192 FS Finding and Vetting Clients with Ryan Waggoner

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02:42 - Ryan Waggoner Introduction

04:30 - Getting Over the Hump

  • Goal Setting
  • Productivity Habits

06:05 - Preparations for Freelancing

07:33 - Job Security

10:08 - Pricing

12:31 - Working with Startups

15:35 - Low Lifetime Value

18:15 - Equity For Payment

19:27 - Vetting Process

21:16 - “Hustling”

30:04 - Filtering Criteria

32:58 - Cognitive Load

34:54 - Project Billing

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Sony MDRMA900 Over-the-Head Headphones (Philip)Million Dollar Consulting by Alan Weiss (Ryan) Solo Retreats (Ryan)Pick Four Notebooks (Ryan)Working Podcast (Reuven)

Transcript

[This episode is sponsored by Hired.com. Hired.com is offering a new freelancing and contracting offering. They have multiple companies that will provide you with contract opportunities. They cover all the tracking, reporting and billing for you, they handle all the collections and prefund your paycheck, they offer legal and accounting and tax support, and they’ll give you a $2,000 when you’ve been on a contract for 90 days. But with this link, they’ll double it to $4,000 instead. Go sign up at Hired.com/freelancersshow.]**[If you're someone who runs your own service-based business, then spending less time on pesky admin tasks means having more time to focus on your clients’ work, which is why you need to give FreshBooks a try. FreshBooks is the invoicing solution that makes it incredibly simple to create and send invoices, track your time and manage your expenses. It allows you to quickly see and track the status of your invoice expenses and projects, and allows you to keep track of your expense receipts in FreshBooks. For your free 30-day trial, go to Freshbooks.com/freelancers and enter the Freelancers’ Show in the ‘How did you hear about us’ section when signing up.]**[This episode is sponsored by Nirdhost.com. Do you wish that somebody else would handle all of those operation details when it comes to hosting your client’s web applications? Nirdhost.com is a Ruby on Rails managed hosting designed to make your life easy. They migrate everything for you, and new sign ups referrals come with a $100 discount or referral fee. To sign up, go to freelancersshow.com/nird, and enter ‘freelancer’ into the contact form for a discount.]** [This week’s episode of the Freelancers’ Show is brought to you by Earth Class Mail. Earth Class Mail moves your snail mail into the cloud giving you instant access 24/7 and integrates with the tools and services you use everyday. It’s crazy that we’ve moved everything we do for the business over to the digital world but still need to pick up, sort and manage physical mail. With Earth Class Mail, you can get all of your mails scanned and accessible online 24/7. You can search your mail, send invoices over to your accounting software, sync important documents into cloud storage, deposits checks and really just make running your business a whole lot easier. You also get real professional address to share publicly with customers, business partners and investors, and you’ll never need to worry about someone showing up at your door if you run your business from home. Now, I've checked out Earth Class Mail and I think it’s a brilliant solution that’s perfect for businesses and independent entrepreneurs of all types. Visit freelancersshow.com/mail and you’ll get your first month of service free when you sign up.] **REUVEN: Hi everyone and welcome to episode 192 of The Freelancers’ Show. On our panel this week we have Philip Morgan. PHILIPHILIP: Hello, hello. REUVEN: And I’m Reuven Lerner. And this week, our special guest is Ryan Waggoner RYAN: Hey. Glad to be here. REUVEN: Ryan, tell us about yourself. RYAN: I am a mobile development consultant, and I've been a solo freelancer/consultant for 8 years probably, and I was a product manager prior to that in San Francisco. And I did web development for a few years, and I eventually switched over to mobile. And I split my time these days between doing active consulting and trying to help other consultants build stronger businesses. REUVEN: And when you say helping other consultants, do you do coaching or run seminars or something? RYAN: I've always been a natural teacher. I love teaching people. I love helping people, and some of it is selfish because I think the best way to learn something is to teach, and I really have thought a lot of things through a little bit more deeply and more carefully because whenever you have to explain a concept to somebody, it really forces you to organize it in your own mind; so some of it is just selfish, but I've just always been somebody who tries to be helpful to people around me and people who are maybe a little bit behind me on whatever particular road I’m on. So I've always helped a lot of freelancers that I just knew individually with just some of the things I've learned over the years; I mean, I've been doing this for a little while and I've experienced a little bit of success out of it. And just over the last year, I've started trying to formalize that a little bit. So I launched a site called LetsMakeApps.io that does lead generation for freelancers. And so we basically do lead curation. I have somebody who, every day, goes through several hundred sites and different sources and tries to find the best freelance job post that people have posted for developers and designers. And then we send that out, and I’ll do an email. And as part of that, I have basically just started to expanding into writing and appearing on some podcasts and stuff about building a strong business as a freelancer. PHILIP: I am curious how you – I think a lot of freelancers have a hump that they have to get over. Did you have that hump at all? RYAN: I definitely did have that hump. My wife and I both quit jobs within like a week of each other to freelance. She is a freelance writer and social media manager. And in retrospect, that was not smart [chuckles]. We live in San Francisco at the time, and the next 18 months, I would say, at least – this was 2007 – the next 18 months were just brutal. Some of it, honestly, was just necessity by living in a high cost of living area. I had to really be disciplined about making a good income. It wasn’t enough to be able to scrape by like I would’ve been able to do in Nashville, where I live now, for example. So some of it was