How To Lose $300K In One Conversation

Will you work for equity?

After you have been consulting for any amount of time, you are bound to get asked this by a client.  You may find yourself struggling to decide whether or not to take some equity or just get paid to work on the project like you normally do.

I had one such scenario a while back that I wanted to share. One day a few months ago, I was approached by a local VC in town.  Our relationship falls somewhere between acquaintance and friend; let’s call him Joe.  Joe has a very successful background and is one of the more wealthy people in my circle of influence.

Joe asked me our for beers to discuss a new opportunity for a mobile project.  I, of course obliged and met him out. During this meeting, Joe proceeded to tell me about an application he wanted me to build that would be aimed at teenagers.  The gist was: `They would create rooms and the “cool kids” could vote other kids in and out of the rooms`.

The offer he made was 30% of the application ownership and profits and a small share in one of his existing startups.  Given Joe’s history, I knew this would most likely be a successful endeavor, however I told him that I had to think about it.  Given the nature of the app, I had some strong moral objections to creating a tool that would allow teens to ostracize each other.  This didn’t quite sit right with me.

After taking a few days to think I it, I ultimately told Joe that I didn’t feel right about working on the application.  He said “no worries”, and that was the end of that conversation.

6 Months Later…

Some time had passed and Joe and I eventually met up for beers.  After a bit of discussion, he said “Hey, I wanted to tell you about that app”.

He then follows with “I found a college kid to work on the application and gave him the same offer that I gave you.  I also had a designer do some very basic mocks of the application. While I was out on a trip to Silicon Valley, I mentioned the application to a good friend of mine at Facebook.  Well, Facebook has a similar product coming out (turned out to be Rooms) and they decided to give me a quick check for $1.1mm to discontinue work on the product. I then wrote the college kid a check for $333K before he’d written a single line of code!”.

My immediate thought was “at least I still have my values”.  It’s pretty funny to look back and think about how I could have made so much money so quickly. However, even if I had known the potential payout up front, I don’t believe I would have still taken the project.  It would have eaten me up inside.

The takeaway of this story is twofold.   First, I’d urge you to choose your compensation wisely.  Before this encounter, I would always give a hard “no” when asked about equity share as part of compensation. I now take it on a person by person basis.  Second, don’t compromise your morals for money.  I look back on this story as a success and wouldn’t change a single thing about it.

How To Lose $300K In One Conversation

Why Start Software Consulting

Want to jump ship and be a software development consultant? This post will detail why this path is a much more fulfilling and safer path than a traditional job.

Diversifying Income

Early in my career, I worked for a software consulting agency.  I was in my early 20’s and getting paid way more than I should.  One day, my boss called me up and let me go without notice.

After interviewing quite a few developers in the consulting space, I quickly realized that this is a very common story.  If you work for a company, they can usually let you go at any time for any reason. Given that this is your sole source of income, you are now in an extremely risky situation.

Contrast this with being an independent consultant.  Most likely, if you are consulting you have 1 or more clients.  In addition to that, you have some sort of pipeline set up.  So when you lose a client, you simply pull another from your pool.

Mo Clients Mo Money

The going rate of a senior software development consultant is between $100-$125/hour.  At this rate, you are looking at pulling in somewhere between $16K-$20K/month.

Working for a traditional company, you would be hard pressed to command this salary even after having 10+ years of experience.  I’m not joking, kids who learned to code on Udemy in 6 months were making this while I had a salary cap of around $100K.

Commuting

In the U.S. , car accidents are one of the leading causes of death among young people.  Obviously, consulting can help mitigate this risk by allowing you to work from home or close to it. Therefore, further limiting your physical safety risk.

In addition to limiting safety risk, not having to commute has financial advantages.  Since going independent, my family has cut down our need to a single vehicle saving us money on car payments, maintenance, gasoline, insurance, and most importantly time.

