10X client (freelancer) here. I'm the guy living in Thailand mentioned in the article. Let me add to a few of the comments here. I am not writing on behalf of 10X, these are my own opinions.
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.
The thing that shocked me from the article was when they said:
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.
> Do "rockstar programmers" really work so cheaply?
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).
However the thing to remember is that most businesses aren't throwing the kind of cash that they can pay a programmer $250/hr.
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.
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.
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.
Yep. Which is why only an insane person would allow open salary discussion in a team they were managing, let alone open-salary policies some places have.
Curious here, willing to share how you're able to source part time work at $200/hr?
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?
Just get into SAP, PeopleSoft, Oracle or any of other enterprise software, be half good at it and make $200+ per hour.. Be ready to sell your engineer soul & any resemblance of quality principles in the process..
"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."
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.
I've run into these things too. If a customer thinks I'm too expensive, I thank them for their time, and tell them to keep me in mind if they need help. Sometimes they call back after blowing even more time and money on the cheaper developer. Sometimes they find a great developer who is cheaper, and I've referred and farmed work out to a couple of those developers.
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.
The larger the stigma, the more of a pain-in-the-ass the client is going to be.
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.
>A few years ago I decided to concentrate on stalled projects and broken code
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?
I get to screen the projects, and if it doesn't look like something I can do I don't have to take it. I know what you mean about bad customers and unrealistic expectations, I've been pretty good (or lucky) so far figuring that out before committing to projects. I only work hourly and 10X structures the contract and payment so I'm protected.
So I've got a similar idea for a niche as you - I really like increasing performance of web applications from existing applications. I know I can take a slow web app and make it fast (really fast). Are you making significantly more than you were as a salaried employee?
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.
Yeah, but you're pretty much guaranteed 2,000 hours of your time will be paid.
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.
If you can charge $250 an hour and work 2,000 hours per year, your gross will be $500K. That's probably not realistic. Regardless of your rate you are not likely to have 2,000 billable hours per year as a freelancer. What you can charge depends on your skills, the demand for those skills, and keeping your pipeline of work full. How many billable hours you can work depends on the projects, your energy and dedication, how organized you are, and your quality of life choices.
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.
Thanks for the endorsement, Greg! Makes me incredibly happy to hear that you've had a positive experience with 10x.
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.
Do think a company like 10x would be more helpful for freelancers vs people looking for salaried employment? In the latter case I can easily see an experienced and talented person interviewing at multiple places and choosing the best fit.
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.
I think 10X is a good fit for freelancers, but that's what I do. I've been offered full-time jobs after contracting/freelancing; I think freelancing is a good way to bypass the recruiting/hiring/HR process if you have an "in" at the company or get placed by an agent/consultancy. Some companies can attract enough good people because of their sex appeal and signup packages (Facebook, Google, Twitter). Most companies aren't so sexy and can't afford lavish signing bonuses or offer the kinds of perks you get at Google.
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.
Slightly off-topic, but: I'm currently working as a remote contractor for a company and am able to travel wherever I please (And have done so). Actually planning to move to Thailand, rent an apartment from Airbnb, and camp out there for a few months come February. I'd love to talk with you about your experience if you could spare time for a few emails. My contact information is in my profile.
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.