What's the difference between 10X Management and any other consulting agency? The article seemed to fluff it up a lot, but the fundamentals seemed the same. Just that the developer is a contractor for the agency instead of on salary?
To be honest, I'm a little nervous about the fluff, too, but I do sincerely believe we're doing something different with 10x.
First and foremost, our clients are the developers. (Admittedly, this nomenclature gets a little confusing sometimes, but it's important for us to constantly remind ourselves that we work for you.)
Rather than thinking of it as a consulting agency, we see our job as making freelancing suck less. In the process, we're building a network of freelancers who share best practices. They even share customers... our customer development has revealed that the #1 complaint from freelancers is that it's feast-or-famine. Since each person in the 10x network brings in his/her own dealflow, one person's feast can ease another's famine. Imagine a P2P network for gigs.
Additionally, the article only briefly touched on the lifestyle design aspect, but that's really important to us. Just like managers in the music or movie industry, we're entering a long-term relationship with our clients, and strive to understand their goals and help them achieve them. For some people, that means we save them cycles that they can put towards their startups. For others, we enable them to travel more. (I started out as a client before we founded 10x, and I spent my time on music, e.g. recording albums, touring, learning the cello.)
Also, my cofounders come straight from the entertainment world. They managed John Mayer from being an unknown singer/songwriter to playing sold-out stadium shows. They bring a really unique outside perspective to our industry.
And finally, as the article mentioned, our cut is only 15%. My understanding is that consulting agencies often take 50%+.
First and foremost, our clients are the developers.
Do you get paid by people for whom you find good developers?
Rather than thinking of it as a consulting agency, we see our job as making freelancing suck less. In the process, we're building a network of freelancers who share best practices. They even share customers... our customer development has revealed that the #1 complaint from freelancers is that it's feast-or-famine. Since each person in the 10x network brings in his/her own dealflow, one person's feast can ease another's famine. Imagine a P2P network for gigs.
I have worked very hard at developing my client base. Why should I share it with strangers? It is also not P2P because you are a middleman.
Additionally, the article only briefly touched on the lifestyle design aspect, but that's really important to us. Just like managers in the music or movie industry, we're entering a long-term relationship with our clients, and strive to understand their goals and help them achieve them. For some people, that means we save them cycles that they can put towards their startups. For others, we enable them to travel more. (I started out as a client before we founded 10x, and I spent my time on music, e.g. recording albums, touring, learning the cello.)
What programs do you have that help people like me get their life goals? I can schedule my own traveling, deal with savings, and hire an accountant to do a lot of stuff for pennies.
Also, my cofounders come straight from the entertainment world. They managed John Mayer from being an unknown singer/songwriter to playing sold-out stadium shows. They bring a really unique outside perspective to our industry.
What is this unique perspective? Can they chime in and share it with us?
And finally, as the article mentioned, our cut is only 15%. My understanding is that consulting agencies often take 50%+.
You are competing with agencies, yet you do not know their rates? No, the rate is not 50%. It is always variable. I've never had one go so high, not even half of that.
Consulting agencies do have one thing: the clients. They sell and market their services like crazy, and get a lot of work that way. Depending on how good they are, they also make sure that the place where you go to work is a good one, with good development practices.
How do you make sure that any client that comes my way will not make me sit through 5 meetings a day and then demand more work from me? Do you have any experience working with development teams?
Wait, I have to bring in my own leads AND you take a 15% cut?
Something like GroupTalent.com provides deal flow, handles contracts/billing, and tacks on a 20% fee to the employer/client. Employers have no problem with it. They get great talent. Developers obviously don't care because they still get paid what they want and GroupTalent takes care of a ton of overhead.
I've probably been their happiest customer. They provide a super high quality leads channel. When I look at something like your service, it scares the crap out of me to give away 15%. Sure consulting agencies take an even bigger cut. But that's for freelancers who have no desire to do their own sales/marketing. The best freelancers I know would never go to them.
