I want to specifically address 1) Sam Altman and 2) Chris Fry's respective points about the problems with regards to models that align with the candidate more directly (like ours):

1) Much respect for Sam, but he's dead wrong with respect to the 'negative selection' problem - yes, good people have no problem finding work, but the key problem is that the opportunity cost remains phenomenally high for suboptimal decision making. We have actually worked with outstanding engineers who are at YC portfolio companies, simply because they wouldn't have known how to get what they're worth otherwise and push for more. And Sam is missing the point entirely with regards to worth - people in the industry are not getting paid based on their merit - not at all. The gender wage gap is perhaps the most stark example of this, but we see it, starkly, along many other demographic slices as well.

2) With respect to Chris Fry's comments - I was actually in Twitter's eng org when Chris raised the internal engineering referral bonus from 2.5k to 10k because the company wasn't getting the volume of quality people it wanted. Chris is a really great guy, but I find his point about "[at] Twitter, you get the best résumés on your desk already [via recruiting department, referrals, etc]" somewhat misleading - there's no way he would have raised the referral bonus as sharply as he did if he really felt that. In fact, there wouldn't have to be an referral bonus structure at all. Twitter is wonderful, and I loved my time there, but even there we weren't getting all the high-quality people we wanted.

[#plug: check out http://OfferLetter.io - we all deserve to get what we're worth]

The problem is they charge 15% of ALL of my income for that privilege and don't make any guarantees. Why should I pay them over $2k a month for them to possibly make me new sales when I'm already capable of keeping myself booked the majority of the time?

The whole thing reeked of predation to me. If they're really able to provide more value than they take from me, then they should only be charging me a commission on the sales they bring in.

That all seems unlikely in the case of 10x.

Contract programmers on the other hand, generally receive their compensation for a project in cold, hard cash, without any lucrative sidelines in selling T-shirts with pictures of their face to manage, or concerns over whether taking on a project for Yahoo will dilute their brand equity or boost their autobiography sales. It's difficult to see where 10X adds the value in cases where they're not finding the work. Interview coaching and advice on upping your rate is not hard to find; any recruiter that does have a position will offer it without wanting a piece of your existing income.

FWIW over at http://OfferLetter.io, we spent a lot of time figuring out the right pricing model - We let the candidate choose either %-contingency-on-increase, or flat-fee. This seemed to be the best route for incentive alignment. If you have any other ideas for pricing models that work well, do let me know! mallyvai-at-offerletter.io

[We discarded the %-of-net-compensation model - it felt too extreme, and it wasn't clear we could add sufficient value in every case.]

One thing we could do is work with more recruiters more aggressively for data and guidance - ping them every conversation for example, instead of for larger industry trends. But we'll have to see if that could truly add value.

Asking for a 15% draw against all income is ridiculous.

You can train and optimize your negotiation skills all you want, but in my opinion it is extremely valuable to separate the "talent" from the "money". Top performers, no matter in what industry, are usually extremely passionated about their craft and undervalue the monetary value they can bring to the table.

Having a third party represent them puts a "neutral" monetary evaluation on them. Good management allows a much more strategic long-term development that focuses on value building and not just opportunity hopping.

Also, our fee structure is much more reasonable than an agent's - we're charging 20-30% of the cash increase, or a $2k flat fee, whichever folks feel is more reasonable. Incentive alignment is important, but there are also cases where candidate may get a huge bump in equity they can't can't necessarily pay us out of.

It'd be interesting to consider derivatives-based model in the future to align incentives better by capturing the value of the equity increase, but that's a long ways off, and not terribly important to us at the moment.

I wrote about this, and I think it's a useful idea, although it has some ethical issues (around whether one can trust the consultant to deliver) that need to be nailed down: http://michaelochurch.wordpress.com/2013/05/07/fixing-employ...

Well, from experience in the music industry, it seems that the person doing the hard work (the artist) most often is on the bad end of the deal, while all the middle-men are laughing their way to the bank.

I'm just saying that analogies are not always to be relied upon.

(Also, a 15-20% management fee is totally not reasonable, except if it is time-limited.)

No, the person assuming the most risk, the label pushing large sums of money in promotion in a high risk investment, gets the most money.

But the DoE, CIA, and NSA will always pay better, have greater challenges, and have a much wider net to cast than twitter, The Zuck, or Google ever will. Why? Capitalism doesn't work at the end of tank barrels.

It not google that twitter is really competing with, its the Air Force and DoD.

Also, thank you very much for pointing out the gender wage gaps here. It is an obvious and clear example of sexism distorting market capitalism.

There is an enormous psychological component to this, and just knowing market rates and ranges for various companies is enormously important, but is only part of the problem (otherwise WealthFront and Glassdoor would have solved this problem already). Getting the right counteroffers and navigating the personal psychology here are enormously important too. That's where we differentiate ourselves with our expertise and guidance :-)

First, it was conducted by Dice, which is a "career hub" that is going to have some sort of subset of overall users. It wasn't a group that was carefully selected to represent the overall market. It's not a scientific survey.

Second, these are for "tech positions", not engineer positions. No technical job is even on the list for women!

Third, this survey only counts employed people. What about all the women who can't find work in their field? Given the fact that engineering is not a top-five "tech job" for women, I'd wager that many female engineers have trouble finding pure engineering jobs and must find something that people believe they're qualified for.

On a semi-related note, I strongly recommend that everyone on HN listen to this: http://www.npr.org/blogs/money/2014/10/21/357629765/when-wom...

You need to actively recruit talent, which means understanding what you're looking for. Building nginx modules? Go through github and see who's built an nginx module before. Do a google search for "nginx module development" and see where that leads. Then send out brief but targeted emails to people you sincerely want to join your team.

There's a ton of developers who aren't actively looking, but presented with the opportunity, they'll jump. I don't know a single developer who isn't flattered and intrigued by a sincere cold call for employment from an actual company (they're pretty easy to filter from agencies)

Second, money and ___location are a big deal. "We can't find developers" really means "We can't find developers who want to work for this salary and/or at this ___location." I remember not too long ago, our startup had a budget for 10 new developers, which we just couldn't fill. Our CTO and CEO 100% refused to get 5 developers and pay them 2x. So instead we stayed 10 people short, for over a year, while "hiring remains a top priority."

TL;DR - If hiring is important, spend the necessary time on it, don't just pay it lip service.

The other side of this is tying up America's top brainpower on banal stuff. As Jeff Hammerbacher of Facebook said, "The best minds of my generation are thinking about how to make people click ads. That sucks." It's either that or quantitative finance to make big money. ("Apps" are a zillion people chasing a market with about 20 big winners.) Two good robotics people I know went to hedge funds.

The problem worsens when one considers that many people realize this issue, but then says, "Oh sure, but we are one of the 5% that really needs these people!" - but if you add up how many folks make that claim, clearly that's not always the case.

If people actually filtered for only what was actually necessary to perform their open positions, I think they'd find that the developer shortage isn't as bad as they believe.

  > You need to actively recruit talent, which means
  > understanding what you're looking for. Building 
  > nginx modules?

If you need that nginx module built and can't figure out how, get that guy whose done a dozen of them before for a month.

If you want someone to add to the team, looking for very specific skills is going to cause you to repeat this process so in three months no one is around who can optimize an SQL query and you need a specialist for that.

Of course, that only works if your permanent employee is not willing to jump ship to be the temp contractor with specialist skills and specific experience somewhere else.

There must be some valid reason why businesses would pay more for recruiting than for training and retention, but I am not familiar with it.

I feel like there exists a market for getting start-ups launched on the right foot. Twelve weeks (480 hours) for $1,000,000 with a bonafide rockstar to get your concept not only up and running but well designed to be carried forward. Do you guys think people would pay that? If no, how much do you think people would spend?

If your idea is good and the work is good it would easily be worth it. Of course proving that you can deliver ahead of time is more than a little difficult.

To share an anecdote: I was having a chat with a HNWI who wanted to "get into startups" about the cost of launching a product that he was thinking about (something similar in complexity to OpenTable). He had very high estimates in mind, something along the lines of what you're talking about and half a year.

