5 ms·

If consulting is making $30k/week/job then why keep running the personal businesses? Why not take the consulting and branch it out, and drop everything else as

by brador 12y ago

If consulting is making $30k/week/job then why keep running the personal businesses? Why not take the consulting and branch it out, and drop everything else as a distraction?

oskarth 12y ago
(a) Money isn't everything. (b) Over a long time horizon, selling a product is more profitable. EDIT: It's non-trivial to go from consulting to product development as part of the same business. It's often easier to use the money from consulting to start afresh.
- brador 12y ago
  That's what I meant by branching out. Productize the consulting, so he doesn't need to be there.
Axsuul 12y ago
Maybe his passion is to build something. I think we all get stuck initially chasing the dough but eventually realize it's not what we want.
patio11 12y ago
Because I enjoyed running the software business more than I enjoyed running the consultancy. Partly that is for difficult-to-explain personal reasons (I feel the sense of satisfaction with operating a software company that some people feel when painting things). Partly it is because of reasons which are endemic to consultancies, even successful consultancies. Feel free to ask if you're curious. I also have a quirky relationship to money as a goal. Rather little would change about my life if my salary increased by $800k. My hobbies would remain books, video games, taking my wife and daughter on walks, and posting too much on HN.
- bcg1 12y ago
  Not snark... serious question... its not clear to me what sort of services anyone could offer for 30k per week... what sort of thing commands that kind of price tag?
  - patio11 12y ago
    Making $20 million a year SaaS companies into $22 million a year SaaS companies. If you have reasonable expectation that I can actually deliver on that, then you're pretty much willing to say yes to any rate I quote. If you're curious "How does one turn a $20 million a year SaaS company into a $22 million a year SaaS company?", there exist many options depending on the specifics of the company and virtually all of them are doable. For example, if you increase the rate at which the SaaS company closes deals by a modest amount, that could reasonably hit that by itself. You could do that by some combination of A/B testing, better email marketing, tweaking sales processes, etc, alone or in combination. I've blogged pretty extensively on all those topics if you're curious. These are not necessarily all that technically complicated. If you can figure out ActionMailer, an if statement, and a for loop, you have every technical capability you need to be an engineer in charge of email marketing. The interesting bits are "What emails do I decide to send?", "What words go in those emails?", and "What goes in the if statement?" The actual work is exactly as dominated by meat-and-potatoes execution ability as you think it is.
    - robinhoode 12y ago
      What books can I read to, at the very least, attempt address the questions in your 3rd paragraph, given how unique every business is? Isn't anything you find a book on sales or marketing so abstract that it's 2 or 3 layers of assumptions before you can talk about projections? How does one begin a career in SaaS sales / marketing? What makes for a good "portfolio piece" in that domain?
      - kasey_junk 12y ago
        One of the things that has made Patrick a "tech. celebrity" is that he has written extensively and openly about this very topic. In particular his brand of uniqueness was to take a lot of things that engineers don't like and then turn it into an engineering problem. He didn't guess, he tested. Here is the amazing thing, he also did all of us a huge service and wrote it up and put it on the internet for everyone to find! If you haven't yet, spend as much time as you can diving in his blog. Every post he's written is worth the price of admission, but you could definitely limit your search to the ones that focus on the SaaS sales and marketing aspects.
- pa5tabear 12y ago
  I'm curious about the endemic reasons. Overall, is it that being closer to the product feels better? And did you really shake all the "weird feelings"/impostor syndrome about charging a high rate?
- toomuchtodo 12y ago
  For a tech celebrity, you're very "down to earth". I don't know a better compliment I could give.
