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Contracting, Permament, Unemployment, oh my!

Well I have an interesting situation I wondered if I could get some feedback on.

My ultimate goal is to have my own business.

About a year ago, I graduated from a community college with an ATA in "Computer System Design & Development."  Basically, it was supposed to teach programming, although I didn't learn even one valuable thing, and it was all a complete waste of money.

Prior to that, I had spent 4 years in the Air Force and also made a gaming network that was pulling in something like $1500-$2000 a month in ad revenue.  6 months after I got out of the Air Force, the ad market died and I was left with no income.  My options were to take a low-paying, non-technical job or go to this community college and use up my GI Bill money.  I chose the latter but also got into $14,000 in debt.

About 4 months after graduation, I was hired at a local software company that frankly sucked.  After working there (coding perl & PHP) for about a month, I realized that they were selling spyware disguised as a virus scanner (I worked on their billing system and company intranet, so I wasn't really involved with the product).  I realized as time went on that the company had no chance of survival and I wasn't happy there, anyway.

I was assigned to the "optimization" group where I was part of a 3-person development team tasked with taking all the personal information gleaned from the spyware portion of the software and putting into hourly/daily/weekly/monthly/yearly reports that they used to make decisions on the future of the product.

After 2 more months (total of 3 months), the entire optimization group, including myself, up and quit.  (We of course gave our two weeks notice).

I was a little worried because the market for programmers wasn't all that great.  I was very lucky to immediately (within a week) land a 6 month contract with a big Seattle streaming media company (I'm sure you can guess who it REALly is).  Since then, I have been working for a small division of the company that markets a PHP/MySQL-based content management system to non-profit organizations (we only deal with non-profits).  They have been paying $30/hr + they pay half the premium on my medical coverage (so I pay $100/month for medical insurance).

Anyway, that sounds like a great deal, but I live across the water and it takes me 2 hours each way to commute.  As you can probably guess, I am not that happy.

The original deal was contract-to-hire, which sounded good.  The company really likes my work and they offered me a full time position.  Guess what?  It's a 20+% pay cut.  I'd be going from something like $62k/yr to $50k/yr.  Of course I'd get more benefits, but the down-side is that I wouldn't feel comfortable moving directly into Seattle at that low salary.  Not that it's "low" - but the rent in seattle within a reasonable distance to work is at LEAST $1500/month for a decent house (not including utilities/etc.), plus I'd have to pay $8/day for parking when I got to work.  That doesn't leave me much for the rest of my expenses and bills (including that awful student loan).

So anyway, I turned down the offer and offered to extend my contract for another 6 months, but only working 3 days per week.  This would leave me at under $40k/year, but I would have time to pursue my ultimate goal, which is to start my own business.  Anyway, my supervisor (this was on Monday) told me "no" that I either had to accept the position, renew at full time, or just have my contract end on the 5th as it stands.

I told him that my contract should just end.  Since I'm working so far away from where I live, I figured I could get unemployment for a few weeks while I get my business going.

On Tuesday, I got a call from a company that found my resume on Monster.com.  They are apparently in a contract project for MS and want me to interview next week.  I talked to her on the phone for almost an hour and she seemed like she knew her stuff and was actually very optimistic.  This position would pay $34/hr + vacation and benefits and would be a 6-12 month project.  I could then move to Redmond (where rent is down around $1000/month instead of the $1500 and have a 10 minute commute to work.  Sounds great, but I have an ethical problem with working for MS.

So we set up the interview for next week, as I'm still undecided.  I would like to have the stability of another contract (as opposed to starting my own business), but I'm not all that excited about working for someone else (yet again).

Then, yesterday, my supervisor at my current company changed his mind and wants me to work part time, at least for another two months!  Damnit, why can't this be easy?  I would really like to do that because it would give me an opportunity to at least find out whether I could be successful on my own.  I would still have enough money to pay all my bills, live comfortably, and I'd only be commuting 3 days a week.

So, what do you think of this situation?  I know there are people that would kill (almost) for a job, any job, but I guess, after having so many interviews and promising leads, I feel comfortable that I can always either get a job or make it on my own.

saberworks
Friday, August 22, 2003

You haven't told us anything about this business you want to start.  Are you thinking consulting or do you have a product in mind?