I told him it was probably possible to do it much faster by employing experienced developers at a high hourly rate but whose experience would drastically cut both mistake time and planning time. He asked me to get him a quote, so I contacted two guys I knew from the functional programming meetups, both with PhDs and recently published papers, both with half a decade experience in a big famous company based in Silicon Valley, both having worked with each other on consulting projects for years, and they spent a week drafting a rough, serious quote.

The estimate came to around 25-40x cheaper than what you're talking about, and two months (part-time, on the side of their research work) to launch + USD 2k/month post launch to maintain it with no new features.

Of course, the HNWI changed his mind (in part due to a co-investor on another project who objected to the "high" estimate and told him to use free or cheap fresh grads instead... welcome to the world outside the US) and I profusely apologised to my contacts for having wasted their time, but it did put an order of magnitude on the "high quality contracting" idea.

A few weeks later he e-mailed back asking how much he would have paid if that friendly chat with an official consulting job. The answer was around $10,000. Yes it was only 2-3 hours of time, but built upon thousands of hours of experience. And the changes they could immediately implement would generate more than $10k in increased revenue so it would easily be worth it.

My point here is that it doesn't matter jack shit how many hours are spent on a project or how cheaply it could be done. What's infinitely more important is how much money can be made. If you can get more money out than you put in and putting more money in means you get more out then you put as much in as you can afford. Now for someone to plop down a million bucks on three months worth of work means they'd have to be unusually confident in a project's chances of success. So that number I gave is pretty high. However paying big money to a seasoned vet to get the ball rolling makes an unbelievable amount of sense.

Needless to say, times change. At present, Patrick's consulting rate is somewhere north of $30K a week [6], and dare I say it, I'm sure he's worth every penny of it for the right companies.

[1] http://www.kalzumeus.com/2011/07/08/business-psychology/ [2] http://productpeople.tv/2012/12/26/patio11-part2/ [3] https://news.ycombinator.com/user?id=patio11 [4] https://news.ycombinator.com/user?id=tptacek [5] https://news.ycombinator.com/leaders [6] https://news.ycombinator.com/item?id=8574541

Even if it was their idea (aka no communication and decision overhead, working 16hours/day), two month is pushing it.

If you have tight, modular code following good practices (e.g. a relational backend, not an ORM), you have experience doing it before, there's no micro-manager, and with a clearly defined, functional spec, you can build robust things that scale well relatively quickly. We're not talking about a new Facebook here, merely copying 80% of the functionality of an existing product for a launch in markets with no competition, as greenfield. Also, it's not like a site like that would reach a million users in a couple of months, nor would it win design awards, but why should it? It just needs to process transactions accurately and list a bunch of shops across a few countries.

I do think that the global market for programming talent is like that for real estate here in Singapore: I pay around 2 grand a month, and my neighbours across the street something like 8-10 for the same space. It is what it is. You'd be amazed how "cheap" it can be to hire a greybeard these days, sometimes less than twice a fresh Stanford grad...

>It just needs to process transactions accurately and list a bunch of shops across a few countries.

Yes, I hear this kind of off-the-cuff assessment frequently from potential clients, and I turn them down if I'm not able to help them see the complexity often involved.

After all, opentable is a restaurant reservation system for the entire world.

>You'd be amazed how "cheap" it can be to hire a greybeard these days, sometimes less than twice a fresh Stanford grad...

This is true, and the open ageism among SV companies makes me incredibly sad.

Knowing how/where you can effectively add caching, or even pre-aggregated data into an existing system can be the difference between a system going under, and being able to keep the single-instance database server from collapsing your business while a new system can be established.

Two months, with two experienced engineers should totally be enough. Sure it's not going to have all the bells and whistles but it should at least be a very very good better than MVP.

Given that

(a) most start-ups fail,

(b) the reason for failure is very rarely due to some irreversible technical error in the early stages of development,

(c) the kind of quality a really good developer can offer is much more valuable later, when you've thrown out the initial junk implementation that got you some customers and need higher quality to start scaling up/out,

(d) you'd need serious outside investment to be able to afford even one person at that rate, and

(e) there are plenty of smart people who could and would produce a useful baseline product for a typical start-up in 12 weeks for a lot less than a million bucks,

I suspect you are being highly optimistic about the size of that market.

Do you guys think people would pay that? If no, how much do you think people would spend?

I know they wouldn't. Most bootstrapped start-ups have enough trouble keeping the power on for the first three months, and no start-up with experienced investors is going to take that kind of proposition seriously. Why do you think most start-ups are so keen to offer long-term, success-based compensation for employees who work crazy hours rather than offering real money at market rates for normal working days, and why do you think so many competent developers now insist on market rates and normal working days anyway?

If you're a freelancer/contractor/consultant type then taking on start-ups as clients is like being a small business trying to sell to students: they want the moon on a stick, but most of them have no money.

If you would need 8 lesser devs to do what 2-3 very skilled devs can do, for only 2x-3x the amount.. you'd be surprised what the differences are... I've cleaned up enough code to know the difference.

And good call on the price being for an MVP. It doesn't really matter how many people are working on it or, for the most part, how long it takes. You're paying for a product. If that happens to be done by one person or four then so be it.

They're inevitably junior-heavy, supervised by 2 or 3 year seniors, who do a reasonable job of keeping things in line but there's only so much you can do. The code ticks all the boxes for testing, etc, but is far from inspired and usually built with the present, not the future, in mind. There are uncomfortable organisational incentives to not over-deliver in quality - wouldn't want changes and maintenance to be too easy, and it's not like the client is tech-savvy or they wouldn't be hiring a "name" shop in the first place.

Most really good programmers who know their value (that I know, anyway) are working for product companies, where quality is visible, valued, and rewarded, or are highly-paid consultants/freelancers.

I've been in this part of the market for a while (getting startups to launch). There are very few people who have that kind of money to drop on initial development, usually you're talking about 1/10 of that at most.

The companies that do have that kind of funds are not looking for an individual "rockstar", they're looking for a nice established company that gives them confidence and can be sued if things go wrong.

This is why most startups "pivot".

A true rock star is not the guy who can code up a great system. It is the guy who can see the pivot coming before you ever start writing code, and get you on the right track from day one.

I'm not saying 10X Management is an example, but why can't individual programming be valued like, say, acting/singing etc.?

Hate to toot my own horn, particularly as I no longer do much consulting, but if a hypothetical software company said "OK we have a product and it works but we can't convince our Dev team to build marketing plumbing and they don't know where to start even if we ask" one could hypothetically have called me up, gotten advice like "You should probably do lifecycle email", and if you were incapable of shipping that yourself in two weeks I could fix that for you for $X0,000.

It works similarly if you need a crypto system validated, etc etc.

That is, how do you decide to specialize in a marketable niche? Sure, if I already knew the marketing business I could probably worm my way into doing marketing contracting. Similarly, if I were an expert in cryptography I could start fielding requests.

What if, however, I'm just a proficient developer qualified in relatively mainstream technologies. By simple analysis of economic principles, I'm not highly valued due to the availability of general talent, so I have to subspecialize in some valuable niche. But how do I choose that specialty ahead of time? I can always choose an arbitrary specialty, but it's possible the demand isn't there.

My specialty, for example, may be in compilers, but I have an inkling feeling that being able to untwist some truly horrific legacy Win32 COM garbage may be the more lucrative endeavor. How do I test these theories without wasting a huge amount of time and money?

Take buyers and sellers of technology services out to coffee and ask what they buy/sell and what they would buy/sell but for the impossibility of finding it in the market.

For example, you could take me out to coffee. It's no secret what I would tell you there, since it is practically in 50ft tall fire letters on my blog: When I was consulting, I made systems which made software companies lots of money, most typically by applying engineering tactics to marketing/sales ends for them. The prototypical deliverable was "Your SaaS app now sends a lifecycle email campaign." My sweet-spot client is a software company with $10 million to $50 million a year in annual sales. (There exist hundreds of these, most of whom will never even be mentioned on HN, in any context.) I am not particularly a supergenius with copywriting -- I just apply a bit of formula, horse sense, and personal experience with experimentation, and it works much of the time. I picked it up with a bit of reading and a lot of doing. Do I think that the average HNer could do this 6 weeks after having announced an intention to seriously start doing this? Yes. Can my average consulting client find someone to do this full-time for them? No, not for love or money. Do I think this niche would support a consultancy full-time? Yes. This tiny little sliver of the global economy would support ten clones of my consultancy, selling 30 weeks a year, without coming close to satisfying market demand for this service.

