Top Coders Can Now Get Agents
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That's really the only structural difference, but it's important. 10X takes less than a typical consulting co, provides less tangible benefits, and has a better marketing story as long as they are smart about it.
Recruiters and consulting cos have always been highly variable in quality, but the current tech hiring drama has brought out some especially bad ones. In the late 90s (the last time I worked thru a consulting co), it was possible to find a rep that you respected and would shop your skills to reasonable customers and handle the annoying bits professionally.
To be honest, I'm a little nervous about the fluff, too, but I do sincerely believe we're doing something different with 10x.
First and foremost, our clients are the developers. (Admittedly, this nomenclature gets a little confusing sometimes, but it's important for us to constantly remind ourselves that we work for you.)
Rather than thinking of it as a consulting agency, we see our job as making freelancing suck less. In the process, we're building a network of freelancers who share best practices. They even share customers... our customer development has revealed that the #1 complaint from freelancers is that it's feast-or-famine. Since each person in the 10x network brings in his/her own dealflow, one person's feast can ease another's famine. Imagine a P2P network for gigs.
Additionally, the article only briefly touched on the lifestyle design aspect, but that's really important to us. Just like managers in the music or movie industry, we're entering a long-term relationship with our clients, and strive to understand their goals and help them achieve them. For some people, that means we save them cycles that they can put towards their startups. For others, we enable them to travel more. (I started out as a client before we founded 10x, and I spent my time on music, e.g. recording albums, touring, learning the cello.)
Also, my cofounders come straight from the entertainment world. They managed John Mayer from being an unknown singer/songwriter to playing sold-out stadium shows. They bring a really unique outside perspective to our industry.
And finally, as the article mentioned, our cut is only 15%. My understanding is that consulting agencies often take 50%+.
Do you get paid by people for whom you find good developers?
Rather than thinking of it as a consulting agency, we see our job as making freelancing suck less. In the process, we're building a network of freelancers who share best practices. They even share customers... our customer development has revealed that the #1 complaint from freelancers is that it's feast-or-famine. Since each person in the 10x network brings in his/her own dealflow, one person's feast can ease another's famine. Imagine a P2P network for gigs.
I have worked very hard at developing my client base. Why should I share it with strangers? It is also not P2P because you are a middleman.
Additionally, the article only briefly touched on the lifestyle design aspect, but that's really important to us. Just like managers in the music or movie industry, we're entering a long-term relationship with our clients, and strive to understand their goals and help them achieve them. For some people, that means we save them cycles that they can put towards their startups. For others, we enable them to travel more. (I started out as a client before we founded 10x, and I spent my time on music, e.g. recording albums, touring, learning the cello.)
What programs do you have that help people like me get their life goals? I can schedule my own traveling, deal with savings, and hire an accountant to do a lot of stuff for pennies.
Also, my cofounders come straight from the entertainment world. They managed John Mayer from being an unknown singer/songwriter to playing sold-out stadium shows. They bring a really unique outside perspective to our industry.
What is this unique perspective? Can they chime in and share it with us?
And finally, as the article mentioned, our cut is only 15%. My understanding is that consulting agencies often take 50%+.
You are competing with agencies, yet you do not know their rates? No, the rate is not 50%. It is always variable. I've never had one go so high, not even half of that.
Consulting agencies do have one thing: the clients. They sell and market their services like crazy, and get a lot of work that way. Depending on how good they are, they also make sure that the place where you go to work is a good one, with good development practices.
How do you make sure that any client that comes my way will not make me sit through 5 meetings a day and then demand more work from me? Do you have any experience working with development teams?
You are paying the agency fees. If they deliver less value than what you pay them, dump them.
Something like GroupTalent.com provides deal flow, handles contracts/billing, and tacks on a 20% fee to the employer/client. Employers have no problem with it. They get great talent. Developers obviously don't care because they still get paid what they want and GroupTalent takes care of a ton of overhead.
I've probably been their happiest customer. They provide a super high quality leads channel. When I look at something like your service, it scares the crap out of me to give away 15%. Sure consulting agencies take an even bigger cut. But that's for freelancers who have no desire to do their own sales/marketing. The best freelancers I know would never go to them.
E.g., agency bills at 50% markup (40-60% average in agencies in the technical space (I was a tech recruiter for 3 years)) $90 / hour to the company, while paying the developer $60 / hour.
Perhaps the founder is saying the agency is "taking" $30 from the developer, but this is a poor way of representing their service as comparative to third-party agencies and is not necessarily reflective of what the developer could make themselves directly with the company [1].