Yeah, I'm actually the Head of Talent at a smaller startup and have worked here, larger startups, Google, Facebook, etc. I've considered starting an agency like this multiple times, and people as me about it quite a bit. I always just assumed the market was saturated with savvy people providing a better value proposition, but if the founders literally have no idea what the normal fee is (founder above claimed 50% is normal agency fee, even though the article itself correctly points out the normal fee is basically exactly what their fee is) and they seem to provide very little value, it makes me feel like I should get on this.
The fees at agencies vary greatly. You tell them how much you want to get paid hourly. They charge clients as much as possible and keep the difference.
Fair enough, but a founder of an agency saying that "standard fees are about 50%" is either an outright lie to get more business or just someone not understanding the business they run. Either one worries me.
I think its a misunderstanding or misuse of terminology. "Take" may refer too the difference of what the agency bills vs what the freelancer/developer is paid out.
E.g., agency bills at 50% markup (40-60% average in agencies in the technical space (I was a tech recruiter for 3 years)) $90 / hour to the company, while paying the developer $60 / hour.
Perhaps the founder is saying the agency is "taking" $30 from the developer, but this is a poor way of representing their service as comparative to third-party agencies and is not necessarily reflective of what the developer could make themselves directly with the company [1].
I can see why this is hard for 10x to get across, because stating "third-party agencies markup the pay for developers by 50%, we only mark it up by 15%" or "we take the 15% pay out of the developer," ergo, the developer needs to be negotiated higher in pay to make up that 15% fee.
[1] part of why companies pay the bill rate to third-party agencies is liability, taxes, ease of hiring/firing, avoiding SOW's and LLC / 1099 freelancers, etc.
Savvy developers will of course negotiate their fee's / pay upwards, but that is what 10x and others seem to be trying to take care of.
Its interesting, but misstated by the founder for "50%" take from the developer.
Will the engineers PLEASE wake up... A deal where an organization is taking a cut of your gross is NOT worth it.
So you work for an entire year, working nights, weekends, and they will take %15 off the top? At 200/hr, if you gross 400K they're taking 60K?
Are they really providing 60K worth of service? No. It's your reputation on the line. Your ass working weekends. You being called at 3am when the server crashes.
If they find you the contract, offer to pay a finders fee that seems reasonable.
They did the work up front, fine, then pay them up front. But don't let them keep sponging off of you like a leach.
"So you work for an entire year, working nights, weekends, and they will take %15 off the top? At 200/hr, if you gross 400K they're taking 60K?"
Your view is very myopic. If your best alternative without them is 100/hr or even 150/hr, then in fact you are still net ahead.
"If they find you the contract, offer to pay a finders fee that seems reasonable."
Who is assessed the fee and when? In this model, they are taking an "equity" stake so to speak. The developer bears lesser risk for a souring relationship.
Right, but the point being made elsewhere in the thread is that agencies usually can approach or exceed your goal rate, while not requiring you to share your secret sauce (ie: your leads).
> At 200/hr, if you gross 400K they're taking 60K? Are they really providing 60K worth of service?
It depends on what you would have been making without their help. If you otherwise would have made any less than $280K that year, they are definitely providing $60K worth of service. (Or, perhaps more properly, "value".)
I think there are plenty of really really good programmers who are lousy negotiators. For these people a 15% cut could easily be made up for by a good agent. It's not perfect for everyone, but for people who are better coders than business people it could easily be a win.
$60K on a $400K project sounds worth it considering that in most other contract broker arrangements the developer is the one getting $60K. FYI, you spelled 'leech' wrong.
Altay, I wish you the best of luck here - I hope this model works for you and your team. One thought for others, one for you.
>>First and foremost, our clients are the developers.
No, they're not. Your clients are the people who pay you money. The companies pay you money, then you pay the developers money. The developers are your vendors.
What you're actually saying is that you care about your developers and you want to treat them really well. That's awesome! Great agencies do this _all the time_.
I run an agency - we have a good reputation, and each of our recruiters has dozens of candidates who will answer the phone when they call, because they've built a relationship over the years that nobody's time will be wasted. All good recruiters have engineers who trust them. If you live in a town and haven't found a recruiter who cares about your best interests, keep looking. If you're in Seattle, find me.
