213 FS Commoditization

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01:45 - Gary Herman Introduction

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CHUCK: Hey everybody and welcome to episode 213 of The Freelancers’ Show. This week on our panel we have Jonathan Stark.

JONATHAN: Hello.

CHUCK: Philip Morgan.

PHILIP: Howdy.

CHUCK: Reuven Lerner.

REUVEN: Hey everyone.

CHUCK: I’m Charles Max Wood from DevChat.tv. Quick shoutout – go check out all the conferences I’m putting on through the end of the year at allremoteconfs.com.

We also have a special guest this week, and that’s Gary Herman.

GARY: Hi everybody.

CHUCK: Now, Gary sent me an email – let’s see, when was this? May 14th is when I got it. And he basically said – and I’m just going to read some of this. He says he’s a small freelance firm. “We are constantly up against recurring misconception, which is annoying, and I love to hear your staff discuss in more detail as I think it would help many. We were just in a meeting yesterday in which our clients suggested again that he had worked for major Silicon Valley companies and that what we’re doing as web and mobile engineers is nothing more than a commodity service. They asked us to act as software architects, but leave the development up to less costly labor outside the United States. It blows my mind the educated well-vetted executives think that what we do is so simple. Their comment was ‘well, it’s not like the old days when we were building sophisticated and complex applications. It’s just a web app or a mobile app’. The amount of energy we've put into training ourselves and following the ever-growing list of trends and standards is huge, and we've been doing it for 10 years. So how does one deal with this stuff? It’s a very frustrating debate to get into and somewhat demeaning.” And then he said nice things about the Freelancers’ Show. So I’m –

REUVEN: That’s why he’s on. [Chuckles]

CHUCK: So yeah, I've ran into this a little bit where I had specialized on Ruby on Rails for a while, and yeah, somebody would go take a Ruby on Rails course online and then I’d be bidding 150 bucks an hour or I would be giving them a straight up value-based bid or a direct bid on their work, and somebody would come in and say “oh, I can write a Ruby script in 5 minutes for $3”, and – that or I would have clients come to me and basically say “so why should I hire you?” after we had gone through the whole process of going through what they needed and figuring out what it would take, they go “why should I pay you when I can pay somebody just like you one-tenth of what I paid you or what I would pay you if I hire them out at India?”

Is that what you're looking here or –?

GARY: Yeah. I think for us, we see this commonly come up in some of our projects where it feels like the client may not be that educated in our space, and obviously our space as you know is really complex, especially that they involve so many different technologies that tie in together.

So when a client comes to us and they're not educated in our space and they're looking towards price, it’s very hard to explain to them in one conversation without probably boring them a bit in how much it takes to get that technology expertise up to par and deliver quality products. So when we’re finding ourselves bidding against other people in whatever it is – we typically specialize in PHP oriented applications, so it’s WordPress, Magento, or a custom built apps using Laravel or AngularJS. Obviously, the – [inaudible] developers made the same, so we find that commonly being a position we ran into that is very hard to get past.

JONATHAN: I have about a million [inaudible]. Chuck, could you do me a favor and read the line from the email where the client made a suggestion about what Gary should be doing?

CHUCK: That they're a commodity service? [Crosstalk] – act as software architects but leave the development effort up to –.

JONATHAN: That’s the one. That’s actually good advice in my opinion. You should work as software architects and leave the development to cheaper labor because that’s the tricky part, typically. I don’t know you and I don’t know your work. Sure, we've just met, but that’s the advice I give all software developers is to move a higher ground because the easy stuff is cheap. And I’m a software developer so I know when I say easy, nothing’s easy, but there are things that you don’t need to talk to your developers for and there are things you do need to talk to your developers for, and coding is not one of those things. Planning is more like it.

GARY: And I would agree with that, except for the fact that our team and myself, we’re engineers at heart. So for us, it’s like yeah, it basically at that point becomes a business and takes away the challenging art form that we’re trying to craft and develop great code for our clients.

I guess we also feel that when we develop a software roadmap or we look at the architecture which involves everything from the ground up, it’s kind of your baby at that point, so you want to be involved in those steps moving things forward to make sure the client’s getting what they paid for. And as you're developing, you often see little things that need to be talked about or resolved that we worry that a lower level tech or an outsource firm may not get to, and the resulting product won’t be as perfect as we’d hope we would make it.

CHUCK: I have a few thoughts and then Jonathan can tell me that I’m wrong, but I tend to agree with the sentiment that the real value is in the planning and the architecture and things like that where you're basically coming up with the solution and the implementation is less valuable, though necessary.

The flipside of that is that I have also seen where development firms and engineering firms tend to get the develop – some tend to be able to get that implementation right, and other firms tend to flail about a bit and tend to write [inaudible] your software, and so I can also see that as an argument for “hey look, we do the implementation. We get it done correctly, we get it done quickly, and we get it done as agreed”.

JONATHAN: No argument there. That’s all true; the question is what does the client value? You guys are one hundred percent on the money that a seasoned developer is going to write way better code, less technical debt and all that; faster to market, less buggy, yada yada yada. The question is does the customer value that? I don’t think – [crosstalk]

CHUCK: I asked a question about does the customer value that? Are we talking about whether or not it’s actually valuable for the customer or are we talking about whether or not the customer actually recognizes the value of it?

JONATHAN: The latter; whether – [crosstalk]

PHILIP: The latter is the only one that matters.

JONATHAN: Yeah, and the first one doesn’t matter.

CHUCK: Ok. What were you saying?

[Crosstalk]

JONATHAN: All of that stuff is true and we all get that, but it comes back to that – it doesn’t matter to the client as much. So in other words, the kind of buggy, technical debt, little bit slower code from India, let’s just say, is good enough for their needs. It might turn out that they regret that decision, and then the next time around, their perception of the value of hiring top tier hands to actually implement the code will be completely different.

