7 ms·

Net of what?

by nstj 10y ago

Net of what?

cperciva 10y ago
Expenses. ISTR that Patrick did a significant amount of travelling for consulting gigs. (Which may also be a reason for avoiding them now that he has a wife and child.)
- nstj 10y ago
  Sure - so let's say you have PI insurance of $100/week, and you do an international flight each week also at $1000/rt. This still leaves you with $28,900/week pre-tax? What other major expenses can you see with private software consulting?
  - cperciva 10y ago
    A "rack rate" is not a typical rate, so he'd presumably take in less money than you're assuming. He lives in Japan and most of his customers would probably be in the USA, so if he wants to be able to function he should be flying business class. He also needs somewhere to stay, transportation, and food while in the customer's city; and it is the nature of consultancies to not have anywhere approaching 100% utilization, due to time spent on research, promotion, and networking, and the fact that gigs never fall neatly into your schedule. I'd guess that "full time consulting" would work out roughly along the lines of * Average billing per week of consulting: $15k * Round trip business class airfare: $3k * Hotel, food, transportation at destination: $2k * Profit per week of consulting: $10k * Weeks spent doing consulting per year: 20 * Take-home (gross) salary: $200k I'd guess this is more than Stripe pays him, but not dramatically more; and if I had a wife and child I would certainly prefer to not spend half the year away from them.
    - idlewords 10y ago
      Why not just ask him rather than derive it from first principles?
      - kchoudhu 10y ago
        That might puncture the brand-management force field.
        notabeliever 10y ago
        So much for Patio transparency
        mythrowaway99 10y ago
        Seems relevant: http://i.imgur.com/aTQzGZn.png http://i.imgur.com/aTQzGZn.png
    - patio11 10y ago
      If I were running a consultancy full-time, and didn't hire anyone, I'd model that as 35 billed weeks a year at $30k. Travel to a client is billed to the client separately via a magical sentence that Thomas taught me: "I will expense travel as per your standard travel policy." I'd assume roughly $50k to $100k in overhead (legal and tax advice, travel to conferences to do prospecting, etc). I have never ran a consultancy full-time, and didn't particularly want to start now. It was certainly an option, but spending a few years building Atlas seems much more fulfilling.
      - nstj 10y ago
        > I have never ran a consultancy full-time, and didn't particularly want to start now Just interested - does that mean that you've never actually been a full-time consultant? And do you really think that it's within the realm of possibility to pull $30k/week for 35 weeks/year? (ie: $1m+ after your $50-100k in expenses).
        kasey_junk 10y ago
        I don't know if Patrick could do that, but I've been on the other side of deals materially equivalent to those numbers. A 30k rack rate at those utilization rate is a high number but not an impossible one. It is not a number you will get for software contracting. It's one you'll get for solving business problems that cost/are worth much more to your clients than that. Sometimes that involves software.
        nstj 10y ago
        I don't doubt it. I've certainly seen people bill similarly (and obviously it doesn't involve writing that much code) - I'm just trying to put the pieces together in this context.
        tptacek 10y ago
        The examples I'm thinking about are entirely code-based, with virtually no business reasoning involved.
- cityzen 10y ago
  Read the blog post I linked to. There is a section that specifically says "What I did to earn those rates" that does not mention AT ALL that he is spending half/one third/some/very little money on travel and expenses. I've been independent for nearly 20 years and I rarely include travel and expenses into this big bucket called "RATE". The more I think about it, if a significant amount of that money was used for expenses than it makes the whole thing look quite bad. He even says at one point, "Spoiler alert: there is virtually no difference in the mechanics of work done between $100 an hour, $200 an hour, and $30k a week — all of the leveling up there is in sophistication on who you go after, what engagements you propose and deliver, and how you package things for clients." which would lead me to believe that he's just charging $30k a week, just as he would charge $100/hour. I think people need to just take this stuff with a grain of salt. i have worked with quite a few large companies over the years and I don't believe any of them would pay $30k a week for: "I combined a modest amount of programming skill (typically Rails, Ruby, and Javascript) with substantial experience with using engineering skills to move marketing/sales levers, including by doing SEO, email marketing, A/B testing, (light) UX design (typically around high-value parts of a SaaS business like signup flows or purchasing pathways), etc. I turned down essentially any gig which was strictly engineering in character and rather aggressively went after bigger projects which were “closer to the money” every couple of months.". That said, I could very easily see a company hiring someone for a $30k contract to do those things, the weekly rate just seems extremely misleading to people that are struggling to charge even $100/hr (which is not a bad rate by any means).
  - steveklabnik 10y ago
    I used to work in software training. We charged $4k/day as a base rate. Travel was charged separately. Most contracts were M-F. That's $20k/week, and that doesn't count that your employees weren't doing their jobs for that week, they were learning stuff. Also, literally our entire curriculum was open source, so it's not like that was secret sauce. Yeah, it's not the exact skills you're talking about, but it's similar. I guess I'm also confused about "I don't believe any of them would pay $30k a week for" vs "I could very easily see a company hiring someone for a $30k contract to do those things". Isn't hiring someone on a contract to do these things for a week consulting?