Price is a signal that the market generates to cue potential service providers that there exists unsatisfied demand for a service. The fact that the market does not clear in e.g. marketing technology or cryptosystem verification or what have you, even at rates in the $20k+ a week region, should signal "Well, that would be a lucrative practice to be in."

And this is coming from someone who remembers reading stuff from you on Joel's Business of Software forums, so it's not like I haven't seen the full path from BCC to consulting to AppointmentReminder . . .

Personally, I fall into the trap of thinking, oh, I couldn't do that unless I master <insert obscure tech at the Knuth level here>. Which is clearly just not the differentiating skill here . . .

Building and running a company worth lots of money when we sold it, yes, took 8 years. But getting the company into the right trajectory to do that --- fits and starts, blind alleys aside --- was nothing like that much work.

Some things take "10,000 hours" to get good at, but a lot of really valuable stuff takes more like 100.

Just didn't ever know that entrepreneurship was an actual option for people. Coming from a risk-averse and somewhat fatalistic family/peer group wrt work/career control hasn't helped.

One of the best parts of HN is actually reading contributions from people like you and Patrick that break down what are frankly self-limiting thought patterns.

It's statements like this where I very carefully consider tossing my day gig aside and committing for 12-16 weeks. Just to see if its true.

>Take buyers and sellers of technology services out to coffee and ask what they buy/sell and what they would buy/sell but for the impossibility of finding it in the market.

How do you even know who those people are?

Thomas' company was, IIRC, my 2nd or 3rd client. He knew me from HN and the ability to talk about a topic of interest to his business over a cup of coffee. Take a look at his writeup of our conversation. You can reasonably assume that our consulting gig involved humming similar bars.

As to who in general buys programming services: go to meetups or events. Talk to people. If they buy, problem solved. If they sell, ask who (in general terms, if you're uncomfortable) buys from them. To a first approximation, everyone who has ever hired a programmer will again, at some point in the future, again hire a programmer. Same goes for consultants, etc.

If you just want to learn about realities of industry work passively, doing it for a few years is also an option. After you've built CRUD apps in a non-tech employer for 6 months you should have a 98% accurate mental model of which businesses routinely buy software in a fashion other than available-totally-off-the-shelf.

Another heuristic you can use is that one white collar employee represents $200k a year in revenue and that anyone with $10 million in revenue probably could benefit from custom software development.

Beyond that, most contract ICs are used as temporary headcount padding that are subject to much laxer hiring standards than full-time ICs.

For example, I could probably build in 10 hours a customized, nice-looking Twitter bootstrap Rails site with Stripe integration and deploy it onto EC2 and set up Capistrano to integrate with whatever existing Github flow they have...but then when it comes to building the admin...um...developing the admin from a technical standpoint is non-trivial, but developing it in such a way that it is hassle free from the client...How exactly does the developer do that, without extensive consultation time with the client? And what if their in-house developer (let's pretend they have one who is competent) doesn't have a workflow like I imagine a good workflow should be?

In other words, I'm having a hard time imagining what a rockstar developer could singlehandedly create that would be spectacular and would be something that that mortals can use and maintain on their own...but obviously that's why I'm not a $200+/hr freelance developer.

"How exactly does the developer do that, without extensive consultation time with the client?"

Well yes you answer your question yourself - top 10% rates are for those who can make the customer happy with the result without having to drag exact specifications, kicking and screaming, from somebody who doesn't want to deal with all those details.

(also, here is the first hint: somebody who thinks about '200$/hour' has the wrong mentality. I do projects where my rate is that, but I never ever (ever) put it that way. Sell services based on benefits or value for the customer, not on how many hours you're going to spend. Nobody cares whether you've spend 6 weeks working 100 hours a week, or if you send 5 emails with the right words to a few people and wrote 100 lines of software on a lazy sunday afternoon. Effort: irrelevant, make customer happy: only thing that matters.)

"This box thing appears here. It should have X Y Z info from the object" which was born from "Let our customers know about the new object".

Aren't you going to see a lot of the same requirements from projects as a consultant? If so, then you're just implementing something you've already done before, +/- some unique features. So if you're something like a 10x consultant or a $200/hr consultant, are you doing that because you're dealing with new problems constantly? I'm a little less impressed if someone can command that rate and has done 20-30-50+ projects in the past that are mostly the same thing. That's just paying for experience.

Nobody is doing that AFAICT, it's just why being a consultant is different from having a job.

"Aren't you going to see a lot of the same requirements from projects as a consultant? <snip> That's just paying for experience."

Well sure. It's the experience and the ___domain knowledge that makes that somebody can do something at a higher speed than someone else, and that somebody knows what a customer is looking for without them having to spell it all out. I'm nobody special, and I'm certainly not claiming that I'm a '10x consultant' in the sense that I'm 10x better than the average or whatever. I was just reflecting on the underlying mis-assumptions in the GP's question.

Also, it's not because somebody bills 200/hour that they make 2004050 per year. Jobs are not like doing consulting. I'm doing OK, but (after discounting for everything) I'm making roughly what a senior employee would. Some do better, again I'm not claiming I'm anything special (and I guess I shouldn't have made this about me by mentioning an example from my own work) but some of the 'calculations' I've seen in this thread are nonsense. It's like people saying 'Mohammed Ali made x million per second in his fights'. Uh, sure.

Product manager is an imperfect solution to a problem your customer doesn't care about any more than he cares about the name of the obscure sorting algorithm you used to scale his system 1000x.

Really, everybody reading this (yes also those in the UK!), if you are an experienced or senior software engineer and you're billing yourself out at these rates ($1000 a day), you're leaving money on the table. If the mentioned work is what I consider 'data science' (i.e., advanced applied statistics requiring fair amounts of high-end, performant software engineering), then $1000/day is really low if it's for anything more than what somebody can do as a weekend gig next to their day job.

You don't want to charge $50/hr then end up doing 2-3 hours extra work because the client uses IE7 and that was never part of the spec, but now you have to make it work with IE7. If you decide to charge them for the 2-3 hours of extra work, they are going to think you're nickel and dimeing them. But if you charge them $200/hr upfront, you now have a buffer, so you just take it care, and it will be like you're a wizard.

If it turns out the task was super easy, and the client is happy with the first revision, then you always have the option of reducing their bill. That is always better than increasing it.

1. Times I'm not working, the effort of finding clients, etc. A standard job ensures that I have work next week (at least, in general) and comes with much longer lead-ins to periods that I'm not working for them, so I don't have to charge (as much of) a regular employer to cover that situation.

2. Training and research. Keeping my skills up-to-date is something I've insisted from employers and just silently charge for when free lancing. Things like covering books or other training materials, sending me to conferences, etc. (In essence, you're paying my 20% time and reading materials during the hours I bill for rather than during the hours I'm 20%-ing or reading.)

3. Most employers will provide some kind of benefits, which I have to cover personally and which cost more as a freelancer. This causes not only my hourly rate to sound higher, but the employer to actually have to pay more, because generally companies get discounts on group insurance. (I'm rolling the differences in dealing with taxes in here.)

4. This one varies by person, but I don't charge for certain kinds of short communications, directly. My rule is generally that synchronous communications always cost money, and asynchronous communications with <15 min of my time invested don't. I find it's easier to just charge more on the core work hours than try to bill for the 30 ~2min emails you sent me over the course of the project.

Together, these make the free-lancing price sound higher, but actually comes out pretty close to what the cost-to-employer is, which is normally higher than the pay rate of the employee, once benefits, training, etc are factored in.

You're number one mission whenever you get a contract is to understand the business and figure out how you can get them making more money.

That's the secret; you should always be framing your services as an investment. Demonstrate how you're going to raise their revenues (and do it!) so that it when it comes time for contract renewal, your worth is easily demonstrable (you paid X in exchange for Y millions).

This is a nice theory, much promoted on HN by a few high profile posters a while back.

Unfortunately, it doesn't necessarily scale well beyond a team size of 1. This may or may not be a problem, depending on the kind of work you want to do.