But to spend time in a meeting trying to persuade them that they're going to regret the decision is a really tough sell and it’s, in my opinion, easier to find people who have already been burned and just let this – the current client is not mature or experienced in these kinds of projects, or is mature and doesn’t care to take what I think is actually good advice, which is to go after the architecture part which is much lower risk, much higher profit – it’s lower revenue than the implementation, but it’s very high profit, and just take that for what it is, warn them that you're afraid that external implementation is not going to be as good, but shepherd them along to the process; you could perhaps manage the external team all the way through, you could throw up the process be saying “see, I told you so. This was going to be kind of rough, but that’s what you decided so let’s finish this and we can – next project we can revisit”. But trying to convince someone –

REUVEN: It’s so funny you're saying this because I had this guy call me I guess two months ago with an emergency and their system had to go live and it wasn’t scaling the right way. So I came in and helped them debug things for a bit, for like half a day or so in an emergency basis, and things got up and running.

And then they turned around and I was thinking they were going to ask me – when they called, they were going to ask me to help with the development, but that wasn’t it at all. It was exactly what Jonathan said. They want to stick with their low-cost developer, but they didn’t want – we all call it adult supervision – the guy is very bright, but inexperienced, and so I’m sure – and really really really, I’m not disparaging people [inaudible] because I know some amazing developers there, but basically I’m sure that what I’m getting paid for my value-based pricing per month to be an architect and overall have a few meetings with them is what this guy is getting paid for the whole month. It’s a win for the company, it’s a win for me, and it’s even a win for this developer who’s not going to get to learn some techniques from someone more experienced than he is.

PHILIP: I just want to jump in here and say that Gary’s question brings out, I think, a larger point which is that the landscape really has changed for software. The ability to produce competent or even great code has defused and so people here in the US who just assume that a better job can’t be done somewhere else are, I think, going to be increasingly proven wrong – and Gary, this is not [inaudible] in your team at all; this is just like an observation about the larger landscape of software is changing, and the ability to produce really good code is going to be something you can source from other places.

I think all of us who are trying to sell services to clients need to realize that the advantage of being in the US is more and more not an advantage.

GARY: I would agree to that. I do think there's some value in that. I think it brings up a couple of things. One is sometimes a client is turning to us to bring in that team. So we obviously don’t work with those teams on a regular basis, so we have an [inaudible] team standing by that come in that are outsourced.

And the other side of it, I think it’s just – yeah, it is a changing landscape. And for us, I guess we feel a little bit more like that chef in the kitchen that’s trying to make that perfect dish that wants to be cooking it and making sure that chicken is seared properly and the rice is cooked perfectly and the meal comes out great. And for us, we feel like that cooking process is part of the passion and the love we bring of the art form to it that comes out in the product.

And so I guess my feeling in general is how do we – either we have to learn to give up that love for things or instill that in other people, but it’s not that passion and that burning fire exists in every engineer that’s out there.

JONATHAN: Oh man, I've got – there's so many – I really don’t want this to turn into being up on Gary because this is super common, but you just used a whole bunch of red flags where it’s –

GARY: Yeah, beat me up.

JONATHAN: Art – this is not art; this is business. And believe me, I get the craft thing, but I save that for my own code. I don’t code for money anymore because of this. But I still code. And I make ten times more money.

So it’s like if you want to have – I was talking about this to somebody the other day, and I was like there's this spectrum between being a craftsman and being an entrepreneur or business person. And one of the really painful lessons that I – maybe I just gave in or gave up or something, but if you're having fun on the job as a developer, you're almost always learning something new because that’s what developers love. And that is – education’s expensive. And if you're charging by the hour, the customer is paying for it; paying for your education.

The really profitable stuff is the really boring stuff because you have it nailed. It’s down. It takes you 2 seconds. And if you're not billing by the hour and you're billing based on the value or some other non-time related thing, the profits are astronomical compared to getting paid by the hour to lovingly craft a code that you want to print out on the wall because it’s so elegant and beautiful. I totally get that. I love that too. I totally love that. But I've just beaten down to the point where I've forced to admit the fact that clients don’t care at all. And to try and have that conversation turns into this thing of like “you're going to regret it. That thing is going to be buggy”, and it never really comes back to bite them that bad.

So I’m like “alright well, where is the high value thing?” I think it’s awesome that your customer was aware of the thing that they really wanted you to do. They recognize that you're an authority. They recognize that you're an expert, and they want you to be the architect because that’s the expert role. And the execution, that can be given to junior developers.

GARY: Jonathan, you mentioned getting beaten down by this and switching your tactics. Was that something that you just easily went away with, or did you fight that along the way to get to that point?

JONATHAN: It’s [inaudible] process, I suppose. I fought it at first. I've gone toe-to-toe with people about whether or not to include jQuery in a website. It’s just not useful use of my time. And honestly I’m happier now, and so are the clients.

I have this exact conversation with people every single day – developers every single day. Especially when you have employees, it’s a huge – it’s kind of a sock in the mouth because you're like “well, but my whole – what about my team morale?” There's so many questions. “How would I shift things around to deal with this? Maybe I’ll just reject this or maybe” – doesn’t know what he’s talking about or maybe start to give up, and if you haven’t given up, then things would’ve worked out.

But all the trend, everything’s going in this direction like Philip was saying. Amazing code is now easy to get. Include the Jam. Include a bunch of Jams. Use Jquery. Use a bunch of Jquery plugins. Use a bunch of WordPress plugins. The development was so – I don’t know how long you’ve been doing it, but I've been maybe for 15 years, and it’s just web stuff, and before that I learned Basic when I was a little kid.

And it’s so different now. Now it’s much more like assembling Lego blocks that were written by like god-level coders and less – cut and paste from Stack Overflow, whatever. And it’s a lot less critical, I think, to have really expensive resources on implementation. I’ll stand by, and I think it’s fair to say that that’s the case.

REUVEN: Jonathan, let me ask you this then. I totally get what you're saying in terms of there's more profit, there's a lot of demand for doing more architectural high level stuff, but Gary had –.

Gary, if I understand correctly, you’ve got a team. You’ve got a company there. How many people are working at your company now?

GARY: Ten.

REUVEN: Ten. So Jonathan, are you basically saying “Gary, I want you to turn all your people into architects”? Is that a reasonable thing to expect?

JONATHAN: It depends on their skills. But yeah, maybe. It would probably be hard to find that much architect work so you probably have to do a combination of – I can imagine a thing where a really top tier lead dev from Gary’s shop approve all pull requests from an outsource team, an offshore team, so that everything went through a quality assurance process where other people are writing the code, but then Gary’s guy or gal reviews it before pulling it into the main – into the master branch or whatever.

