Can anybody mention the disadvantage of being a consultant over having a startup? Or could it be that consulting is better than starting a startup, at least sometimes?
Edit: what about consulting only for interesting projects, for example?
The advantages are, that i was profitable from day 1. Although i've always wanted to do a product startup, but the point is i don't have to. Now i have sufficient lee-way on time/savings to do my own product startups. But one caveat is that you're more likely to favour money in hand(i.e. more clients consulting) rather than "hope money"(i.e. a successful product). So you have to be prepared to step out of the circle and do what you started out to do i.e. if a product was your aim.
So let's see how this pans out in a year from now for me.
1. Pure luck - i got a nice little project starting out, which had a nice, unique design and where i became a lead and got a chance to do some neat stuff. They also got some neat press, which added weight to my portfolio.
2. Used Elance etc for what they are, i.e. lead building. Initially i was the lowest bid, since i could afford to be... just to get some links to showcase. Also, i moved back to living with my parents, thought it's the norm in India.
3. I was everywhere, wherever i could find a lead. It didn't matter if i wasn't interested in the project, although i focused only on django, python gigs. I just shot a mail to get some eyeballs. I would look for startups that needed full-time people and sent them an email if they were open to freelancers. That sometimes lead to long-term projects which are still continuing. Infact i still spend a couple of hours everyday on stuff like this. But my hit-ratio has definitely increased, out of every 10 emails i get atleast 5 responses.
4. I started my rate at $20/hr :-|, and kept increasing it after one or two projects.
5. I didn't really sleep much initially, or could only manage ~4-5 hours every 2 days. But i was working equivalent to 3-4 people, and thus was building a portfolio at a double pace. Although it seems obvious in hindsight, but i realized late that this wasn't gonna scale up much.
5. I collaborated with some offshore(i'm in india, so i mean offshore as in other 3rd world countries). It took a while to find the right sort of people, since most of the freelancers out there are not good. They don't have a sense of urgency, and closure on projects. They don't meet deadlines, and disappear after a few days. I usually got a constant string of excuses like hard-disk failure, laptop screen busted, grandfather died. But i found some good devs along the way. So i started delegating more stuff to them, and increasing my bandwidth.
I'm not sure if those points are of any help, since your mileage may vary!
Building a startup you are building a company that can grow and end up being worth millions and millions of dollars (and it more rewarding to me then working on other peoples projects).
The choice you present is as if a person with the motivation and insight to start something has no choice but to throw caution to the wind, abandon any semblance of stability, and burn the ships (as the saying goes). Plenty of very successful entrepreneurs have proven this wrong -- there is no need to romanticize a very risky proposition.
On the one hand, you present a choice where a lot of one's income is scalable and under your (mostly) direct control. Sure, there is a limit of around $250k/year -- that's a gross of $2M+ in a decade. Meanwhile, you have more flexibility with your time than you would at most jobs. The typical startup entrepreneur, if they last a decade, will have gone through multiple ideas/ventures in that time frame, while earning 10-20% of this.
On the other hand, you present the notion of taking a wild, largely unmitigatable risk -- live an austere lifestyle while devoting 60+ hours/week to your pet project. Your only way to manage risk is to try to confirm early-on in the process that you are actually building what people will pay for (or even want) ... before you build it. Even then, the territory remains largely unknown. Any number of black swans can swoop in and completely destabilize your agenda, turning what you think you know upside-down. You simply cannot plan for success -- high-risk proposals are always subject to wild fluctuations in the landscape (or else they wouldn't be high risk) -- the best you can reasonably plan for is to make a product and release it.
The end of your post does your argument no favors either. Establish a practice where I can sell my talent for (at maximum) $250k/year, or go work on one of four me-too ideas? There's a reason why the devs you approached said that they want to work on their own idea, or in lieu of that, consult.
EDIT: I'm sorry if this reads harshly. I tried to give you honest criticism without insulting you. I regret using the phrase "me-too ideas".
I know plenty of people who were happy making their six figures and found enjoyment in other areas of their life - It wasn't for me and I wanted to found a startup. Looking back I should have quit consulting and gone to work at a startup instead of continuing consulting and hoping it would make it easier to transition to startup life.
It's just that if you do consulting but get caught in the golden handcuffs, then you're only earning for the present and not the future.
On the other hand, if like me you keep your previous lifestyle even after raising your income, then you can also build for the future as a consultant.
EDIT: but like james commented, you only go so far as scaling yourself as a consultant, whereas you can definitely scale out as a company/startup.
If people pay for your time then the three ways you can grow the business are:
1) Charge more (which has an upper limit. This limit is higher than you think though - eg: lawyers are effectively a very specialized form of consultants)
2) Work more hours (which has an upper limit)
3) Hire people (which increases your costs along with your revenue)
If you sell software though, you can sell the same piece of work an infinite number of times. Maybe you need to spend more on marketing to increase your revenue, but marketing budget scales much better than paying full time employees as other consultants.
However this advantage is often theoretical. The risk/reward ratio of consulting vs startup makes consulting more attractive to many. It's pretty simple (and not very risky) to jump from an employee to a consultant: sign up for a medium term engagement, then quit your job. Provided the engagement is long enough and you set your rate correctly you don't even need any savings to do it.
This becomes an issue when you want to settle down and grow your family.
Sure, I doubt most of us would disagree with that. Startups are risky... they're bloody f%!#kng risky... but if you succeed, you have a chance at being legitimately rich. To some people, that's a chance worth taking, to some people it isn't.
Me personally, I prefer the idea of trying to build a product company and work for the big exit, to the idea of being a consultant. But I'm not making any claim that either lifestyle is objectively better... clearly it's a personal choice.
Even with crazy startup hours, we could usually get at least one shared meal a day and you know... see each other. We could also workout together. Maybe get a hug while I'm talking to a customer on one hand and coding in the other. It adds up.
When you are in another state - its really away.
I guess it's a matter of picking the right customers maybe; not everyone will work this way.