Flexibility Of Location

When you don’t have to work in a traditional office, you are free to work anywhere in the world.  This could be coffee shops, the park, or even on a cruise ship.

I typically like working in my shipping container office (post on that in the future) or wherever my wife has chosen to take the kids on a field trip that week.

Flexibility Of Time

When I worked at a traditional company, I was required to be signed in and available from 9-5 Monday – Saturday.  As you can imagine, this has a huge impact on how you plan your free time.   It’s also extremely limiting when you are trying to plan a trip or vacation.

As a consultant, you have 100% control over your time.  This allows you to live life more on your terms.  If you enjoy staying up late and hacking until 3am, you can then enjoy sleeping in until 11.

My wife and I currently homeschool our kids.  So when we want to take a trip, it’s literally a matter of leaving our house.  We don’t have to ask for time off, we don’t have to plan around other people.  We can quite literally drop everything and head to Disney World during the “deadest” parts of the year and enjoy doing things while others are “working”.

I have found this level of flexibility has greatly improved my quality of life.

Unlimited PTO

This sort of goes with what I said above. Traditionally, if you want to take off time you need to:

  1. Make sure it’s cool with your boss
  2. Make sure it’s cool with your team
  3. Give 2 weeks notice
  4. Fill out paperwork
  5. Burn through your limited “vacation days”
  6. Still take calls from vacation because your are a “nice guy/gal”

When you are a consultant, the process becomes:

  1. Leave for vacation

You Are Your Own Boss

“So, Peter, what’s happening? Aahh, now, are you going to go ahead and have those TPS reports for us this afternoon?” – Bill Lumber

I never want to have a “boss” again. It’s true. I hate the thought of someone constantly breathing down my neck watching my every move.  I also can’t stand the idea of someone giving me a “performance report”.

When you become a consultant, it should be obvious, but you are the boss.  Early on, I would make the joke when my wife asked me to go on a random adventure “Let me check with my boss”.  Hilarious right?

Working In Your Underwear

Unless you are a Victoria Secret model, chances are you actually have to put on pants to go to work.  Not with consulting! I’m so glad I met my wife before I became a consultant, otherwise there would be no chance of me landing her wearing some of the choice outfits I do during work hours.

I find my level of quality goes up with my level of comfort.  It never made sense to me why companies preferred “business casual” over “sleep professional”.  Seems like millions in lost revenue.

Other Benefits

This list is in no way meant to be exhaustive. These are just some of my favorite perks that I have been enjoying over the years. If you have some others that I have missed, please feel free to add your comments below.

Why Start Software Consulting

Goals For 2016

As the new year kicks off in full swing, I am reflecting on my 2015 goals and setting some new ones for 2016.

Here is how I did on each of last year’s goals:

  • Create a business planFail. I did not create a business plan for Pixegon.  This might have to carry over.
  • Grow Pixegon (my mobile consultancy) to 2x 2014 revenueSuccess. We not only achieved this goal, but surpassed it. Pixegon did a total of $1.1mm in revenue in 2015!
  • Hire a “director” – Success. OK, so this one is sort of in the middle. I didn’t quite hire a director per se, however I did elevate my senior employees to more management roles. This allows them to take some of the day to day tasks off of my plate.
  • Move to a weekly – Fail. But I’m OK with it. This isn’t very important.
  • Morning RoutineModerate. Some days were better than others
  • Blog twice a month – Huge Fail.  I averaged .41 times per month.
  • Take off / reduce workload – Success. More camping!
  • Give away more than 10% of personal income – Success. Our family was blessed with multiple opportunities throughout the year to be a blessing to others in addition to our normal donations.

Overall, I’d call 2015 a success. I managed to hit the goals I felt most passionate about, and more importantly, this exercise has helped me to determine what I should focus on.  With that being said here are my goals for 2016.