[Crosstalk]

GARY: [Inaudible] hybrid approach.

JONATHAN: Yeah, like a pair programming thing, or you could also perhaps sell services to train those – use those people to do training for outsourced teams that wanted to get better. Who knows? There are a million ways you can repurpose a smart developer other than typing semicolons.

CHUCK: I think it’s interesting too because what you're talking about there, Jonathan, is that you're essentially making some of the same guarantees that you would make if your own folks actually wrote the code. It’s just that the company may be saving some money or some effort or in some other way that affects their bottom line; they're saving some money in getting the work done. And it may not be top-notch work, but you can at least guarantee that it is reasonably good work.

JONATHAN: Yeah, I think that’s more or less what I’m saying.

CHUCK: But there's value there too, because then you have that experienced eye on the code even if you don’t the experienced hands writing the code.

JONATHAN: So close. There may be value there if the customer perceives that as valuable. We all know it’s valuable or we all know that it will be beneficial [inaudible] better code that’s less buggy and more extensible. That might not be valuable to the customer, in which case they won’t pay you for it.

So if you do find a customer that wants a hybrid approach, then it’d be a cool service to offer. So I was just trying to come up with some kind of way to repurpose the hands on deck in a way that made them happy, made customers happy, created something that probably would be valued by some customers, but still made them feel like they weren’t paying top dollar for every little refactor.

CHUCK: Can I ask another question related to this perception of value? How much of this work then is actually setting up the systems to provide the service, and how much of this work is training your customer through your sales process to value the work that you want to provide them?

PHILIP: You can’t do the second.

JONATHAN: Yeah, I totally agree.

PHILIP: But I want to speak the first. I think a lot of it is – let me just say this; I've worked with a  number of development shops, and the revenue per employee numbers of people who have someone here in the US managing a remote team tend to be a lot more attractive for the owner of the firm than any other type of configuration I've seen. So I suggest that if you can figure out how to solve that problem of communicating well with a remote team and managing them – now, when I say remote, I really mean a team that charges less because they live in a cheaper part of the world.

So I just want to throw that out there, but I also want to throw out the fact that – well, I actually want to ask all of you – do any of you have experience with the fine art market? Do you know anything about how that works?

REUVEN: My wife’s a curator, but besides knowing that a lot of artists are crazy, not too much.

PHILIP: Ok. I just want to say this – it’s going to sound terrible; it’s going to sound like I’m beating up on Gary because he used the word “art”. If you use the word “art” to describe your code, you are saying that you want to be in a different market than you really are. You want to be in the art market, and the rules of the art market are quite different than the rules of I think the market that you're in if you're selling software development services.

REUVEN: I’ve got it way better than my wife. You're a hundred percent right on that [chuckles].

PHILIP: How value is assigned in the art market is quite different than – what I’m saying is it’s quite different than how it is in the world of software development.

GARY: Yeah, I would agree. I think that – I would say it’s – for us, it’s more of a – let’s use the word craft, but it is what drives our team; it’s what drives me. I do spend all of my time as the CEO of the company going in and running the show and working with clients and training them and helping my team from a software engineering architecture approach, look at problems differently, but I spend most of my nights researching other tools. I listen to a lot of podcasts. I spend a lot of time going through courses online and just keeping myself up to date with the latest techniques so that I can advise my clients properly and give them not cutting edge bleeding edge technology, but the best solution for the job. And I think that one of the reasons that we’re able to do that is because we’re constantly in the mix with all these clients seeing all these different opportunities come up where we have to solve different problems.

I guess one of my fears in that is as we escalate out of that and start using offshore teams or looking at other teams that might be a little less expensive to help fill in some of the gaps, my fear is we’ll lose some of that insight that we get now from being at that level and getting our hands dirty per se.

PHILIP: I hear you on that. I would say the flipside is if you can solve that problem – that’s an expensive problem, and if you can solve that, I think you can capture a lot of value.

REUVEN: Jonathan, at some degree – I've definitely had the experience of doing development and working with clients, and they knew they were paying more and they knew that they could get equal quality from someone else and they still wanted to work with me or someone on my team because there is still something intangible and worthwhile and giving them value in having strong relationship – a strong understanding of their product, of their services and their market. Is there something [inaudible] for that? Is that a positioning – we are on your wavelength and easy to get along with that they could not necessarily easily get from offshore developers?

JONATHAN: Oh yeah, absolutely.

PHILIP: That’s a potential market segment.

JONATHAN: Yeah, but it’s – what's it worth?

PHILIP: Yeah. That’s unknown. At least theoretically, that’s a potential market segment you could try to target and identify. And one that’s similar to that is “we’ll come in and rescue the project that your offshore budget teams screwed up”.

GARY: That’s never fun, right? You're going in and rescuing your project – we do that all the time. It tends to be 50% of our work probably, but it’s not a fun exercise because for us we’re dealing with a client that has a lack of budget at that point. They've got relatively bad code. Their timeline has shrunk, and they have emergency needs so we’re under a lot more pressure. And we always end up in this position where we start feeling bad for the client and end up doing additional work that we’re not getting paid for because we don’t have a – we got into this savior mode and we want to be the hero in the process, and I think that ends up hurting us.

And I just want to [inaudible] is that we tend to be pretty busy right now. We’re not in a position where this commoditization is really starting to affect us now. We tend to get a lot of clients that have complex problems and need teams that have a little bit of a higher skillset to solve those problems, but what I’m starting to see is more and more clients coming to the table with these projects that used to be somewhat more complicated, and as you said before are basically you just have an expertise in putting those Lego blocks together, which I also think has a scale. There's some people that you can just go and download a whole bunch of WordPress plugins and produce a site. There's other people that can download plugins that weren’t really well together and have a good [inaudible] and build a great solution.

So I guess my question would be have any of you guys actually gone down the road of actually bringing in a vetted team from overseas, because a lot of our clients that do come to the table don’t necessarily have a team overseas or have anyone else they can use, so they're coming to us to solve the full problem, not just the software architecture. Now, we could solve the software architecture, but it makes sense that we would probably start to try and vet some other teams. I guess my fear in that circles now we’d become responsible for those teams’ work and we don’t have vetted teams available that we know of right now.

