Hourly billing is nuts! - Business Coach Jonathan Stark
This episode is kindly supported by With Jack!
With Jack help keep you in business by supporting you financially or legally if you have problems with a client.
Get the freelance insurance you deserve.
Visit withjack.co.uk and be a confident freelancer.
Hourly billing is nuts! - Business Coach Jonathan Stark
For Jonathan, who was a software developer before he became a business coach, freelance life began after an epiphany. While working with a team as an employee, Jonathan realised that many of the problems they faced were caused by hourly billing.
And so Jonathan started his own software consultancy with fixed prices based on value rather than time.
Today, after a successful career in the tech industry that saw him flying all over the world to give talks and consult with businesses, Jonathan’s teaching independent professionals how to stop exchanging their time for money.
Pricing based on value rather than time
Jonathan used to approach his sales interviews with a goal of discovering the scope of a project. How much work is involved here? How much time will this take?
He would then produce a quote based on his best estimate and then spend the entire duration of a project trying to deliver without going over budget (and, inevitably, disappointing the client).
Now he does it the opposite way.
In his sales conversations, Jonathan asks a series of questions that fall into three different categories:
Why would you do this?
Why do you want to do it now?
Why would you hire someone expensive like me to do it?
Jonathan explains that he is almost trying to talk the client out of the project. His aim is to raise every possible objection that they would have to a proposal.
“I act like a doctor. I want to know that the solution they've prescribed for themselves is actually going to help the business. First, do no harm.”
Next, when he presents back to them, he has all the information he needs to create a proposal that ticks every box.
He sets out what their current situation is, where they’d like to be in the future and what they believe his contribution to that transformation will be. He includes three different options (based on price) for how they could move forward.
“It's impossible to scope well first without getting paid to do it, so I scope last. I estimate the value to the business of the transformation that they want, come up with three prices that are a fraction of that number, and then come up with a scope.”
Finding freelance clients
When he was offering only services and working on client projects, Jonathan says his entire approach to growth was to find bigger companies that had more expensive problems.
“The way that you grow in a value-based system is by finding bigger problems that you can solve or bigger transformations. Bigger opportunities that you can contribute to, and then your contribution is automatically going to be valued more highly even if it doesn't take you any longer.”
To attract clients, Jonathan wrote books and spoke at conferences, once landing a six-figure deal over drinks at the bar right after he came off stage.
“If you want to be a solo person who's recognised for your expertise, you basically need to become famous. At least in the world that is going to care about your kind of expertise.”
If you want to sell yourself as an expert, Jonathan says, you have to write and speak.
“The speaking could be on stage or meetups, it could be podcasting, it could be a vlog on YouTube. The writing could be a mailing list or a blog or a book or a regular column in a publication. Pick whatever medium is right for you.
“If you just keep putting yourself out there, you keep writing, you keep at it, you're passionate about the subject, and you're not afraid to speak and write, good luck is probably going to find you.”
Changing what you’re known for
As he was about to start work on his fourth book, Jonathan realised he wasn’t excited by the subject matter any more. He pulled out of the deal, sent the publisher their money back and recommended another author.
Jonathan stopped writing and flying all over the world to speak. And then he stopped getting leads. He had clients on retainer but nothing new was coming in. And he found that he didn’t really want anything new to come in.
It was time for a change.
Throughout his time running his business, Jonathan had blogged about the way he ran it. He spoke about value-based pricing, which no one else in his industry was doing at the time, and that attracted a lot of attention.
In the summer of 2016, Jonathan released a book called Hourly Billing is Nuts.
And from there, he launched his new coaching business.
“I started a daily email list when that book launched and I just went hard on that. I went through a transitional period, probably about three years, of ramping down the mobile consulting business and ramping up the business coaching.”
As well as his daily newsletter on pricing, Jonathan also runs two podcasts. The first is a solo project, Ditching Hourly, where he muses on value-based pricing, and the second is a co-hosted show titled The Business of Authority, for “independent professionals who want to go from six-figures to seven while increasing their impact on the world.”