It's also worth noting that if you're going to play that game, you need to be much more of an all-rounder than just someone with technical skills. This will suit some people very well, but it's not for everyone.

In short, demonstrating a direct return on investment is a safe and reliable way to convince clients of your worth if you have the option, but it isn't the only way.

There are also many ways that any organisation with more than one person contributing could collectively achieve good results, while any given individual personally made anything from a disproportionately positive to a negative contribution.

As I said, demonstrating your personal worth through a direct measurement of your contribution is not necessarily easy with team sizes greater than 1.

If we're discussing $200+/hr consultants, you're going to do yourself a disservice if you don't find some way of objectively measuring your contribution.

No one ever argues with increases to the bottom line, so start there.

Even then, unless the training is in some convenient sales/marketing field where the resulting conversions are easy to quantify, you may not be able to put a dollar amount on the long term value of the knowledge and insights your people gained from the training for a long time.

As an extreme example, consider the possibility of a one-day training course for software developers taught by a world class expert for $10K. Maybe one of your developers learned a new defensive programming technique five hours into that day, and that technique later prevented a bug that would have cost your business $1M to rectify. Obviously that training had a very high return on investment, but how is the trainer supposed to demonstrate that to his next client?

For the rest of the training market it would come down to a client requirement for the service, general qualification to do the job, and typical market price - existing budgets and product pricing kicks in at this point rather than ROI on specific individuals or teams. We see this in the dev contract market as well and that's what the article is about - commodity resource vs stars.

tl;dr if you can't demonstrate exceptional value, you will trend towards commodity.

Outside of really small organizations where you can have direct control of all parties, guaranteeing increased revenues (and/or profits) is pretty damn hard.

Guaranteeing lower costs, faster operations, increased efficiencies, etc., is easier to achieve, because it's largely within your scope (speaking from a software perspective).

But keep looking for the revenue lift opportunities. Even if you're kept from doing the "right thing", continue to be vocal about your position. If it has validity, eventually it's going to play out and at least you will have a "told you so" when your contract comes up for renewal.

Sometimes you win. Sometimes you lose. Sometimes you say "I told you so" and they say "fuck off" and you part ways.

I've done a number of projects for $200 per hour. To me, the biggest differences are:

1) Business knowledge. I work full time at an investment bank but I also do side work. I spent 350 hours per test studying for the three CFA (Chartered Financial Analyst) tests. They have nothing to do with technology obviously - they are widely considered the hardest tests in finance. The years I took the tests, I took them with multiple business people from my firm where I ended up passing and the business people ended up failing. Business knowledge is the single largest thing that will gain you respect (and a higher rate) from a company.

2) Full stack knowledge. When a client's website is down, he doesn't want to hear, "OK then. I've checked all my code and it is just fine. This is a database problem. I'll forward this to the DBAs." They want you to fix the problem no matter where it lies.

For example, I could probably build in 10 hours a customized, nice-looking Twitter bootstrap Rails site with Stripe integration and deploy it onto EC2 and set up Capistrano to integrate with whatever existing Github flow they have

You're obviously new and sincerely inquiring, but I'll tell you - writing what you wrote here shows just how new you are. Anyone can build an app with a lot of moving parts "in 10 hours". Ya know what that's called? A prototype. It doesn't have proper error handling in it, it doesn't have proper logging, it doesn't have proper monitoring, it doesn't have proper business logic, it doesn't have proper features, etc. The 10 hour prototype you built is probably 10% of the actual project. A $200 per hour software engineer with business knowledge and full stack skills knows that.

You need a full blown add-hoc reporting system customized to your system, in two weeks? No problem! The system already exists, it's just a matter of integrating it. And then they go looking for another company that needs a reporting system. The good ones will have more than one trick up their sleeve, but it will be basically the same thing over and over. That's how it gets done so fast. It's easy to integrate OAuth2 into somebody's site when you've done it a hundred times before.

In my 15+ year career I've not met a single person who could do this. Not even close.

I'm not doubting your abilities as a developer, just pointing out the typical oversimplification of scope and underestimation of effort that happens in software development. This is why software projects are always 'late' and 'over-budget'

The specific technologies that danso mentions are crucial for two reasons.

First, danso probably already has lots of experience with those pieces. Second, those aren't the buzzwords of the month, they're specific technologies that developers choose to use because they're force-multipliers.

Go back 10 years and I'd share your disbelief at the 10-hour time frame for the given task. It would take me at least 10 hours just to figure out where I can host the site! Twitter Bootstrap makes nice-looking design so easy to build, compared to 10 years ago where I'd easily burn hours trying to get the CSS to look right and it'd still end up looking like a programmer made it.

Rails could have several models generated in the same time it takes me to setup PHP to connect to the database.

Stripe's main claim to fame is that Paypal's API sucks. Go skim the Rails guide for Stripe: https://stripe.com/docs/checkout/guides/rails (Paypal's documentation has improved lately though.)

10 hours is not a lot, but leveraging current technologies makes a large portion of this task totally feasible.

OTOH, there's this quote about the underestimation of time required, popularized in 1985 which still rings true today:

"The first 90 percent of the code accounts for the first 90 percent of the development time. The remaining 10 percent of the code accounts for the other 90 percent of the development time." —Tom Cargill, Bell Labs

But the respect should flow both ways here too. Treat your client and project professionally - answer calls, answer emails, show up to meetings when you say you will, etc. It's amazing how many people don't do those sorts of things. Really. I'm forever amazed at how low the professionalism bar is in our industry.

Having a higher bill rate allows you a bit of negotiating room if you need it - easier to come down from $150/hour to, say, $125/hour if need be. It's easier to comp a meeting to someone, or not always invoice for travel time. I've got colleagues billing $40/hr, and asking "should I bill for travel time to the meeting? How about the drive back home?" The idea of getting on a plane and flying to a client meeting, and getting a hotel, on their own dime, is outside their experience. If you're charing $150/hr, it's not unreasonable thing to do, ime. Even if you get reimbursed later, you've got cushion to float that for a few weeks - you're not living check to check.

IMO, the $200/hr dev is far more adept at servicing the non-technical aspects of the project - professionalism, people skills, project management, setting expectations, etc - or they hire people who are (agents, like in this article).

If you're an insurance company and you need a computer system to support adding a new line of business to your products available, there are very specialized programmers who can help you do that. (Or you can hire Accenture and, for a 150% premium, you won't need to know that any programmers were harmed in the making of your system.)

There are virtually infinite examples of this.

1. The average developer is bad. Really bad. You can easily work 4 times as fast and produce code that's much shorter and more maintainable.

2. The $200/hr developer gets paid according to the value he provides. It's not hard to provide that value if you work on the right stuff, even for an average developer. Remember that Apple has $460000 in profits per employee per year (and that includes all employees), which already translates into $200+/hr. When you provide a service that costs $200 but makes the company $1000, they'll happily accept that. If you frame it without that reference $1000 then you just sound like a very expensive code monkey.

Perceived value is the most common - no-one gets promoted on their past performance only on their expected performance. And so the difference between 50/hr and 200/hr is

Please note that 200/hr is not 10x 50/hr. Either we are comparing top coders to minimum wage coders - of which I suspect there are few if any (in each "locale" not globally) or we are actually capping top coders - this is very likely the explanation - to get to 500/hr or 5000/day or ~1million/year you need to be looking at equity level compensation. And that's a different issue.

Anyway where was I ? Yeah perceived value - this can always go up - but at a certain point you are no longer discussing per hour rates but project total rates and soon after the value becomes equity (I guess at around 1% o total perceived value)

And the time to have that conversation between hourly rate, project and equity? That depends on the cluefulness of management

I will suggest that climbing that compensation ladder from hourly rate to weekly rate to project rate to equity is a focus on understandin business problems, and how tech can solve them, understanding team and coordination problems and selling the business solution.

Identifies business challenges and offers a custom-tailored solution that will generate more money than it costs. Then that said developer will effectively pitch their prospective customer from that angle.

A business, if convinced you're correct and capable, will be happy to pay $500,000 to a developer who will develop software that will make them or save them $1,000,000 in the next year.

http://doubleyourfreelancing.com/get-started/

A lot of it is tied into what business value that solution will bring the business. i.e. They have an issue/fix that would make them an extra $200k per year, they would pay $50k for it regardless of whether it takes you two days or two months.