JONATHAN: Yeah, I do this all the time, but the approach I take because of the concern that you just raised is to make the introduction. I don’t get in the middle and mark up their invoice or anything like that. I say – in fact, I’ll charge for the service to find them some outside teams or if they want to hire internally to vet their internal – candidates for an internal job and help them write job descriptions, all that.

But I have experimented with getting in the middle and having a virtual agency and it’s a nightmare for the exact reasons that you pointed out. You don’t have as much control as you need basically and it makes impossible – guarantee any kind of customer satisfaction. So I’ll usually just say “alright, I've got these 3 candidates. I've worked with them many times on other projects, or for whatever reason I think these people are worth looking into. Here's the contact information. You can tell them you got their name from me, but it’s up to you how you want to move forward. If they send you a proposal and you want me to review it, I’m happy to do that, but I’m definitely not in the middle of that relationship”.

GARY: And how successful have those been for you Jonathan? Have you – when you make those introductions, how many times has it succeed versus fail?

JONATHAN: It’s never failed. I can’t think of a time it’s failed. And I can think of one example where I was advising a client for 3 years at which point I had a kid and had to stop travelling. And so I basically had to fire the client, which was unfortunate because he was a great client. And that was 2 years ago because my daughter is 2 – 2 and a half. So one of the companies that I introduced them to is still working for them, so that would be 5 or 6 years now.

REUVEN: Wow, that’s great.

GARY: Yeah.

JONATHAN: That’s just one example. There are others, but that’s probably the most dramatic one.

PHILIP: I actually have a previous client whose entire business model is a matchmaker between US companies and overseas teams. And from talking with him, I know that the success or failure is often based on cultural fit as it’s often is and skillset fit. Again, that’s basically as businesses is finding the right fit. Of course, once he’s found that, he’s like a matchmaker and he just hands it off just like Jonathan talks about doing.

I have other clients, development shops, who if they have an overseas team, it’s a very close relationship and there's a lot of communication. It’s not something where they're just like throwing work over the wall and then it comes back, perfect and ready to ship.

GARY: Yeah. And I just wonder if this is a sign that at a certain level of software development if in the US is it reaching a point where you're going to have to be ok with going away from the keyboard and moving into that other level of software architecture.

And I think I heard on a show before – there's someone explaining that if you're really going to be an entrepreneur, you got to resist the pull of that keyboard, but it’s a hard thing to do. Most of us got into this because solving problems is what drives us. So moving up to that other level where you don’t get into that day-to-day development paradigm is somewhat less rewarding.

PHILIP: [Inaudible] what I mean.

JONATHAN: Everybody is jumping on.

[Chuckles]

PHILIP: Apple makes one computer – they build one computer – they design everything in the US, but they just build one computer here and it’s their crappiest computer. That’s of course a sweeping provocative way to put it, but I wonder if that doesn’t point the way to where things are headed.

JONATHAN: You also said something that I wanted to call out which is that everybody there got into it because they love solving problems, but that doesn’t necessarily mean keyboard. And the flipside of it is – I love coding. I still do it. You can still do it all the time for – you can do it for internal systems. You can build tools for yourselves to allow you to execute the stuff that you do for your clients much more quickly. In fact, that’s another way that you could repurpose internal employees. Instead of working on implementation of client work, they could be building systems to drastically increase your efficiency with perhaps writing proposals, resubmitting proposals, responding to RFPs, project management – there's a bunch of things that you could do to drastically lower your cost. If this code is so valuable – we’re all telling everybody this code’s so valuable. You can have them create some of that valuable code for your business and use it to decrease your cost. As long as you're not billing by the hour, then that is money straight in your pocket.

CHUCK: I have one more thing that I've been thinking in this whole discussion, and it goes back to the idea that we've been talking about with the company or with the client’s perceived value. Some clients really do want an onshore team. They want somebody who’s here in the US that they can reach out and touch, or at least they know they're within a couple of hours on the time zone, and they value that work that’s done by people in the US because they perceive that it has fewer bugs and higher value.

Is there a way to connect with those clients? And at what point do you start going “ok well, these clients are becoming rarer and rarer, so I do need to move into this other space where that commodity is offshore or outsourced to less expensive producers”?

PHILIP: I agree completely that that’s potentially a viable market segment; it’s a difficult one to nail down. Jonathan’s email list – or his email software sent me an email about this today. It’s like it’s that characteristic visible from the outside or do you have to get into a sales conversation with the client before that becomes apparent?

CHUCK: Yeah. I was going through that same thought process in my head and I don’t know. I can’t think of a way to identify those companies.

PHILIP: You can be clear in your messaging. “We are here for those people that don’t trust an offshore team or think that an offshore team is kind of screwed up. We mitigate risk because our developers are here”. That’s an easy message to articulate in your marketing.

That’s not the problem. The problem is how do you get it in front of the people who have that fear or that problem.

GARY: And I would say you're right. I think the large amount of our clients currently are exactly that. Their clients are looking for onshore teams that want a team that they can meet with on a regular basis that want to be close to us. And that highly value what we can bring to the table in some ways. Probably the value is more in the fact that we’re close and that we’re somewhat experienced, but – and for us, we still do get those clients, but it tends to be – those are getting to be the big, the larger clients, and the smaller client – and larger clients and startups, I should say; the smaller clients that sit in between are really starting to go away, which isn't necessarily a bad thing. I think there is obviously value in them accomplishing their goals at a cheaper price, but that’s like a reset on that.

And I think generally, what you guys are saying is – and I think I’d love to hear your feedback on it, but as we are entering into this world of commoditization and that’s affecting everybody along the [inaudible], but it’s not just WordPress developers anymore; it’s the entire spectrum.

CHUCK: Well, and the people that I know that are succeeding at WordPress development in particular have specialized one way or another so that it’s not necessarily about the code. It’s about the solution and it’s about their particular way of solving it. And so when they get hired and they get paid a high fee, the high fee is for their expertise and not for them actually writing the code even though that’s part of what they’ve been doing.