  • Professional
    • Land ONE new client.  Sounds crazy I know, but allow me to explain.  Pixegon has been fortunate enough to work with some pretty incredible clients.  Many of these clients trust us to be their primary dev team throughout the year. I intend on finding at least ONE more client like these in 2016 (Referrals welcome 😉 ).
    • Build Something New. As I continue to build a company, it’s often hard to get back to my roots of writing code and actually creating something. I miss this. It provided so much value to me over the course of the years. So, this year, I want build some “side projects”.
    • Hire. I hope to grow the team by at least 20% this year.  (We are always hiring most positions).
  • Personal
    • Be more intentional about EVERYTHING.  I have really been into a few blogs lately (Mr Money Mustache, The Minimalists, 4-Hour Workweek, etc…).  What I have really learned is that I want to be more intentional about everything I do (Family, Time, Money, etc…).  Part of this is removing my dependency on my phone, simplifying my life, and scheduling undivided time for the things that are important.
    • Stop Complaining. I read this incredible book called A Complaint Free World . He talks about the power of Not complaining. This has really resonated with me.
    • Blog Twice Per Month. OK This time I mean it (1 down, 23 to go! )
    • Read 5 books. Arbitrary amount I know, but I need something measurable.

That’s it. Here’s to a healthy and productive 2016!

Feel free to link me to your 2016 goals blog posts in the comments.

Goals For 2016

The Value Of Quality Assurance

It’s late, you have been hacking all night to get the client a build. Finally, around 2:30 am, you hit submit and publish something to the client and go to bed. When you wake up in the morning, the first thing you see in your inbox is an email titled “Completely Broken!!1!”.

How could this be? You stayed up late, you hacked, you tested and you sweat over this build to find that it crashes for the client when they try to do something obvious.

As developers, we often can’t see the forrest through the trees. What this means is, we get so deep into the code working on a new feature or fixes that we often don’t notice when we break things. This doesn’t mean that we are bad developers, it just means we think differently about development. It also means we can’t personally handle everything.

However, from a client’s perspective, failures like this can really tarnish your brand. They start to get the impression that you are unprofessional and even worse, start to doubt your abilities as a developer.

Enter QA

QA (short for quality assurance) is an idea that someone other than the developer tests the build before the client ever sees it. These people are responsible for

  • Regression testing (as in the scenario above)
  • Generating a test plan/matrix
  • Ensuring parity (if needed) between multi-platform applications

If the QA team is doing it’s job, the client won’t every see these obvious failures mentioned above. This can greatly improve the client’s perception of you/your team.

Basic Process

OK, QA sounds great, how do I get started? Well, it’s actually relatively simple. First off, I assume you are doing some flavor of agile, and hopefully logging tickets for each task. If not, you should (even if you are a one man show). Here is a rough flow that my team follows:

  1. Developers determine which tickets to work on for the current sprint
  2. Developers complete a ticket and move it to a “dev complete” column in the task manager (Jira, Trello, Pivotal Tracker, etc…)
  3. Developers deliver a build internally
  4. The QA team takes the build and goes through their testing matrix to check for regressions.
    • If a regression is found, a bug ticket is created for the responsible developer
  5. New features are added to the QA test matrix and tested
    • If the feature has bugs or doesn’t work as intended, the ticket is rejected and pushed back to the developer
  6. Once everything passes, the build is green-lit to be sent to the client (usually one build per sprint)

Like anything, you may develop your own version of the above, however this should be a detailed enough outline to get you started.

Pushback

In my experience, clients will generally give you some pushback when you say that you are billing them for QA hours. They will say things like “It’s OK, I can test the build myself.” or “I understand, things won’t be perfect. We will through this together”.

While this all sounds good at the surface, the fact of the matter is, it almost always will end unfavorable. The client might have some level of tolerance early on, but as you start sending them more and more builds, each potentially missing/breaking features, they will become less patient. I have seen this happen plenty of times even with the most tech savvy of clients. Here are a few ways you can build QA into your billing process:

Add it as a line item

This is where you will most likely see the most opposition. Make sure to explain to the client that their time is valuable and you don’t want to waste it. Also, ensure that the cost of QA is drastically less than the cost of engineering or you will get questions like “Why am I paying you full price to test?”.

