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Taking Steering Wheel Into Own Arms

I'm working for in-house IT department within large manufacturing  organisation. My boss is a typical salesman, a type well described here every now and then.

Recently, promoting his loyal lieutenants he started introducing more and more layers to development process: we are no more allowed to speak to users sitting next to us, everything has to go via my bosses clueless fellow-salesmen.

Naturally, we have to make good use of scarce hardware resources to meet tough deadlines, while next tier enjoys the use of newly bought flashy laptops, projectors and company cars. Their salaries make good part of whole department's budget.

Now, IT department manager reports to financial director, who is lean and very mean guy himself. Of course, the director is becoming more and more suspicious of the IT department performance as a whole.

We, developers, are bored, frustrated and willing to take action for positive changes. I've talked to two others (that's it - 3 core developers + 2 QA guys + 3 managers) and they've agreed that we could do better without the extra load.

Our plan is to create a separate company, involving three of us plus one person from QA/Support team. Then we would sell our services to current employer as consultants seeking additional contacts within the industry at the same time.

Pros:
-we have core competence with in-house systems, no one else inside the IT department is fit for the job
-financial director might like the idea of stripping off software development as it has nothing with the group's core activities and goals

Cons:
-as you can see IT department manager, his two lieutenants and one other person from QA will be strongly opposed to such change

Does anyone has similar experience? Any stories, advice? What we should start from?

sorry, can't disclose the name - not this time
Thursday, February 19, 2004


Oh, boy. I _love_ this. BEST OF LUCK. GO FOR IT.

Agent X
Thursday, February 19, 2004

I was part of a mass walkout in 1992. A team of 17 developers. We were tired of... well, I can't really remember, to tell you the truth. I was fairly junior at the time. Lots of People Who Knew More Than Me were grumbling about how awful the management tier above us was.

The situation was possibly different to what you're describing here. This was a team that worked for company A but essentially ran a project on behalf of company B. The plan was to leave company A, form a new company that continued to run the project for company B but had a much better deal in doing so.

(Some possibly off-topic rambling to follow...)

It was a very interesting experience. There are three things I clearly remember.

(1) When this all hit the fan, the management tier above us sent a bunch of suits in to try and convince us to stay. They used a 'divide and conquer' approach, where they spoke to everyone separately and tried to convince some of the key players to stay in the hope that they could retain enough critical mass to avoid the whole situation.

That didn't really work all that well. We weren't openly uncooperative in their interviews, but we had been given very good information about what approach they would use and we knew exactly what was going to be said and offered. We all stonewalled pretty well. Solidarity, brothers!

(2) On the subject of solidarity, the team consisted of a 50/50 mix of permanents and contractors. The contractors were naturally the top of the pecking order and commanded a much higher rate than us code monkeys.

It was agreed, right from the start, that that shouldn't become an issue. IIRC, it was openly said that "we should not use this as an excuse for the permanents to try and leverage a better wage deal -- that's not what this is about".

At one point there was a meeting that just involved permanents, and one particular person bought up that very issue, and suggested the permanents should get a better deal. His little rant included the phrase "... I think I speak for everyone in this room when I say ...".

At that point I spoke up and reminded him that it wasn't about pay, and made it very clear that he might speak for others but he did not speak for me. It kind of killed the moment for him, and it went back to being a non-issue. The team lead had a quiet word to me later and thanked me for it. I've since worked for that same team lead on other projects for other companies and I don't think he's ever forgotten what I said in that meeting. I've kind of felt he's looked out for me a bit since then.

(3) The whole thing worked really, really well. We went from really crappy low rent offices in a slummy part of town to nice newly fitted out offices in the CBD -- new hardware a-plenty, just around the corner from company B. It was brilliant.

----

If you're sure you can carry it off and get a better deal out of it, go for it. Good fun.

I anonymous too
Thursday, February 19, 2004

>Oh, boy. I _love_ this. BEST OF LUCK. GO FOR IT.

And tell the us the story when you do!!

Aussie Chick
Thursday, February 19, 2004

Good luck, BUT, be prepared to lose your job.  Sometimes management deals with unruly employees by firing them on the spot.

Think of the worst things that can happen, and mentally prepare yourself for them.  Being fired isn't a reason not to do it, but you should be prepared for that to happen, or to pull that trigger yourself.  If it comes down to accepting some paltry concession or walking out, be prepared to walk out, because if you cave in for pennies, it'll only get worse.

Justin Johnson
Thursday, February 19, 2004

"Our plan is to create a separate company, involving three of us plus one person from QA/Support team. Then we would sell our services to current employer as consultants seeking additional contacts within the industry at the same time."

The first part seems very reasonable, but the latter "sell our services to current employer" seems very hopeful. You are essentially putting the company into a position where you call the shots. My guess is that since they do not value you now and are barely paying what you need, they will not go for it and pay, presumably, more to cover your immediate costs and the overhead of doing business. I suspect your revolt will serve to lower their already low opinion of you and they will rather go through the pain of finding others to pick up the pieces.