GARY: Sure, and I would say our team’s gone the same thing. We've started to become much more specialized in things like AngularJS and then we specialize further in that to start to use the Ionic framework, which gives us the ability to build hybrid applications. We started to become specialist in that as well and moving away from these more commoditized services which do seem to be in demand, but again we’re dealing with clients that – I think at any level our clients just come to the table with that approach of “what makes you guys different and why would I work with you over this guy”. It doesn’t have to be India; it could be the Ukraine or it could be in Oklahoma, and it is becoming harder and harder to explain that difference without getting into a specialty area.

CHUCK: I also want to push back on – you said you specialize further into Angular and Ionic, and specializing on technology is something that as those skillsets become more dispersed, you're going to face the same problem there. [Inaudible] PHP systems with Angular. Now it’s PHP systems with Angular and Ionic, or PHP systems with Angular and React Native, or whatever it is. Because ultimately again, they don’t care if you use Ionic, they just want a mobile app.

And so if you specialize in solving a particular problem for a particular niche, then your expertise become what they hire you for. Similar to the architecture discussion that we've been having earlier, instead of “oh, you have these other technical skills that we may or may not actually value over the fact that we have a solution that may or may not be written in them”.

GARY: [Inaudible] what I've been doing – when I say I specialize in AngularJS and we’re moving towards Ionic, a lot of that push was because our clients were looking for mobile applications and we were trying to find a way to deliver mobile applications at a lower cost and Ionic and Angular were – it was the direction we were heading in any case and the results of that was that we could still compete on that circuit and produce some great solutions for them without the native approach which tends to be a little bit more expensive.

JONATHAN: The tricky part with a horizontal specialization like Angular is that if that’s what you're using in your marketing, it’s like a carpenter marketing himself as a table saw expert. It assumes that the client knows they need some table sawing done and – again, it’s a tough market to specialize in because how do you reach people proactively who you know need Angular?

CHUCK: Or who know they need Angular. So the problem there is if they know they need Angular, they know enough to know that they need Angular, then they know enough to actually not need you, kind of.

JONATHAN: Right, right. They're halfway there anyway.

CHUCK: Right. So if you're moving in circles where it’s like the music industry or the dentists or whatever where people are going to go to a seminar or a conference and they're going to say “oh, have you seen my mobile app. Oh, this great guy has made it for me”. They're not talking about Angular or Ionic at that point; they're talking about “I have a mobile app and it’s making my business better. Check it out”.

JONATHAN: Right. And then Gary, you just happen to use Angular because it allows you to deliver solutions very quickly and cheaply that are valued by your customer. The customer doesn’t care if you use a table saw or the circular saw or whatever. They're like “oh man, check out this table”.

You mentioned earlier that you spend time researching different things, and two things I want to look back to on that. One is that I do the same thing for the exact same reason, which is to advice clients strategically about what might be the best tool for the job when that question comes up. But in my experience, it is not necessary with whatever – 10 or 20 years of developing experience, it is not necessary for me to do an entire paid client engagement with somebody using Angular to know what the pros and cons are.

GARY: [Inaudible]

JONATHAN: Yeah. So I think that that kind of time spent is really good as long as you're charging a premium for access to that expertise after the fact, and not just using it for your internal team to decide whether or not you should switch from Angular to Amber or something. So if you're selling that expertise, then that’s super interesting.

GARY: Well, I think it comes back to also the model that we've taken because we are – we started as a development shop and grew into a software architecture shop that can do all parts of the equation for our clients. I think part of this is that we also tend to give that information away. So when we first enter into a relationship with a client, the consulting or advising part of it seems to be part of the sales process. So we’re often sitting at a table espousing that expertise and information to our clients at no cost. And then our cost gets hopefully recovered by getting an engineering project to actually lead the project.

JONATHAN: Yeah. We actually did a show on this recently.

[Crosstalk]

CHUCK: Yes, [inaudible] Brennan Dunn about it, and I think it’s well worth to listen especially considering – yeah, the real value is “how do you solve the problem”, not “can you solve the problem”.

JONATHAN: Yeah. So I’m a big fan of – in that situation, it’s always been my experience that the best way to build trust, which to me is the thing that you want to build if you want to charge premium rates, they need to trust you. The best way to build trust is to ask a bunch of really smart questions and perhaps you offer some advice, but asking questions that make the clients sit back and they – “wow, we didn’t think of that”, is probably my number one deal closing activity, and I’m sure you can – well, you’ve got experience doing projects; I’m sure you could do this all day long with clients sitting in a room.

But certainly, if I get the sense that there's something I could say that would basically pull a splinter off of somebody’s eye, just be like “you guys are still in the decision-making phase and you're trying to make this thing work. Did you consider using this other thing?” and if they say no, then I’m like “oh ok. This is probably not going to turn into anything” and – not in the meeting there, but like “ok, you should check that out. If you think it’s going to meet your needs, then go for it; and if not, give me a ring back”.

That hardly ever happens. It usually always happens where they’ll say – they’ll call me up and they're like “oh, [inaudible]. We need you – mobile responsive site, and we have to rebuilt from scratch”, and I’ll try and talk them out of hiring me if I ask some questions like “there's a bunch of responsive WordPress themes. Why don’t you just buy one of those” or “why don’t you just wait and gather more information or why don’t you just wait until your mobile traffic is 90% instead of 65%”. And they’ll tell you all the reasons why they don’t want to do that or they tried it and it won’t work and they can’t do it.

But if you can get them to think by asking really insightful questions that indicate that you’ve been around and you know 10 times more about this than they do, then you're just going to put yourself in a – it’s going to put you in a very favorable position compared to a bunch of order takers from – that don’t know what the heck they're doing and are probably overly confident and not – just being like “yey! We could do that. We can do that”.

Someone who’s like – I love what Philip said earlier – parental supervision. Somebody who’s like “whoa whoa whoa, pump the breaks. Do you know why you guys want to do that? Is this really the best approach? If it is, great, but I just want to make sure you guys are asking the right questions”, and you will set yourself apart wildly from a risk standpoint. You will feel like the much safer bet, and therefore you can just [inaudible] premium fee because you won’t even be in the same ballpark with the other – somebody who’s just willing to – I think at the beginning you said somebody’s cousin who just learned WordPress.