TL;DR: don't focus on the technology you are using, focus on the business problem you are solving.

So, standard market rate?

The rates those agents were talking about seem to me to be approximately what every high-end iOS dev shop charges.

Another ballpark estimator: that bill rate wasn't even in the ballpark of my (more specialized, of course) bill rate for the last two years I was consulting. It's nuts out there right now.

I would think that people hiring would like potential hires to be unrepresented. An un-represented developer is going to be cheaper. (chrisbennet)

Price is just one factor. If I charge twice as much as someone else but I can solve the customer's problem in one-fourth the time, the customer saves money. Customers are usually focused on solving business problems within their budget and schedule, not just on hourly rates.

It's not about the technology. It never has been. You're number one mission whenever you get a contract is to understand the business and figure out how you can get them making more money. (aantix)

Almost exactly right. It's not always about making more money, though; it may just be to figure out how to make their software do what it is supposed to do. Too many job postings and too many résumés list technologies without addressing business needs or experience. For me, 10X has been good at getting both sides to talk about and describe business requirements and setting clear deliverables and goals.

Boy. As someone who actually runs a contracting + project agency, that looks to be of an approximately similar size as 10x (at least before this was published), this was lifting-cars-painful to read - not just because they have PR and I don't, but because they (Solomon and Blumberg) _are the inefficiencies they are pretending to eliminate_. (scottru)

The New Yorker article was not an exhaustive description of how 10X works or who does what. Most of my interaction with 10X is with Michael Solomon, so to say he isn't adding any value is just not understanding what he does. Everyone at 10X is adding value for me, and the several 10X customers I work for or have worked for have without exception said only good things about 10X Management. In my experience most projects go wrong due to miscommunication and conflicting expectations. 10X, and specifically Michael, are good at heading those things off before they become problems, and working out solutions that are acceptable to both sides.

Yes, 10X has had some great PR. No, they aren't the only good freelancer agency or consulting firm. I've worked for quite a few placement/consulting firms and with many recruiters in my career (35+ years) and for the work I do now and the life I want to live 10X is a great fit. It may not be the right fit for every client (freelancer) or customer, and it may not be the way to go if you want to try to make millions at a startup.

A few years ago I decided to concentrate on stalled projects and broken code, the almost-working or somewhat broken stuff left behind when developers fall out with their customer and stop answering their emails. My customers are mostly smaller businesses and non-profits, without the need or resources for their own IT staff, and without the sex appeal of Facebook or Twitter. They have real business problems to solve, they can't throw everything away and start over, and they aren't qualified to recruit and hire technical staff. I found plenty of this work on my own, but when I decided to travel and freelance remotely I worried about finding customers and easing their fears about hiring someone living overseas. 10X has been a good fit for me -- they bring in plenty of customers, they have clients with every technical skill you can think of when I need help, and they are a real US-based company that can assure customers I will deliver no matter where I happen to be. They have also negotiated better rates and more useful contracts that I was doing on my own.

you’re talking a hundred and fifty to two hundred and fifty dollars an hour

Do "rockstar programmers" really work so cheaply? Crappy attorneys make that much and good attorneys generally start their billing around $350 per hour.

I don't have an agent and even though I work full time at an investment bank, I find all the side programming work I want @ $150-$200 per hour. In the past four years I've averaged 18 hours per week from side work.

Even I'm moving away from hourly pricing to value based pricing though. I would think this is where an agent would provide the most value. Evaluate the project, determine a the project's NPV and then base the pricing on a percentage of the NPV.

Envisioning agents like outlined in the article - they seem little different than high-end technology shops that provide bodies.

Absolutely. You can find amazing programmers even in San Francisco for < $150/hr.

But the thing is that software development is a market for lemons in the worst sense. In fact I can't think of a hiring market that is more opaque. You have clients who are technologically illiterate, and then you have massive Dunning-Kruger effect from the fact that knowing how to FTP a file to a Linux server made everyone worship them as a computer "genius" from a young age. Then you have the fact that the quality of the deliverable is inherently hard to measure. If the expert software craftsman builds something that is rock solid and scalable for 10 years, it might not be appreciated as much as the spaghetti-code time bomb that a whiz kid drops on their plate in half the time but ends up requiring a complete rewrite.

Heck, even after being a professional web developer for 15 years, all I can say about myself is that I am better than average, but only because I've worked with hundreds of developers and seen that the average is not great. I have no idea really how much less valuable I am than the elites. I even suspect that context plays a big role in the relative merits of different developers.

It sounds like you're moving up the food chain in terms of being able to deliver value. Expert programmers who also understand business are thin on the ground and exponentially more valuable than either one of those skillsets in isolation. However the thing to remember is that most businesses aren't throwing the kind of cash that they can pay a programmer $250/hr. Lawyers can make that much because of the nature of the work (ie. time-limited, risk mitigation), but software people? Investment banking is one of the few places where people won't balk at those rates. There are many other profitable businesses that could afford it, if you can prove your ROI to them, but those industries (manufacturing, etc) are much further behind on the curve than ones where the competitive advantage of good software is already well understood (finance, tech).

I disagree with this. In fact, one of my largest side job customers is a trash company and I can give you an example of one of the projects I worked on.

For every job he does, there is a variable charge both from his supplier (another trash company) and his customer. Original state was that he had a bookkeeper that he paid $70,000 per year that calculated, recorded, charged and followed-up on the revenue and expense of this variable charge for every job.

I came in and modified his dispatching system to do all this work in a fully automated way. This did two things:

1) Eliminated a $70,000 per year (salary) bookkeeper that all in was probably costing $100,000 per year with benefits, 401k, medicare taxes, social security taxes, etc.

2) Increased net revenue for these variable charges by $100,000 per year. With the bookkeeper formerly doing this all manually, she was only catching a small percentage of the revenue but paying all the expenses. (Because guess who was the squeaky wheel in this transaction?)

What is a $200,000 per year bottom line improvement worth to the average small business? There are many ways to evaluate this. Small businesses often look at payback period. A good payback period for a project is typically considered one year or two years. If that is the case, then the project is worth $200,000 to $400,000 to the customer.

Now consider that the whole project actually took me 45 hours that I billed him at $200 per hour for a total cost of $9,000. His payback period is now SIXTEEEN DAYS.

More sophisticated small businesses as well as almost all larger U.S. businesses will consider the time value of money and actually calculate an NPV and IRR for the project. In any way that you measure the profitability of this project or similar ones, the reality is you could charge $1,000 per hour and still make it a "no brainer" for the client.

There are plenty of unique need transaction-based companies that are in the same boat. And honestly that's why I'm moving to value based pricing. Hourly based pricing is asinine. I should get paid based on the value I bring to a company, not the amount of time I spend sitting in a chair typing.

Sure, you can throw in a collection of achievements, but then you could just as easily end up with that whiz kid and spaghetti code while your best developer works under NDAs and has nothing to show for it.

So how do you even value yourself? You say that you're better than average but how do you know that? Are you faster? Better at architecting apps? Is it the business side or communications?

I honestly don't know about myself but balk at the idea of trying to find out and push my rate at that range. Either I'd be positively surprised (and subsequently depressed because high-paying full-time work is difficult to find) or negatively surprised...which would just suck.

    > I think the reason why rates fluctuate so much is that
    > developers don't know their worth (positively or
    > negatively). It's nothing you can truly measure. There
    > are shoddy developers with $150 rate and great
    > developers with a $70 rate. In all kinds of different
    > cities and situations.

That's pretty impressive. I find that people paying a reasonable wage inevitably want someone who is available during typical working hours.

Is this for a particular niche?

I've been doing the same sort of thing, but:

a) have only been able to find people through personal contacts (limiting the pool) b) most want full time, not part time c) max I've been able to find is $100/hr

Are you doing very specialized stuff that commands more? Or maybe have a pool of contacts or ___location where people are willing to pay for the value you deliver?

I'm not asking you to give away all the secrets, but I'm wondering what I can do better. Better sales, better way to find clients?

