We’ve been talking to John Hunter, exploring his journey from technical employee in the United States to consultant, writer, speaker, and sometimes programmer in Malaysia, including his minimal annual income ($16K/yr) and how he generates the revenue to pay for it.

Today I close the interview, and add a few words of my own.

Let’s get back to it.

Matt Heusser: Is it a little odd, socially, to be the minority caucasian around?  Do you have VISA Issues?

John: It is not that odd for me. But I might be odd. I don’t have visa issues because Malaysia offers a long term visa I can use. That was a big part of my reason for picking Malaysia (along with lots of other things I wanted – reliable internet, good weather, can get by in English, fairly cheap, in SE Asia so I can travel around the area). My current lifestyle would probably be lonely for some but I am fine with a large amount of time on my own.

Matt Heusser: Do you have any advice for someone from a developed nation, perhaps with a mortgage, family, and day job, who is looking to do something a little different, perhaps off the wall?

John: I think building up multiple sources of income is a great start. As is sensible financial planning in general (avoid debt, save up for retirement, etc.). In my Curious Cat Investing and Economics blog I discuss personal finance issues occasionally. Getting into a strong personal finance position (no debt, well funded emergency fund and retirement, etc.) lets you take the plunge into something off the wall from a position of strength. Now plenty of people don’t do that, but I that is what I would suggest. And it is a good idea if you want to do something crazy in a few years, or if you plan on staying with the same job until you retire.

I am conservative, financially. Dropping my income to $0 and hoping I can find income would bother me, but lots of people do it. One thing to consider, if you want to rely of some income from a rental property is that your net income from a rental likely goes up over time (if you pick well). It can well be that a house you bought fairly recently, in a non-great rental area, especially if you didn’t put a large amount down, won’t be cash flow positive right away. And cash flow positive is the most important factor for thinking about it supplementing your income. My cash flow on the second house is less than 25% that on the first house for multiple reasons (the first house is about perfect as a rental, I bought it really cheap before the real estate bubble even started, plus I have had it a long time now…). So you can’t count on a positive cash flow – you will have to look at it and see if that will be a strength that can help support your off the wall plans.

I very much like the start something on the side strategy. Keep your full time job and look for contract programming work, or write your book, or create a SaaS that allows you to generate income. Plenty of people just take a leap into spending all their time on their dream idea. That has certain advantages but it just isn’t right for me.

If someone wants to move overseas I would suggest doing a great deal of reading online first (blogs of people doing the same thing you are considering is a great place for information). It would also be much better to have traveled a fair amount to at least have a clue about what you are getting yourself into.

Matt Heusser:  …

John: A couple things I want to get done in 2013. First, I want to travel more – I failed to travel nearly enough last year. I will try to do more in 2013.

I should also talk to a few more people I know to see if they have any consulting for me to help with. I don’t like marketing or sales. My strategy is just to avoid that by letting people I know (with consulting firms) use me if they have the need and they get to profit off bringing in the business and I get paid. Consulting and presenting seminars pays so well that there is plenty of money to split. I am perfectly fine leaving lots of the money on the table for someone else to have and letting me avoid stuff I don’t want to deal with.

I like the idea of a very short term consulting (IM style consulting for management or managing software development issues). I think it would be fun. I thought about trying to build the platform with another person but that fell through. I tried providing consulting that way, but it didn’t amount to much and the company closed down.  I would still like to try that idea but I do understand there are significant challenges getting customers to think of this as something they would like to use.

Finally, I want to do more on getting my travel content online – I have years of trips I haven’t put online (I also have updates for many of my web sites that I want to make). I did at least get a site started last year for Curious Cat Travel Destinations.

Matt Heusser:  Thank you for you time today, John

John: Thanks for the opportunity.

So we have a technologist who loves the work with an aversion to marketing. He makes his money three ways – through seminars and consulting, contract work, and a series of websites that draw in readers.

The high dollar-per-hour activity for John is the seminars. Being one of us, he doesn’t like the marketing, so he finds a partner to get him the work and splits the rate — in order to do that, he needs to be sufficiently differentiated from his competition, to offer something different. For John, that’s the W. Edwards Deming method of management applied to technology, but it could also be support or extensions to an open-source system he wrote. David Heinmeier Hanson wrote Rails; Matt Mullenweb started WordPress.