Either way, some more background would be useful.  Do you have clients/customers lined up already?  How will you be funding that start up period?  Etc.

Give us some meat.

Steve Barbour
Friday, August 22, 2003

If you're comfortable living on the part-time wage, I'd say stay with that. It seems to me like it will be much simpler to get your personal business up and running with two days off every week. In other words, how does a move to Redmond help you get your own business going (your real goal)?

Rob VH
Friday, August 22, 2003

I thought the topic was contracting permanent unemployment, like it was a sickeness!

pdq
Friday, August 22, 2003

More jobs == More contacts == More future opportunities.

If you get offered the MS contract go for it.  You will learn a lot.

cheapo
Friday, August 22, 2003

I'd suggest moving to Redmond. 

You claim that you want to start your own company but don't have enough time to dedicate to it.  You propose that working 3 days a week for 8 hours with a 4 hour commute may be better than a 5 day a week for 8 hour job.  That's 36 hours versus (assuming 2 hour commute time total per day in Redmond), 50 hours.

Are 14 hours a week worth $8000/year + vacation + benefits?

Perhaps you should work for Microsoft (and do you really have an ethical problem working for them or is this some "I'm a geek I swear, see how much I loathe MS" thing? Would you have the same problem working for any other company with a near monopoly (my company is 72% of our regional market)). You'll get great experience, more skills, pay down your debt, have a better quality of life (less commute + less stressful community + lower rent) and you might even find that you like working for MS.

In my experience most of the work that goes into setting up a personal business (having watched my father and uncle both do it) requires a little investment each week for a long time.  Only after that slow building period does it become a full time endeavor.

Best of luck.

Lou
Friday, August 22, 2003

"Perhaps you should work for Microsoft (and do you really have an ethical problem working for them or is this some "I'm a geek I swear, see how much I loathe MS" thing)."

Hey man.  Ever since I started working at Microsoft, my street cred on JoS has been shot to hell.  =-)

I don't have an ethical problem working here as I do a morale problem.  It is so easy to feel insignificant in a megacorp like this.

But hey ... I get to take Bill's money, *and* post to JoS all day?  Hot damn!  What's the catch?

Alyosha`
Friday, August 22, 2003

I actually have quite a few things going on in regards to my own business.  My brother and I have gotten through the prototype phase of a product we intend to sell over the internet and in retail sports stores.  It's an accessory useful to anyone that owns a snowboard.  Problem is (as with every product launch, I gather), trying to judge whether or not it will actually sell enough to be worth it.

The second is a program I've been working on for about a year now (development has been very slow due to my hours).  It's a good solid product, something that doesn't have any competition I can find, but that appeals to a fairly small audience (web sites that are trying to build large web communities and that are willing to pay for web software).

Finally, a friend of mine and I are talking about going at it like Joel, where we do consulting 50% of the time and spend the other 50% developing two software products that are designed to provide services over the internet (as opposed to selling the software itself, we provide a service in exchange for money from the end-users).  We think both of these ideas can be profitable, but of course, it will take a lot of time and effort (and a little bit of money) to get them off the ground and really find out.

Sorry I'm a bit hesitant to provide more details right now (I'm sure you understand :).

Regarding funding, all the projects have been designed with the assumption that we won't need a lot of start-up capital.  I want to start small, very small, and build a larger customer base as we are able.  I'm not interested in getting any more loans, especially a business loan!  I have enough money saved up that I can afford things like the web design [I do web programming but I suck at artwork], web hosting, merchant account fees, branding, business license fees, and a trip or two to a small business accountant.

Regarding my ethical problems with MS.  Basically, I work like this.  If a company screws me over, I do everything within my power to not buy from them *ever* again.  I am still on Windows98.  I don't do business with Qwest, or AT&T.  I don't shop at Safeway if I can because I don't like their membership cards.  I don't do business with GEICO anymore.  Regarding MS specifically, they overcharged my debit card for a game called Asheron's Call (basically, they kept charging for 6 months after I cancelled the membership, and since it was such a small amount (9.95/month), I didn't notice it.  When I called and asked for a refund, they refused.  They said they have no record of when I last played the game (a big lie, since as soon as you log in, it tells you when you last played).  Furthermore, just a few days later, I got an email from one of their automated systems telling me that my account hasn't been active for 6 months and they were going to delete it!

