Author: Drew Kime

How to negotiate a better contracting rate

In any transaction, the person with more information and more experience usually comes out ahead. That’s why the typical consumer negotiating with a full-time salesman is at a huge disadvantage. A car dealer, for example, might negotiate several sales every week, while you only do it every two to three years.

So people making big decisions — new car, new house, new job — do as much research as they can, trying to level the playing field just a little bit. And lots of the information they come up with is flat out wrong.

One of the most damaging pieces of advice to follow when looking for a job is to rely on a headhunter’s self-interest to get you the best rate. The idea – which seems quite reasonable on the surface – is that the headhunter’s commission is a percentage of your salary. Obviously they want this number to be as high as possible. It’s easy to believe that their self-interest lines up with yours.

The first flaw with this idea is that the headhunter doesn’t get anything if someone else gets the job. If there are multiple qualified applicants, you are on the wrong side of a bidding war. The contractor doesn’t want to price you out of the running, so the incentive is to lowball your rate.

The second flaw is that every day the headhunter spends searching for your perfect job is day they don’t spend finding a job for the dozen other people they’re working with. They make more money by placing more people than they do by placing fewer people at higher rates. 30% of $70k x 3 is more than 30% of $80k x 2. Their incentive favors the quick hit, not protecting your interests.

So what do you do about it?

  • Stop thinking of the headhunter as your own personal agent.

    They’re doing a job for you, but they are more interested in getting you something than in getting you the best thing.

  • Know what you’ll accept before taking the interview.

    Have a bottom line that you won’t go below. Based on what you hear in the interview, you may decide to demand even more to accept the conditions. But your lower limit should never be negotiable.

  • Ask what the range is for the position up front.

    There’s no point in wasting time on a position that you’ll never take.

  • Never give up something for nothing.

    If they want you to travel and you don’t want to do it, ask for extra vacation in return. If they want you to be on call, ask for comp time. Never give up one of your demands without getting a concession in return.

  • Get it in writing.

    You can’t deposit a promise in the bank, or buy groceries with verbal assurances.

So are all headhunters ready to sell you out at a moment’s notice? Of course not, even if onlyto preserve their reputation. But if you want to avoid being disappointed, you should never forget that your best interest only sometimes matches up with the headhunter’s interests.

How To Triple Your Output By Cutting Your Output In Half

The fastest typist I’ve ever seen was a guy I used to work with. When he started going it sounded like a machine gun. Our standard line when people asked the rest of us about him was, “Yeah, he types over 150 words per minute … and about 40 of them are spelled right.”

Even after you ran his stuff through a spell checker, you’d have to proof-read very carefully to catch the places where “there” and “their” were mixed up. Where single letters showed up at random because the spell checker skips one-letter “words”. Where he left out words or just plain didn’t make any sense.

It usually took longer to fix his stuff that it would have taken to do it yourself from scratch. So why did we put up with it? Well, he was the boss. Keen.

But like anything else in life, you can at least learn something from the situation. What I learned from him was that it doesn’t matter how much you produce if no one wants it. Or put another way: Anything you do for someone else that isn’t up to their standards doesn’t count.

For an example of an entire industry that’s working as hard as possible to ignore this simple truth, compare television today to what it looked like in the 1950s.

The golden age

Back then there were three networks. How many prime-time shows did they collectively produce per week? Counting 8-11 p.m. Monday through Friday, that’s three 1-hour slots x five days x three networks = 45 hours of programming. Lets say a third of those hours were broken up into half-hour shows, so a total of 60 shows per week.

Let’s assume that to have a consistently great show you needed six extremely talented writers and actors. (Yes, there’s a lot more to it. This is just an example.) The fewer good people you have, the less often your show will be good. To fill 60 shows, you might have the following mix:

Show quality Talented staff
per show		 # of shows Total
talented staff
Consistently great 6 1 6
Excellent 5 2 10
Very good 4 2 8
Good 3 18 54
Sometimes good 2 35 70
Generally poor 1 2 2
Total 60 150

Obviously every network would like their shows to be better. But for whatever reasons there are only 150 people with the level of talent needed to produce a weekly show.