These are all the sort of things that a dedicated, committed person can do at night, to get things started.

Two hours a night, four nights a week, fifty weeks a year is four hundred hours a year.

I’m not exactly sure how John Hunter got to where he is. Certainly the situation of birth, of luck, and the fact that he is single has something to do with it. Yet Andrew Davis, a programer at Moodle, has been travelling abroad with his wife while programming for 530 days as I write this, with no particular end in sight.

The only thing I know for sure about John and Andrew is that, recession or no recession, layoffs, downsizing, new skilling or no, these two gentlemen refuse to be victims.

How are you doing?

“Move to low cost-of-living area of the world, set up shop working remote, work ten hours a week while building a huge nest egg.”

Whole books have been published on this model, along with terms like “The Nouveau Rich”, people who get to earn wealth while enjoying the easy life.

And yet …

It seems to never actually happen.

Or, at least, it doesn’t seem to happen much.  Often the people living the “Jimmy Buffett Life” are already millionaires living off interest.  Often the person speaking is selling something (perhaps a dream) more than a reality. We can do better.

Then I met John Hunter and learned about his technology business.

John is not independently wealthy.  He did not have a big IPO, and does not have have a revenue stream.  Nor does he have a best-selling book on, say, how to live cheap.  Instead, he was a practicing programmer and IT program manager who moved from Virginia to Malaysia, on the expectation of taking a year long “sabbatical,” and, if he could find a way to make it work, to stay a bit longer.

And Now

John has been in Malaysia for a bit over a year now, with no sign of returning anytime soon.

I thought he was worth talking to, and sharing here.

Matt Heusser: ’Inverting’ your life, that’s kind of a big deal. How did you decide to up and move?

John: I had been thinking about it for years.  Originally my focus was on moving to cheaper area in the USA (and with warmer weather).  At that time my plan was to make the move into a full time job – with the plan to transition out of that into working for myself in a few years.  Then I started to think of building up some sources of income (management consulting, management seminars, income from my web sites and rental income) and move without a full time job.  I worked primarily on building up web site income for years.

I was mainly focused on just building what I wanted while seeing if also I could have that make some money.  I did put a bit of effort into thinking about making money to guide my effort, but very little.  I also did a bit presenting: about one management seminar a year.

The main factors that got me to move were: figuring out I could make it work financially and deciding it was better to try something that could be great than to just do what was expected.  If it didn’t work out, then I could return to a more traditional ‘job.’  Also I found limits with my strategy of working side projects while fully employed.  I like the side-job approach,  but I had reached a point where I couldn’t move nearly as fast as I wanted on my web sites and I hadn’t made progress on seminars or consulting.

I also don’t think much of the fake barriers we erect.  There were two time where I was in a job where going part time wasn’t an option; both times I managed to convince management to let me go part time in order to get more time for my side projects.

The main reason I decided on going to SE Asia (or somewhere else cheap) was I thought I needed that very low expenses to make it work.  I also wanted SE Asia because I wanted to use some of my free time (at least 7 weeks a year) to travel.  As it turns out I think I was significantly overly conservative.  I could easily have done this by moving to a cheap area in the USA.  I think maybe my expenses would be double in the USA but still that would leave me in good shape.  This is actually very good news for me, as I am convinced I won’t have to go back to a “real job” when I move back.

Matt Heusser: What is life like in Malaysia?   How much does it cost to survive for a year?

John: I am enjoying it.  Great weather, good food, all sorts of great travel opportunities (though I haven’t taken nearly enough advantage of that).  It can be cheap.  My apartment is $800 a month (large unit, 3 bedrooms) overlooking Singapore, and the complex has a very nice pool which I use regularly).  Saving a bit on that wouldn’t be tough especially if you wanted to share an apartment (they don’t have many small units – most have 3 bedrooms though in the last 2 years they have started to build 1 bedroom units – though aimed upmarket with fancy finishing touches so not that much cheaper than older, much larger units).

Health insurance and food are cheap.  I don’t have a car and taxis are cheap (owning a car is not cheap).  Electricity is cheap but has graduated charges (the cost per unit of electricity increases the more you use, so if you go over a level they consider excessive costs rise dramatically – I did that 1 month but most bills have been under $20).  This is actually a cool economic strategy.  Essentially they subsidize electricity for most users by charging those using very large amounts of electricity (who mainly are going to be rich people living in big houses using a lot of air conditioning) very high rates.  Alcohol is not cheap, that isn’t an issue for me but may add hundreds of dollars a month to expenses for some people.

