<story><title>The Software Millionaire Next Door</title><url>http://journal.dedasys.com/2013/01/04/the-software-millionaire-next-door</url></story><parent_chain><item><author>javert</author><text>How does that work out?&lt;p&gt;I mean, it seems like if someone went to their employer and said, &quot;I&apos;m going to stop working for you, but if you pay me more than you are now, I will sell you software,&quot; they would say, &quot;No thanks.&quot;</text></item><item><author>jacques_chester</author><text>Lots of people contract to a former employer. That&apos;s what I&apos;m doing at the moment.</text></item><item><author>killahpriest</author><text>Customers are not as inevitable as gravity. How do they find their customers?</text></item><item><author>patio11</author><text>I mostly hang out with folks who run product businesses, but numerically, I&apos;d bet on services businesses being substantially more numerous.  There are probably tens of thousands of consulting firms in the US.  Most of them produce bespoke software for businesses at 
five/six figures an engagement.  The math works out such that the principals at this type of firm become modestly wealthy fairly quickly, with little execution risk.&lt;p&gt;Think of every Rails dev shop you&apos;ve ever heard of: $8k monthly salary per dev, $12k in fully loaded costs.  Each dev has 70% utilization (~35 weeks a year) at a chargeout rate of $6k to $8k per week for journeymen and $8k to $10k for partners.&lt;p&gt;You can do the math yourself, but the short version is that a consultancy that would fit around my dinner table makes all partners millionaires, with the approximate inevitability of gravity.</text></item></parent_chain><comment><author>tptacek</author><text>Businesses are rational. If they need what you&apos;re selling, and buying it from you is more cost-effective (inclusive of risk) than building up an internal process to deliver it themselves, they&apos;ll buy it.&lt;p&gt;This apart from the fact that transforming an employee to a contractor is often a net financial win for a company. Not just because of benefits, but also because when the contractor finishes, you don&apos;t have to find a way to fire them.</text></comment>
<story><title>The Software Millionaire Next Door</title><url>http://journal.dedasys.com/2013/01/04/the-software-millionaire-next-door</url></story><parent_chain><item><author>javert</author><text>How does that work out?&lt;p&gt;I mean, it seems like if someone went to their employer and said, &quot;I&apos;m going to stop working for you, but if you pay me more than you are now, I will sell you software,&quot; they would say, &quot;No thanks.&quot;</text></item><item><author>jacques_chester</author><text>Lots of people contract to a former employer. That&apos;s what I&apos;m doing at the moment.</text></item><item><author>killahpriest</author><text>Customers are not as inevitable as gravity. How do they find their customers?</text></item><item><author>patio11</author><text>I mostly hang out with folks who run product businesses, but numerically, I&apos;d bet on services businesses being substantially more numerous.  There are probably tens of thousands of consulting firms in the US.  Most of them produce bespoke software for businesses at 
five/six figures an engagement.  The math works out such that the principals at this type of firm become modestly wealthy fairly quickly, with little execution risk.&lt;p&gt;Think of every Rails dev shop you&apos;ve ever heard of: $8k monthly salary per dev, $12k in fully loaded costs.  Each dev has 70% utilization (~35 weeks a year) at a chargeout rate of $6k to $8k per week for journeymen and $8k to $10k for partners.&lt;p&gt;You can do the math yourself, but the short version is that a consultancy that would fit around my dinner table makes all partners millionaires, with the approximate inevitability of gravity.</text></item></parent_chain><comment><author>jacques_chester</author><text>I quit my job for family reasons; they asked me to stay on as contractor. It&apos;s a surprisingly common pattern, I&apos;m told.&lt;p&gt;I am developing a niche tool for business at the moment. To get my initial customers I expect I will go visit them in their offices, ask questions and show them the prototype. Old fashioned, but I&apos;ve picked an area where improving performance by a few percent can mean millions of dollars difference in outcomes.</text></comment>