Be sure to tell the client that QA is just part of your team’s process. You simply don’t operate any other way as you know that this is the best approach for both parties. Hopefully, this will establish your expertise in the domain and the client will respect you for that.

Bake it into the cost of engineering

Often times, you may not bother with too many line items. You may just have something like Engineering $200/hour. When/If the client gives any pushback about cost compared to other shops, simply inform them of all they are getting inside of that hour (Engineering, Consulting, QA, Project management, Office management, etc…). It actually works out to be a much greater value for them than paying say $125/hour for a “code monkey”.

Final Thoughts

I absolutely believe that QA is crucial to the success of any software agency or freelancer. Not only does it allow you to come across as more professional, it also helps keep you sharp as a developer. While I’m not suggesting QA is a silver bullet (I still believe in Unit / Automated testing), I feel that everyone should at least have some layer baked into their process.

The Value Of Quality Assurance

Ship Products You Are Proud Of

There is a familiar phrase that I hear all too often when a client comes to me with an existing application.  It goes something like this:

“Our team spent quite a bit of money on our application and we don’t want to ship it.  We are not proud of the product.”

It blows my mind that many developers and development teams are still in business given the poor quality of products that I see getting churned out all of the time.

When I encounter these types of situations, I immediately know that the team (or individual) behind them is much more interested in a ‘quick buck’ instead of the longevity of their company.  Poor quality in software is directly related to cutting corners.

A few examples of cut corners:

  1. Using inexperience developers without proper guidance.  I am all for hiring ‘staff’ level developers, however, they must be properly mentored and trained so that there is no compromise on quality.  If you must compromise on something, compromise it on time.
  2. Outsourcing the project without proper guidance.  Although I don’t prefer outsourcing given the communication challenges, I am not opposed to it.  There are plenty of talented individuals all over the world.  However, given the varying degree of abilities and communication issues, one must not rely 100% on an outsourced team to ship a product.
  3. Not following coding standards/guidelines.  This could be things such as: not commenting code, not testing, not leveraging a QA team, or simply writing “smoke an mirror” code.

I can usually identify immediately which of the above applies after spending a few minutes with the code.  In fact, I have built much of my business around saving these types of projects.

So I urge you, although it might cut into my market share, *please *build something you are proud of.  This is not only the right thing to do, it is also **critical **to your future success as an independant software developer.

Ship Products You Are Proud Of

Your App Idea Most Likely Falls Into One Of Three Categories

During my years of mobile development, I have heard the phrase “I have an idea for an app!” hundreds, if not thousands of times.  Sometimes it would be from family members, sometimes my dentist during a cleaning, and sometimes from a naked dude standing in the sauna at the gym.  Everyone pitches app ideas to me.

What I have learned from hearing so many pitches is this: apps really fall into one of three (sometimes four) categories.  Allow me to elaborate.

1. The app has been done before

This is the most common category of app idea I hear.  Usually, these are along the lines of, “It’s like Instagram, but for finger painters…”, etc… where the user takes an already proven idea and tries to tweak it in some way that they feel makes it new.  Most of the time, these people have not even done any research to check as to whether or not a solution already exists.

The biggest hurdle in developing an app that has been done before is visibility; How are they going to get people to find the app and why should they choose it over the competition?

2. The app idea is too niche

Every now and again, I will hear a truly unique idea.  Keep in mind, unique does not necessarily mean good.  For example, I might hear, “I want an app that you can take photo of your cat, put it on a weather balloon, and send the balloon to space.  ‘Catz In Spaze!’”.  While this is unique, and technically feasible, one would be hard-pressed to make a real business out of it as it would be hard to get enough users on board to make it profitable.