Double the output

Fast forward a couple of decades. Now there are six networks. The talent requirements to produce a good show are the same, but there aren’t suddenly twice as many talented people available to do the work. The chart above might now look a little something like this:

Show quality Talented staff
per show		 # of shows Total
talented staff
Consistently great 6 1 6
Excellent 5 1 5
Very good 4 1 4
Good 3 6 18
Sometimes good 2 21 42
Generally poor 1 75 75
Unwatchable – bad 0 15 0
Total 120 150

Notice how many shows had to drop into the lower categories to make this work. The contrast is really obvious when you look at the two outcomes side-by-side.

writer-chart

With twice as many total shows, there are fewer shows that are even sometimes good. By doubling the total output, there are fewer than half as many shows that are ever acceptable to the audience. And there are only a third as many shows that are usually good.

These numbers are obviously a gross oversimplification, but they illustrate a point: By increasing the output without increasing a limited, but required resource the overall quality declines faster than the total output increases.

500 channels and nothing’s on

Now fast-forward to today. There are literally hundreds of networks trying to fill 24 hours every day. Sure, with the amount of money available in the industry today there may be more people willing to work there.

But if my assumption is at all close to reality, then we would expect to see shows that clearly don’t have anyone talented working on them. We might even see shows where they simply send a camera crew out to film people without a script. We might call this a “reality” show.

So you’re not in the TV business. How does this apply to you? Everywhere in the example above, replace “talented staff” with “attention”. How much undivided attention do you have each day? How many ways are you dividing it? By trying to do more things, are you doing fewer things well?

VB3 is just fine for running your business

http://discuss.joelonsoftware.com/default.asp?joel.3.552365

“… all those cheapskate companies running said VB3 app for 15 years will have nowhere to go, because their shitty app won’t run on it and they won’t pay to have it redone with modern tools.”

You’ve got some typos in there. Let me fix those for ya:

“…all those fiscally responsible companies running said VB3 app for 15 years will have nowhere to go, because their well-written app that has performed its intended function without fail won’t run on it and they don’t need to pay to have it redone with modern tools.”

Analogy time:

I’ve got a 25-year-old fridge in my kitchen. Even if a new one saves me 50% of the electricity used it would take about 13 years to pay back the cost of buying the new one. And don’t talk to me about the environmental cost of that wasted power, since the impact of manufacturing the new one dwarfs the power used over its lifetime.

If you think you’re saving money, or helping the environment, by scrapping working appliances in favor of newer, more-efficient ones, you’ve fallen for someone’s marketing plan. Just like all the people who want to re-write functioning apps in the cool new language du jour.

It’s time to cheat on your publisher

With the current generation of high-speed digital printers, print-on-demand [POD] publishers are making aspiring authors feel wanted like they’ve never been wanted before. It seems like everywhere you look there’s another slick come-on … free ISBN numbers, your own storefront, listings on Amazon.com.

For someone getting propositioned for the first time, it’s easy to fall into a deep relationship with whoever offers the nicest package. The smart ones make it really easy to say “yes”. It’s just so simple and comfortable, let them take care of everything for you.

I bet you can see this coming

Then something goes wrong and you realize how dependent you’ve become. All those links on your blog pointing to the order page. All the people you’ve told where to find you. The PayPal account you set up to take the payments.

It sure was easier to get into this relationship than it is to get out. You tell yourself the problem — whatever it is — isn’t really that bad, come to think of it. At least it’s not bad enough to be worth the pain of finding someone new.

You don’t think that time is going to come? Well, you may be right. Through some combination of luck, work and compatibility you may have found the perfect partner for the rest of your publishing life. But do you really want to jump into things that deeply without seeing what else the world has to offer you?

