Patrick has to be one of the nicest people in our community. Whenever I shot him an email, even with the worst questions, he always took the time to respond. And please keep in mind that he used to consult big companies at that time and charge good money for it, but he always helped the community like this.
Thank you Patrick and all the best with Starfighter.
Something to note, for those who want to flood nice people with emails: I sent him a couple emails (probably similarly stupid questions -- I recall one was about his thoughts on Twilio having a "build your own appointment reminder" page -- not a direct competitor for your customers, but that does seem a little rude, no?), and never got a response. Nice people get busy, and it's best to consider if clever googling / just trying it will be a better use of the shared public resource called 'Patrick's Good Will'. In my case, I could have just e.g. assumed his thoughts mirrored mine, because even if they didn't, not really important to me.
I still remember the first time I read about Bingo Card Creator. I immediately dismissed the idea. But as noted in the article, it was a small brick and he kept stacking them and look how far he has come.
Thanks to his advice, I have also made decent progress in my own career. As a thank you, I wanted to get him a gift as a token of appreciation. And here's what he replied:
"Nope. I tend to just buy things that I want, considering my wants are generally small."
I'm hoping it does or I'm firing myself. The last few months dealing with the BCC acquisition and getting SF running and AR settled down simultaneously have been rather rough (a combination of raw hours and how many were between 1 AM and 7 AM due to time zones).
One of the things I loved about BCC is how it hit many of us over the head with the idea that a product does not have to be 'cool' or innovative or even really all that interesting to make money. Au contraire - bingo is about as uncool and boring as you can get. It kind of opens your mind to new horizons in business terms.
I'm curious about other projects created in the same vein that are making money. I saw a typing tutor webpage posted here on HN, and a stock portfolio tracking service, but don't know if they ever became profitable.
MicroConf just concluded (patio11 spoke) and I spent the conference collecting businesses doing just this.
My favorite two were
1. Software for people who sell and install granite countertops to help their customers preview what their counters are going to look like, doing millions of ARR.
2. Software to help high schools and colleges schedule umpires/referees for sports leagues.
I did some (non-dev) work for a small software company in Australia who make workflow software for car body shops.
There's so many 'niche' markets around that are worth millions if you can hit them (but they're not sexy like social networking or consumer mobile apps)
i actually felt that BCC was a very interesting product - it took a small, well-defined problem that was causing a lot of people a lot of tedium, and solved it in a nice, polished manner. far from being uncool and boring, it is a deeply satisfying use of computing - automating tasks for people who cannot automate them themselves, so that a relatively small bit of work for you adds up to a larger win for lots of people.
Making 30k a week, is very different from saying he made 30k some weeks. 120k in Profit is hardly something I would call an 'Empire'.
I appreciate the sentiments of this community, its unquestioning reverence towards Patrick, but the article is full of misleading statements. What is factually correct, can still be grossly misleading.
> I appreciate the sentiments of this community, its unquestioning reverence towards Patrick
I honestly don't. I mean, nice guy, sure, and a great writer, but I don't see that he has built anything I consider particularly inspiring, or successful. In fact he has had quite a few misses, which were announced with the usual self-assured write-ups, only to disappear later.
(I only say this in light of the surprisingly large following patio11 has, he is certainly more accomplished than I or most most posters here will probably ever be.)
Personally, I think he's one of the most inspiring examples of personal success that I've seen on HN.
I know I'm not brilliant enough to change the world with some new revolutionary invention or discovery, and spending years killing myself to try and build some ultimately ephemeral business empire holds zero attraction for me. Achieving a comfortable lifestyle in which I work for myself and can reserve most of my time for my friends, family, and hobbies is my main aspiration, and patio11's success at building that lifestyle is enormously inspirational.
If you charge more, people don't bother you with nearly as much low-ROI scut work, which means you (assuming you can deliver) find yourself focusing on more interesting & more valuable work that has a stronger connection to attracting and keeping high-value clients.
Yes, there's an Underpants Gnomes quality to this sort of career advice. It's not bad, but there's a giant "?" in the middle that nobody can really help you with, which seems to involve accumulating a huge base of clients beating down your door.
Actually, that '??' part is only '??' for engineers, who generally don't know how to drum up work.
There is a process to getting business, it's called 'sales'. Take a reputable sales class (3 or 5 days or so). It'll set you back $5k-$10k, and it'll push you way outside your comfort zone, but it works.
Getting business isn't that hard: first, you identify your customers. Then you think of a way how to find those people/organizations. Then you contact them, and set up appointments. Lastly, you convince them (during the meeting) to buy your product (where 'product' can be software you've already written, software you'll write or man hours you'll spend working for them).
The above of course skips over many details. But the point is - selling stuff is not 'luck' or 'magic'. There is a process, although of course it has to be tweaked every time. All you have to do is learn it.
Patrick was about as well known on the Business of Software message boards as you are on HN when his consulting career started. Those boards no longer exist and were always smaller than HN. Prior to consulting he held what is probably the lowest- status job in software development. What do you think the secret ???'s were for him?