Jonathan says he’s slowly morphing into more of a product business now, selling seminars, self-published books or courses alongside his high-end £10k coaching programme.
And the one thing Jonathan would tell his younger self about being freelance?
“When you go out on your own, you’ve started a business. You’re no longer a designer or a software developer or a copywriter, you are now a business owner. And business owners have to do certain things, like marketing, if they want the business to stay alive. If you aren’t doing marketing — and innovation — you are not running a business that’s going to be successful. ”
To listen to Jonathan’s episode in full, start the episode in the player above or find it on your favourite podcast app.
MORE FROM JONATHAN STARK
Jonathan’s book - Hourly Billing is Nuts
Jonathan’s book - The Freelancer’s Roadmap
Jonathan’s podcast - Ditch Hourly
Jonathan’s podcast - Business of Authority
MORE FROM STEVE FOLLAND
OTHER USEFUL LINKS
Join us in the Being Freelance community
A place for freelancers from around the world to come together, chat, have fun and - importantly - support each other.
podcast transcript
Transcript of the Being Freelance podcast with Steve Folland and x Jonathan Stark
Steve Folland: I say how about we get started hearing how you got started?
Jonathan Stark: Hmm, okay. I'll try and keep it short, I'm old. I went to music school and wasn't making ends meet with that so I started doing, I guess you'd call it freelance through an agency. I started doing graphic design for a Fortune 50 company near where I live and did that for a while. They eventually hired me as a full-time employee. So I really only did that for about a year, I think. So it was freelance through an agency like Robert Half type of place. And that was fine, it was better money than playing guitar on the street, that's for sure. And then through that job, I really got back into computers. I had done computers as a little kid in the '80s, my dad had one of the original IBM PCs, didn't have a hard driver or anything and I learned basic. And I had always loved that, but I got away from it when I was doing music. And then I got bit by the bug again, this would have been in the late around 98, 99.
Jonathan Stark: So after a couple of years at that Fortune 50, I became to be dissatisfied for various reasons, money and so on and so forth. So I started looking around and I got a job with a fairly well known firm in a niche space doing FileMaker development in Atlanta, Georgia. And worked my way up there and eventually became the vice president reporting to the owner and was managing a bunch of other FileMaker developers. So I was doing things like telling them to get their hours in and making hourly estimates for project work and fighting with clients about how many hours we built last week and sending out invoices with hours, hours, hours.
Jonathan Stark: So I eventually had an epiphany that hourly billing was causing lots of problems for us, and it actually created a perverse incentive. And once I recognized that, I decided to leave and start my own shop doing software consulting on a different basis. Instead of billing by the hour or trading time for money, I gave fixed prices. Instead of billing for my time, I gave fixed prices for my work based on value, instead of on how many hours I thought it was going to take me to do the work. So hopefully that wasn't too long of a story.
Steve Folland: So when was that you broke out as a software consultant on your own? Jonathan Stark: I went solo in 2006.
Steve Folland: And how did you go about finding your first clients once you were that solo consultant?
Jonathan Stark: I think the very first ones came with me from the firm that I had been at, which was an arrangement that we all made. I didn't poach them or anything, we did like a rev share thing. So I think those were my first. First couple of clients had met me through that job when I worked at the firm.
Steve Folland: How did you broach that though? You say a revenue share, so was it look, these guys are going to come to me anyway, I'd like us to be on good grounds? Because that sounds like a tricky conversation.
Jonathan Stark: Yeah. I was really close with the owner. We're still close, it's like 20 years or 15 years later, so it wasn't a big deal. And the clients only knew me, so it would have been weird to try and hand them off and all of that stuff. So I was like, "Hey, how about if I do a solo, I give you half the money, and take the client with me?" And he was like, "Sure."
Steve Folland: Wow. Here's the good bosses.
Jonathan Stark: Yes. He's an amazing boss.
Steve Folland: Suddenly you're your own boss but you've got a different take on how to bill, how did that go?