necessity, but for me personally, I think the big things were I am really big on setting goals, and I really set aggressive goals and track my numbers on a month-by-month basis. And I think another – for me, another big part of it, which I think is probably true for a lot of freelancers who are not honest with themselves, is that I had terrible terrible productivity habits. I was not a productive freelancer for the first couple of years that I've started. And whenever you go from working in a job to being a freelancer, the reason I think a lot of freelancers struggle is that there's nobody to – your clients will bug you, but you definitely have to be a lot more self-managed. And it took me a little while to figure some of those things out, and I still – still figuring out some of those things, but I think those were some of the things that contributed. PHILIP: Interesting. REUVEN: So someone starting off or someone interested in starting off, aside from quitting the job at the same time as their spouse, what would you suggest that they do to – maybe even before they do that, if they're thinking of freelancing, what preparation should they do or [inaudible] should they do? RYAN: I am – my situation was that I started freelancing moonlighting, basically, on evenings and weekends, and I think that is a much, much safer proposition for most people. It depends on your situation; if you have a spouse who is working and you can live off on one income, or if you have some savings and so forth. But I think I would probably not encourage anybody to jump into freelancing until they’ve given it at least a little bit of a shot just because I think the freelancing – I’m a huge fan of it, and I don’t think I would ever go back to having a job, but I don’t think it’s for everybody. And there's, I think, some – just some mindset things with freelancing that are just different from having a job, not necessarily better or worse, but just different; so I don’t know that it’s necessarily for everyone, and I would encourage anybody to at least give it a shot. So that would be my first answer; just dip your toe in, do some moonlighting, and that hopefully will give you an idea of what it’s like. Obviously, you still – you don’t have the income insecurity that is part of being a freelancer to some extent; not that there's a lot of job security for most people these days, but it’s a little bit more apparent, maybe, as a freelancer. PHILIP: Yeah. REUVEN: Right. I definitely – I've got and many other people I know who have been freelancing for a while and they’ve set up systems and [inaudible] so forth have worked several months in advance, some of them many months in advance. And I mentioned this on my Mastermind – one of the people in Mastermind said “oh my god. I work for the government. I think you have more job security than I do” [chuckles]. And granted that he’s a consultant to the government, but you can get yourself to that place, but it takes some time and it takes, I would also say, some luck as well as hard work. RYAN: Yes, for sure. And I think the difference for me with job security – because I definitely – I have a pretty stable roster of clients now in a sense like I have a mix of project clients who bring me recurring project work, and I have a few clients who are on just recurring monthly agreements and so forth. So I have a lot of job security; like my natural pipeline, so to speak, is really healthy. At the same time, I do definitely wake up cognizant everyday as a freelancer that the default is that I’m not going to get work, like this is going to end at some point. Maybe it’s a few months from now, maybe it’s a year from now, but I am going to go after find the next thing. However I do that, and honestly there's a ton of different methods to do that, but when you have a job, the default is that you're going to continue having that job. And if you get laid off, obviously that’s like a departure from the default. But as a freelancer, a departure from the default is a little bit different. REUVEN: Yeah. Every time I get a new client and I come back [inaudible] I tell my wife “oh my god, this client is the best. This is going to be the greatest relationship ever”, she says “no” [chuckles]. And she’s not saying our relationship; she’s saying – she says “the nature of your work is that it will end at some point, and that’s just the way it is. And [inaudible] for all you can while it’s happening, but you have to expect it to end”. RYAN: Yeah. I've been doing this for 8 years. I don’t know about you guys; I've had – I've probably had well over a hundred clients at this point. Some of those are pretty small engagements, but I don’t think I have a single client that I had – that I got in the first couple of years. My oldest client at this point is probably 2 or 3 years. And some of that is that I’m pretty aggressive about raising my prices and changing the thing that I focus on, that I do best, and so in most of these cases, it’s just that – it’s just like no one [inaudible] good fit for my end. But yeah, there's just a lot of – there’s always going to be turnover and –. REUVEN: So you mentioned raising your prices. So how do you price things and how do you raise your prices? And how would you suggest other people do that? RYAN: First of all, I never charge hourly, and I haven’t for years, which is pretty – I would say that in terms of people who spend time thinking and writing about freelancing, that seems to be pretty prevalent. And the nature of my work, my focus is startup. So I build mobile MVP applications for funded startups. And so typically, they are trying to build up the first version of their app, they’ve raised a round of [inaudible] funding or maybe they're self-funded. But where they build up the first version, usually they are fundraising the next round. They're going to need an internal team at some point. And so I can I help them get to that point, and then help them make the transition to having an internal team once it makes sense for them. So that’s the typical engagement for me. Value-based pricing is pretty hard in that value-based pricing in terms of like “well, this is going to be this much added to your bottom line”, and so by comparison, paying some fraction of that is a good deal. It doesn’t work terribly well just because they're – one of the [inaudible] about startups is that it’s hard to get good financial metrics because it’s all speculative. So I