If you actually read that post, you'll see it talks about how he got started, and that it also contains a clue as to why I think I know a bit about that. In any case, I'm not sure what this has to do with Patrick's "underpants gnome" secret. Is the trick "have a high-karma HN account"?
The secret sauce is that he's a good developer, and really good at "engineered marketing" in a way few people are. In addition to communicating really well.
He also seems very good at marketing himself - as a proof, that so many people here know and talk about him - and at networking; he bought lots of coffees to strangers who asked to meet him in Tokyo - including me.
And also participating a lot on forums and blogging. If he gives free advices to hundreds of freelancer/programmers and ten make it into a multi millions company, that's ten potential clients for Patrick.
Well, if I knew what went there, it wouldn't be a question mark. My best guess is "luck," though I feel like that's kind of a facile answer. I don't have a better one, at any rate.
That's good advice, but the problem is that the ??? comes at the point where your only sources of prospects are morally equivalent to oDesk. No matter how good you are at qualifying and closing deals, it does no good if deals.filter(:is_qualified?) == []. Based on Patrick's account, it sounds like good consulting work mostly just came to him — he commented late in his consulting career how strange it was having to actually go out and hit people up for work lately. You do need to close the deal when you find a good prospect, but we're still jumping over the ???, which is where you get that steady stream of good prospects in the first place.
That's why my best guess is "luck" — because I've never heard anyone say anything about what they did beyond, "Eh, I found good clients and became a successful consultant" or "I did not find good clients and struggled in my consulting career."
I suppose this is true, but also mostly irrelevant. If I am faced with two doors, behind one a car and the other a goat, I am technically making my own luck when I pick a door, but there's still nothing I can do to improve my chances of getting the car past 50%.
You are looking at the single point of choosing the door as your definition of luck, rather than all the decisions that led you to be in a position where your only choices were between a car and a goat.
When I say you mostly make your own luck, I was referring to making decisions and choices so that you don't end up with only a car or a goat as your choices.
Personal and business relationships vary from person to person. I guess the assumption is that, if you are skilled enough at engineering and marketing, you will find yourself getting clients and make money hand over fist.
Unfortunately for me, I'm purely a technology guy, not a people person.
"Unfortunately for me, I'm purely a technology guy, not a people person."
This is bullshit. People can change. You can change yourself. 'I only do tech' is an excuse to not have to go outside your comfort zone. Of course it's a big change. Of course it's scary. Of course you don't know exactly how to get from A to B. But just giving up with a 'this is how I was born' is defeatism.
That's also true but I literally mean "you can specialize in having higher rates"; I'm not just saying "if you have higher rates you'll have free time to find more lucrative specialties". You can change nothing else about your practice but your bill rate and have a good chance of succeeding.
While I accept this is likely true, I still have a hard time incorporating it into my thinking.
I think I spent too much time as an employee, a relationship in which every increase in salary needs elaborate over-justification. Consulting isn't like that.
(Disclaimer: I've been an employee and a product startup founder but never a consultant.)
I think the key idea here is that you can change who you hang with in consulting. The world is a really big place, and it's filled with some people who are willing to pay a lot for the particular services you offer, and a lot of people who are not willing to pay a lot. Raising your rates just means that you will self-select for engagements with the people who are willing to pay a lot.
When you're an employee, your pool of opportunities is significantly more limited, at least unless you're willing to change jobs. So it's a lot harder to convince people to pay you more.
The key mindset shift you need is the ability to a.) put yourself out there and let yourself be found by the folks who are willing to pay a lot and b.) say no to the people who are not willing to pay a lot. (Also c.) get laughed at by folks who think it's ridiculous how much you're charging.) This is uncomfortable for a lot of people; it's still uncomfortable to me, which is why I'm not a consultant at this point, although it's also a very necessary skill for a startup founder and so I'll probably have to learn it and make peace with it anyway on my current trajectory.
I think the key difference (having done both) is that when you are consulting, a company is paying you (usually out of a pretty large budget) for a business outcome that they really, really want. When you are selling something that somebody with a lot of money really, really wants, you have a much easier time convincing them to pay you a lot of money. So your rate is really a function of those two things- perceived value of what you are delivering and how much they have to spend. It has nothing to do with what they pay other people who work there, etc.
When you apply to a job, they see you as a permanent cost center and not as an immediate way to grow their bottom line. In this case the negotiation changes to a large degree. I suppose it's possible to transfer the conversation during a salary negotiation so that you are selling based on the points above, but I think that's much easier said than done.
I think this constantly recurring point about raising rates is based on people who sell consulting services having a larger-than-necessary gap between what a company would pay for the outcome and what they are charging.
The limiting factor is how much value you add to their business. That can be a lot, eg. I could easily imagine patio11 adding $50K of value in a week's time by introducing a marketing campaign that sells $500K of product, or Matasano adding that much value by fixing a security hole that would cost more than $1M in lost goodwill.