Jonathan Stark: It went amazing, the first year I basically doubled my income. And that's not really apples to apples because I had a salary and then I was taking in revenue and I would pay myself. But it was a lot more money than I was making as an employee, right about double. But the other thing, the most important thing was the quality of life was dramatically different. So when I was billing, I was constantly thinking about hours, I was constantly trying to log in things, and justifying things, and trying to keep track of things, administrative stuff, and arguing about why did this take so long this time and last time it took half as long? And it was just super tedious.
Jonathan Stark: And the thing that really, really bugged me about it was at the beginning of a large project, you'd meet with a client and you'd ask him as much stuff as he could about how much scope you thought was going to be involved with building the thing because the project would be like six months, usually longer and it was basically impossible. So you're taking an educated guess at how many hours it's going to be and then you give them an estimate for say $50,000 let's just say. And then when you get into it, you realize it's way more complicated than that and it's going to take longer. They start to get pretty antsy when they've given you $50,000 and they can see that they're not done or even close to it. And something about it really bothered me because I'll continue to keep making money unless they get so frustrated that they kicked me out and say this is ridiculous, it seems like we're never going to be done, and we've spent $75,000 now and we've got nothing to show for it.
Jonathan Stark: That happened too many times. It just seemed like there was no good way to do a big software project hourly and have high customer satisfaction. It was extremely rare to hit the estimates. And maybe we were just terrible as to talk to enough people to know that it's really hard to estimate a big software project based on hours. So what changed after I stopped billing and started pricing, it just changed the whole relationship with the client because all of a sudden they were calm, all of a sudden they weren't going to lose any money. Maybe the project would take than they expected, but clients usually, unless there's some real reason for a deadline, they don't really care that much if you take longer than you expect as long as they're not paying you more.
Jonathan Stark: A lot of freelancers will think that clients are super concerned about deadlines and deadlines and they really want to stay at this deadline. It's like, no, they want you to hit the budget usually, it's usually not the deadline. It's usually more about the budget, but to them it's one and the same because they're used to billing by the hour so they think, oh, well we've only got enough money to do this for three months, if you're not done in three months then it's going to be a problem. But occasionally there's like, oh, this needs to be done before the Olympics or something and there's an actual hard deadline. But usually that's not the case, usually if a client is creating what you perceive to be basically a made up deadline, it's because they're trying to keep you on budget. And when you take that away, when you take away that fear that they have, which is a rational fear of just having this endless expense going out the window, when you take that away, they become super calm.
Jonathan Stark: And it's on me or you, if you're doing it, to get the job done as quickly as possible at a real high level of quality so that you can stop. So the faster you finish, the better it is for you. Which aligns the financial incentives between you and the client because the faster you finish it for them, the better it is for them. They don't want it to take a long time, most of them wish they could just snap their fingers and have it done in one day, so why should you only get paid for eight hours if you have this magic wand?
Steve Folland: So how did you go about pricing though? So for example, you say you were estimating 50,000 pounds, ends up taking 75 and that was based on hours, how would you then, as you created your own consultancy, how were you doing it differently where you knew to charge 75,000 or 100,000 or whatever that wasn't based on hours? Because surely somewhere along the line, you must have been thinking how much time is this going to take me or you're not at all?
Jonathan Stark: I don't anymore. At the time, it took me probably maybe six months to a year to start to get really comfortable with it. And even then bad habits would creep in in some sales interviews that I would do. But I feel like I've got it pretty nailed at this point. So I guess I'll just give you final solution, which is that you... Here's the way it used to work for me when I was going to bill by the hour. You go into a sales interview with somebody they said, "Hey, let's talk about this project that we've got." So I'd go into this meeting, usually on the phone but it could have been in person, and the whole time in that meeting, my purpose for being there is because in the next day or two I'm going to have to put together an estimate of how much time it's going to take me to do this. So in the meeting, I spend the entire time, or we used to, spend the entire time asking the wrong kinds of questions, just the wrong category of questions.