3. There is a reason the app does not already exist

“I want an app to map out all of the grocery stores layouts in the world, so husbands can finally shop efficiently!”  This is a great idea.  It really is.  So great, that I have literally heard it no less than ten times from various people over the years.  Often times, I can predict when someone is about to pitch this particular idea, just by the setup: “You know how, like, shopping is hard, and like, you can’t find stuff…”.

There are some real technical hurdles surrounding this problem.  While there are a few apps that have tried to solve it, no app will really accomplish the goal unless they have all of the following: total store participation, a large enough group for crowdsourced data, faster and more reliable GPS to know exactly where you are in the store, stores stop changing layouts, etc… You get the idea.  There are a lot of reasons a solid solution for this does not exist.

There are other countless examples of app ideas falling into this category.  Another fun one I get pitched is a killer app that converts any photo into a (caricature) [http://en.wikipedia.org/wiki/Caricature].  I’m sure someone will link one in the comments, but they are all mediocre at best.

Bonus #4: The app is used to augment their existing business

This is actually my favorite type of app to work with.  The user has an existing business and wants to build something that benefits their business in the mobile space.  I see ideas from evaluation tools for employees to apps that allow users to order products directly from the business.

I like these because the success of the business does not depend entirely on an app.  Also, there is generally an audience built right in at launch time so everyone is happy.

Conclusion

I am not writing this post because I’m jaded and sick of hearing app ideas.  Quite the contrary.  I love hearing app ideas and would love to hear examples challenging the stereotypes that I have created here.

I give this spiel to clients from time to time and wanted a place that I could point them to, so feel free to send your clients to this post the next time you get the grocery store mapper pitch.

 

 

 

 

Your App Idea Most Likely Falls Into One Of Three Categories

Goals For 2015

It cannot be overstated that writing down one’s goals is critical to acheiving them. Pair that with sharing them with others who might help keep you accountable and your probabilty of achieving those goals goes way up.

With this in mind, I have decided to share my 2015 goals here on my blog in hopes that I will do a better job of acheiving them in the new year. I tried to focus on more measurable goals rather than things like “eat better” and “exercise more”.

So, here they are in no particular order.

Professional

  • Create a business plan
  • Grow Pixegon (my mobile consultancy) to 2x 2014 revenue
  • Hire a “director” to help with oversight of current developers
  • Move to a weekly rate instead of hourly

Personal

  • Be consistent with morning routine
    • wake up early, pray, blog, mediate, read Bible, write down MITs,
  • Blog twice a month
  • Grow the blog’s mailing list
  • Take off / reduce workload on Friday’s to spend the day with my family
  • Launch Autumn Village
  • Give away more than 10% of personal income

This list is definitely not complete, however it’s a good start. I hope to refine it over the coming months and more importantly, stick with it.

What are your 2015 goals? I would love to hear about them in the comments or via email.

Goals For 2015

Software Consultant Contracts: Fixed Bid VS Time And Materials

One of the most common questions I get from software consultants is whether or not to accept fixed bid contracts.  In this post, I’m hoping to shed some light on fixed bid vs. time and materials contracts and help you make the best decision for the project at hand.

Let’s start with some definitions to help you better understand what I am talking about.

A fixed bid contract is a contract where the developer and the client agree on a price and/or timeline up front for a particular contract.  If additional time is needed, there must be some sort of change order issued to and signed by the client.

Time and Materials contract is a contract where the developer and the client agree on an hourly rate for the development of a project.  While there should be some initial estimates up front, the developer is not locked into a certain number of total hours/dollars.  If more time is needed than stated in the original estimate, the developer has the freedom to continue as the client’s budget (and patience) permits.

Below, I’ll compare and contrast the pros and cons of both fixed bid and time and materials contracts.  Note, this is just from my experience and your experience might vary.  In fact, if it does, I’d love to hear about it in the comments.