I don’t have fancy habits but I live on $1,300 a month easily without feeling deprived.  All told, surviving on $16,000 for the year is easy – not including my travel.

When I interview contractors, I think they are often cagey about income and expenses. Listing your hourly rate (or what you ‘need’ to survive) ‘sets’ the expectations of some potential customers and can drive away others — it can even alienate your peers. So when John was willing to talk about expenses, real expenses, in Malaysia, I was impressed. At $16,000 a year means not a lot per hour to survive, or else not a lot of hours a week.

Next time, I’m going to talk to John about the other side; where he got the income.

It has been an interesting couple of weeks for the tech giant yahoo. First Jackie Reses, the head of HR, wrote a memo forbidding telework for the employees. Shortly after the memo appeared, the internet began to associate it with Marissa Mayer, the CEO of Yahoo and former Vice President at Google.

Last time I checked, Google didn’t have a telework policy — instead, they strived to make the atmosphere at work so wonderful, with free food, massages, a gym, showers, lectures, and on-site medical, that the employees only go home to their empty bachelor-pad like apartments to sleep for a few hours.

Combine Mayer’s background at Google, her reputation for data, and one comment that Mayer found report employees were not “checking in on the VPN” often enough, and suddenly you have a media firestorm about how the CEO of Yahoo eliminated telework at Yahoo because the VPN logs showed people weren’t working.

Bring to a boil and stir, and we quickly see the blog-o-sphere, as well as traditional media, explode in amazement at the hubris, the arrogance, and the foolishness of of Marissa Mayer. And I do mean explode; BlueJeans Video Conferencing just put up a billboard on Highway 101, on the commuting path into San Francisco, that says “The Unofficial Sponsors of WFH. Call us Marissa; we can help!” – at least that is what Kara Swisher is reporting in this blog post at AllThingsD

This leaves me wondering:  What did Mayer actually say about those VPN Logs, and how did it get reported?

Retracing The Story 

 To figure out I tracked the story backwards:  From an IT Business Edge article back to one from BusinessInsider.com, finally to another from Kara Swisher about an interview with Yahoo’s CFO. That second Swisher article was, again, about Yahoo’s CFO, not Mayer, and only had these two relevent sentences:

The work-from-home debate has certainly exploded across the landscape this week, after an edict to eliminate the long-time employee policy at Yahoo, especially since most other Internet companies tout flexible work arrangements.

But, apparently, Mayer thinks Yahoos have abused the privilege — she noted at an employee meeting last week that VPN logs showed work-at-home staff did not sign on enough — and a Yahoo internal memo said that working “physically together” was the way to reenergize the lagging fortunes at the company.

That is all we know, folks:  People working from home did not sign on enough. We don’t know what “enough” is, or what the numbers showed, or how Mayer came to those conclusions. We don’t know the context of the company meeting or why she said it.  While we might imply the comment was  to explain the new “no remote work” policy, we don’t really know.

If you think more information is out there, you can always try to find it. You might, for example, google the topic, find a respectable media outlet like CIO, then follow the links backwards.  I suspect  you will probably end up where I did, at that same post by Kara Swisher with two sentences of actual background.

The Good News

Not every media piece is short-slighted, reactionary, and assumption laden – Cameron Laird, over at Correlsense, has a thoughtful article doing some real spade-work on what we know and what that might mean.

And that’s the good news; real journalism and thoughtful analysis isn’t dead.

You just might have to dig a bit to find it.

Speaking of which, one thing we haven’t seen yet, is any journalist going back to Yahoo, asking the company to explain what Mayer meant (or appealing to her directly). I have tried, but as I hit submit, have not heard back from anyone at Yahoo.

Who knows?  There may be more to come.

This is my friend, Darin Ninness.  I knew him mostly in the 1990’s, when he was working on Military Cadet Programs (in Michigan) and I was working on them in Maryland.  We both ended up in technology, and we see each other every few years at social events for mutual friends, so I connected with him on Linkedin.

You probably noticed that tempting box at the top, asking if I could recommend Darin for technical skills.  I have no idea if Darin knows anything about SQL Server, but there is that annoying box, asking me to recommend him anyway.

This is a problem.