Plus I have all the normal issues with their crappy software (I develop on Linux, I have win98 solely for games at home).  Actually, I don't even mind crappy software, I mainly have a problem with their "product activation" which requires me to give them an inventory of my hardware, and their license agreement permits them to disable my OS if I change my hardware too many times.  I guess I just want more freedom than that. (No, I don't pirate software.  I pay for every bit of shareware I use.  I don't download music, even though I dislike the RIAA.)

saberworks
Friday, August 22, 2003

saber: think of it this way ... go to work for Microsoft.  Goof off for two hours.  Voila, you've just gotten them back for Asheron's call ...

Alyosha`
Friday, August 22, 2003

I thought of that but I would also have an ethical problem with that!  Argh maybe I should just jump off a bridge and get it over with :P

saberworks
Friday, August 22, 2003

saberworks,

Joel talks big like it is easy to start you own software business, but my guess is he has had the luxury of running in the negative for multiple years.  I am speculating here, but based on his bio I'd guess he ran away with a bunch of option money from the boom, and is acting like his own angel investor.  The rest of us unfortunately need to earn a living.

cowardly anonymous
Friday, August 22, 2003

you didn't really specify what else you program in, but 50k a year for doing web based scripting language ain't bad.  Now, if your also a C++ guru, I can understand not wanting to settle.  If they're making a ton of money off you, get as much as you can.  But just be aware there are a lot of people who are more qualified on paper (and possibly more qualified, but not likely) who are out of a job.
Good luck.

Vince
Friday, August 22, 2003

Thanks vince.  According to salary.com, the average web developer in seattle makes 66k/yr.  The problem with taking 50k is that there is literally nowhere decent to live for under 1500/month (if the requirements are a house w/3 bedrooms and enough space to park 2 cars) within a reasonable distance to the city.  The reason prices are so high is that seattle is surrounded by water, and there aren't that many neighborhoods closer than a 45 minute drive (considering traffic - usually about 20 mins if there's no traffic).

So, that 4 hr commute isn't really an option for me.  So what I'm saying is, taking the permanent position at my current company isn't considered an option at this point (I'd rather dig ditches closer to where I actually live).

saberworks
Friday, August 22, 2003

Bear in mind that "the average web developer in Seattle" probably can do other things like write Java servlets that talk to EJBs, and has more experience than you.  So don't expect to make $66K yet.

Still, I can understand why you wouldn't take $50K in Seattle, even if it is a fair wage for your qualifications. I'm probably not worth six figures yet, but I wouldn't work in New York city or California's Bay Area for less than $100K.

T. Norman
Saturday, August 23, 2003

I think salary.com is a little overinflated.  66k is a lot for a web developer, even one who knows front end J2EE or ASP.net  This isn't to say that you shouldn't be getting more however.  I believe that if a company is billing you out at a high rate, your more then justified in asking whatever you want, regardless of your qualifications on paper.  There are definatly some guys that maybe only know php or perl but are just so valuable that they are worth 100k or more.  Also, the cost of living isn't *that* high.  I live in orange county, and one of my friends just moved closer to where he works, and he's paying 1500 for a one bedroom. (no its not on the beach or in a high rise). 

Vince
Saturday, August 23, 2003

What? $1500 for a one bedroom isn't *that* high?

T. Norman
Saturday, August 23, 2003

Saber: i've tried to start my own business a couple of times. both times I failed because I was undercapitalized.

My business ideas were similar to yours: a software product and also an action sports product (snowboarding in particular).

Here is my story:
I took a high paying contract for 6 months, then took 3 months off to work on my business. What happened was that I burned up a lot of cash just buying business stuff: computers, desk, chairs, accounting software, books, talking to lawyers, accountants. Then I realized that since I was working in a vacuum, finding clients was next to impossible!

