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?

Last time we met John Hunter, a digital migrant living in Malaysia.  John is a regular human, with two mortgages in the United States, who took a ‘six month’ vacation to Southeast Asia in 2011 … and never came back.

We ended with John making the claim that he could live on $1,300/month in Malaysia.  That’s $16K/yr, which, given taxes, means a minimum income around $10/hour to make a go of a forty-hour work week.  At $20/hr, that’s a twenty hour work week- anything higher than that means less hours or more in savings.  (Of course, that doesn’t include the cost of packing up your entire life, or the price of plane tickets …)

Still, it got me interested.  Just how does John generate the income to sustain that sort of life style, plus to save up for emergencies or retirement?

I’ll let him answer in his own words.

Matt Heusser: Now let’s talk about the hard stuff.  How did you find remote contract work in Southeast Asia?  Who are your customers?  How many hours do you really work a week?

John: I have several sources of income: rental income, income from my web sites, consulting income.  All I have done to find remote contract work is talk to a few people I know.  I should talk to a few more people I know (I planned to do so, but things worked fine financially and I kept myself busy so I never go around to it – if I had needed the money I would have).  I work a great deal on my web sites but the income from that is fairly low.  For The W. Edward Deming Institute I do some consulting, write their blog and present seminars.  For Hexawise I do some consulting and write for their blog.

My total hours of consulting and seminars a week averages less than 10.  I work on my web sites over 30 hours a week on average.  I make less from my web sites than either consulting or rental income.  At the very beginning the web site earnings alone (Google, Amazon and similar options) more than covered my living expenses.  That has declined significantly (for whatever reason I had a significant surge in income for about a year but it has gone away – from a bit before I left until about mid 2012).

I wrote a book last year, Management Matters: Building Enterprise Capability, which doesn’t show any evidence of providing significant income yet, but maybe it will (I do not think it is incredibly likely to do so however).  I just launched it in January and have been working on marketing it.  I probably averaged over 10 hours a week for 6 months on it.  It was what I wanted to do with my time; not something I figured would pay well.

I have no question if I was most interested in raising my income I would need to focus on getting consulting and seminar work.

Matt Heusser:  You decided to keep your homes when you moved to Malaysia and rent them out.  Why did you do that?  How has that turned out — I imagine the taxes, mortgage payment, and paying someone else for upkeep exceeds the rental income, so why do it?

John: Well it started when I kept my first house and rented it out when I bought my second.  Actually it started when I was looking for my first house; part of my thinking was buying something that would be a good rental.  I was actually planning on convincing my mother or brother or someone to take ownership of half of the first house (just to raise some cash and spread the risk – having to replace a roof or whatever) when I moved into a new house.  But I ran the numbers and the return was so great it was crazy to give that up to someone else (even family).

I very much like the idea of multiple sources of income.  And I had plans of going out on my own, in some undefined way, so creating an income stream from real estate was one strategy to support that option.  My second house I was less focused on rental prospects and it shows – I paid significantly more (and it is assessed at more) but rent is about 85% of the other one and has many fewer interested tenants when I try to rent it.  My first house is 2 blocks from a metro, in a very nice and active neighborhood.

The rental income is great.  It provides a consistent stream of income.  Though you do need to understand you can have months where you might have more expenses (due to repairs) than income.  I do pay someone to take care of them for me – I actually started doing that the last few years I was there (for the first property – just to not have to deal with it myself).

Matt Heusser: Describe a typical day.  How much time do you spend working, and what else is there to do?

John: A typical day is:
1) Wake up and go onto the internet, do some reading, maybe write some, maybe do some research… while grabbing a bite to eat
2) Option to go for a swim or play basketball (I’ll do one or the other 3 or 4 times a week)
3) Do a bit of work: maybe a bit of coding, write for one of my blogs, consulting… (basketball takes longer so this is not done if I play basketball)
4) Walk to lunch (a great Indian place about 3 times a week is 5 minutes away, some other places within 10 minutes.  About once a week a longer walk (several more options within 20 minutes).  Or I’ll get delivery, eat what I have on hand or take a taxi somewhere.
5) Work some more – with online breaks or reading books…
6) Dinner, normally I just eat what I have; I eat dinner out once or twice a week
7) Working on stuff for fun

I will have plenty of days where I only really do 2 or 3 hours work and others where I do 10 or more.  I spend a bunch of time doing things that can certainly be classified as working but are certainly not the way to optimize income.  I can spend a great deal of time gathering data and analyzing it for a blog post which couldn’t really be justified if I was trying to maximize income.  I am working on what I feel like.  If I needed more current income I would have to put more effort into where I knew the pay was greater (consulting and seminars) but as I don’t have to, so I do what I feel like.  I would be happy to do more consulting and seminars, doing the work to get more of that work doesn’t really excite me so I let it slide.