Jonathan Stark: I would spend the entire time asking scope questions. How many tables need to be in the database? How many business objects are of concern to you? Can an invoice item ever be spread across more than one invoice? How much business logic do you have around employee permissions? All of these scope, scope, scope, scope, scope, things. And they're happy to give those answers if they have them. And then I would go and write a proposal based on hours that would almost without fail, not have things listed in the scope that ultimately it became clear we had to build and that's where the scope creep would come from, and that's where the budget overages would come from.
Jonathan Stark: So now when I'm going to do a project proposal, I do it the exact opposite way. So instead of coming up with how many hours do I think it's going to take me to work and then I come up with an estimate, which isn't even a price if we're being honest, and then try and do the work fast enough to satisfy the client and not go over budget, I flip it upside down. And this is going to sound really weird so dear listener, let this sink in for a second before you rejected out of hand. Now in a sales interview, they're going to tell me a bunch of things. Oh, you're a mobile web developer, what sorts of stuff, these are the things that we think we want you to do. And I'll take notes and everything and we'll do that for maybe 15 minutes when they're brain dumping all of the things they think they know about the project that relate to what I do.
Jonathan Stark: And then I would say, okay, this is great, I've got all these notes, this all seems reasonable, but let's back up for a second because I could build this 100 different ways. There's so many different ways to skin the cat, can you help me understand the larger business context that this is going to exist within? And they say, okay. Good clients will be open to that kind of a conversation. Clients who just want to tell you what to do are going to react negatively to that, which is a great way to root out bad clients. So they'll say, yeah that would be great, so let's talk about that. And I'd say, okay. And then I'd go through this list of what I call the why conversation.
Jonathan Stark: It's a series of questions that fall into three different categories of why would you do this? Why do you want to do it now? And why would you hire someone expensive like me to do it? And you know, I've got, maybe you could probably got six different styles of questions underneath each one of those three things. And I basically try and talk them out of the project, talk them out of hiring me, talk them out of doing it so that I raise every possible objection that they would have to a proposal. So if we're sitting there and I say why do this? What's wrong? I know you just told me all of these things that you want, but why do you want them? What's the motivation? What changed? Is something broken? Are your numbers down? Is there a new strategy from the board of directors for this year that we need to implement? What's the reason?
Jonathan Stark: Because I act like a doctor, I want to know that the solution that they've prescribed for themselves is actually going to help the business, first do no harm. Like a patient doesn't run into a doctor's office and say, doc, I need a triple bypass and the doctor says, sure, let me go get my scalpel, jump up on the table and take off your shirt. It's like, no, it might be that you just have heartburn and you don't need a triple bypass, so they just give you some pills. So I want to make sure that the self diagnosis that the client has done, I want to make sure first validate that I have some confidence that they've picked the right medicine because a lot of times if they're not experts at what you do, they might pick the wrong thing. So I just validate first that this is a good idea and I'll take...
Jonathan Stark: And when they tell me why it's a good idea and also just other things like, why not do something different? Why not do it differently? Why not handle this with hiring instead of building software? Why not just hire more people to type in your invoices? And they'll give me all the reasons and I'll write them down as verbatim as possible as I'm taking notes, then move into the why do this now? What changed? Why not study this for six months? Maybe now's not the right time. Are you sure you have the money for this right now? Are you sure that your employees have time to do this right now? And I want to get confidence that the project is really urgent. The more urgent, the better because if it's not that urgent, then it's going to be a long sales cycle and the value is going to be lower, it's not that important, they're just kicking the tires, they're just investigating, some a lot less interested I might not give them a proposal.
Jonathan Stark: But if they say, oh, no, Amazon just came into our space, we think we've got a three month window of opportunity before they completely decimate our industry. We need to get this live now or we're going to miss the window. I'm like, okay, I like the sound of that, it's a very high pressure situation. And then the last category is why hire someone expensive like me? Why not get your cousin Vinny to do it? Why not outsource this, hire someone from Toptal or wherever, Fiverr? Why not do this internally? Why not get with interns? And they'll give me reasons for all of these things. Like if this is going to be a good project that I'm going to bother putting together a proposal for, they're going to say things like we tried the outsourcing thing before but the time zone and the language barrier was too much it ended up screwing things up, or we do have interns, we have internal employees that could do this, but they're already maxed out on another project, and they'll give me all of these reasons.