GARY: Sure. And I also think just circling back on a couple of things you mentioned earlier is one of the things about taking our development team and trying to get them to do more project management or getting involved in the software architecture process, we do that already now, but I also – just from my team’s perspective and the type of people we tend to hire that bring a lot of passion and energy to these projects, these guys want to be knee-deep in code and what we’re trying to do is give them that opportunity to really spread their wings and develop great products for our clients. So I think it would be a tough shift because we are in this – pretty close to Silicon Valley here so we’ve got a lot of competitive pressure from what we call “over the hill”; we’re about 35 miles away from the center of Silicon Valley over a mountain range by the beach.

So keeping our engineers excited and happy and keeping them on our team – they bring great value to the table, and I think by not having the ability to give them that work and we potentially lose that ability to keep them happy and keep them on board.

PHILIP: I know. It was that same way for the manufacturing sector in the US. It was not an easy transition. I’m so glad we’re having this conversation because I think every freelancer has to grapple with this question. It doesn’t matter whether you're solo or have a shop with 10 people or 100 people. To me, it’s the question of the next decade is how are you going to deal with commoditization.

GARY: And if you love coding and that’s what you want to do everyday, is that even an opportunity – [crosstalk]. Is that opportunity just going to go away because the interest is going to be too expensive to compete against?

CHUCK: I just want to point out. You're making some assumptions about what your folks want, what you think is going to actually keep them around and keep them excited to come to work. And you may be right, but you may also find that there's some other aspect of what they do that they enjoy that you can work from. So rather than make that assumption, you may also just have a conversation and say “look, we’re looking at some of these other options. These are some of the things that we think will help the business grow and help us move toward whatever goals we have” and make sure that everybody understands where you're going and why you want to be there, and then see what solutions they come up with as well.

So some of these folks may actually say “yeah, I’d like to get better at architecture” or “I wouldn’t mind spending half or more of my time consulting with clients as opposed to actually writing code”, or you may find that some of them are like “you know what, if you change it and I’m not writing code all the time, I’m out”. But then you can start to make decisions based on that and say “this is what makes sense for us, this is what doesn’t make sense for us” rather than just going on this train until the train runs out of fuel.

GARY: Yup, absolutely. And I think, Charles, to your point, I've actually – we've had some of those conversations probably not as in-depth as you're mentioning, and I would say that we have lost some team members by shifting a bit and some of the folks that we have on our team would definitely probably not be interested. Most of these guys on our team are in the 20s and they've been coding for 4, 5, or 6 years, and so they're kind of hitting their peak, and I think for them they're really starting to overcome these challenges and develop some truly amazing code in a quick period of time. So I think they – they're going to want to keep exploring that, and from the conversations I've had lately, that does seem to be a little bit of a pressure internally for us.

REUVEN: I remember when I started off as a developer. I was working for HP. Everyone pointed out that at a certain point and if you're working in a big company, or even I guess if you're working on a small or medium-sized company, over time you're not going to be able to continue being a developer. You're going to have to move up into management.

And so a lot of companies came up with these technical tracks where you could become an architect, you can become a chief technologist, and it was clear that not everyone can move into this, but that a lot of people could or at least it was non zero, and this was to help the developers realize they had a future in doing coding.

And I think many people move into freelancing or consulting because they said “well, this is a chance for me to do that technical thing for a much longer time”. And I think it does give you a little more of a cushion and you can’t do it for a longer time and you'll stay more technical than you might have been able to in a bigger company, but I think part of the issue here is that as you become more senior, it’s just almost inherent to the computer industry that you're going to price yourself out of day-to-day development. And so you’ve got to find something that involves the development [inaudible] requires your knowledge of it, but allows you to build on that experience to give more value and thus charge more as well.

GARY: That’s probably why we find ourselves being somewhat altruistic about giving away advice and trying to do a lot of stuff for our clients that we don’t charge them for because we’re trying to stay relevant in that area, but we are probably have reached that seniority point where we’re pricing ourselves out and we’re defeating ourselves by not charging a rate for that time that we’re going into the red zone per se to help our clients achieve their goals.

JONATHAN: Totally.

GARY: Which is probably not the best business decision, but that’s the business entrepreneur fighting the curious software engineer and butting heads with that on a regular basis. And I think that’s – I’m not sure if all freelancers have that same issue, but I love that quote that you guys shared on that other show which I’ll just repeat again, which was resisting that draw at the keyboard, and that’s really tough. And I think someone on your show mentioned that it’s something that you definitely can’t do, and if you are going to back to the keyboard, then you can’t really be a manager on a company at that point.

PHILIP: Yeah, sounds like something Marcus Blankenship would say. And I totally get it. That’s what got me interested in technology in the first place was it was this way to affect the world just like through this machine. It spoke to the instinct to want to build things and create things, and trust me I get it. I just don’t know how you can face down those commoditization locomotive that’s coming down the tunnel without changing something, and the easiest thing to do is just find new ways to – or maybe it’s not the easiest way [chuckles]. Finding new ways to create value is the solution. I guess how that exactly looks is going to be different for each person, somewhat different.

REUVEN: Well, how about this? I know there are not a lot maybe, but a few consulting companies and even product companies where they spend a lot of time working on an open-source project where they’ll even create and maintain an open-source project, and they then become the world experts in that and can charge a premium because they are the experts. And so they're contributing open source, they're helping the world, and they're getting to – they're getting their technical jollies out of it as it were and they're learning a lot, but they're also using the technology to solve serious problems and they are [inaudible] to enable [inaudible] results.

PHILIP: Yeah. That’s almost a variation of building a startup except the product is free; you're just charging for some support services. I think you're right. That is an interesting way to face down the locomotive coming down the tunnel.

JONATHAN: Yup. Yeah, even if you don’t create it; if you're a Rails core committer, you’ve got point. You can make money – or Shopify expert, you can make money. But at that point, you are a very very very specialized – much more specialized than it sounds like Gary’s firm is and much more specialized than the vast majority of people out there are.

GARY: We tried to diversify a little bit because of this. We saw this coming down the road which was we were always interested in seeing how far a team could get us by developing our own software. So we started a startup about 18 months ago. We got some funding and started building and incubating internally and it’s still going on – just to allow us to take what we consider our amazing team and really flex our wings and build something great.