So what’s the alternative?

The great thing about all these options is that you can try lots of them without guilt. You realize, if think about it, that they’re hooking up with every other writer on the planet just as fast as they can. You’re nothing special to them, so why should they be anything special to you?

So play the field. Sign up everywhere you can find that doesn’t have setup fees. Upload, test, experiment, enjoy the thrill of it all. And see who actually gives you what you really want: sales.

Are you wasting your time being productive?

Most people think that wasting time means you’re not doing anything. Maybe they include not doing anything productive. But can you be doing something productive and still wasting time?

To answer the question, let’s go back several years to a time before optical mice were common. I was working the helpdesk at a law firm. I got a call from an attorney that his cursor was skipping around the screen erratically. It was pretty obvious from his description that there was gunk in his mouse.

I had just started explaining to him how to remove the mouse ball to clean it out, when my supervisor tapped me on the shoulder and told me to bring him up a new mouse. I said, “But it only takes five minutes to clean it out.”

She told me, “He bills $600 an hour. Bring him a new mouse.”

I didn’t know the term at the time, but she had just taught me a lesson in opportunity cost. If whatever you’re doing is less valuable than what you could be working on instead, you are wasting time.

How corporations spin a risk into a benefit

James Maguire, managing editor of Datamation, wrote in “Indian IT Firms: Is the Future Theirs?

“In the past, companies used to award IT outsourcing contracts that were longer, 7-10 years. They would hire one firm to do it, and that firm would have subcontractors,” Ford-Taggart says. Now, big clients split up major projects and request bids on individual components. “Then they’ll say, “Look, we can have this portion done in India for 30% less.'”

This might cause more managerial headaches for the client company, but in fact it’s less risk: clients have fewer eggs in a basket with any one IT firm, so if a projects goes bad or creates cost overruns, the entire project won’t take such a big hit.

Emphasis added.

I hate this corporate executive definition of “risk”. And before you think I don’t get it, I understand what they mean but I think they’re wrong.

When I talk about reducing risk, I mean that I’m making problems less likely to occur. What the execs mean when they take this position is that they’re diversifying the accountability. They want to be able to report that while 20% of the project is at risk, the other 80% is on track.

Well sure, the other 80% can’t be used without the 20% that’s missing. But the focus here should be that we’ve got 80% of the project on time and on budget!

If you admit up front that your process is increasing management headaches, you should realize you’re increasing the likelihood of problems. You may be mitigating the potential impact, but that’s not a given.

Any mitigation strategy that seeks to reduce the impact of a failure, and does so by increasing the likelihood of failure, is probably a bad idea.

How using people in your ads increases sales

We’ve all seen the light beer commercials with young, impossibly attractive people guzzling a product that, by all rights, should be making them fat and unhealthy. The obvious question is, “Do they think we’re really that stupid? That we think if we drink their beer we’ll become supermodels?”

Good question. But it gets the real thinking backwards.

When you show people using the product, you’re helping the prospect visualize themselves using it. Make it seem familiar and safe, instead of new and unknown.

But since you can’t put each viewer into their own personalized version of the ad (yet), you have to use a stand-in. If you show someone that the viewer would like to be, it increases their desire to want to recreate that image.

So you don’t want the prospect thinking, “If I use that product, I will become that cool, attractive person in the ad.” You want them thinking, “Because I am cool and attractive, I can see myself using that product.”

It’s the same thinking that leads to cliques and fads:

  • I’m not cool because I wear Air Jordans. I wear Jordans because I’m cool.
  • I’m not tough because I play rugby. I play rugby because I’m tough.
  • I’m not a redneck because I drive a truck. I drive a truck because I’m a redneck.

You don’t want your prospect to think your product will make them more attractive. You want to help them confirm what they already believe about themselves.

Why no one wants software: a case study

No one wants software.

Really, no one.

