We generally bill $125/hour. That income gets divided as follows:
* 65% to the developer
* 10% to whomever brought in the client
* 10% to whomever is managing the contract
* 15% to the house
It has been rough coming from a good-salary-with-benefits culture to what I usually call a commission culture. It is a different way of life, professionally. When I was working on salary, the only time I really needed to think about my income was in the salary negotiation, or when asking for a raise. Once I was past that, my paycheck was directly deposited and I would pay my bills a couple times a month. The day-to-day work at the office was stressful for all the reasons that make Dilbert funny: political maneuverings, fights between marketing and development and QA, schedule and feature and testing insanity and whatnot. By contrast, there are three day-to-day stresses at bivio. Am I getting the features out in a timely manner for our customers? Have we lined up the next pile of work? Am I billing enough hours this month to cover my bills next month? That last question is terrifying. "Am I providing for myself and my family?" has been a daily source of stress, sometimes even hourly. Not an easy transition. For most of 2005 I was regularly worrying that I wouldn't be able to hack it as a software businessman. Fear of failure loomed.
I kept reminding myself about the experience with Spatial/PlanetCAD. I had been paid a big, fat salary with benefits and responsibilities with a medium-sized, well established business. But there were major corporate events almost every quarter after I got hired. Just months after my first day on the job, the company sold off its main business asset to finance a dot com play (in November of 2000 -- great timing, huh?), and then we went through round after round of layoffs. Two years later my number finally came up, about a week after I got back from my honeymoon. That's the short version of my dot-com-crash-and-burn story. Notice that I did not get a job at a start-up. Spatial was 15 years old when I was hired. Enron is an even bigger example of every appearance of big and established and growing. Illusions of stability.
Even if it was terrifying facing the daily reality of billing enough hours at bivio, at least I knew exactly where I stood. There are no board room maneuvers and there's no rumor mill. We practice open book management. We all know exactly where the company stands. It is no secret where the money comes from nor where it goes. At one level it's scary as hell, but it's also completely real. No illusions. If the company is struggling, we all feel it directly. If we're doing well we feel that too. I've learned a bit about reading balance sheets and income statements and I'm starting to understand what they say about where we stand financially. I've learned a lot about cash flow and exactly how critical it is that we deliver value to our customers. I've always had a strong belief in customer service, but there's a profoundly different feeling when you can connect the dots between the check the customer writes and your own paycheck.
Even with this awareness, the culture shift has been difficult. One uncomfortable conversation with my Mom stands out in particular. Probably last Thanksgiving she commented that its often hard to take the risk of changing jobs, that it's easier to play it safe and stay with what you know. At the time I had been worrying out loud about whether I could hack it financially. But somehow Mom's comment about playing it safe really struck a chord, but not the way she intended. The idea of getting a traditional job with a salary and benefits felt much more like the play-it-safe path than sticking with bivio. It contradicted my story about Illusions of stability, but rang true nonetheless. The more courageous thing to do was stick with bivio.
This year has been a much different experience than last year -- I'm finally getting the hang of it. I've had month on month improvements in the number of hours I've billed. And unlike in the salaried jobs, when I really apply myself (like I did last month), it shows up in my paycheck. That's also real. The company does better -- bivio gets the 15% cut of a bigger pie. But I get almost immediate feedback about my effectiveness. Tight feedback loops allow you to adjust more quickly to the feedback. In that way, this arrangement is so much better than an end-of-year bonus. It's money in my pocket right now that lets me make decisions about what I do this month.
The conversation at our regular Friday lunch last week inspired this post. We had a guest to whom we explained how we work. I'm the brunt of a running joke who's punch line is "get back to work, Eric". At lunch Rob delivered the punch line. Everyone laughed. A few moments earlier Rob had just mentioned that he really doesn't want to be in the business of telling people what to do. He just wants to enjoy going to work. Think about that situation for a moment. I'll bet the image it has painted in your mind is almost completely opposite of what actually happened. If you work in a typical salaried position, you're probably imagining an awkward moment of silence around the table, or some knowing glances between co-workers. Eric just got publicly scolded by the boss in front of everyone. But that's not at all how it happened. Instead it was a scene of a playful joke among friends. This running joke is fundamentally about a bunch of guys who care about the fact that I spent most of last year worrying about my billable hours. They want me to succeed, to be able to make this work. I may be the brunt of the joke, but it's a kind of camraderie and encouragement that makes it really great to work here.