Another Friend

No, I did not end up recommending Darin for anything, but last week I did receive a recommendation for my web development skills.  It was another friend from my cadet days, Leonard,  who I have not seen since 1997.  At the time we had a conversation about region tabs.  Before that, I remember a breakfast in 1995.  In the time since we probably exchanged a half-dozen emails, all about military science. Yet here he is, endorsing me for my web development expertise.

This is no surprise … but it might just be an opportunity.

How We Got Here

If you’ve been using Linkedin for a few years, it is likely that you completed your profile for the same reason I  did:  The positive reinforcement around having a better profile.

As I used the site, I would invariably get a firm warning that my profile was missing something — a picture, some job history, education, take your pick, combined with a notice that people that had that feature were some percentage more likely to be clicked on or have a job offer.  Eventually I would fill out that part of my profile, just to get the annoying box to go away.

Now that we are all trained to click boxes to make them go away, Linkedin suddenly created a new kind of box — the endorsement.  If I am looking at a friend who is down on his luck and that box appears, I might be tempted check it, especially if it would just make that annoying notice go away.

It would help if we had some way of clarifying our endorsement, with one being “he seemed interested in it at a user’s group” and ten being “I saw the guy personally perform complex tasks over a long period of time.” Still, when you combine that with the mutual admiration society I’ve been writing about (“You recommend me and I’ll recommend you!”), suddenly, the endorsements mean almost nothing.

The good news is that single word: “Almost”.

The Right Place For Endorsements

Say I am looking for hire a subcontractor in my field of software testing, and I end up on Linkedin.  When I am looking to work with someone, yes I can look at their endorsements, but I have no way to tell the quality endorsements from the bad.  So first I am going to look at the people we have in common, and what those people have recommended Joe for.  Then I want to reach out to them personally, and ask how strong the recommend is.

It is an extra ten minutes of work, per search, sometimes more.  It fails when I am working with people outside my network.  Still, if the relationship is “We see each other at Social functions and chat and he seems competent”, I suspect the answer that come back would be honest.  What does the person gain by lying?

That simple work process makes the process personal, realistic, and honest. It will take more time, but that is how a effective search works.  You can also use this when interviewing or considering a hiring offer, to find out what the person interviewing you is really like.

Skipping that step gets you the kind of results in this video (which does have a bit of strong language):

The choice is yours.

As for me, I’ll leave that kind of thing to someone else.

Before I was inspired to write by a sudden, surprise, 1% linkedin email, I was interviewing David Gewirtz, a CBS correspondent, Lecturer at the University of California at Berkeley, and author of “How to Save Jobs.”

It was the David’s work on economic policy that got me most interested in an interview.  Along the way, I wanted to find out what his own life was like, and how he steers between the freedom of freelancing and the reliability of steady employment.  

Let’s get back to it.

So I just got an email from Linkedin, telling me that my account is in the top 1% most viewed.

I should be happy right?

But I can’t say I am.  Instead, I suspect that something is very wrong.   Allow me to explain.

The Problem

Last week I was on linkedin, looking up a former colleague, and to the right, the little “People who viewed this also viewed …” box showed names of other former coworkers.  You know the types:  The project manager who never had a project come in on time (they rarely came in at all), the architect whose participation in a project was the kiss of death, the executive who didn’t even seem to follow through, but always had q great ‘story’ (right up until he was fired), and so on.

Out of a morbid sense of curiosity I clicked on a few of these, and read the bios, which were certainly putting their best foot forward.

Then there were the recommendations.

Oh my goodness, the recommendations.  Each of these people was “exceptional”, they all had keen, accurate, clear, and deep insights into the problems at hand, could think “outside the box”, they were strategic thinkers and high-level change initiators, coming from all levels of the organization, including from the person that decided to let them go.

Every single one of these folks had a pristine set of “this person walks on water” recommendations.

Just.  Like.  Me.

I truely am pleased and honored that people are either seeking me out or stumbling on to my profile.  Still, I have to wonder, when it gets time to choosing who to work with, if we all look perfect, doesn’t that create a sort of “Lemon Market” where the sellers can’t tell the good products from the bad?

A More Excellent Way

Looking at those recommendations a second time, I noticed something. Without a successful project to point to, the recommendations were limited to a list of virtues, like sharp, decisive, open-door, and so on. In writing, we call this “telling” – the author makes the decision for the reader that the hero is brave, or strong, or noble.