I can see why this is hard for 10x to get across, because stating "third-party agencies markup the pay for developers by 50%, we only mark it up by 15%" or "we take the 15% pay out of the developer," ergo, the developer needs to be negotiated higher in pay to make up that 15% fee.
See also this good comment by scottru https://news.ycombinator.com/item?id=5529001
[1] part of why companies pay the bill rate to third-party agencies is liability, taxes, ease of hiring/firing, avoiding SOW's and LLC / 1099 freelancers, etc.
Savvy developers will of course negotiate their fee's / pay upwards, but that is what 10x and others seem to be trying to take care of.
Its interesting, but misstated by the founder for "50%" take from the developer.
>>First and foremost, our clients are the developers.
No, they're not. Your clients are the people who pay you money. The companies pay you money, then you pay the developers money. The developers are your vendors.
What you're actually saying is that you care about your developers and you want to treat them really well. That's awesome! Great agencies do this _all the time_.
I run an agency - we have a good reputation, and each of our recruiters has dozens of candidates who will answer the phone when they call, because they've built a relationship over the years that nobody's time will be wasted. All good recruiters have engineers who trust them. If you live in a town and haven't found a recruiter who cares about your best interests, keep looking. If you're in Seattle, find me.
Then when the recruiter finds the right role - or, as the article says about 10X, "the company tries to find gigs that match coder skill to client need" - you can make a match. (Note that the article forgot that 10X's "clients" were the developers. That's because they're not.)
>>And finally, as the article mentioned, our cut is only 15%. My understanding is that consulting agencies often take 50%+.
I wish! I wouldn't be typing to you, I'd have my minions do it.
OK, kidding. There are consulting companies that do bill >2x of their employee's wages, but they're not the kinds of companies you're competing with here. Those are companies that have folks on salary, that bench them and pay them in between projects, that provide training/mentorship, have management in place to help support their people, etc. (You can decide how valuable those things are.) Also keep in mind that their folks are employees, so they're paying a burden of 18-22% on top of their wages, which my assumption is you aren't doing.
You're competing with placement agencies (whether you want to or not). Those are the Volt/Greythorns of the world, who are likely taking more like ~15-25%. For example, many hiring companies will negotiate a markup rate of ~50% on top of someone's hourly rate, not including load/benefits - which when you add on load/benefits and calculate cut (i.e. margin) off the top, that's more like 20%. ($150 bill rate -> $100 pay rate + $20 load/benefits -> 20% cut)
If you can make 15% work with the cost of client loss and wasted time, etc., that's great. I hope the press gives you a lift you can sustain to get there.
> No, they're not. Your clients are the people who pay you money. The companies pay you money, then you pay the developers money. The developers are your vendors.
What would be the big problem with the money going directly to the developers, and then the agency billing them for their agent-y services? Presumably, the agency could just help the developers create a a Limited Partnership or something, consisting only of the developers; the clients would pay that LP, and the agency would bill that LP.
Will the engineers PLEASE wake up... A deal where an organization is taking a cut of your gross is NOT worth it.
So you work for an entire year, working nights, weekends, and they will take %15 off the top? At 200/hr, if you gross 400K they're taking 60K?
Are they really providing 60K worth of service? No. It's your reputation on the line. Your ass working weekends. You being called at 3am when the server crashes.
If they find you the contract, offer to pay a finders fee that seems reasonable.
They did the work up front, fine, then pay them up front. But don't let them keep sponging off of you like a leach.
Your view is very myopic. If your best alternative without them is 100/hr or even 150/hr, then in fact you are still net ahead.
"If they find you the contract, offer to pay a finders fee that seems reasonable."
Who is assessed the fee and when? In this model, they are taking an "equity" stake so to speak. The developer bears lesser risk for a souring relationship.
It depends on what you would have been making without their help. If you otherwise would have made any less than $280K that year, they are definitely providing $60K worth of service. (Or, perhaps more properly, "value".)
(And is often irreverently referred to as your pimp.)
Obviously, this makes it less scalable, but I do spend my nights writing software for 10x to automate the things we find ourselves doing more than once. (I spend my days working on deals... still working out the balance; see PG's essay about maker/manager schedules.) And one of the things that's always at the back of my mind is how to maintain the high-touch, personal approach as we scale.
And I regret nothing.
Magic? Nope. I have such system in place.
EDIT: Finally one, how are you crawling? Aggregating lists or web crawling? Tips?
I don't use it anymore, because I have a long term contract.