Once I burned through about $10K with no positive cash flow, I got nervous and did the following:

- I took the easiest, but highest paying job I could find
- In the mean time, I've been trying to do as much contract work as possible that relates to the software product I am building. This way I can turn on my contract clients  to my software product, once I feel it is ready to roll out.
- When the time comes, I can turn my permanent job on to the "enterprise" edition of my software, and charge them a recurring fee for support.
- If the software takes off, I can use $ from the software biz to figure out how to get my snowboarding product to market. I love software, but I love snowboarding more, so the ultimate goal is to support myself through my action sports empire. :-)

So my advice to you is to take the MS job AND try to keep hanging on as a paid consultant to your old job, through telecommuting. You'll need all the cash you can get! In my experience, cash is more important than free time when starting a business. I can easily get more free time by simply drinking more coffee. Getting more cash is a lot harder to figure out. 

Also, if you do consulting, read the book joel recommended: Managing the Professional Services Firm. It is golden!

rz
Saturday, August 23, 2003

regarding apartments, $1500 is pretty much the going rate for a good 1 bedroom in Boston, NYC area, SF, the nice parts of LA, Seattle, nice parts of Portland, nice parts of Chicago, the nice parts of San Diego, Tokyo, London, etc.

Yeah it is too high, but those are the breaks. What suprises me is how expensive it is to live in towns you wouldn' t think are that expensive. A _decent_ but not fancy 1 BR in minneapolis can rent for $900 a month!

rz
Saturday, August 23, 2003

rents are collapsing in many places, including seattle.

$1800 will get a 3 bedroom house in a nice but not necessarily central neighborhood. houses are difficult to find because the market is small and somewhat inelastic.

$800 will get a not-so-nice 1BR in a nice neighboorhood, $1000 will get you a nice 1BR in a nice neighborhood.

mb
Saturday, August 23, 2003

Saberworks:

If you contract, expect to be whipsawed until you establish long term relationships with people that you're working for. 

Making contacts with companies for contracting has always been pretty much like what you're describing for me: "you won't take our offer, go, we don't use contractors after X months, company policy!" ... "Yes, we can use you over here". "No, we still need you, we'll use you part time". "No, we reevaulated and we don't need anyone now so we're pulling the offer." Etc etc.  Also, a lot of HR policy in this field is/has always been based upon bluff, assumed dishonesty, and bullying. IE: your current employer wanted to squeeze you into taking a full time job, but turned out to really need you when you demonstrated that you were serious.

I'll add my $0.02 to your game plan. You really need to find truly independent, project based solo work if you want to make your own product. You need to find work that you can take offsite from the client. If the client ties you down to being another happy onsite face in their empire, you'll be worn down by the employee mentality they will inevitably push off on you.

What I've found is that it's much easier to work on your own stuff when you aren't billable at all. When you're able to be billable, every hour not spent on the client's work feels like another hour of non billable time.  Also, the "compulsion" to be billable fights your need to invest time in your own business.

Marketing a service business - SW contracting - is VERY distracting. And clients add a lot of their own noise. My recommendation here is to not tell your clients - future or prospective - what you're planning. It will make you less desirable as a contract candidate.  Your contracting and your own product should be two different universes and planes of existence, as far as clients are concerned.

So my recommendation is to hit the contracting hot and heavy, bill as much as possible, and bank it with the understanding that it's a slush fund to finance your own projects. Accept that contracting will consume too much time to do much justice at all to your own future ideas.

Meanwhile, plan your new endeavor.  Have an exit strategy. 

Eventually: quit or let your contract(s) wind down, and transition to your own business.

Good luck.

Oh, yeah:

cowardly anonymous:  Joel's never said it was "easy" to do what he's done. My take is that he's never really indicated how much effort or investment it's been for him. And your hypothesis that any stock option money made it easy is kind of foolish; anyone sitting on several hundred $K will not accept running in the red for very long. Even someone that looks "rich" doesn't like to piss money away unless they're REALLY sure they can make it worth their while.  He had a plan, he executed it. Not easy... per above.