Good luck though and focus on other clients! A very good positive spin is this group has real-world experience working together.

m
Thursday, February 19, 2004

One more thing to add to what Justin said - There is a statistic (can't remember the source) that says if you threaten to quit and get talked out of it with more money, different title, or promise of things getting better, there will be a 70% chance of you being fired in the next twelve months.

The point being, if you revolt, then change your mind, be prepared to look elsewhere.

m
Thursday, February 19, 2004

m,

we're talking about eleminating 4 people here from the development cycle, in addition each of them is on much higher salary and benifits package than we are (include the administration and communication costs envolved).

So we're speaking here of being able to deliver better for 70% of the price and still having a massive increase in profits as our own current "price" for the company is only somethat 40% of the IT department development team work force expences.

Two of us are "seniors", so its not just "we could easily get rid of useless management" teenagers talk, we know own limits.

sorry, can't disclose the name - not this time
Thursday, February 19, 2004

(3 core developers + 2 QA guys + 3 managers)  = BAD MANAGEMENT.

I'd be pretty anxious to leave too.

Dan Brown
Thursday, February 19, 2004

I had to re-read your original post and I still feel like I don't see the whole story based on your last comment.

m
Thursday, February 19, 2004

m,

thanks for advice, we do not worry about leaving as we'd do it anyway sooner or later. Moreover IT jobs' market is slowly picking up now.

As for the "whole story" - its pretty long and would remind you one of those numerous stories of desperate developers that bomb this forum on a weekly basis.

sorry, can't disclose the name - not this time
Thursday, February 19, 2004

The other option is going to the financial director, explaining what's going on, and proposing a specific solution. You might get what you want with minimal effort, and it doesn't preclude you from taking a more extreme approach later.

Julian
Thursday, February 19, 2004


When you get to selling, pointing out that "Instead of a guarentteed annual expense of $500,000, you get to pay for what you, when you want it.  Each project is a separate, timeboxed, guarenteed on-price project, instead of 'oh, we forget xyz, it'll take an extra six months."

In my experience, companies love this.  It's what gives the independents an edge.


Regards,

Matt H.
Thursday, February 19, 2004

A very happy story.

But be sure to deal only with the people above the person who introduced all the new dead weight, and regarding the layer you propose to eliminate, make sure you do, in fact, eliminate them.

"one has to remark that men ought either to be well treated or crushed, because they can avenge themselves of lighter injuries, of more serious ones they cannot; therefore the injury that is to be done to a man ought to be of such a kind that one does not stand in fear of revenge."

machiavelli
Thursday, February 19, 2004

Talk to a lawyer. Your employer might try to sue you for non-compete or something, especially when you "steal" most of the development team and sell your same services and products to competitors.

runtime
Thursday, February 19, 2004

Original poster, sounds like you guys have balls. Go for it. To the other poster who described a successful break away, that's a brilliant achievement, well done.

Must be a Manager
Thursday, February 19, 2004

"m" and runtime, you don't seem to get it. Maybe you're just young graduates.

To "m", they hold the cards and are not dependent on their incompetent management; it's the other way around. This is actually a pretty common scenario, but these guys recognise it and are prepared to act on it.

To runtime, drop this "talk to a lawyer" bullshit as if it is some great solution. A lawyer probably would have told them they're breaking their employment agreements. This is business, not law, and it's also about being bold.

Must be a Manager
Thursday, February 19, 2004

"they hold the cards"

I absolutely agree. The thing is, he paints a picture of poor management who under appreciates the employees. My guess is that they will also under appreciate the predicament they will be in when these people walk. I am suggesting that they be prepared for the manager may try to save face and not accept the help. At the end of the day, these people are walking out to do their own thing which in the eyes of management will be considered a full scale revolt. Sure what you are doing may be noble and brave, and you should do it anyway, but the plight of your department probably has little meaning to your CxO's.

This is based on my experience in working situations and my assessment of modern management quality, not school.

m
Thursday, February 19, 2004

So.  You're planning to quit the job you have, with several other people, and start your own business with one - ONE - client, who if they have any sense will own all rights to the product you are developing once it's done - which precludes any chance of your leveraging the efforts of your new company's first project into any new business.

To me, that is a recipe for disaster.  You no longer have a job, you don't have any leadership who knows how to run a company (based on what I read), you don't have a product or expertise you can market to anyone except your one client, and therefore your prospects once this project is complete are nil.

Does any of you have a good rapport with the CEO of the company you already work for?  Can all of you go to this person and explain the current situation, and how s/he is in danger of losing his/her IT department?

If you can solve this with an in-house solution I think it would be much better for you and your company.

Karl Perry
Thursday, February 19, 2004

Don't listen to Karl.
Do find or at least make a list of other companies in your area who would be interested in your services. Have another customer waiting in the wings.
Not because the company you currently work for will not pay for your services. It will take longer than you think to get a contract past lawyers and signed.