don’t necessarily do value-based pricing, but I always do either flat-rate pricing, or if it’s like an open-ended engagement, I may do weekly pricing; that’s about the smallest time increment that I do. And even the weekly pricing is not a certain number of hours per day or anything like that; it’s basically like you're going to be my primary focus on a week-by-week basis. And my assumption is that if the progress that we’re making together is not sufficient, then you'll find another developer. And I have yet to have that happen, so it seems like it’s working, but that’s a very high level of how I do pricing. REUVEN: So you're basically doing flat-rate weekly billing until they – more or less, until they wanted to finish or you wanted to finish? RYAN: Sorry. So I’m doing flat-rate billing in 90% of cases. In the last 10%, I do weekly billing. So it’s either one or the other. So flat-rate, meaning, I’m going to [inaudible] a project, an MVP, and it’s going to be whatever it is for this person. And then if – often, they’ll be a monthly support retainer attached to that, and if they want to do other major improvements, then we’ll do future phases that gets scoped out separately. PHILIP: You said a couple of things there, Ryan, that are pretty interesting. When I’m working with a lot of people on their positioning, a lot of folks are like “I want to work with startups”, and I think that’s because they're – it’s appealing, that building something new, something unique, something interesting. I’m curious what you’ve learned working with startups about working with startups. What would you advise other people about them as a type of client? RYAN: Well, I love working with startups, first of all, on the whole, because they're always doing new interesting things, and they tend to be – just by nature of the type of person who wants to build a startup, they tend to be pretty open-minded and forward-thinking. And I have a very soft and murky process that is way more art than science for how I feel out who would be a good fit as a client, and we can talk about that, but [inaudible] large startups, they tend to be forward-thinking and so forth. At the same time, I don’t know that I will stick with startups as my focus in the long run for a bunch of reasons, but essentially, they come down to startups on the whole don’t have a lot of money, which is why I focus on funded startups. But the biggest issue is that no matter what you do, no matter how good you are in my particular role, they're probably going to fail. And so I have tremendous portfolio rot, and I have a lot of – my lifetime value for startup as a customer, I think, is a lot lower than it would be if it was another type of business just because 90% of them are going to go under in the next 18 months, and so I’m not going to have the chance to work with that particular entity. Often, I get a lot of referral except from the people at the startup who go on to other things, so I don’t know. So maybe in that sense it is valuable because they're seeding my reputation all over the startup landscape. But my portfolio rot is brutal. I've launched dozens and dozens of apps in the Appstore. And currently, there's probably less than 10 of them that are currently in the Appstore, which is frustrating. It means that I have to work really hard to capture the work that I do in some format that I can show it to somebody 2 years later whenever it happen that company doesn’t exist anymore. PHILIP: So you might knock it out of the park, and still it goes nowhere ultimately. RYAN: Yeah. There's an aspect of – there's a huge aspect of luck with startups. And then, even if my technical solution is amazing, and I have a background as a project manager, so I often – I serve as much as a consultant for startups. In the ideal scenarios, I do help them with development, and then I’m helping them figure out what to build, and more importantly, what not to build. And we can do all that pretty much perfectly, but they're out there doing business development, and that just doesn’t work or whatever. They can’t raise the next round. And so I really enjoy it and we’ll see where my positioning goes from here. Maybe it’ll be something that is a little bit more vertical-focused so that I could still work with startups within that vertical as opposed to being business phase focused like it is now. PHILIP: Yeah. You mentioned low LTV and – low lifetime value – and one of the things that you always hear is that the – making a subsequent sale to someone who’s much cheaper than that first sale is – is that why that’s a problem for you? RYAN: Oh yeah. This is something that I've had to learn over and over, and I still forget it almost literally, every time I talk to a new client, but Alan Weiss, who I’m sure you guys are familiar with, wrote this book called Million Dollar Consulting that has been tremendously valuable to me to think about what I do in a little bit different way. Anyway, one of things that he talks about in the book is think of the fourth sale first. So whenever you talk to a new client, don’t be thinking about this immediate transaction. Be thinking about the value of this relationship in the long run. And I still find that difficult. I still find it difficult to not get hung up on what this immediate engagement looks like. And obviously, you want it to meet your criteria, but at the same time, I think for me, if I look back at my most lucrative clients, my most lucrative relationships, they’ve definitely been long-term relationships and I would say a good half of them have been things that weren’t that impressive from day 1. They just grew and did something impressive over time. And if these entities are going out of business in 6 months, it’s hard for that to happen. PHILIP: Yeah. Can you give an example, without any names or details, but what would be an unimpressive engagement that later turned into a really nice relationship over time? RYAN: Sure. Very typically, I’ll do a build out of a [inaudible] MVP app, and I'm constantly raising my minimum so this might not be an option for some of you listening now, but if I build an MVP version of an app for $1,500, in the grand scheme of things, that’s not terribly interesting to me, but if you raise a round of funding and you need help building up the phase 2, and then we end up doing a couple of years of ongoing consulting work, that can easily be a 6-figure engagement. And that’s not uncommon. I