Bored Bystander
Saturday, August 23, 2003

My 2c:  You're still a newbie.  Having MSFT on your resume can only help you.  You will work with top people. 

Also, you do come across as a prima-donna.  I suggest you really decide what it is you want, and stop wasting your time and company time by taking jobs you quit in 2 months. It takes a lot of time and money to recycle staff.

I agree with bailing on the Seattle job.  Screw the 2 hour commmute.  Nail in the coffin.  You are an identified risk, at this point, since you refused to take FT (which is fine)  Also, your supervisor will shitcan you when its convenient for HIM.  It is a dead end.  What the heck is 2 months going to do for you?  Have SOME longer term vision.   

> If a company screws me over, I do everything within my power to not buy from them *ever* again.  I am still on Windows98. 

You seemed intelligent until I read that.  Talk about cut off your nose to spite your face.  Your issues with MSFT indicate to me (and I'm entitled to my opinion) that you are too rigid and dogmatic for this, and many other fields.  I don't think you have much of a future in IT.  Sorry, just my candid opinion based on very limited knowledge, but if I had to bet, that's how I'd go...

Sell your snowboard wax on Ebay.  You can start tomorrow.  Market it on all websites and forums where snowboarders go...

PS : I believe Joel got a decent amount of VC during the insanity....So yes, I'm sure he was able to bleed blood red for a decent while..

Bella Toughlove (Or How I Learned to Stop Worrying and Love the Blaster Worm)
Saturday, August 23, 2003

"When people ask me if they should seek venture capital for their software startups, I usually say no. At Fog Creek Software, we have never looked for venture capital. Here's why."

from:

http://www.joelonsoftware.com/articles/VC.html

would indicate that Joel hasn't taken any VC money for Fog Creek

Andy Norman
Sunday, August 24, 2003

If refusing to do business with companies that are in business to screw over their customers is "too rigid," I'll take it.  I guess I still believe that there are plenty of people and companies out there without that mentality.  Running a company or a business does not have to run contrary to someone's ethical standpoint.

I appreciate everyone's input.  I'm going to take a while to digest this before I reply again.  Thanks very much for your time!

saberworks
Sunday, August 24, 2003

Saberworks, without realising it, you have done the right thing. You worked out what you would require at your current contract and stood by that even though the employer tried to bluff you out of it. You won.

Regarding the new contract, I would stay away from it. It is not as certain as your existing one, and you are exposed to being ditched or stuffed around. Stay where you are.

JB
Sunday, August 24, 2003

Don't take the MS job unless you are at least prepared to take "well, let's see what it is really like on the inside" stance. Otherwise you will be doubly frustrated: hate your work + hate not going 100% after that dream. You'll be miserable.
But be warned. Your "dream" sounds like that of so many I have seen fail, with serious debts (almost always to family and friends and CC's, since they never could present a businessplan that could convince any professional money) as a result.

Just me (Sir to you)
Monday, August 25, 2003

"If a company screws me over, I do everything within my power to not buy from them *ever* again."

And if you take the MS job, what will you be _buying_ from them?  Seems to me that they'll be buying from you!

bpd
Monday, August 25, 2003

As to the housing prices, I noticed that you kept using that ugly word, "rent."  If a three bedroom with attached garage is renting for $15k/mo, you can probably buy it for a lot less.  Think about it for a minute: the owner has to cover the payment, other expenses and still make a profit out of that $15k.

I'd recommend taking the job with Microsoft as well. In spite of all the MS bashing that gets done, there's a huge difference in the quality of product that comes from MS and that comes from your current employer. My experience has been that MS puts out a better product and provides better support. Also, there are worse places to learn about how to run a business successfully.

Get in there, talk to managers, learn about how they do their job, and make absolutely as many contacts as you can, so you have a solid base of contacts when you go out on your own.

Clay Dowling
Tuesday, August 26, 2003

Thanks for all the input guys, I really appreciate it.  Since I'm not that happy where I am, and I may not be ready to go into business for myself quite yet, I will probably take the offer from MS.  Thanks again!

saberworks
Tuesday, August 26, 2003

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