My Humble Beginnings
Today I’d like to share with you a story from my private life.
I had a rough childhood, and the day I graduated, my folks already had me set up with SSI, Food Stamps, and Medicaid. (Government welfare programs) They also purchased a condo to rent to me. (Talk about growing your own business! :D)
Well, I moved out / was forced out, right after I graduated, and lived on roughly $675 per month from the government. My food was limited to $200 per month, and my medical expenses were paid for.
At the time, in 2003, my rent was $500, which left me with $175 for the month to pay the $40 per month electric bill, $10 dial up internet bill, and various other bills. In the end, I had roughly $20 – $50 to my name. As the years went on, my SSI income only ever reached $720 per month.
Then it all changed!
After well over a decade of that, in late 2015 I posted an answer on Quora. Someone had asked, “Are software engineers rich?”
When I posted my answer, I was just answering a question for the fun of it, and I never thought anything of it. However, it zoomed up to be a very popular answer, and gathered attention from people with good hearts who started hiring me on my Upwork profile. At that moment my life changed for the better, and things started to be alright.
I was so conditioned to believe that I’d have to continue struggling financially, as all of my businesses were failing. Why? That’s because I only ever focused on building the software for them and never tried to market them. (After all, how could I market them on only $20 per month?)
It’s then that I learned that to make progress in business, I had to take on a job of some kind. Work as a contractor, I had assumed, required marketing, but in fact it didn’t need anything more than that Quora post to kick off my career in something I enjoy.
In time I was evangelizing Upwork, and even raving that I made $30,000 per year. For all intents and purposes I thought I was rich! I was making at most $720 * 12 = $8,640 per year, and now I made over 3x that amount. Little did I know I was still considered fairly indigent.
My First Car (Age 33!) and Massively Successful Business
In the Spring of 2016 I bought my first car, a beat-up 2000 Mazda Protege for $1,000 out the door. I spent another $1,000 right away, to have a mechanic fix it up. Not bad for someone who originally had $20 * 12 = $240 in spending cash EACH YEAR.
By the end of 2016 I was living well and enjoying life finally. The bills started increasing, but that’s to be expected when trying to enjoy life. I started Excited Dragon as a web development agency at the end of 2016, and recruited some engineers to our cause. Excited Dragon sought to fix the issues the web development industry faces. (Ex. Uncommunicative contractors who charge $10 per hour and spend years sucking clients dry for thousands of dollars with nothing to show for it!) FYI, Dragon Cloud later acquired Excited Dragon.
We only accepted the top 5% of engineers, and paid them appropriately. How did we manage to do that as a startup while my own personal income was only $30k per year? Charge the client enough to cover the contractor’s pay. (They work 10 hours for the client, and the client pays for 10 hours of work.)
We played with the numbers a bit, and found that clients are willing to pay $100 per hour on average for our services, and contractors are willing to accept $50 per hour as payment. That left us with $50 per hour the contractor works, in order to cover other expenses. (Upwork connects to put in proposals, hiring a Business Manager to place those proposals and run the show for $15 per hour anyone in the company works, bills, etc.)
A word of caution…
The only thing we had to be careful of is the fact that they’re contractors, not employees. That means we cannot legally control the way they work, the times of day they work, or even their number of minimum hours each week. However, just like when hiring contractors to work on any other project, as an employer, we have the ability to ensure we hire quality engineers. So, to do that, we perform coding interviews.
Contractors in turn provide a couple advantages for us. They pay their own taxes, not us. They only get paid when we get paid instead of having to guarantee a stable paycheck. That allows the business to stay afloat even in our time of need. (Barring bad marketing of course…)
The Dream Deal
- Client pays $100 for an hour of work.
- Upwork takes their commision for procuring the contract.
- Contractor gets paid $50 (less fees)
- Business Manager gets paid $15 (less fees)
- Company keeps $35 (less fees)
- Company pays bills and employee wages for any employees
Now let’s look at that for a moment. The company makes approximately $35 per hour that anyone works, and on average we have contractors working 5 hours per week. We have a deal with a professional recruiter who finds us new engineers at no cost because we give her free web development services instead. So, we can get as many contractors as we need. (The coding interview is handled by the Business Manager / Hiring Manager as part of his job duties.)
That means we can now make as much as we want as long as we have enough clients to need us to solve their problems. So, if we have 10 people working 5 hours each for a total of 50 hours per week, then multiply that by $35 of company profits, we’ll make $35 * 50 hours = $1,750 per week. Not a bad deal! (Keep in mind it’s still gross profits, so we have bills and taxes to pay on that.)
When business was low, I took on projects personally so my time was used in exchange for an extra $50 per hour.
You can overcome any issue.
The reason I’m telling you all of this, is because I want you to realize that even when you think times are desperate in your own company, you need only manufacture your own way out. Learn to architect deals that make everyone, including you, more profitable, and you’ll never be for want.
Oh, and what happened to my beat up 2000 Mazda Protege? The government failed to plow the highway, and my friend and I slid off the freeway going 40 miles per hour. We tumbled down and the car had to “rust in pieces” at a junkyard. The very next month I bought myself a 2007 Hyundai Santa Fe on my first-ever car loan for only $4,000. I negotiated to get a better deal, too! It goes to show you that you can find money anywhere as long as you know how to architect a good deal.
Speaking of good deals, I’ve seen some shit. rickmacgillis.com was wasting away as a useless dump of places where I’d post the occasional article over the years. So, with profits down in Dragon Cloud because of the holiday season, I decided to relaunch it for coaching so people don’t have to deal with the same problems I went through in various businesses. I make money, Dragon Cloud Makes money, and most importantly, our clients make more money than they pay us because they follow our advice.
So, in your hour of need, don’t be afraid to architect your dream deals, or even throw away bad leads. Your company will grow as long as you put forth the effort.