Fixed Bid: Pros

  1. You can potentially make a lot more money.
    If you are a good estimator (or a bad one and the client accepts an overbid), then this is your chance to get paid whatever you want to get paid per hour.  If you bid 100 hours and get it done in 50, you have essentially doubled your rate.
  2. *It’s easier to manage the pipeline.
    *Generally, when you do a fixed bid contract (again assuming you are decent at estimations), fixing a contract allows you to plan out more contracts ahead of time.  Typically the fixed cost comes with a (roughly) fixed timeline.  This allows you to project future availability for yourself to work on other projects.
  3. You know what you are building up front.
    *If you have done your due diligence (gathering requirements, specking things out, etc…) there 
    should* be no surprises.  Everything is already laid out for you and if the client wants to change anything, it will require a change order.
  4. *You are selling value instead of time.
    *This is actually a hot topic lately.  Many will argue never to sell by the hour as so much more goes into your rate than just time (your knowlege, history, expertise, etc…) The client wants to pay your for a solution to their problem and that’s infinitely much more valueable than your time.
  5. *It’s sometimes easier to land contracts.
    *Some clients have a very specific budget.  If you can provide a solution to them inside of their budget, then the contract is yours every time.

Fixed Bid: Cons

  1. You can potentially lose a lot more money.
    There is a joke that goes something like this: There are only 2 hard problems in software development, knowing when to expire a cache and accurately estimating working.  Generally, the overzealous developer will error on the side of too few hours in order to ‘land the contract’ or ‘please the client’.  This usually results in the developer bidding 50 hours and realistically working the 100.
  2. Feature Creep.
    Clients WILL feature creep.  Feel free to tweet that or write it on your forehead.  It’s just a fact of life.  You, being the super nice developer that you are, will want to please the client and will say something like “it’s outside of scope, but I’ll make an exception”.  Before you know it, the app has pivoted and you are building things WAY outside the scope of the initial contract.
  3. Can I…? NO! Well, what about…? NO! Just This… NO, NO, NO!
    With a fixed bid contract, if you are an experienced developer, you will ALWAYS be telling the client NO.  If you are wondering why, see #2.  While feature creep creates a tension, so does not allowing the client to change course, if needed.
  4. *It’s sometimes harder to land contracts
    *If I take a fixed bid contract, I generally error on the side of overbidding.  This allows padding for things like QA, small changes, App Store submission, etc.  Given the high bid, your client might baulk at the contract and attempt to outsource to India himself, where he will eventually spend double.

####

Time And Materials: Pros

  1. *Your work is always compensated
    *Given that you are getting paid per hour, you can always count on a steady stream of revenue coming in.  This is very comforting to developers since you know you will always get paid the rate you want for the work you do.
  2. *Landing contracts can be easier
    *Clients don’t always know what they want up front and the idea of not committing to a certain dollar amount is sometimes comforting. It also gives them MUCH MORE freedom to make changes and pivot down the road.
  3. *It gives clients the freedom to prioritize features
    *This is one of the biggest selling points that clients appreciate when I sell a time and materials contract.  Given that my team follows a version of the agile development methodology, clients love that they have some insight as to how much each feature roughly costs.  They can see the estimates and translate that into cost.  If they feel a less important feature is too costly, they can prioritize the backlog to get more (less complex) features for the same price.
  4. *Less Risk
    *Since you are only selling the client your time, you don’t necessarily owe them anything except work.  Most of the time, time and materials contracts don’t even have an official scope of work attached.

Time And Materials: Cons

  1. *It doesn’t scale
    *You can never make more money than your time will allow. If you charge $100/hour and work 40 hours/week, then you can never make more than $4,000/week unless you work more.
  2. *You are a commodity
    *The client doesn’t so much look at you as someone who is providing them a solution as they do a “resource”.  You are perceived as less valuable and therefore could easily be replaced.
  3. *More Risk
    *I know this type of contract is listed as less of a risk above, but there is also some riskiness to it.  If you get in the weeds on a task or start introducing too many bugs, the client might feel that you are misleading them or incapable of performing and you risk getting released from the project.

