!
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 :-)
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.
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?
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 : )