As I transition from full time employment to being fully self-employed (starting in September), I’ve had the wonderful opportunity to talk with a number of potential clients from all industries, with all types of past experiences and varied budgets. In the last month alone, I’ve talked with over 20 different companies. During these talks I’ve learned one major thing that surprised me. I suppose because I’ve been working for individual companies for so long I didn’t realize there were so many misconceptions about developers, web development, and productivity out there in the business world.

I’m only going to discuss one misconception in this post, if you want to hear more about the many issues of web development and putting a team together, come to the open Tampa Bay WaVE meeting on 9/20 – cohosted by TBTF’s Emerging Companies Network where I’ll be on a panel discussing how to avoid pitfalls in website development.

The most major disturbing trend I’ve observed is the sole reliance on hourly rate to determine overall project cost. In other words, a developer who charges $45/hour is far cheaper than one that charges $75 hour. Make sense right? If you paid for 10 hours of work, it costs you $750 vs $450. But if you calculate development costs that way you are leaving out the #1 most important factor in development: time.

It takes time to code anything, but if you think rates among developers have a wide varied range, you may have no idea just how wide the range is in productivity. It can be so extreme as to be almost unbelievable. There have been numerous studies over the years demonstrating this to be as much as 10:1 or even 100:1. In my 15 years in IT, I’ve observed this range in productivity to be extremely common. I’ve had many managers who actually double and triple development estimates depending on which of their developers they plan to assign the task to. It’s really not unlike typing. If you wanted to pay someone for data entry and paid for the hour, wouldn’t someone who types 120 words a minute be cheaper in the long run to hire than someone who types 30 WPM, even at 2 or 3x the rate?

“A great lathe operator commands several times the wage of an average lathe operator, but a great writer of software code is worth 10,000 times the price of an average software writer.” –Bill Gates

Consider then, that if you decided to hire the $45/hour developer and it takes them 40 hours to complete a task. The project took longer than you’d hoped, the software isn’t quite as fast as you would like, but its completed and you are quite pleased that it only cost $1,800. But what if you had hired a more experienced developer, one who is more a ‘Software Engineer’ than a programmer, and that person had completed the same project in 10 hours? At $75/hr (which is still a steal), your total cost would have been $750, and most likely perform better, be more stable, and be better able to be expanded and supported in the future. Or even if it had taken 20 hours, the total cost is still only $1,500 for very likely a better result.

If you aren’t convinced this issue exists, ask around. Talk to CEOs and Founders of startups and ask them for their early experiences of hiring developers and just how well it went for them. I’ve heard horror story upon horror story, and a good percentage of my projects over the last year have been to fix poorly written code written by teams that were hired on the cheap.

Sometimes the code is poorly written because those hired are unethical or believe themselves to be far better than they really are. Other times, its not that the person you hired is a bad person, its just that they haven’t yet put in the time on numerous projects in a wide ranging set of challenges to have gained the experience necessary to increase one’s productivity and quality. I’m not attempting to disparage any of them. Everyone must start somewhere, and everyone has or will. I’m speaking to owners, CTO, founders, and anyone in the position of deciding what rates to pay and what developers to hire to make them aware of the other side of the cost equation.

It’s a simple plan of action to help ensure you don’t pay more in the long run. When you ask for an hourly rate, recognize that you have only asked for half of the information needed to determine cost. You cannot decide to hire one person over another based on the rate. Make sure all your inquiries include both hourly rate and hours estimated. It’s the total project cost you have to calculate. And even with that, this simple calculation leaves out future costs of maintenance, likely hood of needing to hire someone more experienced in short notice to assist the cheaper developers when they are faced with an issue they can’t resolve, etc. I’ve heard so many stores in just the last month of estimates provided by the cheaper developers that in the end resulted in 3 – 4x the hours they originally estimated…and paid for.

I love seeing products come to completion. I love seeing a Founder’s vision realized. I know from experience its very exhilarating to see an idea from your head actually result in a finished working product. Equally, its so disheartening to hear of startups and companies unable to get their product to launch because of poor hirings, particularly when so many of them seem to have been entirely based on finding a low rate.