The time difference means if I need communicate in real time with the USA I need to do the early in the morning or in the evening.

I just started a new activity: taking a course via coursera.org.  It looks like that might take a significant block of time (more than an hour a day), I just started this week (and am signed up for a second course taught by Dan Ariely).

After a great deal of email correspondence and a phone conversation or two, I can start to see how John is successful. I can’t help but notice that while he needs to work 10 hours a week to make a living, he ends up spending forty on business.  Plus earning that $16K won’t pay for plane tickets, so he doesn’t get a chance to get back to the United States as often as he might like.  Finally, I’m struck with how John has certain advantages over the typical tech worker in a developed economy.

So let’s dig into that, with a final piece of the interview next week, where I ask John his advice on how others can get where he is.  I’ll close with my own thoughts, including how to develop that differentiation yourself.

Stick around; we’ll have cookies.

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.

I’ve covered a lot of things on this blog in the past year and a half, but one of the recurring themes is going independent.  I’ve run interviews with Corey Haines, J.B. Rainsberger, David Hoppe, and Rosie Sherry, along with several posts about my own journey as a digital migrant.

A few people expressed concern over what I was writing.

After all, most North Americans are looking for those ‘job’ things, with the benefits, paid time off, corporate retirement plan with unemployment insurance if things go badly.  By pushing people to go against their natural instincts, I am pushing them to make an unnatural choice.

At least that’s the argument.

I’m not too worried about the person that shouldn’t go independent.  They won’t read these articles, or if they stumble on to them by some great accident, they certainly won’t do anything about it.

No, I am looking to find people on the fence, who have the inclination, but lack a little something – people who want to be inspired.

Today, I’m going to try to inspire you.

The Set Up

Imagine for a moment you are a director of IT, trying to plan out what you can do in the next year. You have, say, thirty employees (five supervisors, each with four direct reports), a fair amount of hardware, and influence over a few ancillary departments. Your fiefdom includes production app support/helpdesk, the Windows Server Team, the UNIX server team, the network guys, and the DBAs – or something like that. You’ve probably seen the setup before.

Your problem is that the world keeps changing, and as it changes, the skill sets you need change. The programmers are talking to the end customers about the benefits of cloud computing – how they could roll out changes at the push of a button – but you don’t trust Amazon’s EC2 and you don’t know anyone who knows OpenStack, and don’t have budget for Windows Server 2012. Even if you did, no one on staff knows Windows server 2012. Then there are the business users who want to get off Outlook and to go gmail — but who knows how to integrate LDAP with gmail? Not to mention the Business Intelligence Initiative. Now you’ve got to hire someone that knows how to support that tool, too. Not to mention (mumble mumble I could do this for three more paragraphs).

If that sounds convoluted, confusing, and too much at one time — well, welcome to the head of a typical director of IT.

If you are lucky, as an IT director, you might get budget for two full-time employees. There is just no way any two people will have the skills on all the new systems you need.

Or, for the price of one employee per year, you could hire five different freelancers for four weeks each — or ten for two weeks.

The freelancers come in, do the integration, train the staff, create the policies, and go away. No long-term impact on budget at all; next year, you can hire ten different people, with ten different skills.

It turns out this is an economically reasonable choice.

Do the math. 5 people 4 weeks = 20 weeks, means the typical freelance contract worker gets 2.5x the hourly rate of an employee. Add benefits, and it could be 3x.

And they should.

Long-term contract labor has some amount of job security; you get a six month contract. Regular employees get unemployment benefits and implied longer-term job security. The economic tradeoff for that is reduced wages.

I am not trying to be judgement here; I am speaking in terms of economics.