- mbesto 12y ago
  I'll take a stab at the "why not build a consultancy business"... It's not scalable in any shape or form. Despite having aspirational goals early on, every consulting company falls into the trap of becoming a body-shop. It happens every. single. time. You begin to feel less satisfaction about your services and proposals to clients because you emphasize "our talent speaks for itself" and it's polarized by your clients desire to simply want to pay X for Y and don't care how, what, or who delivers it. Being a one-man shop means that right from the beginning your client's expectations are set on you being the right man for the job and they'll get Y because they're going to pay you X. At scale (I'm looking at you IBM, Accenture, etc) you end up fighting with cost center budgets, and spend more time trying to squeeze quality and scope within a set budget, or risk overspending budgets and end up looking like a bad services partner. Building a consultancy sounds awesome at first, looks awesome at first, and then it slowly burns you down.
  - tptacek 12y ago
    Another way of saying this is that scaling a consulting business involves a peculiar set of challenges which may or may not be animating for people like Patrick. :) I enjoyed the process of scaling Matasano; I only left because Erin and I were more engaged with the idea of making a dent in recruiting. Things one does to scale consultancies: * Refine a recruiting and hiring strategy to make it easier to staff larger number of projects. * Build ramp-up processes to take new consultants and get them to "billable" status quicker. * Play with service definitions and rate books, so that clients that need Patrick-level delivery can pay extra to get it, while clients that just need deterministic competent execution of tasks Patrick was good at 5 years ago can pay less to get someone without the name brand. * Develop systems to cross-train consultants so that more people get an opportunity to (a) watch Patrick deliver a project, (b) deliver a similar project themselves, and (c) help bring other consultants up to speed. Because revenue is so directly tied to performance and delivery in a consultancy, I think it's a pretty good lab for learning how to effectively manage people. It's also true that a lot of them just turn into body shops.
  - rev_bird 12y ago
    Horizontal scaling in consulting seems to be what you're so put off by, but I think at most lower levels, vertical scaling is still very possible. For me, at least for the forseeable future, I'm pretty solidly convinced that I can earn more money by studying and improving my tech skills than I could ever earn by taking a side-job that actually pays me dollars in my hand. Maybe one can "max out" and just know enough to get their job done, but I'm not there yet -- I frequently find myself ditching other opportunities for making short-term cash in favor of learning something new. That's why I would favor "building" over running a less profitable software business.
- MagicWishMonkey 12y ago
  How did you find your clients? Mostly through word of mouth?
davidw 12y ago
I was fortunate enough to be able to ask patio11 that same question at MicroConf Europe a few years back, and I was very heartened by the answer: it's not what he wanted to be doing.
waterside81 12y ago
I'm going to hazard a guess and say it's not sustained i.e. he's not charging $30k/week for 52 weeks straight. He gets a gig here or there and that's what he charges. I've charged $20k/week for consulting and it was week here or there, not for the whole year. But I may be wrong.
- MichaelGG 12y ago
  In his blog he says he was actually offered a full time "consultancy" position at $750K a year, IIRC.
mmcconnell1618 12y ago
Can you offer any insight into how many gigs per year you booked? I know utilization rates for consultants can vary greatly and I'm curious to find our more about the relationship between number of gigs and your increasing rates.
- patio11 12y ago
  The typical consultancy would try to sustain ~70% utilization (+/- 35 weeks worked per year). I was generally doing closer to 10, as it was a sideline to my software company. I am reasonably confident that I could have sold 35 weeks of availability, or 100 for that matter, if I wanted to run a multi-person consultancy (c.f. tptacek's comment).