Here are a few questions to ask before hiring a contractor/freelancer to work on your project…in addition of course to asking for both an hourly rate AND an hourly estimate:

• How many projects of this size have you provided estimates for in the past? Can you provide contacts and recommendations from clients about those past sizings?
• What are you basing your sizings upon? What past projects provided similar functionality to my project?
• How many projects of this size have you completed in the past? Can you provide contacts and recommendations from those clients?
• How and when will you communicate to me if the time you originally estimated isn’t enough? How soon will I know?
• If the deadline is approaching and it doesn’t look like it will be reached, what is your strategy for increasing productivity and still meeting that deadline?

Nothing can ensure a perfect development process and no set of questions or advice will completely prevent hiring the wrong person or spending too much. But the more you know the better the decision you can make. So please, never let me again here the one and only question: ‘What’s your hourly rate?’ Ask for the rate, that’s fine, but follow up with some sample projects and ask how long they took. You might be quite surprised how fast some developers can complete projects.

Do you have any development horror stories and/or suggestions for dealing with these situations? Leave your thoughts in the comments below.

I finally had a chance to finish up reading the Delivering Happiness book I’ve been reading and writing about for the last few weeks. In all, I do recommend the book both to startups, and to those running a larger company. The book is almost two books in one. The first half, as I covered in my posts, Discovering Happiness and Now This is Real Passion, are about Tony’s early startup experience and the path he was on that led to his personal discovery of what his passions really were. This was the part of the book that I enjoyed the most as it focuses on my situation and on one of my favorite areas of interest: internal motivation and discovering one’s passions.

The second part of the book deals with the management of Zappos, as Tony transitioned into running and growing a company. Here, he discusses how he built the now famous Zappos culture. He discusses this in detail, including many internal memos and company letters, and even including 24 pages of the company’s Core Values Document. I touched on this in my previous post The Zappos Culture Book. This is all very interesting, but since I’m more involved in the early startup days, it’s a bit beyond where I need to be. It was still helpful and I identified with many of the core values, and felt like I would be comfortable adopting the entire thing, as-is, for my own company, though with some personal changes here and there.

I do think that overall, the book could have been better with an editor reviewing and chopping out maybe 25%. For that reason I gave it 4/5 stars, compared with 5/5 for both Rework and Gary Vaynerchuk’s Crush It. If you remember, with Rework, between the next-to-last and final draft they cut the book in half, down to 27,000 words from 57,000. Delivering Happiness would have been better a bit shorter and more focused.

In this second part of the book, spanning sections 2 and 3, you will learn what it is that Tony believes are the only competitive advantages they have, “everything else can be copied”. You’ll read examples of how the company stood behind its culture and core values and how they developed what those would even be. Tony will discuss the number one driver of growth: customer service and word of mouth, and how that is more than a marketing scheme, but a way of life for the entire team at Zappos. Tony also discusses the importance and value they place on their call center, and how differently they handle that than most other companies, and how other companies can instill excellent customer service at their companies.

As I mentioned earlier you’ll be able to read the entire Core Values Document of the company with helpful example stories where they put it in practice and how it effected the people and the company. Tony will discuss his experience with beginning to speak publicly and how he changed his approach on how to prepare for speaking and how freeing the new approach was. He concludes with a discussion on the science and study of what happiness means and the frameworks of happiness.

I would summarize the entire book into one main theme: Do what you are passionate about, embrace your passions, and share them with others, focusing, in all you do, to make others happy in every opportunity, using all your skills, experiences and passions.

Remember to post a comment on any of my Zappos posts to be entered to win a free copy of the book. I’ll name the winner on Monday. You could share an idea, ask a question, share a related quote or experience as well.

Update:I’ll be shipping a copy of Delivering Happiness to the winner of the free book, Amber Weinberg. Thanks for reading Amber!