When I talk about going independent, some of my friends are scared.  They are worried.

But wait.  Take a moment.  Make a list of your strengths and skills – especially unique skills.  Are there skills in that list that some executive, somewhere, might find valuable enough to rent at a premium?

If the answer is yes, well, congratulations.  You could probably be talent if you’d like … but don’t quit your day job just yet.

All I am saying is that you might have more options than you previously realized.

Forget about living out of your car and starving — that IT director needs you.

You just need to find him.

Let’s keep talking.

I my previous post I suggested that the workforce is split into three general roles – ‘Labor’, ‘Crew’ and ‘Talent’ — and that it was better to be talent.

In order to be talent, you need to be differentiated somehow from everyone else.  Unique; different.  The classic definition is either a ‘known good quantity’, willing and able to do things others are unwilling, or unable to do — and you’ve got to work gigs, not that day job stuff.

Let’s talk about how to get there.

A Branded Quantity

The straightforward way to do this in IT is to pick one (preferably several) of the following:  Get a PhD in computer science, become a professor at a referencable school, write a book establishing your expertise, then work at a big company with an impressive title.

My model for this is a man named James Whittaker, who yes, earned his PhD from the University of Tennessee, taught at Florida Tech, gave a talk with one of his students that he later turned into a book, How To Break Software.  After Florida Tech, Whittaker left for Microsoft, then did a couple of years at Google, and, as of last February, is now back at Microsoft.

That’s Whit over at right, when he was a director of Test Engineering at Google.

So yes, real people are really able to plan their career in such a way as to do things others have not done, to make their expertise sought-after and desired.  If you are under 25 with no mortgage or serious life commitments, this is an approach.  Right now, my advice is the University of California at Berkeley, MIT, or Carnegie-Mellon University, then on to Google, possibly Microsoft, or Groupon.

But that’s not the only way to do it.

Willing To Do What Others Can Not – Or Will Not – Do

When I click on the “Talent” list for Craigslist, the same listings come up again and again – actors, actresses, and *cough* models doing, well … things on cameras that anyone could do, but that violate the average person’s sense of proprietary.

The easy way to be talent is to simply do things others are unwilling to do.

It doesn’t have to be … adult.  Garbage and Sanitation workers get to work reasonably short hours and command premium pay and benefits relative to their experience.   Mike Rowe, on the discovery channel, has an entire show about this called “dirty jobs.”

In IT, this means carrying a pager or offering support services at midnight.

Consider this business model

There are one hundred and sixty-eight billable hours in a typical 40-hours-per-week month.  If you know your customers well, you might know that they only need, on average, thee to five hours of support – but want time reserved if they need it up to ten hours a month.  So you sell thirty customers up to ten hours of reserved time and get paid for 300 hours a month.  Most of the time it will work – occasionally you will need to call in some help (or just go crazy.)

This is how my brother in law got a very large house.

Or This One

The other end of what people aren’t willing to do is what they aren’t able to do.   So you go out and write your own webserver, or some other component, that is terribly needed to make an open source project really work.  You don’t have to write the whole thing. Zed Shaw, for example, wrote Mongrel, the webserver that made Rails efficient – and gave it away.

Or take David Heinemeier Hansson (“DHH”), the creator of rails. He once had a recruiter ask how many years of Rails Development experience he had.  David replied “ALL OF THEM.”

Neither of those guys is going to have a problem finding a gig anytime soon

The Last Piece

But there’s another element, the toughest element, in becoming talent – moving toward pay-per-event – that most of us avoid out of culture.  We want the “safe” day jobs, which, ironically, means that freelance work becomes  work that few people will do, further increasing the value of that work.

More on that next time.

So earlier in the week I was on craiglist, looking at gigs.

Yes, gigs. Not jobs.

Part-time, temporary, and flexible, gigs represent a different lifestyle, different risk profile, and different rewards.  You can start them with a day job, and have the best of both worlds … there is just one small problem.

They don’t pay much.  Or at least, they often don’t pay much.

This article is about how to change that — to get the high-paying gigs,  while doing good, ethical work, that you can tell your family about with pride.