Price is just one factor. If I charge twice as much as someone else but I can solve the customer's problem in one-fourth the time, the customer saves money. Customers are usually focused on solving business problems within their budget and schedule, not just on hourly rates."

True, and as a freelancer this is an argument I make as well. But something I've noticed is that the client doesn't talk/work/think any faster. It still takes them an hour in a meeting to get their points across. It still takes us 3 hours to review key issues together. Anything that is synchronous time is throttled to the slowest person, so the "I'm 5x faster than someone else" isn't the slam dunk it should be.

And there's still a stigma with some people about high priced consultants, when they know they can get it 'cheaper' somewhere else.

A friend of mine is managing a project on behalf of his client. He's been dealing with offshore (India I think, not sure) devs for months. I built a prototype of a tool, based on chatting with him, in under 30 minutes. The tool did more than his offshore people were able to do after days of talking to them, and days of trying. He was a bit ... taken aback. He went to his client and said "we need to bring this guy on to the project to handle some of this stuff". My hourly rate is 8x when they're paying the offshore people, the client balked, and it didn't happen.

Ignorant short-sighted client? Probably, but this still happens.

My friend was more than a bit shocked, but I wasn't. The project owners essentially have a cheap team of playthings to keep building whatever ideas pop in to their head, whim changes, etc., and the cost of changing their mind and changing ideas is low. At least, they think it's low. When you've not worked with developers who've actually built the core plumbing of all the stuff you're trying to build before, you really have no idea if "functionality x" should take 2 hours, 2 days or 2 weeks.

If the customer can't organize their key requirements themselves, or they don't have a rough schedule or budget, I tell them I need that as the bare minimum to have a discussion, unless they want to engage me to help them define their requirements. Any reputable freelancer is going to need requirements defined, there's no way around that unless the schedule and budget are open-ended.

I mainly do maintenance work so it's probably easier for my customers to define what's broken or what they need added than it was for them to define the application or web site from scratch.

    > And there's still a stigma with some people about high
    > priced consultants, when they know they can get it
    > 'cheaper' somewhere else.

I used to work in another random industry where we did seminars. The less someone had paid to attend - starting at free - the more likely they were to be hard work and a draw on your attention. Customers who had paid for the actual seminar itself would give it their full attention, and would trust in our expertise to deliver to them.

That sounds like a good niche, but I've been cautious about taking these kinds of projects. Often, there's a good reason that goes beyond just "bad developers" that explains why the project is unfinished: abusive customers, grossly unrealistic expectations, unpaid bills.

For this reason (and after a couple of very bad experiences), I've avoided this kind of client categorically.

So is 10X able to screen out these kinds of disaster clients for you?

Every time I see one of these articles and subsequent comments, I feel terrible about myself. As a salaried employee I (thought I was, at least) doing well, but then I read things like this and I'm wondering what the hell I'm doing wrong not making $500k/year. I mean is the difference really that stark? Are all of us salaried employees just suckers? I seriously can't tell if a $50-75+/hr salaried employee is doing a lot better/worse than the $150-200/hr freelancers.

What am I missing?

I can see how specialists, available for short-term gigs, are worth more per hour than generalists. Companies prefer generalists, since that gives them the flexibility to assign them to another project, should the priorities change, but specialists are good for removing specific roadblocks and then moving on.

As a freelancer you will have higher taxes. You may have to pay for lawyers and accountants. You won't have employer-paid health insurance or retirement benefits. You won't have paid vacation time. You probably won't get stock options or equity. You will have downtime when you have no projects or you are waiting for your client(s) to make decisions or deliver something. You will probably spend a considerable amount of unbillable time finding clients and projects, negotiating contracts, and various marketing and administrative chores. You will probably have to learn new tools, languages, and application domains on your own time. You may miss working with other programmers and being part of a team.

Some people choose freelancing because they can make more money. Some people choose freelancing because they want more control over their time, or they don't want to be stuck in a cubicle job. I started freelancing because I was working as a salaried employee at a company that was slowly dying, and I wanted to have a backup plan. Then I decided I could travel and work remotely since I wasn't working on-site anyway.

Having a marketable speciality helps, especially if you can build a reputation around it. Marketable speciality doesn't just mean an unusual skill or talent; you need to have a skill or talent you can get paid for. Back in the minicomputer days of the 70s and early 80s I freelanced doing performance analysis and improvement on PICK and PR1ME computers. That was a lucrative speciality for a while, because those systems were fairly popular, and buying faster hardware was prohibitively expensive. Now hardware and cloud computing power is cheap, so a slow web app can be made faster by throwing RAM and CPU at it. I'm not saying your skill isn't valuable, just that you need to be careful not to back yourself into a niche that has other, cheaper, solutions.

I don't work 2,000 billable hours a year. Instead I have more free time to do what I want to do. I live in places that are cheaper than the US, sometimes a lot cheaper, so I can work less and enjoy an equivalent or better quality of life.

I don't think you're missing anything. You have to weigh the pros and cons of a full-time salaried job and everything that comes with it against freelancing and decide which is best for you.

Re: the praise for Michael Solomon, for the record, I (the technical partner at 10x) was originally very wary about starting this company with non-technical cofounders... but, at this point, the value they add to our clients and to our business is absolutely undeniable. Michael and Rishon are world-class advocates for talent.

Btw, you all can learn more about Greg (the parent commenter) in last week's Mashable profile of nomadic coders -- http://mashable.com/2014/11/09/digital-nomads/ -- and at his excellent blog, http://typicalprogrammer.com !

Seen in this light, the comments from Chris Fry and Sam Altman make sense. If you're looking for employment, have a very good resume and a good network you might not need an agent. However, they don't seem to be considering the case of freelancers who need to spend a large amount of time finding clients.

Given that I haven't worked as a freelancer this is something I know little to nothing about. Hence the question.

Cheers and all the best with your work!

If you want to use an agent or consulting firm to get interviews at multiple companies you are probably better off finding a truly talented and connected recruiter -- they do exist. Ask everyone you know, including hiring managers, for referrals to good recruiters and see which names keep coming up.

Some companies don't use recruiters or consulting firms, they do their own hiring. If you've identified one or a few companies you really want to work for the best way to get interviewed is to know someone who works there.

What you say does fit with my intuition. If I wanted to start looking for a job now I'd talk to the folks in my network at various startups / the Googles or Facebooks of the world.

However, it does make sense that a connected recruiter would help with looking for opportunities outside of that sphere as well. The suggestion to ask for referrals to good recruiters and sort by frequency is a good one. I'll keep it in mind for the next time I start job hunting.

Thanks again!

And that's gameable with a bit of effort.

This isn't new, but using the term 'agent' makes it sound more appealing to all sides. The consultant can say "I have an agent", and the hiring company feels that the level of talent should be higher from an agency than from your everyday recruiting firm. If the talent is vetted better, it could be.

Where the concept of agents gets much more interesting is when discussing those in salaried/permanent hire situations. Consultants are generally willing to cede 15% or so of rate in order to use a broker/agent/recruiter's services to find gigs. But will someone seeking a salaried employment role (a 150K software engineering job) pay an agent 5%/10%/15% of their salary in order to find a permanent position?

Because most of the tech population works in salaried positions, this is the real question. Independent consultants make up a relatively small portion of the industry, yet this 'agent' conversation really only applies to them at this point.

I like the agent concept as it aligns the incentives of the recruiter/agent and candidate much more clearly, as opposed to the current recruiter model where the recruiter is typically considered to be more aligned with the hiring firm. (The real estate agent argument comes up here).

In this case, the 'agent' model is mostly just a rebranding of what we currently have in place. If this ever hit the permanent/salaried job market, that will be a bigger story.

That may be true of this case, but I think that the agent relationship, if done properly, is long-term and involves a lot more trust than exists between a job-searcher and a recruiter.

If you get fired (let's say it's not your fault but potentially embarrassing, as most terminations are) and you have rock-solid trust in your agent, you can tell him and he'll tell you what to do next, and he'll know which companies you should be truthful with and which ones you should hide your past around. With a recruiter? You're not going to tell him that you were fired, because you know that he's paid by the employer's side. He might not even call you back if you admit to it.