What they want is documents … pictures … loan applications … insurance claims … Software is just another tool they can use to maybe produce more of the things they really want, better or cheaper.

What this means to legions of unhappy, cynical programmers is that no one cares about the quality of the code. Nope. They don’t. And odds are, they shouldn’t.

Here’s a little story to illustrate why. (By the way, this is the kind of thing you’ll see in an MBA course. If you don’t already do this kind of thinking, you should stop telling yourself there’s no value in getting an MBA.)

The pitch

I’m in charge at an insurance company. I have a manual, paper-based process that requires 100 people working full time to process all the claims.

Someone comes in and offers to build me a system to automate much of the process. He projects the new system could reduce headcount by half. It will take six months for a team of four people to build.

If you’re a programmer, and you think this probably sounds like a winner, try looking at the real numbers.

The direct cost

100 claims processors working at $8/hour. $1.6M per year in salaries. (Let’s leave benefits out of it. The insurance company probably does.)

Four people on the project:

  • architect/dev lead, $100/hour
  • junior dev, $60/hour
  • DBA, $80/hour
  • analyst/UI designer, $75/hour

Total $325/hour, or about $325k for six months’ work.

Still sounds like a winner, right? $325k for an $800k/year savings!

Except the savings doesn’t start for six months. So my first year savings are at best $400k. Damn, now it’s barely breaking even in the first year. That’s OK though, it’ll start paying off nicely in year two.

The hidden costs

Oh wait, then I need to include training costs for the new system. Let’s figure four weeks of training before processors are back to their current efficiency. Maybe a short-term 20% bump in headcount through a temp agency to maintain current throughput during the conversion and training. Add the agency cut and you’re paying $15/hour for the temps. 20 temps x $15/hour x 40 hours x 4 weeks = $48k one-time cost. Now my first-year cost is up to $373k.

And don’t forget to add the cost of hiring a trainer. Say two weeks to create the training materials plus the four weeks of on-site training. Since this is a high-skill, short-term gig (possibly with travel) I’ll be paying probably $150/hour or more. $36k for the trainer.

So if everything goes perfectly, I’ll be paying $409k in the first year. And actually, I don’t get even the $400k savings. I can’t start cutting headcount until efficiency actually doubles. Generously assume that will be three months after the training finishes. Now I’ve got three months of gradually declining headcount, and only two months of full headcount reduction. Maybe $200k in reduced salary.

Of course you need to add a percentage for profit for the development company. Let’s go with 30%. So …

The balance sheet

Software $325k + 30% = $422.5k
Trainer $36k
Training (temps) $48k
Total Y1 cost $506.5k
Projected Y1 savings $200k
Shortfall $306.5k
Y2 savings $64k/month

The project breaks even near the end of the fifth month of year 2. And that’s if NOTHING GOES WRONG! The code works on time, it does exactly what it’s supposed to, I don’t lose all my senior processors as they see the layoffs starting, etc. etc. etc.

The other pitch

Then a lone consultant comes in and offers to build me a little Access database app. A simple data-entry form to replace the paper version, a printable claim form, and a couple quick management reports. Two months’ work, and I’ll see a 10% headcount reduction. The consultant will do the training, which will only take a week because the new app will duplicate their current workflow.

Software $200/hour x 8 weeks = $64k
Training $200/hour x 1 week = $8k
Total Y1 cost $72k
Savings $12.8k/month (starting in the fourth month)

The project breaks even six months after the project is done, so early in the ninth month of Y1. Since the scope was much less ambitious, the risk is also lower.

The obvious choice

Which sales pitch do you think I will go with? Does that mean I don’t respect “proper” software development practices? And, the bottom line: should I spend more money on the “better” solution? And why?

The difference between innovation and sloppiness

I took a couple of art classes in college. In Life Drawing we were supposed to look at the arrangement or person in front of us and put it on paper. In pencil, then charcoal, then ink … watercolor … oil … etc.