by brador 12y ago

If consulting is making $30k/week/job then why keep running the personal businesses? Why not take the consulting and branch it out, and drop everything else as a distraction?

oskarth 12y ago

(a) Money isn't everything. (b) Over a long time horizon, selling a product is more profitable. EDIT: It's non-trivial to go from consulting to product development as part of the same business. It's often easier to use the money from consulting to start afresh.

brador 12y ago
That's what I meant by branching out. Productize the consulting, so he doesn't need to be there.

Axsuul 12y ago

Maybe his passion is to build something. I think we all get stuck initially chasing the dough but eventually realize it's not what we want.

patio11 12y ago

Because I enjoyed running the software business more than I enjoyed running the consultancy. Partly that is for difficult-to-explain personal reasons (I feel the sense of satisfaction with operating a software company that some people feel when painting things). Partly it is because of reasons which are endemic to consultancies, even successful consultancies. Feel free to ask if you're curious. I also have a quirky relationship to money as a goal. Rather little would change about my life if my salary increased by $800k. My hobbies would remain books, video games, taking my wife and daughter on walks, and posting too much on HN.

bcg1 12y ago
Not snark... serious question... its not clear to me what sort of services anyone could offer for 30k per week... what sort of thing commands that kind of price tag?
- patio11 12y ago
  Making $20 million a year SaaS companies into $22 million a year SaaS companies. If you have reasonable expectation that I can actually deliver on that, then you're pretty much willing to say yes to any rate I quote. If you're curious "How does one turn a $20 million a year SaaS company into a $22 million a year SaaS company?", there exist many options depending on the specifics of the company and virtually all of them are doable. For example, if you increase the rate at which the SaaS company closes deals by a modest amount, that could reasonably hit that by itself. You could do that by some combination of A/B testing, better email marketing, tweaking sales processes, etc, alone or in combination. I've blogged pretty extensively on all those topics if you're curious. These are not necessarily all that technically complicated. If you can figure out ActionMailer, an if statement, and a for loop, you have every technical capability you need to be an engineer in charge of email marketing. The interesting bits are "What emails do I decide to send?", "What words go in those emails?", and "What goes in the if statement?" The actual work is exactly as dominated by meat-and-potatoes execution ability as you think it is.
  - robinhoode 12y ago
    What books can I read to, at the very least, attempt address the questions in your 3rd paragraph, given how unique every business is? Isn't anything you find a book on sales or marketing so abstract that it's 2 or 3 layers of assumptions before you can talk about projections? How does one begin a career in SaaS sales / marketing? What makes for a good "portfolio piece" in that domain?
    - kasey_junk 12y ago
      One of the things that has made Patrick a "tech. celebrity" is that he has written extensively and openly about this very topic. In particular his brand of uniqueness was to take a lot of things that engineers don't like and then turn it into an engineering problem. He didn't guess, he tested. Here is the amazing thing, he also did all of us a huge service and wrote it up and put it on the internet for everyone to find! If you haven't yet, spend as much time as you can diving in his blog. Every post he's written is worth the price of admission, but you could definitely limit your search to the ones that focus on the SaaS sales and marketing aspects.
pa5tabear 12y ago
I'm curious about the endemic reasons. Overall, is it that being closer to the product feels better? And did you really shake all the "weird feelings"/impostor syndrome about charging a high rate?
toomuchtodo 12y ago
For a tech celebrity, you're very "down to earth". I don't know a better compliment I could give.
mbesto 12y ago
I'll take a stab at the "why not build a consultancy business"... It's not scalable in any shape or form. Despite having aspirational goals early on, every consulting company falls into the trap of becoming a body-shop. It happens every. single. time. You begin to feel less satisfaction about your services and proposals to clients because you emphasize "our talent speaks for itself" and it's polarized by your clients desire to simply want to pay X for Y and don't care how, what, or who delivers it. Being a one-man shop means that right from the beginning your client's expectations are set on you being the right man for the job and they'll get Y because they're going to pay you X. At scale (I'm looking at you IBM, Accenture, etc) you end up fighting with cost center budgets, and spend more time trying to squeeze quality and scope within a set budget, or risk overspending budgets and end up looking like a bad services partner. Building a consultancy sounds awesome at first, looks awesome at first, and then it slowly burns you down.
- tptacek 12y ago
  Another way of saying this is that scaling a consulting business involves a peculiar set of challenges which may or may not be animating for people like Patrick. :) I enjoyed the process of scaling Matasano; I only left because Erin and I were more engaged with the idea of making a dent in recruiting. Things one does to scale consultancies: * Refine a recruiting and hiring strategy to make it easier to staff larger number of projects. * Build ramp-up processes to take new consultants and get them to "billable" status quicker. * Play with service definitions and rate books, so that clients that need Patrick-level delivery can pay extra to get it, while clients that just need deterministic competent execution of tasks Patrick was good at 5 years ago can pay less to get someone without the name brand. * Develop systems to cross-train consultants so that more people get an opportunity to (a) watch Patrick deliver a project, (b) deliver a similar project themselves, and (c) help bring other consultants up to speed. Because revenue is so directly tied to performance and delivery in a consultancy, I think it's a pretty good lab for learning how to effectively manage people. It's also true that a lot of them just turn into body shops.
- rev_bird 12y ago
  Horizontal scaling in consulting seems to be what you're so put off by, but I think at most lower levels, vertical scaling is still very possible. For me, at least for the forseeable future, I'm pretty solidly convinced that I can earn more money by studying and improving my tech skills than I could ever earn by taking a side-job that actually pays me dollars in my hand. Maybe one can "max out" and just know enough to get their job done, but I'm not there yet -- I frequently find myself ditching other opportunities for making short-term cash in favor of learning something new. That's why I would favor "building" over running a less profitable software business.
MagicWishMonkey 12y ago
How did you find your clients? Mostly through word of mouth?

davidw 12y ago

I was fortunate enough to be able to ask patio11 that same question at MicroConf Europe a few years back, and I was very heartened by the answer: it's not what he wanted to be doing.

waterside81 12y ago

I'm going to hazard a guess and say it's not sustained i.e. he's not charging $30k/week for 52 weeks straight. He gets a gig here or there and that's what he charges. I've charged $20k/week for consulting and it was week here or there, not for the whole year. But I may be wrong.

MichaelGG 12y ago
In his blog he says he was actually offered a full time "consultancy" position at $750K a year, IIRC.

mmcconnell1618 12y ago

Can you offer any insight into how many gigs per year you booked? I know utilization rates for consultants can vary greatly and I'm curious to find our more about the relationship between number of gigs and your increasing rates.

patio11 12y ago
The typical consultancy would try to sustain ~70% utilization (+/- 35 weeks worked per year). I was generally doing closer to 10, as it was a sideline to my software company. I am reasonably confident that I could have sold 35 weeks of availability, or 100 for that matter, if I wanted to run a multi-person consultancy (c.f. tptacek's comment).