The classic way to express this in writing is not to tell but instead “show” – have the hero fight the dragon when everyone else runs, win the arm-wrestling match with the giant troll, or sacrifice himself to save the defenseless.

My favorite stories show, they don’t tell.

So my first takeaway to avoid the lemon market is to work on myself.  I’m going to review the folks who have recommended me, to see if those recommendations “tell” or “show”, and ask for revisions.

I want to have my recommendations talk about the challenging conditions, the conditions of uncertainty, the hard deadlines and out-of-control scope — and what I did to help the team move toward an outcome we could look back on and be proud of.  And if my friends can’t write that, if they struggle to find examples, I want to find out why, and change my behavior to make things better.

A Final Thought

When I left my last long-term consulting assignment, the staff got together and made me a goodbye card.  I kept it in my desk and re-found it the other day, and just took the effort to scan it in (click for the hi-res version):

Somehow, I suspect the folks I mentioned before, with the perfect set of “walks on water” recommendations, don’t have a card like that in their drawer.  I wonder how I could get that on linkedin?

Executing the Reboot

John Bruce, an active blogger in the early 2000′s, once pointed out that when companies need help, real help, not just empire building, they want grown ups, people that actually get things done.  Making it clear that you are a sound craftsperson may just be the new linkedin differatiator — or at least one of them.

For now, I’ll settle for checking my recommendations, asking people to focus on show, not tell.

More to come.

Last time I mentioned David Gewirtz, the author of “How To Save Jobs: Reinventing Business, Reinvigorating Work, and Reawakening the American Dream.” At the time, I was talking about mergers and acquisitions, and how without creating new companies, M&A madness will inevitably lead to layoffs and unemployment. There’s a whole lot more to David’s book than that, and while we’re at it, it turns out that David is making a living as an independent, running the U.S. Strategic Perspective Institute, but David is doing real freelance work as a contributor for CNN, instructor at the University of California at Berkeley  check.  Editor at ZDNet, Check.

Interesting Ideas – Check. Making a real go of it – Check.

It’s time we had this guy on for an interview.

Matt Heusser: Tell us about your background, David. Have you always been independent? Did you start with one of those ‘day job’ things?

David Gewirtz: Well, let’s see. It’s been a very long time since I’ve been an “independent”. I worked for International Paper, Creative Computing, Unisoft, Pyramid Technology, Symantec, Living Videotext, and managed a very large project for Apple. I also started a number of companies and have been an employee of first Hyperpress, then Component (which is better known by its ZATZ tradename) for almost 20 years. Further, I’m also a government employee (technically). I teach at UC Berkeley and have even had to take an oath to protect and defend the State of California against all enemies foreign and domestic. Since I live in Florida, I keep a pair of Birkenstocks in the front hall in case of emergencies. Today, bulk of my time is spent working on behalf of CBS Interactive, for its CNET, ZDNet, and TechRepublic operations.

For the record, USSPI is a U.S. government-sanctioned 501(c)3 nonprofit research and policy organization, with a real purpose that it’s been fulfilling with some degree of success. CNN, for example, excerpted the work we were doing on jobs for 10 full months, every week. We have a grant from Google, and work hard to get the word out on some of the most challenging issues of the time, donating time, money, and very hard work. On behalf of USSPI, we’ve conducted training programs for various professional organizations as well as the National Defense University and, most recently, the University of New Hampshire School of Law.

Matt Heusser: You’re making a living in the 21st century as a tech journalist. Given the recent melt-down in the print media, and the crowdsourcing in content, that seems like a bit of a ‘shrinking market.’ Do you agree? Why journalism, why tech journalism, and why now?

David Gewirtz: Well, it’s funny. I’ve never considered myself a tech journalist. I’m more of a columnist and a commentator, and, to be honest, only part of my living is made from that work. As I mentioned, for most of the last 20+ years, I’ve started and run technology businesses with a focus on software, publishing, and consulting. Ever since I wrote the White House book back in 2007, I’ve been moving towards more of a full-time career as an advisor, pundit, and teacher, which I find incredibly gratifying.

Matt Heusser: ’How To Save Jobs’ is about a lot more about M&A activities and a dearth of new, small companies. Tell us about the book, your motivation for writing it, and what you hoped to accomplish.