have a client now who I started at the beginning of October, and that engagement was only supposed to last about 6 weeks until they on-boarded a new developer that was going to be full-time. And they on-boarded the developer, but it turns out they wanted to move faster than they thought, and so that engagement is still ongoing. And so the initial dollar value of that is about a third of what it’s turned out to be. And who knows where it’ll go from here. So that’s no atypical at all. PHILIP: Mm-hm. Super interesting REUVEN: If you work with startups, how often do they try to convince you to take equity for payment, and how often have you done that? RYAN: Yeah. So the answer is zero and zero. And the reason that the answer is that is they never try to convince me is that I literally never get on a phone call with somebody without vetting them first. And one of the things [inaudible] I don’t do equity ever. And the reason is that, and this is what I always tell clients: “it’s not that I don’t believe in your idea, it’s not that – it has nothing to do with the startup, it’s just that I am not an investor at this point in my life”. I’m not a startup investor. That’s a completely different skill set and I don’t really want the cognitive overhead of trying to determine whether or not I want to invest money in a particular startup. So I just don’t do it as a blanket rule, like literally 0% of the time, and so it’s easier to – that doesn’t come up unless somebody lies to me and gets me on the phone under false pretenses. REUVEN: Ok. By the way, I, a hundred percent, agree with you on what you said, and I also – I think once I knocked my rates down a tiny bit to get a tiny bit of equity, but that was it. And it never went anywhere. That’s proving that I should never do this in any way, shape or form; but you said that you have a vetting process. So could you describe that because I think many people might be surprised to hear why don’t you want everyone in the world to be knocking on your door and how do you make it so that people still do even if they are pushing some others away? RYAN: Yeah. This is one of the things – to go back to your earlier question about what got me over the hump – if I had to pick one thing that for the vast majority freelancers that they should do differently, it’s really hustle for work a lot more than they are. Most freelancers love their craft, and they don’t love the business side of freelance as much, which in my view is primarily sales. We – to be really successful at freelancing, you need to be great at the same things that makes somebody great at sales, which is building relationships and closing deals. And I say that because whenever I talk to a potential client, my assumption is I’m not going to get this job; this is not going to be a good fit. And I’m ok with that because I have really good inbound lead flow. I hustle a lot even now; even though I’m busy, especially because I’m busy. And I think a lot of freelancers, they don’t want to lose a particular sale. And a big part of that is if you don’t have a lot of leads, then you probably can afford to lose one. So I don’t want all the people who come to me. I really just want the ones that are a great fit for me that are high margin that are – where I feel like I can add real value to what they're doing; I like to be a part of their going after, and that are – ideally, that are a really good fit relationship-wise in terms of it being something that can be a long-term relationship if the company is around. So I have a project minimum as a way to weed out a lot of people. I basically have a fuzzy project minimum that’s a little bit higher if I feel like this is just a one-off thing for whatever reason, just because I’m not going to get a lot of value out of this in the long run. And so I’ll do it, but it would have to be a little bit higher budget for me to do that. REUVEN: When you say that you're always hustling, what does that entail? What do you do? RYAN: Sure. So in the early days – so I wrote a 10,000-word guide to this that I haven’t published yet, but for the first 5 years, I got 90% of the work that I got off Craigslist, which I think a lot of higher-end freelancers would find really surprising, and I have done other than the first 3 years maybe of my freelancing, I've always done well in the 6 figures of revenue. So these are good jobs. In 2014, I got a client who I did a 6-figure engagement with off of Craigslist. So essentially, I started the LetsMakeApps.io thing that I mentioned because it’s basically just a reflection of what my process was for many years, which was responding to a ton of freelance job posts, not on oDesk or Elance or any of those; I never did any of that, but really just trying to find people who are looking – who are already looking for what I was doing, and building relationships with them. So for a long time, that was my process. At this point, I get a lot of inbound lead [inaudible] get a lot of referrals, I got a lot of repeat business, and that makes up probably half of the quality leads that I get at this point; maybe more. But I’m a big fan of the thought leadership approach to freelancing, which is you pick a niche and you write and speak within that niche to your target audience, and you build up relationships over time, and that brings you good consulting engagements. But that’s – honestly, that’s a good fit for me and I should’ve done that years ago. I know a lot of freelancers do that, just not great fit for [inaudible]; like they don’t like to write, they don’t like to speak, that’s just not the kind of thing that they're looking for. And I think I have, in my own career and the career of others, I've seen a lot of people who’ve built really healthy businesses off of nothing more than having the skills that’s just in demand and just responding to people who are looking for it. PHILIP: Can you flush out the Craigslist thing? That’s super fascinating because I think in my mind I've got Craigslist pegged as interesting, but sort of like a sewer. RYAN: It is. That’s exactly accurate. It’s exactly like a sewer. PHILIP: How do you pull out the good stuff? RYAN: Craigslist is basically a sewer, but Craigslist has one thing that a vast majority of sites on the web do not have going for them, which is volume. So there's like 500+ individual Craigslist regional sites or local sites essentially that gets stuff posted to them. And so everyday, there's tens