Takeaways

While I have only scratched the surface in comparing these two types of contracts, I hope you have a better understanding about which route to pursue for you.  My advice is to not be too rigid stating “I’m only going to use contract type X forever” because each contract situation may vary.  Use your best judgement and make the decision that is best suited for each individual project and client.  At some point in the future, I will post a few tips for making this decision based on some factors, but that is for a later date.

Until then, happy consulting!

P.S. Make sure to sign up for the newsletter below to be notified about awesome posts like this in the future!

Software Consultant Contracts: Fixed Bid VS Time And Materials

Software Development Consulting: Some Tips On Structuring Your Contracts

When I first started out as an independent software developer, one of things that stressed me out the most was how to structure contracts that I sent to clients.  Working for a consultancy in my previous work-life I had seen contracts before, however, I never really paid enough attention to them to know what type of content went into them.

After quite a bit of research, I found an invaluable resource.  Over at techrepublic.com, Chip Camden posted a beautifully crafted consulting contract template.  You can see the post and download the template here.  This post was a lifesaver.

Chip goes over EVERY single section of the contract and gives an explanation of why it’s there.  You can download the template and determine which sections you need for your business, based on his explanations.  It doesn’t get much easier than that.  Of course, I would still strongly suggest you fork over a couple hundred bucks and have a lawyer look over the contract before sending it off to clients.

How To Sign Contracts Online

Once you have your contract in place, you will need a way to get your clients to sign it.  You could go the old-fashioned way of scanning, both parties signing, and scanning again OR you could use an online signature service.  One that I use and highly recommend is RightSignature. I know those guys personally and have had a great experience with the service so far.

Here is my process:

This is what I have found works out well for my business.  #proTip: I have my assistant do this now 😉

  1. Complete the contract blanks in regards to rates or any other information you want the client to see before they sign the contract.
  2. Upload the contract template to Google Drive (optional).  Make sure your company info is completed and all of the other fields (dates, signatures, etc…) are blanked out.
  3. Once inside of your RightSignature account, you can connect to your Google Drive and import the document in.  You can also upload them directly from your computer if you don’t want to use Google Drive.
  4. RightSignature lets you put text fields and date boxes in the blanks and specify who is responsible for filling them out (you or the client).
  5. Finally, add the signature fields at the bottom and send off the document for signing.
  6. Once every party has filled out the needed information, the completed document is then sent to both parties via email.

Other Considerations

Often times, the client will have their own contracts for you to sign.  This isn’t necessarily a bad thing.  However, make sure that you read over it carefully and run it by your lawyer.  Don’t try to force your contract on a client that already has their own.  They will usually not be open to this, in my experience.

Make sure to have an ‘exit clause’ in your contract in case things go sour.  I seldom enter into fixed bid contracts so I usually have a clause where either party can cancel the contract with 7 days written notice.  This also makes the client feel at ease as they are not trapped with you in an event where their situation changes.

Finally, be willing to be flexible.  Sometimes clients might not like certain clauses in your contract.  Be willing to change things like delivery dates, invoice dates, invoice periods, rates, etc… on a client to client basis.  Obviously, use your best judgement here.

Conclusion

I hope that you have found this post useful and it saves you some time hunting down a contract template.  I am always open to suggestions so if you see anything else that works for you, I would love to hear about it via email or in the comments.

Please consider signing up for my email list to get killer posts like this one delivered to your inbox.

*Disclaimer: I am not a lawyer and do not claim to be giving any real legal advice.  I am simply stating how I do things with my business.  Make sure to consult with a lawyer before engaging in any contracts.

Software Development Consulting: Some Tips On Structuring Your Contracts

Being An Indie Software Developer And Signing NDAs

Very frequently, I receive emails that go something like this:

“Hey Brandon, I have a killer project idea. Do you want to work on it?  Please sign the NDA so we can talk.”