Then when the recruiter finds the right role - or, as the article says about 10X, "the company tries to find gigs that match coder skill to client need" - you can make a match. (Note that the article forgot that 10X's "clients" were the developers. That's because they're not.)
>>And finally, as the article mentioned, our cut is only 15%. My understanding is that consulting agencies often take 50%+.
I wish! I wouldn't be typing to you, I'd have my minions do it.
OK, kidding. There are consulting companies that do bill >2x of their employee's wages, but they're not the kinds of companies you're competing with here. Those are companies that have folks on salary, that bench them and pay them in between projects, that provide training/mentorship, have management in place to help support their people, etc. (You can decide how valuable those things are.) Also keep in mind that their folks are employees, so they're paying a burden of 18-22% on top of their wages, which my assumption is you aren't doing.
You're competing with placement agencies (whether you want to or not). Those are the Volt/Greythorns of the world, who are likely taking more like ~15-25%. For example, many hiring companies will negotiate a markup rate of ~50% on top of someone's hourly rate, not including load/benefits - which when you add on load/benefits and calculate cut (i.e. margin) off the top, that's more like 20%. ($150 bill rate -> $100 pay rate + $20 load/benefits -> 20% cut)
If you can make 15% work with the cost of client loss and wasted time, etc., that's great. I hope the press gives you a lift you can sustain to get there.
>>> First and foremost, our clients are the developers.
> No, they're not. Your clients are the people who pay you money. The companies pay you money, then you pay the developers money. The developers are your vendors.
What would be the big problem with the money going directly to the developers, and then the agency billing them for their agent-y services? Presumably, the agency could just help the developers create a a Limited Partnership or something, consisting only of the developers; the clients would pay that LP, and the agency would bill that LP.
The dev isn't a contractor to the agency. The dev just pays the agency 15% of billings.
That's really the only structural difference, but it's important. 10X takes less than a typical consulting co, provides less tangible benefits, and has a better marketing story as long as they are smart about it.
Recruiters and consulting cos have always been highly variable in quality, but the current tech hiring drama has brought out some especially bad ones. In the late 90s (the last time I worked thru a consulting co), it was possible to find a rep that you respected and would shop your skills to reasonable customers and handle the annoying bits professionally.
My thoughts exactly. The "agent" concept is quite common in Europe, where niche contractors work through "boutique consultancies" (agents - thats really what they are) to get a lot of their work. The agent does exactly what this article describes. The agent would typically take between 15 - 30%, depending on their greed!
(And is often irreverently referred to as your pimp.)
(Altay from 10x here.) Not exactly sure what you mean, but if you're suggesting this is a problem that can be solved with software, I actually think one of our competitive advantages is that we're approaching it as a high-touch, people-oriented, service business rather than a software problem.
Obviously, this makes it less scalable, but I do spend my nights writing software for 10x to automate the things we find ourselves doing more than once. (I spend my days working on deals... still working out the balance; see PG's essay about maker/manager schedules.) And one of the things that's always at the back of my mind is how to maintain the high-touch, personal approach as we scale.
No, no. You have a point. A programmer could simply develop a system that would scrape the web to get leads. Then sort them in a way that the best gigs are on top. Then an automatic email would go out to these leads introducing the coder to the company. Then, depending on the answer, the coder would simply follow up on that introductory email.
At first, it sent around 300 a month, but then I dialed it back to less than 50. Then I added the ability to automatically follow up on people who I had contacted before, but did not a close a deal with (did this monthly, to keep leads warm). I never really used subs, but tried it. It was too much hassle and I'm very lazy.
In terms of dialogue, I searched for key terms in replies, and only replied to those that fit. I did miss on good leads, but the follow up email got me back on their mind and they would always reply.
I've thought about it, but the code is shit. Cleaning it up would not take much time, but I'm very busy with like a thousand different projects. This is an old version of the Nuuton crawler (V0.2, I think), and is way buggy. And its overly complicated being that it was a crawling/aggregating system for a search engine. I would re-write it in Python (like I did with Nuuton), and take off all the crap. Use something like Scrappy to make development easier.