About Talent

The first thing I notice about Craigslist gigs is the types. Labor, Crew, and Talent.  Labor is back-breaking work that anyone in reasonable shape can do – moving furniture, delivering pizzas.  Because there is high competition for labor gigs — they are often cash-by-the-day, ideal for undocumented workers – the pay is extremely low.  Crew is the next level up; it not differentiated, but a smaller number of people have the special equipment (typically a camera or A/V equipment) and skills to do it, thus it pays slightly higher.  Then there is talent.

Talent is where the money is.

When a cameraman gets sick on the set of “The Counselor“, Bradd Pitts new movie, you get a new cameraman, maybe from Craigslist.

When Brad Pitt gets sick, the whole dang movie shuts down.  You lose a few hundred thousand dollars a day, and you get a world-class doctor in really really fast.

Talent gets the nice office, fresh bagels, and can command the kind of rates that you would hope they could command.

Maybe not $20 million for a nine-month movie shoot, but yes, Virginia, Talent does exist in IT.

Talent In IT

Last week I was in New York, city, doing a live video-shoot with my friend, Michael Steinhart, about Cloud Computing Security fr TheSMBAuthority.com.  Here’s a still from the show (click-through to watch the entire episode):

I’m not showing you the link to show off.

Actually, quite the opposite.  Look at me real carefully.

I’ve got a weight problem.  I have an acne problem.  My shirt, though high-quality, wasn’t wearing right; it was bunching at the bottom.

Somehow, this very non-Brad-Pitt like dude got to do a day of consulting in New York City at a ‘talent’ level rate.  It’s not my first one; in November, I was in Malmö, Sweden, giving a slightly ironic talk called “Building Your Reputation Through Creative Disobedience.”  Yes, there is video.

Again:  I am not Brad Pitt.

Now watch the SMB video.  If you are a real operator in technology, you watch a video like that and say “hey man, that’s introductory stuff.  wide, sure, but not very deep. Why … I could do that.”

Yes, you probably could.

How ‘Talent’ Works

When I look at the classifies, I see two general categories of talent.  The first is work that many people can do, there there is an existing market for, but most of us would find distasteful.  (We don’t need to get into it here, but it involves things that are probably best kept private, and no, don’t click those links at work.)

The second way is to develop specialized expertise that is a known quantity.

The last step is to offer the services on an as-needed basis. That means you trade some personal risk for the ability to negotiate each assignment separately.

“The Counselor” could have any unknown actor for a hundred thousand dollars, but with Brad Pitt, the movie is sure to be a hit.

It is better to be that guy.

Hey, I’m an old fat guy, and I have my moments.

It takes a bit of work, but we can cover it here.

More on the how next time.

Source: Pew Immigration Survey

It’s been four and a half months since the last post about my story as a digital migrant.  (If this is new to you, you might consider reading the original essay, then parts one and two of my story, before checking out that last post.)

A lot can happen in four months.

Before I get to my update, though, I’d like to talk about a common aspect of digital migrant work — the systems upgrade.

Not Too Long Ago;  Not Too Far Away

I was working at an Insurance Company that did periodic upgrades of its ERP system.  When it came around upgrade time, the server admins would set up the test servers, the DBAs would do the migration … and suddenly we needed an army of people to crawl through the code, and change every reference of SGSG_SUB_GROUP into two tables; both SGSG_SUB_GROUP and SBSG_MINOR_GROUP.  Or perhaps to add a new column.  Or perhaps to eliminate a table.

It didn’t really matter, there was a big pile of predictive work to do.  Some folks suggested using a code generator, but even if we did that, there would be a lot of cleanup/retest work.

That meant the company would need people to do the testing, the setup, the configuration, to create new reports, and to integrate the modified code with the new code the salaried staff would need to create.

An army of contractors descended upon our codebase like wasps.

They weren’t bad people.  The background they had was often in the specific ERP package we were using.  The lifestyle was to drive, or, more often, fly, during the work-week, to the client site, and fly home on weekends.  They would do the upgrade work, and, toward the end of the project … look for the next one.

Problems with the Migrant Life

Our large-ish insurance company did not like to work with “lone wolf” contractors; it looked for a partner that specialized in our specific kind of ERP systems.  This partner, often with a fancy name (“Accenture”, “Covansys”, and “Cognizant” all work in this space) wins the bid on the contract and offers to find employees.