And then on top of that, during that process we felt like we had so much more time that we decided to build a non-profit, which we were also coding for as well. So we've been developing our own projects to give ourselves a chance to go in that direction, but client work is still what pays the bills.

JONATHAN: This reminds me of a – my wife is super into knitting, like she freaking loves it and she sounds like a developer when she talks about it because I don’t understand a damn thing she says. It is super technical. It is super technical. And she loves it. She spend hours a day knitting – listening to knitting podcast, the whole thing, just like a developer.

But imagine if she used to make tons of money doing it, and then the money went away. That’s where I feel software developers are now. There’s tons of ways you can do it for fun, just for fun like you're knitting. You could create all sorts of projects, you could create a side project, you create a product product, you could create internal software for your business. But to expect people to pay for your knitting, like how awesome your – like “look at these needles I chose”, like knowing – not knowing; very few customers are going to care what needles you chose. They just want to know if this sweater is going to keep them warm.

So you could have a run down the back and maybe it’s probably good enough for a lot of people, but it just reminds me of the tension between being a craftsman and a businessperson is the source of a lot of cognitive [inaudible] that we’re hearing here and basically all the time.

GARY: So going back to my question earlier, do you guys – do you feel that the American freelancer in software development is something that will be a thing of the past to the future?

PHILIP: I think so. They’ll have to change how they do things. I think they have to – I think the value that comes from technical knowledge that anybody in the world can develop and sell, that value is going to go down, and so they’ll have to – you'll have to figure out new ways to create value. I guess that’s my bottom line take on it.

CHUCK: One thing that I’m wondering now is there some kind of limitation of offshoring? For example, let’s say that we’re offshoring to South America or certain Asian companies. What if they get to the point where we are now? Where do they offshore to?

JONATHAN: Well, the bottom line is the cost. So as the value approaches zero, your cost start to matter. And if the US economy collapses, we’ll be fine [chuckles] because then we can charge [inaudible] on the dollar. But the problem is that our costs are higher; our living is – somebody said Oklahoma earlier; that’s not a joke. I have friends who live in Kentucky or wherever that have a very much lower cost of living and it gives them so much more flexibility because paying a premium for real estate is no longer pre-conditioned for a high salary or even a middle level salary, whatever that’s called.

I happen to live in a fairly expensive place – not crazy expensive place in US, but my family is here and I’m like [inaudible], and it occurs to me all the time how great it would be in many ways if I could move to Poland or just some place that are – Croatia, which I kind of like actually, but I just – my family’s not all going to come with me and it would just be really tough personally. But man, I would never have to work. None of my work is local.

Gary, how much of your work is local?

GARY: Very little. In fact, I'm from South Africa originally so I've thought about potentially taking things over there because they’re about 4 years behind us. I would come in being a few lightyears ahead of them and that’s pretty decent life over there.

But yeah, I think one of the interesting things – I actually read this amazing article recently which was somebody was asking that question about “can you reproduce Silicon Valley in other places”, and there's lots of cities trying to do that right now. And I think the answer is almost – I think it’s very difficult and I think there's a lot of reasons why. I think Silicon Valley grew over many many years and what resulted in is this huge explosion of technology and developers and meetups on a regular basis. And I think – I've seen a lot this happening maybe in Utah as well, but it’s very difficult to recreate that. And there's a driving competitive force here that gets everybody to up their game on a regular basis and keep in the mix.

And I guess my question is because it is hard to replicate that, there must be some value in the people that are here and the people that bring that passion and energy to these companies and work in that community that can’t be replicated overseas. It’s not as easy to go to Croatia or Poland and extract the culture of Silicon Valley out of those people that you might get from developers over here. Is that not an innate value to what a team brings to the table?

PHILIP: I was going to mention earlier that even though manufacturing has largely migrated out of the US to cheaper areas, there's still plenty of stuff that’s made in the US and it’s sold at a premium rate.

GARY: Tesla for example, right?

PHILIP: Yeah. There's always going to be – at the top end of any market, there's always room an incredibly expensive thing if it’s valued. I certainly didn’t mean to say that forget about it if you're a freelancer in the US; 10 years from now you're going to be unemployed. It’s not that at all. It’s just you probably have to change and find a way to get to the top end of whatever market niche you want to be in.

JONATHAN: [Inaudible] would be the luxury goods of your area.

GARY: And I think Reuven’s comment is pretty common. Most of us that started out anywhere got that same comment from whoever our boss was at the time saying “you can only be a software developer for so long. Eventually you'll reach management. You'll take this track or that track”. And some of us reach that point and go into management and do whatever it takes to be in management. Some people love managing; some people don’t. I personally do it out of necessity. I’d much rather unfortunately admit that I would rather be dealing with computers than people sometimes. So it’s a breath of fresh air when I get to do stuff like that. But as Jonathan said, I do it on the side and I do it for fun and it does keep me informed about things. And I would say 90% of my programming happens outside of work hours at this point.

JONATHAN: I know we have to get to picks, but there's one thing that I want to clarify, which is that management is not the only non-code option. There's plenty of other advice-giving you can give and get paid. [Inaudible] that it’s not managing people. So I guess I wanted to put that out there just to point out that it’s not the only option.

GARY: What are some of the other options? Are you talking about like teaching or going to events and speaking engagements and things like that?

JONATHAN: Speaking gig is a big one for me, but also the matchmaking stuff and vetting things. It could be reviewing RFPs before they go out. It could be reviewing quotes when they come back in. It could be making connections for people; all those sorts of things.

GARY: I do like the idea of helping a client find the right team. So reviewing RFPs before they go out and helping them ask the right questions so that they get the right team and they find that all the right people that they need to do the project, that would solve team problems in that we get to bring our expertise to the table. We also get to help educate a client or make sure they're asking the right questions before they hire that team, which hopefully will avoid them running into a failure situation.

PHILIP: That’s a serious conversation. It really – it has real implications for the future of a lot of people’s livelihood.

REUVEN: Someone said to me years ago that the difference between being self-employed and working for a company among other things is when you're self-employed, you're exposed to the business side of things. You're exposed to the real world, whereas if you just – if you're a developer working for a company, you'll obviously going to hear stuff about what's going on with the business, but your company is responsible for keeping track of trends and responding in kind.