of thousands of people posting all over the country looking for all kinds of stuff, from software engineers to designers to writers and so forth. And I think the – where people go wrong is they look at the stuff and it’s like the signal-to-noise ratio is horrible. There's tons of spam, there's tons of people who are looking for somebody to build their website for $100, and that kind of stuff. And if you don’t have some kind of process to filter all that out, you can waste a lot of time going through it. So my manual process essentially look like me pulling RSS feeds from all 500+ sites into a reader, and doing a bunch of setting up existing – pre-existing searches on those feeds to filter out just the stuff that was a good fit for me, and then having a [inaudible] batching process that took 20 or 30 minutes of going through, finding all the stuff that was a good fit, firing off emails and then handling the responses. The 80% of that work is covered by LetsMakeApps; and we pull stuff from all over not just Craigslist now, but we pull from Twitter and from AngelList and from a bunch of design job boards and we work remotely and some others. But it’s the same kind of process. It’s basically – whatever process you're using, whether you’re using LetsMakeApps or something that’s more home-grown, or you basically want to pull in as much as you can, filter out 98% of it, go through the last 2% and try to find the .01% that is a good lead. But that can still be 10-30 people a day who are looking for somebody who is, for me as a developer, who were looking for my web development skills whenever I was doing that, or for mobile development stuff. And I just got to the point where it wasn’t terribly time consuming and it’s just a funnel. I would send out – I probably got responses for 110% of the emails I sent out. But I sent out – I got really good at sending emails out very quickly, and again, I wasn’t spamming; I was only sending to things that were relevant, but for various reasons, like you just don’t hear back for most of those. And then once you get somebody on the phone, like I typically could close 30-50% of those, and of those, 20% would become good long-term clients, and it worked out for a long time. It bootstrapped my network and my portfolio and all these other things to the point where I don’t do that anymore. I could, and I don’t think that I’m beyond it necessarily because I think there's still, like I said, I got something in 2014 that was into 6 figures. I wish I could say that that’s nothing to me [chuckles], but it’s not. I’m not quite there yet. But it’s more just that I am busy these days. I’m busy with consulting work at the moment as I want to be. REUVEN: I think your point about – first of all, the very distinctive about this process with Craigslist, but my guess is that when you said at the end here which is you got really good at setting emails quickly, that was in many ways the most important part. Because you know that you have to reach out to a hundred people to get 10 potential leads, then you’d better be writing email real fast, and not doing what I often would do, which is sit and think about them and be very specific. And if it becomes half an hour per email, then the ROI is really, really low. But if – [crosstalk] – a minute per email, then you're doing great. RYAN: Exactly. So I use TextExpander to this day, but I always use it for this. And I don’t know how familiar you guys are, but – so I would use TextExpander, and I would have 10 or 20 different variations just depending on what I was responding to, and that would have just slight differences, and then I’d also have a fill-in at the beginning. So I would type in whatever my shortcut is, and it would pop up a window to type in something specific for that project. So I usually open my emails by saying something that was very specific to that project like “hey, I saw your ad looking for somebody who has experience with a Bluetooth SDK on iOS, and I just built those app and I’m very familiar with that”. And then the rest of the email would be canned. It would be just general information about me and a couple of links for them to check out, and then a specific follow-up for them. And also – this was also really important – it would also have money, some kind of financial qualifier in there, because I got very low response rates, but I wanted low response rates. I did not want to have to get on the phone and go back and forth over email at people who were never going to pay my rates. So I would put something about my rate and my minimum project size or something in every email that I send out. REUVEN: How do you say that without coming off as crazy, arrogant, spamming, something like that? RYAN: Yeah. That’s a good question. I still feel like in certain situations where especially if [inaudible] referred to somebody, it definitely feels like “oh, just so you know, I’m a big shot”, but for me, the minimum project size is a good way to qualify people before you know anything their project. And I – it took me a long time to actually have a minimum project size because I think I felt like “well, if I get this job for a thousand dollars and it only takes me 2 hours, that’s $500 an hour”, but it’s just not how my mind works. There's a lot of cognitive overhead with having a client, and so even if it only really truly only does take you 2 hours, it’s still just like something that weighs on my mind in a way that it’s not beneficial and it’s clouding out – there's an opportunity cost for that, so it’s clouding out the space for me to get a $20,000 job. So I have a minimum project size, and that’s a good way for me to filter some of those people out. And I've find that that’s maybe a little bit less – it maybe comes across a little bit better, so my specific wording now, I think, is something like “just so you know, I have a minimum project size of X, and most of my engagements are in the X to X range”, and X to X is typically like 2 to 5 times whatever my minimum project size is. Some of it is just anchoring like I’m just trying to help them realize I don’t charge small amounts, typically, and so if they're looking for somebody to just do a smaller job or take care of something really quickly, that’s like probably just not a good fit for me. I also had success doing the number of figures. So I would say typically, for me to build a mobile app, [inaudible] minimum is, we can probably talk and maybe