The vendor can then scour the internet to find people with the right skills who are (often) out of work, then offer to find them short-term work.

The pay sounds good … at first.

Problems with Contract Work

Independent Contractors make a conscious decision to have temporary work, so they don’t qualify for unemployment — but they still need to pay into the system.  They also pay both halves of unemployment; personal and company obligations.  Contractors pay both halves of social security as well, which means they end up paying about 7% more than a full time employee.

Contractors also do not get paid for holidays; in some cases, they may not be paid travel expenses.  High-level consultants may build travel time into their rate for short consulting engagements, but even that has a price – the consultant will have to book a lot of engagements.

Add in the full cost of health insurance, unbillable time to find the next contract, and it’s not huge surprise that most people choose to pursue the ‘day job.’  As my anonymous person described contract work:  ”You need to come in, work 8-to-5, on-site, travel for work, pay your own benefits, with no job security? That’s the worst of both worlds.”

Or you might look at it like my ERP upgrade friend did:  ”I earned enough Marriott and Delta points for a free trip to Hawaii — but I had to explain to my wife about the opportunity cost.  We can go for free … and I still can’t afford the trip.”

The alternative is to become an employee of the contracting company.  The contract company needs to make a profit, of course, and will take its “cut.” In turn, the company will provide vacation pay and some benefits — including unemployment pay, and, possibly, “bench pay” between assignments.  The problem with being a migrant employee is that cut; it is often a significant cut in pay.

It’s not all bad

Some people are trapped in the contracting life because they lack choice, but others choose it consciously.  Digital Migrants get to do many different kinds of interesting work in short periods of time, get paid travel to new and (sometimes) exciting places.  If they time it right, a Migrant can schedule mini-sabbaticals between contracts — I got to take most of January 2012 off due to timing.  Beyond that, the sheer economics of uncertainty, travel, and short periods of time means that companies typically need to pay a premium above employee wages, which makes the sabbaticals possible.

Meanwhile, Back at the Ranch

In the last installment of our story, I was working with a wonderful little company in Northern Indiana … but that was last April.  The adventures since?

I’ll tell you all about it next time.

When we last heard from our hero, he had left his position at Socialtext for a life of roses and caviar as an independent consultant.

More seriously, I had a problem: A fair bit of writing assignments, a few speaking engagements, and no long-term client.  For that matter, no idea what my ideal client looked like.    Did I want to do short-term consulting assignments, “assessment and recommendation”, hiring and placement, or long-term contracting?  Was I willing to travel?Well, okay, it’s not all roses and caviar, but it does definitely have its advantages.

There are plenty of folks who have plenty of different advice, and it all depends on your situation.  In mine, I played a fishing game:  I put a note out on the internet that I was available for work, and waited to see who bit.  (The trick to get that to work is to put out a blog post or two every week for three or four years, with good content, before you hang out your shingle.)

Did I write that I “waited”?  I’m afraid that’s not very accurate.  It would be more accurate to write that I “went crazy”, continuing my involvement in user’s groups, professional associations, finishing up the book, and keeping up my column in STQA Magazine and my blogging.  After three months, I had my first assignment, and had about as much in the checking account as when I started to go independent.

But I’m getting ahead of things.

My friend, Lanette Creamer, was consulting for a client in Northern Indiana from Seattle.  To get there, she had to fly, so the travel expenses were eating into her fees – and due to the flying, she was working less than forty-hour weeks.  About that time she became literally sick of traveling.  When it came time to renew, she didn’t pursue it — but she did have a friend to recommend.

So I had a lead.  Actually, I a had a few leads; a work-from-home 75% of the time position for a silicon valley company; another contract lead from another company out West, and a half dozen that never got to the third interview.  In most cases, the company wanted an employee, had a different vision for it’s strategy than mine, or wanted me to move the family.

In the end, the Indiana job won out.  The rate was high enough that I could stay down there four nights a week, so I could write at night.  The distance was a little over a hundred miles; a nice monday morning/friday afternoon drive.  If there was an emergency, I could bounce home in a couple hours, no need to buy plane tickets.

Most importantly, the contract gave me time to think, to figure out the consulting model, which is just starting to get interesting.

More next time.