Early on when I first started consulting, I would have responded with something like “Sure send it over!” and signed the thing without hesitation.  As of late, I have changed my view on NDAs; at least in this type of situation.

For those that don’t know, an NDA (non disclosure agreement) is a contract that is intended to protect the intellectual property of the client.  They make a lot of sense, especially in the event that the deal goes sour.  Say a client has some great idea for how to better take selfies that is going to revolutionize the selfie game.  If he doesn’t get a developer to sign an NDA, the developer could potentially be free to discuss the idea with others, leaving the idea open to be stolen.

Why I Don’t Sign Preliminary NDAs

In the scenario I mentioned above, it would be very unwise of me to sign this NDA as I don’t have enough information about the product.  This puts me as a consultant at a huge risk.

Say for example I am working on a photo/video sharing app (I get roughly 1 request a week for some spin on Instagram). Now, say the incoming project is some variant on photo sharing. If I sign the NDA, it now now puts me in a conflict of interest with my existing project.

Even if I knew that the project was a photo/video sharing application up front, I still would not sign the NDA.  Much of the time (as mentioned above) clients want very similar applications.  If I went around signing every single NDA that came across our desks, I would be out of business after the first client.

When I Will Sign NDAs

Well, the first thing that I do is ask for clarification on the project and tell them my NDA policy.  I basically tell them that I am happy to sign the NDA if one of the following conditions are met:

  1. There is extremely proprietary information (you can’t land a big enterprise contract without first signing an NDA)
  2. We are ready for project kickoff and all parties are aware of any potential conflicts

In addition to that, if I am currently working on a project that is of similar type, it would be worthwhile to disclose that information to the potential new client (not the proprietary info, just that there is some overlap) so that they can choose whether or not to proceed.  Better to possibly lose the new client than end up in a crazy legal battle.

If the new client refuses to give you any more information, then they are not worth your time.  They will most likely be too challenging to work with down the road anyway.

NDAs Are Not Set In Stone

When you do finally decide to sign the NDA, know that it is not complete until you sign it. If you see something that you don’t like or want to add any additional clauses, feel free to propose those to the client.  Most clients will be very understanding.

That being said, it’s VERY IMPORTANT that you read all the way through an NDA and possibly run it by your lawyer before signing.

Suggestion If You Want Your NDA Signed

If you want a developer to sign your NDA, make sure to give him enough information about your project for him to make an educated decision.  If you just say “I want a photo sharing app” and expect an NDA signed, good luck.  Make sure that they know there is proprietary information involved and that you are doing something different that must be kept private.

An NDA is not required if you want to make say an “Instagram Clone For Puppies” or a “Miley Cyrus Flappy Bird Clone”.  Be sensitive to the uniqueness of your idea and decide if it really warrants an NDA.

Also note that developers are not out to steal your idea.  They get pitched hundreds of ideas and most of the time your idea falls into 3 categories anyway:

  1. It’s not unique
  2. There is a technical challenge and that’s why it hasn’t been done (I get pitched a lot of ‘Map a grocery store so that my list will navigate me around’ ideas)
  3. Your idea is so niche and so unique that the general audience won’t get it and it won’t be profitable anyway

I’m not saying that every idea falls into these categories. But a good majority do. Most of them fall under #1 and that’s not necessarily a bad thing.  Google fell into #1 and look where they are today.  Just keep these things in mind when requiring a signed NDAs before you will give out any info.

Conclusion

There has been quite a bit of discussion lately (especially on Hacker News) about whether or not to sign NDAs.  Most of the recent articles I have read are simply titled “I Will Not Sign Your NDA”.  I feel that NDAs have there place, but you should sign them only with extreme caution.  Examine each NDA on a case by case basis and determine how it will affect your business in the long run.

*Disclaimer: I am not a lawyer and do not claim to be giving any real legal advice.  I am simply stating how I do things.  Make sure to consult with a lawyer before engaging in any contracts.

Being An Indie Software Developer And Signing NDAs