Life isn’t about finding yourself. Life is about creating yourself. ~ George Bernard Shaw

It is amazing what you can accomplish if you do not care who gets the credit. ~ H.S. Truman

We either make ourselves miserable or we make ourselves strong. The amount of work is the same. ~ Carlos Castaneda

What lies behind us and what lies before us are tiny matters compared to what lies within us.~ Ralph Waldo Emerson

As I continue to read through the Delivering Happiness book from Zappos CEO Tony Hsieh, I’ve come to the introduction and discussion of the Zappos Culture Book. If you are a fan of Zappos you have probably already heard about this famous book. The idea for it came when Tony and others at the company wanted to improve the chances that any new employees hired would fit in with the company culture. To Tony, company culture at this point had become the number one focus of the company. They not only wanted to be sure new employees fit in at work, but also that they were a fit personally with everyone. They wanted a manual to hand out that discussed the company culture, and then decided the best way to do that was to ask the current employees to write it themselves.

They invited all employees to submit 100 to 500 words describing what the Zappos culture means to them. They committed to using everyone’s contribution, unedited, even if it was a complaint. Management learned a lot from the book, and it is now published yearly and made available not only to prospective employees, but also to vendors, and even customers. In fact you can request a free copy of it, as I did over the weekend, by sending an email to ceo@zappos.com.

This middle section of the book, ‘Profits and Passion’, goes into a lot of detail on what that culture was, how they established it and why. Tony believes that in the end, the only competitive edge Zappos has over anyone is: Brand, Culture, and Pipeline. Everything else can be copied. The section goes on to give some great tips on creating culture in your company.

Don’t forget to leave a comment on this post or either of the other two Delivering Happiness posts (Discovering Happiness or Now This is Real Passion) in order to have a chance to win a free copy of the book.

In my previous post I wrote about the first section of Tony Hsieh’s book where Tony discusses discovering his true happiness and passions. I began the second section today, and while I haven’t finished it yet, I had to write about the period during which Zappos was struggling to make any profit. They had sales, they had employees, offices, a warehouse, and a real growing business model, but they still weren’t making any profit.

Tony was only working for $25/year full time at Zappos. He had invested millions from the investment fund, Venture Frogs, that he’d started, to the point that there was no money left. He then began to invest money from his own personal funds but that began to run out. They had to layoff some employees and significantly cut the salaries of the others, but in order to make that work and still keep the employees, Tony put them up in his own loft without charging rent. He also began selling off the property he had purchased as an investment in order to put that money into Zappos and keep it going. He even listed his favorite loft at less than market value, and then dropped it by 40% in order to quickly turn it around, get the cash and keep Zappos going.

VC’s said it was a bad investment; naysayers said people won’t buy shoes online. The business plan, should someone have ever bothered to put one together, would not have indicated any of this was a good decision. But Tony believed in the idea, he believed in the team, and he believed in himself and he was willing to risk everything for his passion of building something. In the end, he decided to liquidate everything he had and have a “fire sale” in order to raise the final round of money to keep hope alive.

We all know how it worked out in the end, though I can’t wait to read more and learn how. This book will teach you lessons in commitment and following your dreams, as well as motivate you, so I highly recommend it…again. And don’t forget, leave a comment on this post or the last one, or the next one, for an opportunity to win your own copy.

Due to my schedule in May, I didn’t get a chance to starting reading the Zappos CEO, Tony Hsieh’s new book, Delivering Happiness until just yesterday. The book is broken up into three sections, which Tony has labeled:

1. Profits
2. Profits and Passion
3. Profits, Passion and Purpose

I completed the first section this morning and rather than wait until I finish the book later this week, I thought I’d begin today with my first impressions of this beginning section. The book is so full of things to talk about, that discussing them all in one blog post would be impossible anyway. So, I’m going to write a few posts throughout week to discuss more of the book and hopefully hear from you with your opinions on the subjects discussed here.