And I think what we’re all saying here is there are trends, globalization and technology changes and commoditization and all this stuff, that are affecting all businesses around the world. And when you are the business or when you are running the business, you then have to be thinking not just “what am I doing for work right now”, but “what am I going to be doing for work in a year, 5, or 10 from now”, and position yourself and adjust your trajectory accordingly. And that can be very [inaudible] inducing.

GARY: I was also told when I first started my business was the dream that I had was that I would be able to employ myself doing coding forever. And quickly within probably a year or two, I found myself managing a team of people and the coding slowly drifted away. So I think just even being a freelancer that wants to grow into a firm and not be a solo guy or gal, obviously you're going to run into that same problem.

REUVEN: And I give you huge credit for pulling it off because I did it for a while and I would not go back to it. It’s really – it’s very difficult.

CHUCK: Yup, absolutely.

REUVEN: So good for you.

GARY: Thanks.

CHUCK: Alright. Well, I’m going to push us into picks. Reuven, do you want to start us with picks?

REUVEN: Sure. So I’ll start with a pick from either one week ago or 51 weeks from now. I was, last week as we record this, at Brennan Dunn’s Double Your Freelancing Conference in Europe, and it was extraordinary; really extraordinary, fun, interesting, full of interesting ideas. So you can mark your calendar now because one of the participants in the conference already reserved the place and sent Brennan an invite to his own conference for next year. So it was really quite good at a fancy Japanese-style spa in Stockholm. Definitely cool, definitely worth putting in your calendar.

And because of the flights involved, I was reminded that one of my favorite apps – I don’t think I ever mentioned it here as a pick, is FlightAware. So when we were not getting online for a flight and they didn’t tell us at the airport what was going on, I went to FlightAware and found out “ok, we were 20 minutes delayed” and that explained everything. So definitely worth using on the web and on the app.

CHUCK: Alright. Jonathan, what are your picks?

JONATHAN: I got a couple of picks this week. The first one is a book by Seth Godin called The Icarus Deception. And I am not always the biggest Seth Godin fan; I think he is a little [inaudible] and adheres to his own narrative a little much at times. I only say that because if you are not the huge Seth Godin fan, I think that you should suspend your disbelief and read The Icarus Deception, which if I was going to summarize in one sentence is that there's a difference between your safety zone, which is actually safe for you, and your comfort zone, which is where you're comfortable, and over the last, say, 10, 20 years, the safety zone for people has moved out from under their comfort zone. The things that they do to keep them confortable are no longer safe as they once were. Very interesting and I think relevant to the conversation which is why I brought it up.

Another thing which is relevant to the conversation is a webinar I did a little while back in February about how to increase your income without hiring employees, which might be interesting to Gary or other people in Gary’s situation about things that you can do to sell your head instead of your hands, which is selling your hands is usually what you're doing when you hire employees is multiplying your hands. So that might be of interest to people.

And then the last thing is a service that a friend of mine has created a while back. Jeremy Keith is a well-known web developer, and he has this podcasting-related service called Huffduffer – weird name – but podcast listeners might be interested in. You can go to Huffduffer and paste links to audio files into it and create your own custom podcast feeds without any shenanigans. It’s very very easy to create your own custom podcast. So I've actually collected a bunch of podcast that I've been interviewed on and created my own Huffduffer podcast feed, but you can use it for whatever you want. It’s really crazy simple. So people might dig that if they're bid podcast fans. So that’s it for me.

CHUCK: Alright. Philip, what are your picks?

PHILIP: Well, speaking of commoditization, Amazon produces a very nice inexpensive line of products, AmazonBasics, and I've recently tried their High-Capacity Rechargeable Batteries and this ball pack of Microfiber Cleaning Cloth. And I've got to say for the price, they're pretty sweet. So my first pick is the AmazonBasics line of stuff.

And then second pick, I occasionally run a bootcamp that’s designed to help solo developers and very small shops plan their way out of a commodified market position. I call it the Commodity Prisonbreak Workshop. And if that’s something of interest, you can find out more at commodityprisonbreak.com.

My third pick is hope. If you're in a commodified position, just know you can get out of it with some work and planning, so don’t lose hope.

CHUCK: I love the idea of a prison break. [Chuckles] It’s just awesome.

I’m going to throw a couple of picks out there. The first one is a tool that I use. It’s a plugin for Chrome, the web browser, and what it does is it actually closes down tabs when you're not using them so you don’t have a zillion tabs open; it’s called Tab Wrangler. And you can actually whitelist tabs so that it doesn’t close them. So for example, it won’t close Gmail, and that way I can just hop onto my email whenever I want. I probably should change that, but I haven’t. And then I have a few others that I've whitelisted, so I’m really – I really like it and it’s really handy.

Another pick that I’m going to throw out there is Privacy Badger, and that’s built by the Electronic Frontier Foundation, and it just blocks everything, which is really awesome. And so if you’re looking for an ad blocker, cookie blocker, privacy plugin, it’s a good one to go with. And yeah, so those are my picks.

Gary, do you have some picks for us?

GARY: I do. I was actually on – since we’re talking about Google Chrome, I use this service that I’ve become attached to called Session Buddy which allows you – I obviously have Google Chrome open with too many tabs at a time and lose track and often have to close down and restart my system after a while. So I found Session Buddy which allows me to actually grab all of my tabs that are open and save them in a session and recall that at a later date, which has been absolutely amazing.

My second pick is – there's a new show I just saw on CNN called I am Rebel, and there is a great episode with Kevin Mitnick on there yesterday for any of the hackers out there.

And my third pick is – I attended an incubation program a few years ago called The Founder Institute at Silicon Valley and it was great. It really helped us get started building some products and giving us the energy to build products internally and get a startup going within our company which diversified our reliance on the clients that are seeing [inaudible].

CHUCK: Cool. Well, if people want to find out more about you or your company or hire you, where do they go?

GARY: They can go to www.jabico.com. That’s jabico.com, and they can email me at gherman@jabico.com.

CHUCK: Awesome. Well, thanks for coming and thanks for asking the questions. I think this was a really really interesting conversation about some of these issues that I think a lot of freelancers are running into, and I think they’re going to become more common things that people are going to have to deal with.

GARY: Thanks.

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