come to some kind of an agreement. But if your budget is 10% of what my minimum is, I don’t want to waste your time as a client. PHILIP: What are the filtering criteria did you have when you're trying to reduce those hundreds or thousands of Craigslist possibilities down to the really – the better ones? RYAN: Yeah. So the rest of them, in terms of my emails that went out, most of it was just the filtering was primarily financial. The ones that I responded to, the filtering was kind of a mix of – I don’t know – this is a lot more art than science, but it’s basically “does this ad look like it was posted by somebody that I would want to work with?” And that’s – it’s very – it’s more art than science because it really is like judging the book by the cover. And I've worked with some great clients who couldn’t be bothered to post more than a sentence or two about their project on Craigslist. And on the other hand, I have seen some amazing ads that have been posted by people who turned out to be terrible clients. So I think that part is pretty murky, and I always air it on the side like I’m going to send an email. Because sending an email, for me, was really cheap in terms of time. I’m going to send an email; if this person is looking for somebody who does what I do and they can pay what I charge, then we can have a conversation. And that conversation will determine where we go from here. So I have another set of murky soft criteria that I use once I've opened a conversation with somebody. PHILIP: Yeah. It’s interesting. It sounds like if you could package up some of these things you’ve been saying, you could say start up by looking at a lot of stuff. And then you develop this filter that lets you make almost a snap judgement, but like a good snap judgement. RYAN: Yeah. I’m definitely a fan of realizing that it takes a little bit of time to develop your own [inaudible] filters and heuristics, and I try to share this stuff that has been helpful for me, but everybody’s different. And when I find a good client, like some of the people might think it’s terrible and vice versa. So I think some of this is a little bit less universal, and I do try and the people that I – the freelancers that I work with that are right for, I do try and emphasize that it may take you a while to figure some of this out. And that’s ok. I’m going to try and give you some shortcuts. But at the same time, if you are a designer who does – I don’t know – banner ad designer or something and you primarily want to work with clients that you can work with locally so you can sit down with them and work one-on-one, what you're looking for might be totally different from what I’m looking for. And what you consider to be great client and good process, I think there’ll be a lot of overlap. Nobody likes a client who treats them poorly or who pays really poorly or whatever. But I think everybody has a different preferences and that just takes time. PHILIP: Yeah. REUVEN: Lots of chemistry often, personal and [inaudible] personality in terms of the work style. RYAN: Yeah, for sure. For sure. PHILIP: Something else interesting that you touched on was this idea of cognitive load. And that – I was interested to hear that that can come from small [inaudible] clients. And where else do you see that coming from, and where else have you been able to minimize the cognitive load so you can focus more on what you want to? RYAN: Well, I would assume probably you guys and a lot of other people in this world, I keep a tight rein on my mind in terms of distractions and trying to be thoughtful and intentional about the way that I work. So I hit inbox zero everyday, I try to only check my email a few times a day, which is probably the hardest thing out of all the stuff that I do. Whenever I’m working, I am really just trying to do that one thing. I use Pomodoros; I don’t know if you guys are familiar, but I work in a short sprint. So I’ll set a timer for 25 minutes or for 15 minutes depending on basically on my mood, and just do a sprint on whatever it is I’m supposed to be making progress on. Always these are ways for me to reduce cognitive load, essentially, to not have things distracting me and pinging at me and so forth. But for me, if I have an open loop with a client where I’m waiting on them for something or I send something off, but they need to check it and get back to me or pay me or whatever it is; there’s some open loop. That’s not the end of the world, but there's a [inaudible] issue with that. So I always think about what would it be like to have a hundred of these. If I had a hundred tiny little projects, that would drive me nuts. And so even though the hourly rate is fine, there's just a certain amount of mental anguish that each project causes me because I’m responsible. PHILIP: Yeah, right. Yeah. Fixed overhead [chuckles]. RYAN: Exactly. PHILIP: So I’m curious with your weekly billing. How often do you communicate with clients? RYAN: Project billing is interesting in a sense that it – depending on how you do it, we can dig into this, but I think it can really opaque in a helpful way, which I’m fine explaining it, but it’s just – it’s always drawing interests [inaudible] clients don’t ask like how I came up with a particular number. Weekly billing, on the other hand, or any time-based billing, definitely has a little bit more of like this is how you got this number, although I don’t think that’s necessarily a fair way to look at it. But I would say that one of the things for weekly billing is that you should raise your rates every time you – every time you do a project, you should raise your rates and keep raising them until you can’t find anybody to hire you. And you can do that with project too, but depending on how you calculate your project rates, that again can be something that’s internal, but I've been pretty aggressive about raising my weekly rates over time, and that has served me really well. I don’t like to do weekly billing, honestly. I only do it because there are certain types of engagements where there's just not a good way to scope out what we’re going to do with – aside from that because I’m helping a startup build something that doesn’t exist; there's a lot of open questions that we can’t dive in and tackle right away. So it just doesn’t make sense to do anything else. And that’s why I do weekly billing. Otherwise, I always prefer to do a project quote if I can. REUVEN: How do you do that? I've