I was always good at photorealism. I might not have been fast, but I had some pencil drawings that could have passed (at a distance) for black-and-white photos.

There was another student, an art major who fancied himself an “artiste”. His work spanned the range from abstract to really abstract. He looked down on my mere technical facility.

But my grades were as good as his, sometimes better. It seems when he talked about his rejection of formal rules, it really meant he wasn’t able to do realism. He didn’t have the command of the tools, the mere technical facility. So everything he did owed as much to chance as to intent.

He may have been right, that I didn’t have the creativity to do modern art. I’ll admit that I appreciate paintings that simply look good, without high-flying pretension or socio-political overtones. I guess I’ll never have a SOHO gallery showing. C’est la vie.

But with all his fervor, and whatever glorious visions he had in his head, he couldn’t reliably get them onto the paper. He couldn’t create something specific, on purpose.

[Cue un-subtle segue … ]

But what does this have to do with the business world? Scott Berkun wrote recently about how constraints can help creative thinking. When a large corporation does “blue sky” thinking, they can wander aimlessly and never produce. Constraints set a direction.

But I think there’s another problem with “blue sky” thinking that goes beyond a lack of direction. It’s summed up by Voltaire’s famous maxim:

The perfect is the enemy of the good.

When a company tries to “blue sky” a problem, they are implicitly seeking perfection: With no limits, what would be possible?

But there are always limits. They may be self-imposed, inconsequential, misunderstood, overblown, or in any number of other ways not real limits. And it helps to know the difference.

When you start out by asking people what they would do if there were no constraints, don’t be surprised when they come back with a solution that can’t possibly work. And then convince themselves that theirs is the only possible solution. By then, you’ve already lost.

Hate the game if you want, don’t pretend it isn’t being played

When I was in college I worked at a bar that had a pool room. I played a lot when it was slow and after hours. I got pretty good on those tables. Only “pretty good” and only on those tables … I knew where the dead spots were in the rails.

If I bet anything on the game, it was usually who bought the next round. Sometimes we couldn’t drink as fast as we played, and we’d go for a dollar a game. We were all friends, and it was just to make the game more interesting.

But every so often someone would come in who none of us recognized. You could usually tell really fast who was better than just a casual player. Sometimes they’d see if they could get a game for $5. I’d always take them up on it. And I always won the first game.

Then they’d ask for a rematch … let them win their money back. I’d take that game, too. Sometimes I’d win, sometimes not. But I was breaking even so I didn’t care. It was usually after the second game that they’d look at their watch and realize they had somewhere they needed to be. But they had time for one more game.

How about one last round for $50?

No.

How about $30?

No.

Come on, give me a chance to win it back!

No, you’re a better pool player than I am. But you suck at reading people. You thought I didn’t know you were throwing the first two games.

That’s when they’d get pissed. It wasn’t fair that I took their money even though they could beat me without trying hard. I was just a punk-ass bitch that couldn’t carry their stick.

Yup. But I had their money, and they were leaving.

If I wanted to, I could have spent the equivalent of a full-time job becoming a professional level pool player. I would have run into diminishing returns as I was going up against ever stronger competition. It would have dominated my life, and the only way to make a steady living would be constant travel.

Plus there’d be no retirement plan. Your earnings stop the moment you stop playing. The skills don’t translate to anything else worthwhile.

So I stayed in school and learned to be a programmer, which doesn’t suffer from any of those negatives. </sarcasm>

Hmm, that came out a lot longer (and a lot faster) than I expected. It all started from one idea, though: You don’t win by being better, you win by playing better. And you start by knowing what game you’re playing.

When you’re in an interview, you’re playing the “get the job” game. Once you have the job you’re in the “impress the decision-makers” game. If you go the uISV route you’re in the “sell the most product” game.

Being better at coding is one of the plays in each of those playbooks. But it’s not the one they keep score with.