What I have learned running a software consultancy over the past two years | Hacker News Reader

What I have learned running a software consultancy over the past two years

reefpoints.dockyard.com

85 pointsbcardarella45 comments

This feels quite raw. I cringed a few times reading it, in the way that you cringe when someone is telling you something that is taboo but is what they really think. A worthwhile read, I think; thanks for letting us peek inside your mind.

curious to hear what you found cringe worthy. was it the hiring/firing part, or was it how he described his client vetting process?

To pre-emphasize, my only judgment of the author is that I applaud him for his candor and for being out there and actually doing things. Here are the things that I had a reaction to:

"work with some really shitty people too"

fawning language over Ember, making bold bets on it based on a hunch

firing a cofounder, admittedly a mistake

These were also probably the most valuable parts for me because they were challenging.

I've always considered myself "on the Blue team" but the past year has really pissed me off. NSA, Healthcare.gov, drone strikes, and the President trying everything he can muster to go to war with Syria. I walked into our Business Developer's office one day and I said enough was enough. I could not in good conscience do work for the Democratic Party because of these issues.

I really doubt any of this would have been different if we'd had a Republican for President. Granted, healthcare.gov wouldn't have happened, but I doubt any of the other items would have looked any different. All US presidents have done things that I consider unethical or illegal. So to castigate one party vs. the other seems shortsighted.

Unless, of course, he has a huge contract offer from the GOP. Then it makes sense. In politics, money is the great decider.

I think you are missing the point, he did not say he went to the blue team. He said he doesn't want to work for the side that supports drone strikes, etc..., not that he has switched camps.

Correct, I actually worked at the Democratic National Committee in Washington, DC for a year as a software dev. He may be right that a Republican President would have made similar decisions but that is not what happened. This was a personal choice as I have become disillusioned with the party. Also, this has pushed me further to the left, not to the right.

Also, this has pushed me further to the left, not to the right.

So...who will you work for then?

Just a wild guess... but someone other than a political party.

> Can they afford us? If you think it is callous to put this as the first thing we look for, then you are probably not someone we want to work with.

I wish you elaborated on this (I think it'd be worthy of its own article). How do you do this? Most articles I read on this topic seem discuss their fee with clients like a diplomat, a politician or a strategist or something. I've read in more than one article you're supposed to sell your price as "an investment, not a fee". But your article implies you cut right to the chase.

I could but I'll try to answer this as best I can here to avoid writing a long post again. (my fingers hurt!)

We do cut to the chase. Some people have seen this as aggressive. If we get the sense that this will turn them off and they seem like a company we want to work with we'll push off that conversation. But most times I am up front and tell them our rate ($6k/week/dev) and I tell them we are looking for contracts with a budget over $50k. I don't have all of the time in the world and I know the client is likely meeting with other agencies. If we are not a financial fit for them then it is better they know that earlier than later.

Anywhere up and down the services chain (from solo freelancer to large consultancy) should do this.

There's a cost to vetting potential clients and service providers in the form of time. The sooner you can tell whether everyone is on the same page with regards to financial expectations, the better.

I learned my lesson a long time ago when traveling for several hours to meet with a client looking for what amounted to $150k worth of work, and eventually telling me/us that they only had $5k.

In the UK, I check clients out on duedil.com - that way I can get a sense of their financial strength.

Shameless plug: you can also download their latest accounts for free from http://www.twilam.com/ as long as they are among the 90% (and growing) of companies who file their accounts electronically.

The interesting thing is: One fundamental concept in my head is: If you don't negotiate the price of your service early on, I'm growing suspicious.

In a buisness context, people are either excited enough to be scary, or they have a material reason to do things. This tends to boil down to complicated reasons, or money. So if someone is upfront about just wanting money, I suppose he is fine, as long as I pay him well or he has little ability to backstab me.

Thus, I like this attitude, I have to say. Get clear about what you give me and what I give you, so this roadblock is out of the way.

"The number one thing I would do different is not agree to a partnership until 6 months out...I would have held off on awarding partnerships until everyone settled into their roles"

I'm curious what being a 'partner' in a design/tech consultancy amounts to. Profit-sharing?

Correct.

On one hand: it's cool to read something so "unfiltered".

On the other, If I was a potential client of Dockyard's and saw this, I would run for the hills. This is not the kind of stuff that belongs on a company blog. Or any blog, for that matter.

That's fair, but then again perhaps this is a good filter for those types of clients we want to work with.

That's a lot of guts. I respect you for keeping in that direction.

It's hard for a consulting company to be selective on the clients (especially during tough time).