Doug Withau
Thursday, February 19, 2004

As noted above, programmers are perpetually optimistic.

m
Thursday, February 19, 2004


m, yes of course management will see it as a full scale revolt. That's because it is a full scale revolt. Big whoop. The programmers win.

Must be a Manager
Thursday, February 19, 2004


  Karl has some good points, but I think that the OP should do it anyway. 

  See, you may start your company with only one client but, once you're on the road, eventually you'll find someone on the sidewalk waiting for a hitchhiking.

  Once your company is set and running, you'll find other clients, or even better, they will find you.  I've seen this happen before, some friends of mine created a startup with one product in mind, and eventually other clients and business opportunities arised.  This rarely happens to an employer.  It usually happens to companies.

  Off course, there's no guarantees that you'll survive, but at least you tried, and you'll have the chance to find another job later.

  Good luck.

Ricardo Antunes da Costa
Thursday, February 19, 2004

Define "win" - they only win if the same management ends up paying them. Or to borrow from others on this board:

1. Idea to revolt
2. ????
3. Profit

m
Thursday, February 19, 2004

If the job is as bad as he says, you could define it to be a win just to get out of the situation, even if they don't end up getting the work.

Of course this depends on the financial situations of all involved and whether they can afford the risk of being out of work.

Sum Dum Gai
Thursday, February 19, 2004

Karl,

your thoughts make sense, although I find it rather amazing how many people here are afraid to loose a job, even its just an average BAFBS (Billing System Development) slavery.

Loss of a job doesn't have an equality sign with physical death. You can always find another job, if you have to, but you can't start up a company if don't keep trying.

As to the "one client projects" - we have great ideas on branching some of the systems. In addition, we have general enterprise scale applications building/integrating/web applications creation experience. Why should we starve?

Do you remember Chicken Little's story?

sorry, can't disclose the name - not this time
Friday, February 20, 2004

> You're planning to quit the job you have, with several other people, and start your own business with one - ONE - client

This is worse than starting your own business with the plan to sell some software which, uh, you haven't written yet?


Friday, February 20, 2004

OP: That's a good, positive post - you've got a vision and the wherewithal to go for it.

I know of three organisations that have started in this way - two out of three were a success. I've been offered this route myself in the past when leaving a permanent role, although I didn't take it up with that particular company.

Just before you march in to your boss' office with guns a-blazing, a quick question:-

What's your business / internal development plan? Are you going to do fixed price deliverables, or work as contractors billing for time? If you go for the former, how will you estimate the time and resources for your deliverables - remember, things don't always turn out the way you might expect, so factor in some risk padding before you come up with a quote.

I have been there before!

If you work as contractors, then the manner in which you work will usually be under the client's control more or less. This is nice if you don't want the responsibility of managing your project, but you may chafe under that kind of regime (especially if you have been working in that manner as permanent employees previously). There are also tax implications of this style of work - here in the UK we have the infamous IR-35 tax rules that would apply in such a situation.

Another thing - it can take time before a client pays money - more time than you might expect. Don't go buying that sports car yet. Consider slack time in between contracts where you aren't earning money.

Make sure your contract for a deliverable is clear on what is an acceptable piece of work, decide on who owns it prior to receiving payment and consider splitting your bill between an upfront payment made prior to commencement of or during work and a final balance payment once the delivery is made.

As for all this rubbish about worrying about leaping into the unknown with an uncertain future, take it from me - there is no such thing as a truly permanent job and you might get hit by a meteorite tomorrow anyway.

While it can be painful clawing your way back up after taking a chance that didn't work out, you will end up winning in the long run. Again, been there before.

Best of luck to your venture!




Gerard
Friday, February 20, 2004

Agree with Aussie Chick; please update in a few months with a post about what happened.

I'm currently going through a similar situation.

I got laid off in Feb 2001 and went contracting.

Last Feb I got involved with a company as a permie for a very low (50% market rate) salary with the promise of options. It wasn't for big money but would have paid tax free the equivalent of 2-3 years contractor money after 18 months.

We realised last August that the management were stupid and greedy and that the eventual payoff would have been a fraction of what was promised and would have tied us in for 3 years. An inept director who was subsequently "let go" ensured that this promising company has only 1 product to speak of and a smoke and mirrors demo system.

I left last October and went back contracting. Another guy left in Jan and the remaining junior developer next month. The company is effectively a shell with no technical staff selling a product they don’t understand with a support contract they can’t fulfil.

It should dawn on them sometime in the next few months exactly how completely f*cked they are. When this happens we intend to offer them a managed development service.

Yes, I know there are IP issues. We have a way to resolve these and the inevitable “what happens if you get hit by a bus/sell us out/etc” questions that will arise.

Leaving a job to start a company is always a risk. Perhaps “sorry, can't disclose the name - not this time” should consider leaving for a short term contract while the dust settles – at least the bills get paid, and more importantly, you will be negotiating from a much stronger position if they know you can leave the table without the deal.

Justin
Friday, February 20, 2004

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