Unless you have a stable of subs (which I recommend -- to the adventurous, only!), how do you manage the dialogue volume?
In terms of dialogue, I searched for key terms in replies, and only replied to those that fit. I did miss on good leads, but the follow up email got me back on their mind and they would always reply.
Though I wish I could do it with someone else (a co-founder, if you will). This sort of thing could make a lot of money in the right markets. They do exist already, but most are antiquated. The advantage that I have is that I do my own email campaigns. So the emails that get sent out are actually A/B tested for performance.
I do plan to offer the actual emails that I sent to get clients for around $20 soon. Its an easy way for freelancers to get clients without much hassles. If you are interested, then shoot me an email.
Except for specific sites like elance, this isn't something I've seen much of.
In a nutshell, to my knowledge, the difference between 10x and EVERYONE else that lives in the ecosystem between technology creators and those who hire them is we work for the creators. We believe in the value of the problem solvers. All the others who do this work for the companies that hire the talent.
With regard specifically to the other types of digital agencies, they try to get their customers to pay the largest amount possible for the work and then hire or pay their developers the lowest amount possible as they live in those margins.
We work for the talent. For me, that is the main distinction and the one which is most important for this community.
Welcome to HN, and thanks for creating an account and then posting a minute later. We're happy to have you.
I'm not sure you're going to get very far saying (to your knowledge) EVERYONE else doesn't give a hoot about the engineers they work with and only cares about squeezing every last cent, and only you care about "creators." Some of us have built businesses that have been around for a while caring about all parties involved.
This is a challenging business. Best of luck to you.
The one caveat is that obviously demand varies based on the skill. Our dealflow is steadily picking up as our network grows and as we get press like this, but customers aren't exactly knocking down our door looking for Erlang hackers... yet.
(The bioinformaticist happens to also be a kickass iOS dev.)
That said, if you have your own dealflow for your skills -- no matter how obscure -- and are interested in our services beyond just sourcing gigs, we're happy to work with you.
I'm a recruiter (used to be an engineer) and recently launched my own firm. This is something I spend a lot of time thinking about, as I find that the incentive structure created by the contingency model where the company is the customer encourages many of the poor behaviors that people associate with recruiting (spamming, cluelessness, bullying, etc.).
Also, what level of talent/experience are you looking for in your freelancers? How do I know if I meet the requirements :-)
Do your clients talk to each other a lot? Work on projects together? I think I'd want to work on a project with someone before I referred a client of mine to them at a moment that I was too busy.
However, one problem I'm seeing is this. You claim about 30 developers right now, and flash Apple/Google credentials... but if you're actually going to be having extremely reputable and experienced Hollywood talent managers selling software developers, and you're expecting to get top-caliber applicants at all times, your niche is fairly small, both in terms of the developers you'll interact with and the promoters you'll be able to hire to keep your reputation above that of a normal headhunter.
Quantity aside -- niche business can be good business -- the major issue I'm talking about is finding talent like this that's not only happy to work for someone else, but available. Even my own standards for hiring developers are too high for the majority of available candidates, and most of the devs I know that would measure up are either running their own consultancies (not freelancing) or working for places that make retention a point.
If you're sitting low in the double digits despite the promoter resumes you're touting and your business has been around for a year... I have to wonder about its growth potential. Not to say every business needs to be absolutely huge, but depending on your goals, you might end up with a fairly low ceiling.
I would love to do small side projects for others, e.g. on weekends, but bidding on projects on elance, odesk, etc is a headache I would certainly pay A LOT to able to skip.
If not, does anyone know of a service that does this?
I doubt that finding jobs for a developer requires anything close to a full time employee. If it were, freelancing and consulting (without an agent) would not be viable ways of making a living (you'd spend 100% of your time finding work and 0% working). I'd guess that each agent represents several developers and a large fraction of that 15% fee is pocketed by the agency as profit.
In other news, I think that you mean per se
I'd go for it if I was a freelancer.
One of the dirty secrets about Corporate America is that "your manager" is really only a manager. What do I mean? A manager is someone hired to make decisions pertaining to a financial asset someone else owns. Actors have managers who handle their reputations and Hollywood careers. Business owners have managers to run the day-to-day. Wealthy people have financial managers. In a corporate setting, you just have a boss.
In a typical company, your manager is the firm's manager and your overseer. Important distinction.
Talent really doesn't have representatives.
Freelancing is the place to start with this, because they know they're on their own, whereas corporate denizens are still somewhat clueless, but I'd like to see this idea branch out. I hope it succeeds.