One of my fiancee's B-school professors specializes in pricing theory. He can make several million dollars in one consulting engagement, because he tells companies where they should price their products to maximize revenue, and so he just needs to charge some fraction of ($new_revenue - $old_revenue), which is usually measured in millions.
Think of it as a machine, a big funnel. Narrow your skills and experience, pump more people into the top of the funnel, increase your ability to charge more. (But of course you only get what you ask for)
"Would love to read more about how that worked. I thought my $180/hour with $1k per diem for on-site was phenomenal. Jeez, I need to charge more."
Maybe not so fast.
To me the 30k is (most likely) editorial hyperbole which is not to say Patrick didn't make $30k on some weeks.
If you can make (repeatedly) 30k per week (or even 15k per week) that's a boatload of money on a yearly basis. So I would imagine that while Patrick had 1 or 5 jobs that might have paid that much, he determined that there would not be a continuing stream of work at that rate. Multiply that by 52 and see what you come up with.
If you could continue to charge that kind of money (and perceived a continuing demand) you could most certainly afford to hire someone to offload some of the work that is done (both admin, sales and actual consulting) to less qualified people that you could then oversee. After all not everything that a consultant like Patrick does needs to be done by Patrick. Similar to what attorneys do and other consulting firms do.
It is no secret to anyone who is in business that there is elasticity in pricing such that you can jack up prices on some occasions and some people will pay those rates. As such it's possible that you (the parent comment) are charging (at the rates you are charging) less than your value. But it's also possible that you would get drastically less work if you charged more than your per diem offsite. Even if a large consulting firm is able to charge 5x as much. (Or Patrick).
As a general rule, what I have found with pricing, is that it often pays to charge on a per project basis as opposed to a time basis. I find this to be true in both how I charge (I do a small amount of consulting on the side (not the main thing I do, but close to 6 figures last year)) and how I buy consulting.
If I need something done and the person says "$5000 for the project" that is easier to spend to "solve a problem" then $750 per hour or "$1000 per hour and it will take me 5 hours". See the difference? On the other hand if you perceive the total cost of the project is many hours and you are willing to sell those hours for $100 per hour it may pay to price like that. It all depends on the circumstance.
He's also a guy who commented toward the end of his consulting career that going out to look for clients rather than having them just appear unasked-for was kind of a new thing for him. I think this also has a lot to do with his above-average income.
I'm curious what justification you use for a daily allowance of $1,000. Are you renting ferraris, eating fabulous lunches and dinners, and staying in a plush hotel?
Careful, you are thinking in terms of cost plus here. Don't. If companies are willing to pay him 1000 usd per diem then he should demand 1440 and haggle from there.
I wasn't really thinking in terms of cost plus but I have never heard of a per diem being anything more than something to cover expenses while traveling. My understanding of a per diem is not meant to be a daily bonus.
If they pay it then it's all the better for the op. I was more curious how much blowback the gp has gotten on a large per diem like that and how they would go about countering it for my own personal use.
If I'm going to travel to someone's site to perform, they want every minute offsite to be completely stressless and relaxing, so I can focus my onsite time on work, not on sleeping.
That means good hotel and air accomdations, car service, luggage handling, ...
If you've read much of Patrick's writing (over on Kalzumeus), you won't find anything surprising in this article - still as authentic and consistent as ever.
"Another thing—be clear with your clients in terms of what their expectations are, and provide falsifiable success metrics"
I'm going to assume that that is a typo (and they meant unfalsifiable) as it doesn't really make sense in the context of what I've heard about Patrick before.
I think they're referring to the philosopher Karl Popper's notion of 'falsifiability', the idea that a claim must be possible to proven false to be admissible in a scientific theory.
Think about falsifiable as "veriviable"/"provable". Falsifibility in Patricks sentence stems from scientific theory. From the POV of critical rationalism a thing is never really provable because there always remains a bit of doubt whether the observed result of an action really is a result of that action and not secretly influenced by some unknown variable. But a proper theory is falsifiable, i.e. it can be proven that action did not lead to a specific result.
So think of Patricks statement as "always give concrete, measurable goals".
auto-antonym[0] is a word that means both one thing, and something else that is the opposite of that. This dictionary[1] (second result on google) has definition one meaning the opposite of definition two, thus the word is an auto-antonym.
They mean metrics you can check such as "sales increased 50%" as opposed to things like "we reinvigorated the sales paradigms" which you can't prove true or false.
This guy is awesome. I read some articles of his on kalzumeus ages ago and thought, "he really gets it." To see the pic of him and know more about him is really great. Thanks for this post.
He has mentioned Bench a few times as a business model/company he admires in various podcasts he's been on. I wasn't surprised in the slightest when I saw that he was featured on their blog. Either they got word of it, or he reached out to them to be featured (I'm guessing the former).
Thank you Patrick and all the best with Starfighter.