Though I wish I could do it with someone else (a co-founder, if you will). This sort of thing could make a lot of money in the right markets. They do exist already, but most are antiquated. The advantage that I have is that I do my own email campaigns. So the emails that get sent out are actually A/B tested for performance.
I do plan to offer the actual emails that I sent to get clients for around $20 soon. Its an easy way for freelancers to get clients without much hassles. If you are interested, then shoot me an email.
I used Nuuton to do all the crawling and aggregating, well, the early Lisp system (that was buggy as hell). In terms of leads, I usually got good leads by simply doing cold emails with data gotten from Linked-in. Though I did crawl craigslist, twitter, and other boards.
I don't use it anymore, because I have a long term contract.
Hi. Another 10x Founder here (Michael). Thanks for all the good comments and challenges. Our inboxes are blowing up from the posts here and on BW.
In a nutshell, to my knowledge, the difference between 10x and EVERYONE else that lives in the ecosystem between technology creators and those who hire them is we work for the creators. We believe in the value of the problem solvers. All the others who do this work for the companies that hire the talent.
With regard specifically to the other types of digital agencies, they try to get their customers to pay the largest amount possible for the work and then hire or pay their developers the lowest amount possible as they live in those margins.
We work for the talent. For me, that is the main distinction and the one which is most important for this community.
Welcome to HN, and thanks for creating an account and then posting a minute later. We're happy to have you.
I'm not sure you're going to get very far saying (to your knowledge) EVERYONE else doesn't give a hoot about the engineers they work with and only cares about squeezing every last cent, and only you care about "creators." Some of us have built businesses that have been around for a while caring about all parties involved.
This is a challenging business. Best of luck to you.
Hi everyone, Altay from 10x Management here. Happy to answer questions here or at altay@10xmanagement.com or via our website (http://www.10xmanagement.com)
Have you guys thought about applying this model to f/t roles (i.e. not just contract)? I know contract work may make more sense because of the shorter stints/more business, but perhaps with enough volume, this is something that could work.
I'm a recruiter (used to be an engineer) and recently launched my own firm. This is something I spend a lot of time thinking about, as I find that the incentive structure created by the contingency model where the company is the customer encourages many of the poor behaviors that people associate with recruiting (spamming, cluelessness, bullying, etc.).
Recruiter here with similar ideas. I wrote about an agent model for perm hire last year, was on HN and ad some comments.
Part I and II below
http://jobtipsforgeeks.com/2012/09/17/disrupt/
If there's a dispute between you and one of your developer clients, who has the 15% of the money the developer's client paid him/her until the dispute is resolved — you, or the developer? I ask because this relates to the much-debated "who is your real client" question.
Do your clients talk to each other a lot? Work on projects together? I think I'd want to work on a project with someone before I referred a client of mine to them at a moment that I was too busy.
I just want to bump this question - they talk about lifestyle, allowing people to travel, etc. Does this mean you have to be based in the US, but you can then go on a trip and keep working? Or are they happy to work as agents for anybody around the world?
Also, what level of talent/experience are you looking for in your freelancers? How do I know if I meet the requirements :-)
We're open to talking to anyone, from web+mobile devs, to designers, to data scientists, etc. We even represent a guy who does bioinformatics.
The one caveat is that obviously demand varies based on the skill. Our dealflow is steadily picking up as our network grows and as we get press like this, but customers aren't exactly knocking down our door looking for Erlang hackers... yet.
(The bioinformaticist happens to also be a kickass iOS dev.)
That said, if you have your own dealflow for your skills -- no matter how obscure -- and are interested in our services beyond just sourcing gigs, we're happy to work with you.
After reading the article (though it is, as mentioned in other comments here, heavy on the fluff), I think this might be a little less like an agency than I'd imagined.