The difference between agents and recruiters is the amount of trust rendered to each. If you have a good agent, you can share your weaknesses and embarrassments and he'll know how to work around them. On the other hand, you're not going to tell a third-party headhunter about such things, because you want him to connect you with his best freight. Your agent can help you with the reputation-management work, but a recruiter is generally going to pipe everything you say back to his clients (i.e. prospective employers).

I've been in recruiting for over 15 years, and some people that I first interacted with around 98-2001 didn't result in any placement ($) for me until the past few years.

Part of the reason this type of experience is rare is because most recruiters don't have much of a specialty, so if they get a position seeking a specific skill set they may be unlikely to get that same mix again. Therefore, the candidate becomes somewhat 'disposable' and can't be worked with for future searches. If you have a specialty, which I've had for years, almost all candidates may be a fit for a future position.

Your example about termination could be valid in some cases, but a recruiter who treats candidates as an agent will get the same level of trust. An agent isn't likely to expose that info - whether a recruiter exposes all potentially negative information probably varies by individual.

I think the difference between recruiters and agents is non-existent when we are referring to solid 3rd party recruiters (good clients, excellent reputation, valuable relationships), except for in rare circumstances like you mention (hiding information about your talent).

I would love to see more of an agent mentality for recruiters. But someone has to pay for that, and the lion's share of work in tech is done by salaried employees and not consultants. Consultants know and accept that their $200/hr rate will get eaten into a bit if they use an agent.

Will someone making 200K a year pay a fee to an agent during a job search? How much should that representation cost?

http://boss.blogs.nytimes.com/2014/09/08/representing-progra...

http://abc7news.com/archive/9075316/

And links to many more in their website:

http://www.10xmanagement.com/

M

Max* is right... we have spent literally zero dollars on PR. The New Yorker approached us for this article. (As did Mashable for their piece last week which interviewed a bunch of 10xers: http://mashable.com/2014/11/09/digital-nomads/ .)

Frankly, it makes it even more exciting to me, because it means this is an actual trend, rather than a manufactured one.

* Yes, the parent is Max Nanis from the article. The article failed to mention that he also currently has a sculpture in the Smithsonian. :)

Even recognizing that the current hiring model has major inefficiencies, it's hard to not see this as awfully ironic.

>>"part of our goal is to de-risk freelancing and make it more viable. [...] She also appreciated that they had been vetted for interpersonal skills. At one point, they had to speak directly with the health-care company’s New York offices. 'They were good,' she said. 'And it wasn’t embarrassing to let them out of their cave.'"

The value proposition of the agent, pushing both technical and personal professionalism of candidates, should be addressable through a reputational system that doesn't take 15% and require ad hoc negotiations. It would, however, have to be complex enough to address how well certain talent is at addressing specific projects. How much of that is a lack of proper metrics and how much is the hiring party's inability to frame their needs?

As we grow, we identify bottlenecks, and we write software to automate those processes; I imagine we're iterating towards something like what you're envisioning. (At least internally, if not externally.)

But your last couple sentences got at an important point... as much as I'd like to see this problem solved with software, there are still a lot of unavoidable, messy, people-related issues that, currently, still require manual finesse.

Hire a few rockstars, belt out a hit with hockey stick growth, watch it flame out or lose interest over time, and then watch the rockstars move onto their next project.

What about the founders who put their heart and souls into building a real sustainable business?

What about the customers who took the chance on an unknown solution and may have become dependent on it?

What about the developers that might have worked with the rockstars, but are less interested in moving on and more interested in continuing to build great products?

I can see why a lot of talented folks got jaded by this industry in the last bubble. And I think it's clearly happening again.

Let's take a few parts of the article:

>>"The three partners have separate roles. Blumberg handles his and Solomon’s eleven remaining music and entertainment clients, and takes care of back-office matters: “Accounting, invoicing, collection, payouts. Everything that’s the bane of most people’s existence.” Guvench vets new talent. Potential clients have to fill out a questionnaire that one programmer compared to “the most complicated dating Web site ever.” Then Guvench and Solomon conduct interviews, to screen for communication skills. (I heard one potential client say, during a meeting in Solomon’s office, “We don’t want people who just write code and drool.”) Guvench also does code reviews—testing Web sites that aspiring clients have built, and reviewing the programs they’ve written."

So... --Blumberg isn't working on the business at all; --Solomon's work isn't even described (except "conducting interviews for communication skills").

So there's one person, Guvench, an ex-engineer, who's actually doing the technical vetting - i.e. 100% of the value so far is coming from one guy.

OK, then maybe the others are selling? Nope.

>>"10x technologists are working with a variety of customers: Live Nation, a virtual-reality startup, and an N.B.A. player who has an idea for a social-messaging app. Solomon admitted, however, that this list is somewhat random—it consists mostly of people who found 10x through Google, or whom he or his clients know personally. He has hired a salesman, to pitch 10x to companies."

OK, so you're closing PR-driven leads and your friends in the entertainment business? That's your sales pipeline?

I know a number of agencies with two or three partners running the organization. I don't know a single one of those where there isn't somebody pounding the pavement, hustling, finding clients - and who know the difference between a long-term partner and a sports star with an "idea for a social-messaging app." (We _all_ hear about those.)

The other value they're talking about is in the negotiation process. Hey, I'm totally willing to believe that a many-year entertainment agent is a better negotiator than I am, at least in the first-principles department. But this is not some magic skill in what is generally a well-defined and competitive market, and of course you're better at it when you deeply understand the technology and market, the BATNA for the client, etc. Those of us who actually understand the very small markets that one job description might meet are, in fact, pretty darned good at it too. For that matter, I've never told an engineer that you should work with us because we can get you a better deal than you can get for yourself, and if you're dealing with a client who understands the market (which said NBA player may not), that's pure hokum. (P.S. plenty of people on HN provide that coaching for free all day long.)

It's ok that the author doesn't really understand this market, and so the competitors she mentions aren't really competitors at all - they're all focused on full-time hiring. I guess it's also OK that the New Yorker's fact-checking department didn't discover that there's no such programming language as "THP" - that should be "PHP." (Maybe it's just a typo.)

But to let the reader believe that this approach represents the best this market has to offer - well, I guess that's just really, really great PR. Back to work.

(Added later: I realized I commented on these folks 1.5 years ago at https://news.ycombinator.com/item?id=5527610. I was feeling nicer then? Maybe? It looks like the participant in that HN thread was the partner who's clearly adding value.)

I wondered what sort of esoteric programming language THP must be for me to have never heard of it...

It does seem very odd that they don't seem to have much of a sales focus. As a developer who occasionally contracts, that's my #1 problem. I don't need help negotiating or "invoicing" (software's great at that). I just need a steady flow of high quality clients. I'd happily give up 15% of my earnings if it meant I could stop playing extrovert by going to meetups and conferences.

Bottom line: find out who their PR firm is. They're worth every penny.

J/K, yeah, I'm guessing that "P" happens to sound a lot like "T" on a fact-checking call. =P I sent them a note about the typo. Hopefully will be fixed online if not in print.

http://www.byteflex.com/thp/thpmain.html

although the THP in the article seems a typo of PHP

How are these agents any different than other contracting firms, other than their supposed access to the best?

I want to also note here that I leverage 10x to do less recruitment for jobs and more with purely figuring out which are the best opportunities to pursue at that time. Personally speaking, I want to spend as little time on the planning / business side of my tech career as possible so I can use that time to focus on my other pursuits. I trust (& they've proven) to be able to make the most advantageous choices for me professionally with long term goals in mind.

M

Many contracting firms are taking anywhere from 50-75% if the rate they are charging.

The only firms I know of taking that kind of cut target governments, which carries a lot of risk and is very high-touch. They need a fancy office and a lot of overhead just to stay in the game. Perverse, I know, but the way things are.

The firms in question then charge very high rates to cover all this, and keep a large percentage of it, as you say. The contractors who actually do the work end up seeing about as much as they'd see in private practise (~$800-1000/day from a chargeout of maybe 1800-2200)

Source: friends working for this kind of company in Australia.

The reason this exists is fear. The project sponsor wants to be able to say, "Well, I hired the best," in case things go south.

A true rockstar developer would change one or two lines of code in a finished project (created by a team) immediately before it was committed then move onto the next project.