David Gewirtz: Well, it started right about when Lehman went out of business. I’d been doing a tremendous number of media interviews on the White House email book, and so I was in a lot of rolodexes. Suddenly, Lehman crashed, and four or five of the radio hosts I’d previously talked to about White House communications decided to look for any experts to interview about how to transform business in recessionary times. As it turns out, one of the only books on the topic was The Flexible Enterprise, which I wrote back in the 1990s and served as one of the foundations of the agile business movement. So, when they saw my name on that, they called.

I suddenly found myself talking about a book that was 17 and 18 years old, repeatedly. Given the condition of the market, I decided I’d update the Flexible Enterprise for more modern times. But 1994 was very different from 2009. A tremendous amount changed since then, including the Internet and the rise of China and India. So, I started to research the changes, using a variety of computer modeling (I’m formally trained as a computer scientist). After a little while, it became clear an entirely new book was needed, and after talking with my producers at CNN, who were also trying to get a handle on the massive changes in our economy, I decided to write How To Save Jobs. It turns out to have been a huge effort, but it was helped by regular feedback during the first ten or so months from many of CNN’s viewers, so I got a good, wide perspective into the problems.

The difference between How To Save Jobs and any other jobs-related book is that I approached the problem from a computer analysis perspective, not an HR perspective. I modeled simulations to see what would be necessary and how changes impacted our society. The results are what are the foundation of my recommendations in the book.

Matt Heusser: So how can we save jobs?  Can you explain that standing on one foot?

David Gewirtz: I can’t do much of anything standing on one foot! But I can say this: we (meaning the United States) needs to make jobs and employment a priority. Right now, we have a large number of programs that are at cross-purposes to keeping jobs in America or bringing them back in. Our health care system (pre- and post-Affordable Care Act) is not optimized for making American businesses competitive, and we have so much influence on our expenditures from foreign nations, that we are often squandering our national wealth to other nations’ advantage.

More to the immediate point, America as a culture is optimized for large businesses, but large businesses can’t grow enough fast enough to support the number of people who need jobs. Conversely, our tax system and our education system is not optimized for small business training and entrepreneurship, and we need to begin to put the creation of small businesses (and very small businesses) into our policies as a priority. My recommendations make up the entire second section of the book.

My interview with David went beyond the limits of a blog post, so we’ll hear more next time about his books, his life as a freelance journalist – and what’s next for David Gewirtz and the USSPI.

The last time I wrote about this I was taking about Call Centers. American Companies had outsourced phone support to other countries, often India, and the results were so bad due to cultural and communications issues that the USA companies insisted on a call center across the street so the Indian Companies rented office space across the street and hired US Workers.

A month after I wrote that article, Tata consulting opened an office for three hundred technology workers in Minneapolis, Minnesota.

Re-shoring isn’t coming to IT, it’s here, and the same offshore companies that started round one are taking the lead in round two.

The odd thing is, at least according to the Chicago School of Business, this shouldn’t be happening – at least on first blush.

Let me tell you why.

How did this happen?

If the Booth School of Business at the University of Chicago were to come up with a slogan, it would probably involve the idea that efficient markets win.

By efficient markets, I mean markets with lower cost structures.  If you pay 2% per transaction in the stock market, and I pay 1%, over ten years, I’m going to end up with more money, right?  Put another way, if we have to pay a five cent fee on every transaction, and work to lower that amount to four cents, in a way, we made money.

If that were true, then the round-tripping of contracts to India/China/Pakistan and back agan, with its associated communications costs (have you ever tried to set up a conference call to a developing nation?), combined with the sheer overhead of managing a multi-national company, should mean that the best deal would be a local deal.

Simply put: This should not be happening.  It makes no sense.

We did this to ourselves

Thanks to the build/boom/bust cycle of American real estate, office space is available cheap.  Thanks to the layoff/outsource cycle, labor is available cheap too.  Those two efficiencies combine to create just enough cost savings to allow for management overhead and awkwardness.  (Shrinking the distance between doer and client adds efficiency as well.) Yet there is opportunity here.