However, one problem I'm seeing is this. You claim about 30 developers right now, and flash Apple/Google credentials... but if you're actually going to be having extremely reputable and experienced Hollywood talent managers selling software developers, and you're expecting to get top-caliber applicants at all times, your niche is fairly small, both in terms of the developers you'll interact with and the promoters you'll be able to hire to keep your reputation above that of a normal headhunter.
Quantity aside -- niche business can be good business -- the major issue I'm talking about is finding talent like this that's not only happy to work for someone else, but available. Even my own standards for hiring developers are too high for the majority of available candidates, and most of the devs I know that would measure up are either running their own consultancies (not freelancing) or working for places that make retention a point.
If you're sitting low in the double digits despite the promoter resumes you're touting and your business has been around for a year... I have to wonder about its growth potential. Not to say every business needs to be absolutely huge, but depending on your goals, you might end up with a fairly low ceiling.
I think this is a great evolution for hackers. Talent should be a premium and the best way to get that is to have an agent. Granted this is only for the superstar coders who normally would get great comp packages. However, how do they know if they are fairly compensated ? Agents will and they are motivated to fight for the best deal. Go hire an agent.
Hmm, I've wondering why there isn't the concept of a recruiter who works for the developer. I'd like to have someone help me determine my worth and work with me to improve my marketability. I know companies pay a lot for this service, but it might be worth it. I know in the past I've not know how much I am worth and missed out on a lot of cash.
Finally. I had a similar idea. I wanted to start or have access to a company called Fuck You Pay Me. They would be contract salary negotiators that developers hire to negotiate their salary.
Do you regularly have clients who need developers for one-time development projects (kind of like a reverse elance.com), or is it strictly for Monday through Friday full time work?
I would love to do small side projects for others, e.g. on weekends, but bidding on projects on elance, odesk, etc is a headache I would certainly pay A LOT to able to skip.
If not, does anyone know of a service that does this?
There is a big difference between a talent agent and a recruiter. A recruiter ultimately works for the company needing talent and has the needs of their client companies. An agent works for the talent and will scout out the most promising opportunities (pay well, interesting work, work that leads to greater opportunity).
I wouldn't say it's new persay but I don't think they're quite recruiters. I generally think of recruiters as being paid by a company to find employees rather than the payed by an employee to find companies. Both agents and employees act as the middle man for the same transaction but they represent different people's interests. It's new in that this it's just now becoming the case that programming talent is valuable enough that 15% of it can actually buy a full time employee to represent the employees interests.
"... programming talent is valuable enough that 15% of it can actually buy a full time employee to represent the employees interests."
I doubt that finding jobs for a developer requires anything close to a full time employee. If it were, freelancing and consulting (without an agent) would not be viable ways of making a living (you'd spend 100% of your time finding work and 0% working). I'd guess that each agent represents several developers and a large fraction of that 15% fee is pocketed by the agency as profit.
The danger here is that their role can become muddled, this is a concern in every industry that has an agent model, in whose interest is the agent working? Good agents work for the talent, bad agents just try and get as much out of each deal as possible, word gets around...
Recruiters trying to hide behind the name 'Agents'. They don't add any value instead headache for developers. I would recommend staying away as far as possible from these so called 'agents' who just want your 15%.
I see it this way: The agent's more than earned his 15% if he gets me a higher paying gig than I could get myself (higher than 15% increase, that is). The benefit I get from not dealing with the stuff they claim to take care of is more than worth it. Unless you love doing your own billing.
This is a really good idea. I know nothing about these guys, so I can't evaluate whether there's true success or just marketing, but the concept is great.
One of the dirty secrets about Corporate America is that "your manager" is really only a manager. What do I mean? A manager is someone hired to make decisions pertaining to a financial asset someone else owns. Actors have managers who handle their reputations and Hollywood careers. Business owners have managers to run the day-to-day. Wealthy people have financial managers. In a corporate setting, you just have a boss.
In a typical company, your manager is the firm's manager and your overseer. Important distinction.
Talent really doesn't have representatives.
Freelancing is the place to start with this, because they know they're on their own, whereas corporate denizens are still somewhat clueless, but I'd like to see this idea branch out. I hope it succeeds.
