[Baypiggies] Thoughts on starting a career as a consultant?

[Alex Martelli]

On Tue, Jul 6, 2010 at 11:26 AM, Emile van Sebille <emile at fenx.com> wrote:
> On 7/5/2010 7:37 PM Alex Clark said...
>>
>> But unlike with day jobs, there is no cap on the amount of money you can
>> make as a freelancer.
>
> Well, there is -- 2000-2500 work hours/year at say $100/hr -- $200k - $250k
> (flavor to taste or individual circumstances)  This is probably the biggest
> downside to strict consulting.  You're selling your time.  You need to add
> people or develop resellable products to go past that and get a multiplier
> or residual effect going.

On several occasions, I've accepted options, warrants, or restricted
stock (at very low valuations, in either case) as part of my
compensation, when I consulted for startups I really liked.

None of those has made me millions (yet -- some of those startups are
_still_ going, they just haven't IPO'd or gotten acquired...
yet...!-), but if I had had a better "nose" (or had been a better
consultant -- enough to propel my clients to triumphal success against
all odds!-), there is, indeed, "no cap" (just as there isn't when
you're working full time for a startup -- but then, you _do_ have all
your eggs in one basket!-).  Yes, you _are_ selling your time, but you
can negotiate some part of the compensation to be in lottery tickets.
(Negotiate _very_ hard, ideally without seeming to, in such cases:
remember you have the upper hand, since cold cash is extremely
valuable and scarce for a startup, while stock-based payments are much
less so... especially if you forget to negotiate for being paid
specific %ages of the company ["number of stocks" is meaningless if
you don't know how many will be out altogether by the time you can
cash yours;-)] or other conditions such as "privileged" status, or
whatever the equivalent is in your country/state, meaning you can cash
out at any event that allows _any_ other stockholder to cash out, if
you so choose).

BTW: 2000-2500 billable hours a year is something of a pipe dream --
sure, you may WORK that much, or more, but you won't be able to BILL
that much -- there's a lot of "overhead time" in which you're trying
to _sell_ your wares, and some more burned in administering your
business.  Old hands who gave me advice back when I was transitioning
to freelance suggested, as a rule of thumb, that I figure I could bill
roughly about half the time I worked (I ended up well above that, but
that was due to several pieces of good luck -- but, in any case,
nowhere close to 100%).  OTOH, $100/hr strikes me as a pretty low rate
for consulting (unless maybe it's part of a long-term recurring
contract which makes it likely you'll be able to bill a lot of hours,
over time, without further "selling" effort, and also with less
administrative overhead).


Alex