A local company, with less overhead, could be more efficient. That efficiency could lead to a better contract, with more cost savings for the outsourcer and more profit for the local company.  When I think about local contracts, a few companies come to mind; Menlo Innovations, in Ann Arbor, Michigan, competes for that kind of work. Pillar Technology is a 200-odd person delivery company which had no physical offices for over a decade; the executives and staff all work from home. I once took a call from a Pillar Recruiter, working out of her home in Georgia, to do a software project in West Michigan. In 2012, Pillar opened a software studio near Detroit, but its executives continue to operate with no building, which means no gas bill, no lease, and no maintenance, reception, or jantorial expenses.

One more time: Efficient companies win.

There is an opportunity here for local companies that are efficient.

Where are the small local companies?

David Gewirtz is the author of “How To Save Jobs: Reinventing Business, Reinvigorating Work, and Reawakening the American Dream.”  In that book, he claims that we schooled the entrepreneurship out of our society – that by focusing our culture on getting a good education in order to get a “stable, secure, good” job, we actively turned ourselves away from the idea of creating a business.  When the companies merged and laid off redundant departments (or sent work offshore), those now-laid-off went to the market to look for another “stable, secure, good” job.  Multiply that by a thousand mergers and offshore initiatives, and you have a lot of unemployment and a job market ripe for hiring, but no entrepreneurs to do that hiring.

This idea of entrepreneurship is not entirely gone; companies like Pillar and Menlo are still doing impressive things, and we cover the individual perspective right here on this blog.

What’s next?  I’m not sure.  Mr. Gewirtz has recommendations in his book, both for society (more small business) and for any individual stuck in the “good job”/lay-off trap.  My favorite idea from Gewirtz is to look for other people who have good products, then either partner with them (you take over marketing, logistics, and production, to make the product “real”) or outright purchase the product idea and develop it yourself.

There are many people with ideas; Gewirtz suggests becoming a ‘finisher.’

Lessons

Writing this article has helped me realize two things.

First, that we (myself included) in the US are overly focused on ourselves.  This blog has readers from all over the world; it would interesting to hear from the current IT workers in India, Pakistan, and Vietnam on their perspectives on re-shoring.

Second,  I would like to get Mr. Gewirtz to interview on this blog.

What questions should I ask him?

Last week, my friend RobLimo asked if I would take my ideas for independence, box them up, and do a video interview for Slashdot.  The resulting video got tens of thousands of hits in two days.

Somehow, I think it was less than it could have been.

Rob called the video “secrets of independence” or something like that.  At the time, I didn’t realize that was the goal — it felt more like a simple conversation.  With a title like “secrets of of independence”, I thought it deserved more punch — like the four things you need to know to go independent.

It turns out, I do have a list of four things.

That sounds like a good blog post for today.

It all starts with a lot of financial modeling in Excel.

Requirement #1: Know Your Household Burn Rate

This looks a lot like the family budget, and includes all ongoing expenses: Mortgage, Heat, Electrical, Car Payments, Car Repairs, Gasoline, Telecommunications, Magazines, Food, Entertainment, Clothes, your weekly allowance, a small amount of savings for emergencies.

Once you’ve calculated the burn rate, you’ve got the real problem: Living by it.  Consider dropping just that amount into your checking account, every month, for four months.  (Alternatively, just check your actual spend over that time period, to find out what your actual burn rate is.)

Knowing your burn rate is just smart, even if you don’t go independent.  If you, however, you’ll have new expenses.

Requirement #2: Know Your Business Burn Rate

Before you found your first customer or sent your first invoice, your business will have entire new sets of expenses.  You’ll need to purchase your own hardware, buy your own health insurance, contribute to your own retirement program, purchase software, join a professional association, pay for tax software and possibly small business software (I recommend Quickbooks Pro online).  You will add all these up, then consider how much charitable contributions you would make on top, and the taxes you’d be responsible for if you made that much income.  That is Federal, State, unemployment, social security, and the small business tax.

Putting those two together gives you your survival income rate per year.  Divide it by fifty, and it’s the amount you need to average, every week, to have a viable independent business – be it IT Consulting, Dog Walking, or Yard Maintenance.  Divide that number by twenty, and you’ve got a minimum rate per hour to charge assuming 50% utilization.  (Utilization being a fancy term for how busy you are.)

Requirement #3: Calculate Your Replacement Income

Replacement Income is the worst-case income you get – the money your household can earn if you go independent and the gigs don’t come your way.  This could be from a weekend job as a bank teller or pizza delivery person, but more likely it is the income from another household member, or possibly investment income.