Hey I do all these best practices, doesn't everybody else?

Then you return back to reality of being a lazy 0.1xer and realize that there is a great deal unwritten and glossed over in these kind of general interest pieces.

There are lots of areas in life where the cost of acquiring a quality product/service is clearly communicated. Salaries haven't been one of them, which might change.

Don't confuse upfront salary negotiations with lack of motivation etc. This just brings more quality candidates to job markets, saves everyone a lot of time and lets you focus on other important parts of hiring process.

Relieved to hear that Todd!

https://leanpub.com/leprechauns/read

1. Can't get anything done on schedule or in budget. 2. May eventually get something done, late and over budget. 3. Delivers what the customer needs on time and within budget.

The first two groups just cost the customer time and money, create uncertainty and stress for the customer, and may or may not deliver something of value. A better developer doesn't have to be 10x better (however that is measured). They only have to deliver what the customer needs within the time and budget parameters.

From the customer's point of view the relevant scale is not 1 - 5 - 10 times productivity from the developer. The relevant scale is 0 - 1, where anything much less than 1 means their business problems weren't addressed in a useful way. It doesn't really matter that one programmer had 10x more commits on GitHub than another programmer if the customer can't ship packages because the programmer didn't correctly add shipping charges to the invoice (real example).

Anyone who is freelancing, leading a project or team, or calling themselves a ninja, rockstar, wizard, etc. should not be surprised or indignant that customers don't understand their requirements and usually can't communicate their needs in a complete and consistent format. That problem has been known since the 1950s. Blaming the customer is not an option. An effective developer will concentrate on business needs, ask the questions and get the answers, and work with the customer to nail down requirements.

When I get involved with a broken/stalled project the first thing I do is ask the customer to make a short list of the problems and missing features in decreasing priority order. What I always get, without exception, are business requirements, not technical glitches. The root cause of a missing business requirement may be technical (e.g. failed PCI compliance audit because of vulnerable PHP code), but all the customer cares about is the business requirement. It doesn't matter if I am 10x faster or smarter than whomever was working on the code before as long as I can fix the problem.

And since software estimates is a known hard problem[1], the only different between 2 and 3 is often just the fact that 3 has learned to appropriately inflate his/her estimates.

I say that as someone who has oscillated between 2 and 3 over my career, although the trend over time is toward 3.

1. https://news.ycombinator.com/item?id=6820547

If your customer (or employer) has no schedule or budget, great, you've landed a job at the next cool startup.

For every other business that is paying for software development the value of the software usually has budget and time constraints. When a customer/employer asks developers for an estimate they are either asking for a commitment to deliver within time/budget constraints, or starting a negotiation where features are changed or removed, or "resources" (more developers) are added.

You are right that it's very hard to get estimates right -- one of the biggest unsolved problems in software development, and one that has been known and written about for decades.

For the jobs I take on, I ask the customer to break down the work into a list of bugs or missing features or missed requirements. Then I ask the customer to put the list in priority order and assign a dollar value and schedule. Then I determine if I believe I can commit to addressing the list, item by item, within their cost/schedule constraints. If I don't think so I tell the customer, and they either change their requirements and constraints, or they go look for someone else -- I don't charge for determining if I can commit or not.

You can do this in terms of a MVP (minimum viable product). If my customer has nothing -- green fields development -- another way to look at that is none of their requirements have been met. So let's put those requirements in priority order and assign maximum costs and schedule to them. I've never been entirely successful at getting customers to actually do this for new development (one reason I rarely take on green fields projects anymore), but when I have tried it they have generated requirements with costs and times that are at least as realistic than any estimate I might attempt.

To prove whether there exists a developer that is ten times as productive as an average developer, you would probably have a hard time both figuring out how productive an average developer actually is, producing a good measurement for productivity, and finding that unicorn. I'm not going to say it's completely unthinkable, there may be a few unicorns out there. Or there may not. In any case, you probably aren't going to find one. Save your money.

However, the statement isn't usually that there is a "10x average developer", the statement is that there exists a developer that has 10x the productivity of another developer. This isn't a myth, and it's not even controversial! Anyone can call themselves a developers, and there is obviously no lower bound in productivity! Ergo: you should quite easily be able to find a developer with 1/10 the productivity of an average developer, and the "myth" of the ten fold difference in productivity is confirmed right there.

From the article:

    ..."well-known fact" of 10x variations in software developers

    There is a hidden inference at work: "there exist programmers 
    who are ten times as productive as the average"...

When it comes to programmer productivity, just try to look for solid developers. There are those that are surely twice as productive as others. Maybe three times. So pay them more. Or get two regular ones. Just avoid the 1/10 developer and you'll be fine. Not least because the 2x developers will likely quit if they are put in a team with the 1/10!

Same on a small scale. Little feature needed adding to a tiny codebase (no hidden enterprise or framework stuff). One guy said he could do it in an hour or two, I took under 3 minutes. Sure, maybe he just failed to see the obvious, easy, FP, way and planned to build some huge OO system. Still, the overall result remains.

I dunno if these other people were average. But I am shocked at the lower levels of competency available and actively working and billing people.

Edit: And I know I'm nowhere near top coder level. I've a limited understanding of many things. So much stuff I read of other people's work impresses my greatly and leaves me knowing I'll never be top level. I don't have a one-in-a-thousand IQ. I find it very plausible there are people 10x me, and I'm probably above average.

http://www.knowing.net/index.php/2011/12/09/forbes-is-wrong-...

> The Myth of the Rockstar Programmer

http://www.hanselman.com/blog/TheMythOfTheRockstarProgrammer...

But we did have a depty CEO (Bruce Bond) as a sponsor so stuff got done quickly.

I reccon in my entire period working at BT that month was most prodcutive - and thats including the time I spent a coupel of days sorting out a BACS trasfer that netted 3/4 mill.

http://morendil.github.io/folklore.html

> 10x Engineer

http://web.archive.org/web/20131110050028/https://medium.com...

In the UK it's all pretty much through agencies ... agents vary immensly, at the top end they can be good, more often they don't know about the technology they are recruiting for, and about 1 in 5 times you will get a bad one that will do things like lie about the rate.

In the past I have worked with agencies and directly with the company for different positions. Many companies will specifically state in their job postings they don't want candidates from agencies. It's kind of a mixed bag that I feel, in general, hurts everybody involved in some way.

Also thankfully, the people we rep tend to bring their A-game to projects because they understand that it's not just their reputation on the line... they're also representing 10x and all of the other consultants that 10x represents.

In my experience, there is no guarantee that an A-grade technician will perform well in any environment. There are so many (not to say endless) factors, which makes it very difficult to value the performance objectively. So unless you have a very good monitoring in place to monitor your client's satisfaction and be very transparent about it to all clients, I tend to claim that you profit from the "Chivas Regal Effect". And I doubt, that your track record of successful time & material engagements really exceeds those of other firms (e.g. Thoughtworks).

From another perspective, you do a great job. Because it is time for many companies to value their staff differently. There are so many IT departments which have not changed much since 20 years.

That may be true now, but programming has a huge reputation management component. Negotiation isn't hard to learn, but it's always better to have an advocate than to negotiate for yourself (note: lawyers retain other lawyers) and detecting trends in technologies and finding work that helps a programmer's career is a full-time job in its own right.

By many measures, the star system didn’t work that well for Hollywood: it made moviemaking more expensive, which made studios more risk-averse, which led to inferior creative projects. And programmers are not movie stars—not yet, anyway. “Movie stars have their own brands,” McKinnon, the Okta C.E.O., said. “People will go to see a movie just because it has Tom Cruise in it. But programmers don’t really have that. No one’s going to pay for a product just because James Gosling built it.” (Gosling is one of the inventors of Java.) “Well, geeks like me will. But most people won’t. They pay for a service.”

In Hollywood and software both, value delivered is multiplicative rather than additive. A good actor in the lead role might add 10% to revenue. If it's going to be a $5 million film, that's only $500,000. If it's going to be a $250 million film, that's huge: now we're talking about $25 million. Of course, many of these multiplicative variables are latent and unknown until the thing's actually released.

Because of this, no one knows what "the base" is, or who contributed what, and there's wide room for negotiation.