To be honest, its probably hurt us as much as its helped us. There have been times that I have made bad business decisions because I didn't think the client was a good fit for us. Even at 2 years our sample size is probably not big enough to say if this is a sustainable direction. It would be great if it were, but I suspect at some point if we want real growth I'll have to get beyond this way of thinking

Yes, its quite the double-edged sword. I used to run my own one-man consultancy shop and picking the right clients was tough. It cost me thousands of dollars in 2013 alone. That's why I decided to move on and work as a full-time programmer. The business side of the consultancy was making life harder than it needed to be. I could have hired people to help me grow it. But it would have forced me to step away from the code and into management. Something I really do not want to do. Currently Im working as a full-time programmer for a growing company and its been great.

Good luck with your company. :)

My company is a Dockyard client, and this blog post hasn't done anything that would make me even begin to think about changing that.

Naw. The world has changed. People value realness more than stiffness. Just google for Upverter's "Startup Depression". They've raised and billed plenty of money since then.

I would be willing to pay a premium to work with a company this transparent, either as a client or employee. Kudos to the author.

So far people have been saying that consultant should focus on solving business problems and not the technology aspect of the work so I'm quite surprised that DockYard made a bet on EmberJS (and Rails before that).

Can anyone explain why people would hire a shop with specific but general tech like EmberJS or Rails? (Rails make more sense a bit since it encompass the whole web-app but EmberJS is just for front-end). I can understand if the company specialized in Enterprise software like SAP, Oracle, SharePoint but less on Rails/Django/front-end-framework.

We can say that we offer true expertise if we specialize. I don't think that small shops should be tech agnostic, they should pick a tech area and really try to kick ass in it. After a certain amount of growth there begin to be a lot of opportunities outside of your tech niche that might get you to start thinking about adopting other competencies. For example, we have been getting a few contracts for iPhone development. This might be something we decide to add.

Huge props to Brian for writing this. This is as candid and unfiltered a look into the tribulations of a small consultancy as I've ever seen: particularly with regards to firing and open source.

> Is this an application we want to work on?

That's a big factor to me. It breaks down into: Is it interesting work? Is it going to be challenging without being impossible or overwhelming? Is it something I can say I was proud to be a part of? And am I even the right person to work on this or would someone else be able to do a much better job? Does it use technologies I really like, or ones that I am not too fond of?

Out of curiosity, did you start as a company? I always thought the way you're "supposed to start" as a software consultancy is like this:

1. Work part time as a freelancer.

2. Get enough work that you can quit your job.

3. Get so much work that you can't meet deadlines without hiring an employee.

4. Repeat step 3.

Is this what you did? Regardless, is this a bad plan?

I went cold turkey with the freelancing. I got a job big enough to pull others into, we worked well together, we formed a company.

Enjoyed this a great deal. It's interesting to get insight into a different part of the industry (for me) and I'm struck by how high costs must be in consultancy if even at $1.5m revenue, a founder can only pay themselves 50% of their set salary? (Assuming said salary isn't unrealistic.) (Update: Profit margin specified as 20% in another comment below.)

Payroll, like most companies, is a huge chunk of our revenue. The thing with consulting that is different than product companies is that we are profitable from day one. But our long term profit potential is flat unless we raise our rates or pay people less. We need to pay well to retain talent as consulting companies are always ripe for poaching.

I've also made some dumb financial moves and we've had lulls in our pipeline. We think (hope) that we've corrected these. So we'll see how the next year pans out.

as you grow, managing utilization and bench time will be key to being profitable. each project has a built in "fiscal cliff" at the end of it, and having a good pulse on when to hit the gas on biz dev and when to ease off is really important in protecting profitability.

> Recently we have been able to build enough of a name for ourselves in the development community where we have started to attract some good senior development talent.

I really like this. Not branding, not marketing - but building a name. Building something of value and being an active member of/giving back to the community.

What makes a bad client, and why did they cost so much? I can understand a bad client who constantly harangues you, asking for tiny changes, tying up support lines, but that shouldn't cost so much?

Not if they don't pay.

For us it always comes down to personality issues. We have had a client that was a good person but ran into financial issues, a good person will eventually settle their debt as this person did.

A bad client is someone who thinks they own you because they're paying. This is not true and I am very protective of my employees.

So what is so great about ember? I hadn't really heard much about it before?

And also what's so bad about angular?

(I'm ready to meet my JavaScript framework)

A very honest read from Brian. I know him personally and I can attest that he writes like he speaks, very honest and transparent. Keep up the good work at Dockyard!

Curious what the revenue vs expense looked like in years #1 and #2. How many employees generated that $750k and then $1.5M revenue?

Good question. We've maintained around a 20% profit margin. I'll add that to the article as it is important.

Great war stories from the trenches, and some useful snippets in there for someone building a company too. Thanks Brian!

How did you pick your law firm. In what ways Daily/Weekly/monthly are you using them?

I actually emailed Chad Pytel at thoughtbot and asked him who they use.

good read...anyone thinking of running a consultancy should read this.

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