The trick is, replacement income can’t get in the way of you being billable during the work-week.  The ideal replacement income allows you to travel to the client site during the work week, so being an online adjunct instructor at night works, as does creating screencasts to teach Ruby On Rails.

As long as #3 is greater than #1+#2, you can go independent right now.

For the rest of us, it’ll take work.

Requirement #4: Calculate Your Runway

(Burn Rate+Business Burn)-Replacement = Burn Per Month, or BPM.

Savings divided by BPM is your runway — the amount of time your have to find another assignment until you start eating into retirement income to pay the bills.

Once you know your runway, the decision suddenly gets a lot easier.  If you have less than a year of runway, you probably need a job.  I’m sorry.  Go back to step one and get aggressive about expenses; that will mean more money in the bank each month and also build your runway.

If you have more than a year of runway, then you can think about how much runway you’d need to find a day job.  Double that, and that’s your minimum.  If savings dip to that level, you start looking for a day job.  For now, start looking for contracts, and when you get enough to exceed your total burn rate, congratulations — you can quit the day job.

At least, that’s the cold, hard, mathematical considerations about independence.  You’ll notice I have not talked about emotions much, or even the hard process of finding new customers.

More about that next time.

At the end of one year and the beginning of the next, a writer’s mind is prone to wander to think about goals, the future, and this crazy thing in modern life we try to call a career.

We are also likely to try to draw some inspiration.

Some authors pull from sports heros — how Tiger Woods rose, fell, and may rise again, for example.  Perhaps politicians or corporate CEOs; there’s more than one story to be found in the life of Steve Jobs.

Today I’d like to draw from the Schwan’s delivery man.

Yes, the guy who brought incredibly good frozen food to your house, offered a free sample … at five to ten times the price of what is in the grocery store.

No, you didn’t buy it, and twenty-thirty-odd years ago, neither did your mom.  Okay, I get it. But someone did, or else Schwans wouldn’t still be in business.

There might just be lesson in there, after all.

 Back In The IT Shop 

Every time I got oa networking meeting with recruiters, I hear the same buzzwords.  Java, C#, Oracle.  ”What’s hot right now” according to the TIOBE Software Rating.  So a million people looking to improve their lot in life go learn Java, or C#, or Oracle.  Just.  Like.  Everyone. Else.

In fact, it’s a little bit worse.  Big commercial ventures with economies of scale set up offshore can mass-produce technologists with skills, then rent them for a fraction of the cost of local talent.  They can do this with C#, Java, SQL, any technology that is big and common.

So that’s my thought for today:  Consider going after not-big, not-common technologies.

In the past I’ve talked about the advantage of brands; that people will pay 3x as much for a solution they know will work, because they trust a brand, over a product that will probably work. When you consider the price differential with offshore work, these ratios roughly tend up.  Yes, you can get offshore work that has a sterling reputation … and you’ll pay for it.  Add communications costs to that premium, and the rate tends to be roughly the same as for qualified local talent.

Which brings me back to the Schwan’s man.  He earns a pay differential that is more than the advantages of branding.

Because what he sells is different.

The Scwhan Business Model

With Schwans, Mom gets to eliminate the entire grocery store trip – food is delivered fresh, to your door, pre-selected from a website, generally heat and serve.  It’s better than TV Dinners, and healthier, and saves time.

Schwan’s isn’t selling food; they are selling convenience to people willing to pay a premium for it.   The premium is high enough that they can give some freebies away.

The traditional wisdom in IT is to get the skills that everyone wants.  But, again, those are the skills that everybody else is busy trying to get.

What if, instead, you became highly specialized, and well-known, in a small niche?  The kind that has their own sub-events and conferences?

You travel to the client and fix problems – make them go away entirely.   Generate free time and productivity.

You might have fewer clients, but they tend to pay more.

Not a system administrator, but a web cache acceleration consultant.  Not a “java guy”, but a leading expert on Struts, or WebLogic, or JBoss – or perhaps the performance optmizer within each of those. Or the Oracle Performance guy. Or …

I don’t know what it is, but I suspect that most technical people could be the guy within some very specific niche.

Last time I wrote about going independent, I said the challenge was finding the director of IT who needed your services.  One thing I remember about the Schwan’s guy was that he didn’t need to find us.  His customers raved about him and passed out the fliers.

We called him.

Just something to think about.