I’ve been a fan of Zappos since September of 2009, when I made my first order and had to exchange it. I wonder if I had become such a fan if I’d chosen the proper shoe size the first time through, because, though I was impressed with the mind-boggling shipping turn around it was really the customer service I received when exchanging the shoes that converted me to a life long member of the Zappos movement. I know it was only shoes I was buying, and yet the way I was taken care of, caused me to see the company as more than just a business. I won’t review that experience again, since I wrote about it here, but I will say that it was that experience and being contacted by Tony himself on Twitter due to my review, that my interest in Zappos and Tony himself began. I started paying attention to what Tony was saying on blogs, and at his speaking engagements. All that led to my interest in reading his book, and looking back, I’m so very happy that I ordered that first wrong size.

As I said above, Tony split the book into three sections. Having only read the first at this point, I can’t comment on the direction he takes in the other two sections, but for me, after reading the first, I have the impression that the title of the first section really should be, ‘Discovering Happiness’, because that is the focus of the first segment of his life’s experiences and it really builds toward his ability to ‘deliver happiness’ through his work at Zappos. Tony begins with his childhood entrepreneurial endeavors, which sounded so much like my life that I made an immediate connection with him. As he experiments with various jobs, including programming, and various opportunities, he discovers that his passion really lies in building things. Again, I could relate to this so well, as I’m sure many of you will, and often reading about a successful entrepreneur who goes through the same challenges and discoveries that you have, can really help you see your own life from a different perspective, and also helps you connect with his wisdom and experience better and apply that to your own situation.

Here are a few ideas and quotes that stood out to me from this first section. I’ll be giving away a free copy of the book at the end of the week to someone who has commented on one of my book related posts. So if any of these ideas and quotes stir your thinking, leave a thought in the comments below and you’ll be entered to win a free copy of the book.

• As I said, Tony spends the first part of the book chronicling his entrepreneur adventures as a child, from worm farms, to selling greeting cards, to button making. It shows his entrepreneur leanings as a kid. I doubt there are too many real entrepreneurs that don’t have a similar story. Those that don’t may be more of a small business owner, and less of a serial entrepreneur. There is a difference, and it’s an important difference to understand and be able to identify in yourself.
• In high school he tried to find creative ways around actually doing any hard work. He did the same while attending Harvard. (if that’s not an attribute of a true entrepreneur, I don’t know what is!)
• He said, “School-related activities aside, my biggest focus during high school was trying to figure out how I could make more money.”
• Discovered the power of crowdsourcing while attending Harvard and collecting and reselling study notes for college classes.
• Held various programming jobs, including working for Microsoft before graduating and going to work for Oracle.
• Tried doing freelance work for clients building web sites, but found out how unsatisfying that can be.
• Created LinkExchange and sold it for $265 million to Microsoft
• Burned out at LinkExchange because he still hadn’t identified what it was that truly made him happy
• Finally realized it was, “building stuff and being creative and inventive” that made him happy, along with, “Connecting with a friend and talking through the entire night until the sun rose”. (This is so true in my own life, but love the way he states it and enjoyed watching him come to this realization, which is worth price of the book alone).
• Started an investment firm
• Discovered poker and realized the similarities between poker and business strategy. This part you can read online at the Delivering Happiness web site. Very interesting correlations, and once again, I could relate to it because I enjoy poker for the same reasons.
• From what he learned from poker he said, “one of the most important decisions for an entrepreneur or a CEO to make is what business to be in.” He goes on to say that it doesn’t matter how great your product is (in other words how great a poker player you are), if you choose the wrong market (ie. the wrong poker table), you’ll lose anyway.
• “Without conscious and deliberate effort, inertia always wins.”
• Discusses how Zappos got started, what his involvement was initially and how it changed to what it is now.

In all, though this first part is technically not yet about how Zappos became successful, it’s easy to see how Tony’s view points developed and what led him to lead Zappos in the way that he has, which led to the environment that formed the basis for all the success we see coming from the company.

I’m looking forward to reading the rest and sharing my observations and reading yours.