always been in awe of people who can give a fixed price quote for something potentially quite large. RYAN: The reality is that if you are giving fixed price quotes, you should be adding a pretty significant amount of margin to that because you're taking on a lot of risk. If you're going to charge weekly and give an estimate, then the client takes on the risk of taking a lot longer than expected. So part of the answer is that you basically charge a lot more than you would if you were getting paid for your time because in some cases, it’s going to take longer than you expect. That’s one part of it. I really do think that a big part of being successful with project billing, no matter what your method is, is finding the right clients. And I am pretty explicit with clients from day 1; we’re building something that doesn’t exist, and in my case particularly with startups, there's always going to be unforeseen bumps along the road, and so I’m looking for partners. I’m looking for people who – like we’re going to attack each unforeseen bump together and figure what's a reasonable way to go through this. Because I have definitely worked on fixed bid projects where something came up that was unexpected, and that’s what the scope of works says, and so that’s what we’re going to do, and that’s horrible to work with. And it’s very short-sighted on their part too, but that’s where you really get yourself in trouble, I think, with fixed bid stuff. So I’m looking for clients who are going to be reasonable. I’m working on a project now where this has definitely been an issue. There are a couple of things that – like they had wireframes of the app when we started, and I went through and I did my best effort to come up with what a good quote was, and it was suitable to all parties, and we dove in. But they had forgotten a few things, and there were a few things that I, essentially, missed because it’s hard to tell sometimes how long something’s going to take whenever it’s just some wireframes. Until you start in – dive in and start doing certain things, it can be difficult to tell in advance how long it’s going to take. But this client, because I am always – at the beginning, I’m always trying to figure out “are they going to be reasonable? Are they going to be pleasant to work with?” and they are, and so we’ve worked it out. Some of the things that they forgot to put in, I've added; it’s not a big deal. They're small things, it’s not a huge cost; I’m not going to send them a new quote for every tiny little item. And on the flipside, they have been reasonable whenever I've said “look, this approach is going to be more difficult than I originally anticipated. Here's some alternatives that I think would be a better fit”, and that’s fine with them. So that doesn’t work if you are basically like you have your lawyers in a room before you start the project and hammer out every tiny detail, and you're going to sue each other if anything goes wrong. That’s just not the relationship that I want with my clients anyway. So I really, really think that the biggest thing you can do if you want to charge flat rates is pick the right clients. Look for people who are – who understands that this  – there's a lot of unknowns whenever it comes to – I do software development, so this may be slightly less true for other types of freelance, but in software development, there's a lot of unknowns and there are a lot of things that are difficult to predict in advance. And so I want somebody who understands that we are basically – we have – we share goals. We’re trying to launch this app, it’s going to do this thing, and we’re going to work together to figure out what the best way to do that is within the constraints that we have of time and budget and so forth. REUVEN: It sounds to me in some ways, you're putting – first of all, I love the idea of [inaudible] clients, but you're [inaudible] with so many other people say which is it all comes down to trust and communication. And if you and your clients communicate well and you trust each other, then you're not going to screw each other over just because a one line change was not mentioned in the original spec [inaudible]. Yeah, that’s great. RYAN: I do try to – it’s always like it’s always a balancing act, because I don’t want to set the wrong tone with the client and make them think that my time is not valuable, and so anything they ask for, they're going to get. At the same time, if a client wants some minor changes even if it differs from our original scope, I’m typically happy to do that. And part of it is I work on pretty large high margin projects. I have margin in the project to be able to do those things. So it helps too. REUVEN: Philip, any last questions for Ryan? PHILIP: Well, I think we've decided we’re going to rename this show the Trust and Communication Show [chuckles]. That is because everybody who has reached any level of success with freelancing reiterates that over and over. That’s the key. It’s just awesome to hear that from you, and I’m just still reeling from the fact that there's anything good at all in Craigslist [chuckles]. I’m still digesting that over here. RYAN: Well, I’ll send you the guide [inaudible] done with it. PHILIP: I would love to see it. REUVEN: The thing is I’m not surprised there’s good stuff on Craigslist. What I’m impressed by especially is that you figure the system that would really just not waste your time in going through it to find those gems. Because there must be – obviously, there are good companies posting there. They don’t know any better; they figure “why not”. And quite frankly, they had success in finding someone, why not do it again? RYAN: Mm-hm. Yeah. I've done – just [inaudible] numbers, I've done well over $500,000 directly from Craigslist, and probably another quarter of a million indirectly from referrals and repeat business off of Craigslist. REUVEN: Hmm. Amazing. PHILIP: Wow. That’s impressive. That’s a good note to wrap up on [chuckles]. REUVEN: Absolutely. Philip, you got any picks for us this week? PHILIP: I am going to pick something a little different. I came across a pair of headphones recently that are kind of interesting. They're made by Sony, which is not a brand that I have a lot of respect for, but it made a pretty interesting pair of headphones. These are the MA900’s, and you can find them on Craigslist; they're a little hard to find because they're not imported directly to the US. But