Net of what?

by nstj 10y ago

Net of what?

Expenses. ISTR that Patrick did a significant amount of travelling for consulting gigs. (Which may also be a reason for avoiding them now that he has a wife and child.)

nstj 10y ago
Sure - so let's say you have PI insurance of $100/week, and you do an international flight each week also at $1000/rt. This still leaves you with $28,900/week pre-tax? What other major expenses can you see with private software consulting?
- cperciva 10y ago
  A "rack rate" is not a typical rate, so he'd presumably take in less money than you're assuming. He lives in Japan and most of his customers would probably be in the USA, so if he wants to be able to function he should be flying business class. He also needs somewhere to stay, transportation, and food while in the customer's city; and it is the nature of consultancies to not have anywhere approaching 100% utilization, due to time spent on research, promotion, and networking, and the fact that gigs never fall neatly into your schedule. I'd guess that "full time consulting" would work out roughly along the lines of * Average billing per week of consulting: $15k * Round trip business class airfare: $3k * Hotel, food, transportation at destination: $2k * Profit per week of consulting: $10k * Weeks spent doing consulting per year: 20 * Take-home (gross) salary: $200k I'd guess this is more than Stripe pays him, but not dramatically more; and if I had a wife and child I would certainly prefer to not spend half the year away from them.
  - idlewords 10y ago
    Why not just ask him rather than derive it from first principles?
    - kchoudhu 10y ago
      That might puncture the brand-management force field.
      - notabeliever 10y ago
        So much for Patio transparency
      - mythrowaway99 10y ago
        Seems relevant: http://i.imgur.com/aTQzGZn.png http://i.imgur.com/aTQzGZn.png
  - patio11 10y ago
    If I were running a consultancy full-time, and didn't hire anyone, I'd model that as 35 billed weeks a year at $30k. Travel to a client is billed to the client separately via a magical sentence that Thomas taught me: "I will expense travel as per your standard travel policy." I'd assume roughly $50k to $100k in overhead (legal and tax advice, travel to conferences to do prospecting, etc). I have never ran a consultancy full-time, and didn't particularly want to start now. It was certainly an option, but spending a few years building Atlas seems much more fulfilling.
    - nstj 10y ago
      > I have never ran a consultancy full-time, and didn't particularly want to start now Just interested - does that mean that you've never actually been a full-time consultant? And do you really think that it's within the realm of possibility to pull $30k/week for 35 weeks/year? (ie: $1m+ after your $50-100k in expenses).
      - kasey_junk 10y ago
        I don't know if Patrick could do that, but I've been on the other side of deals materially equivalent to those numbers. A 30k rack rate at those utilization rate is a high number but not an impossible one. It is not a number you will get for software contracting. It's one you'll get for solving business problems that cost/are worth much more to your clients than that. Sometimes that involves software.
        nstj 10y ago
        I don't doubt it. I've certainly seen people bill similarly (and obviously it doesn't involve writing that much code) - I'm just trying to put the pieces together in this context.
        tptacek 10y ago
        The examples I'm thinking about are entirely code-based, with virtually no business reasoning involved.
cityzen 10y ago
Read the blog post I linked to. There is a section that specifically says "What I did to earn those rates" that does not mention AT ALL that he is spending half/one third/some/very little money on travel and expenses. I've been independent for nearly 20 years and I rarely include travel and expenses into this big bucket called "RATE". The more I think about it, if a significant amount of that money was used for expenses than it makes the whole thing look quite bad. He even says at one point, "Spoiler alert: there is virtually no difference in the mechanics of work done between $100 an hour, $200 an hour, and $30k a week — all of the leveling up there is in sophistication on who you go after, what engagements you propose and deliver, and how you package things for clients." which would lead me to believe that he's just charging $30k a week, just as he would charge $100/hour. I think people need to just take this stuff with a grain of salt. i have worked with quite a few large companies over the years and I don't believe any of them would pay $30k a week for: "I combined a modest amount of programming skill (typically Rails, Ruby, and Javascript) with substantial experience with using engineering skills to move marketing/sales levers, including by doing SEO, email marketing, A/B testing, (light) UX design (typically around high-value parts of a SaaS business like signup flows or purchasing pathways), etc. I turned down essentially any gig which was strictly engineering in character and rather aggressively went after bigger projects which were “closer to the money” every couple of months.". That said, I could very easily see a company hiring someone for a $30k contract to do those things, the weekly rate just seems extremely misleading to people that are struggling to charge even $100/hr (which is not a bad rate by any means).
- steveklabnik 10y ago
  I used to work in software training. We charged $4k/day as a base rate. Travel was charged separately. Most contracts were M-F. That's $20k/week, and that doesn't count that your employees weren't doing their jobs for that week, they were learning stuff. Also, literally our entire curriculum was open source, so it's not like that was secret sauce. Yeah, it's not the exact skills you're talking about, but it's similar. I guess I'm also confused about "I don't believe any of them would pay $30k a week for" vs "I could very easily see a company hiring someone for a $30k contract to do those things". Isn't hiring someone on a contract to do these things for a week consulting?