what is interesting about these headphones is that you don’t need an amplifier for them to sound great. And they're kind of angled on your head; they're very comfortable, but they are angled in a way that creates a very nice sound [inaudible]. So if you're into listening to music at your desk and want a not terribly expensive pair of headphones that sounds pretty nice and is easy to drive without any kind of dedicated equipment, this might be worth the look. The Sony MDRMA900’s. I’ll drop a link in the show notes for those. That’s it for my pick for this week. REUVEN: Excellent. Ryan, you got any picks for us? RYAN: Yeah. I’m not sure how much time we have. I have three, but I can give you – REUVEN: Go for it. RYAN: One or two or all three. Ok. The first one is one that I mentioned earlier. I don’t know if anybody else on the show has mentioned it, but the book Million Dollar Consulting by Alan Weiss. Alan is an old school consultant, I would say. He’s been consulting since the 80’s, but he built a solo 7-figure consultancy. And he does strategy consulting, not technical consulting like I do. But I think just in terms of the way that you relate to your clients and the way that you think about your business, his – the lessons from that book and a lot of his other books – he wrote a popular one on value-based pricing and some others, but those lessons are all timeless. So I highly recommend the book. My next pick is solo retreats. I don’t know if you guys do this, but I try to do this every quarter. I often only get twice a year, but I try and get away by myself somewhere I can unplug for at least a few days. Typically, I need at least 3 days to – for the ringing in my ears to stop, but just to think about my business and to think about life and think about where I want to go over the next quarter or year or whatever it is. So I often do a cabin in the woods and I've done some other more unconventional solo retreats. But yeah, definitely just unplugging is probably the most important thing that are like you can’t take your phone and your laptop and surf around the internet the whole time or you will never get to the point where you're like feeling about some new stuff, thinking about some new things. And the last one is something that I found really helpful as coming out of retreats like that which is this little package of notebooks called Pick Four. Have you guys heard of this? PHILIP: No. RYAN: So Zig Ziglar is this very old school motivational speaker who passed away a few years ago, and Seth Godin always sites Zig as one of his biggest influences in helping him get over some early career failures and so forth. So Zig have this motivational goal planner type thing back in the probably 60’s and 70’s. And Seth republished it as this set of notebooks called Pick Four, and it basically walks you through picking four goals to focus on everyday for 12 weeks. And everyday, in the notebook, you write down what you did towards each of those four goals and whether or not that was enough for the day. And it just helps you narrow your focus and be accountable for a short period of – a relatively short period of time. I don’t really do annual goals anymore because it’s just too long. So in January, I’m thinking “ah, I got plenty of time [chuckles]”. And in October, I’m thinking “ah, it’s already almost the end of the year. I guess I’ll just start next year”. For me, doing specific goals on a quarter by quarter basis has been really helpful and the Pick Four notebooks, which you can just get on Amazon, has just been a helpful way for me to frame my thinking around that. PHILIP: Nice. REUVEN: So I've got one pick this week. I think I've mentioned on the show in the past; Slate Magazine has this podcast called Working where they interview people in all sorts of jobs to find out what they do all day. And in general, I recommend it. I think it’s interesting. They had a few different hosts over the years. And I just heard one earlier today; the How Does a Professional Pie-Baker Work Edition. And I think it was – it had a lot of useful lessons in there besides the fact that pie is just really good; but a lot of really useful lessons in there for any business. So this woman, Teeny something – I forgot what her last name is – she decided that she wanted to be a pie baker. And so she realized that it wasn’t enough to learn how to be a baker; you need to learn how to run a pie business. So she spent a year instead of paying to go to [inaudible] school, baking school, pastry chef school, she wrote to a bunch of different bakers whom she liked and respected saying “hey, can I come work for you for free for a month and intern and apprentice, and learn how you run your business, both from the baking side and from the business side?” And so she did this for a year, and learned a ton, and now has her own successful business. And it was fascinating to hear that, and also the way that she structures her week so that she can get it all out. And briefly basically, if she sells everything on Friday and Saturday, she has all the crusts done Sunday and Monday or Monday and Tuesday, and then does the fillings on Wednesdays so that she can make the pies on Thursday and Friday. And it never occurred to me that to run a bakery, you really need to be so organized to have a system, but just like all of us with our businesses, the more we systematize and the more we plan in advance, the better it is. So anyway, I thought it was a really fascinating fun interview, full of interesting stories and of course lots of good [inaudible] pie. So [chuckles] I’ll put a link to that in the show notes. RYAN: It’s a great podcast. I love that podcast, actually. If you have a list too, I highly recommend The Bail Bondsman Edition. REUVEN: Yeah. Oh, that was amazing! That was amazing. I totally agree. RYAN: That’s probably my favorite episode of the Working podcast. REUVEN: That’s right. That’s right. Oh, I totally forgot about that one. Well, Ryan, thank you so so much for joining us on the podcast this week. We enjoy speaking with you, and we learned a lot from you. And we will see you next week on The Freelancers’ Show.[Hosting and bandwidth is provided by the Blue Box Group. Check them out at BlueBox.net.]**[Bandwidth for this segment is provided by CacheFly, the world’s fastest CDN.  Deliver your content fast with CacheFly. Visit cachefly.com to learn more.]**

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