Jonathan Stark: Again, I'm writing all of this down verbatim, why they can't do any of the cheaper options. So then when I go put my proposal together, I'll say, hey thanks for having me on the call. As I understand it, your current situation is this, your desired future state is that, and you believe that my contribution to that transformation from state A to state B is X, Y, and Z. And I basically set the stage for the entire proposal or the project. And then I'll give them three options and say, well, there are three ways that we can do this. And I'll set the prices for these three things based on the transformation. So the transformation from state A to state B whatever it is, I'll have a sense from talking to them.
Jonathan Stark: I'll know why they want to do it, I'll know what number they're looking at that's broken, I'll know at least what symptom, it might not be a number, but it probably is a number of some kind because when they told me that they have to do this and they convinced me that they have to do this, they told me something broke or they told me that something had changed. Amazon came into the space and our industry is about to be annihilated. Well, that's a pretty expensive problem, so I know that there's a lot of value in solving it. So at that point, I'll just do a back of the envelope calculation, like well, a company this size they're doing 100 million a year, or they're doing a million a year or whatever it is, they're doing this much per year, their payroll is probably $100,000 a month. They have money and this is an existential threat for the business let's just say. So this project being a success is at least worth $100,000 to them, at least.
Jonathan Stark: I'm not going to do the whole thing by myself, it's going to be collaborative or there's a bunch of different ways I could engage, so let me just pick three prices based on $100,000 annual value of this successful outcome of this project. And I'll just set three prices, $10,000, $22,000 and $50,000. I still haven't decided at all what I'm going to do, but now that I have prices, I can say to myself, okay, what could I do for $10,000 in option one that I would be happy to do and it would feel very profitable that is going to help contribute to this desired outcome that they have?
Jonathan Stark: And I do the scope last instead of like I described before, where I'd sit in the sales meeting and try and magically uncover every bit of scope as if it was going to be some kind of a waterfall project upfront, which is virtually impossible without a weeks long engagement. It's impossible to scope first well without getting paid to do it, so I scope last. So it's estimate the value to the business of the transformation that they want, come up with three prices that are a fraction of that number, and then come up with a scope. So super long answer to your question, but it's backward what everybody does. So it's worth, I suppose, spending a little bit of time on.
Steve Folland: Do you think that works best though for well, let's say for example in software development that you were doing? Do you think it could work for anyone doing that way round?
Jonathan Stark: I've never found an industry that it didn't work. There are some that are regulated that have to have hourly rates included like some government types of projects, sometimes higher ed. But outside of that, anything can be value priced. But that doesn't mean that every project has enough value in it to pay you. So there's two different things. So can anything be value priced? Yes. In fact, most things are purchased based on value. Like when you buy a coffee at Starbucks, you don't ask like, well, how many hours did it take to make this coffee? And how many hours did it take to ship the beans here? And how many hours did it take to design this store? You don't care about that, you're just like, is this worth three bucks or not? Yes. It's worth three bucks.
Jonathan Stark: So virtually every purchase decision that we make, we have this gut reaction to the price and we decide if it's worth it or not. My wife was telling me earlier today, she has this friend that just bought a $7,000 sewing machine. And our reaction to that was like, that's crazy. But to that person, for whatever reason, the sewing machine was worth $7,000. So it's just a completely subjective reaction that you have to a price. So yes, every purchase decision is based on value. So yes, I don't see any reason why you wouldn't be... Let's put it this way, I've never come across an industry where you can't do this outside of regulations.
Steve Folland: So back in your story, you get your first clients from your previous role, how did you grow the business from there? How did it evolve?
Jonathan Stark: Yeah. When people say growth, they picture a lot of different things. So a lot of people picture growth as adding headcount or increasing top-line revenue. And neither one of those two things interested me in the list, they both seem like vanity metrics to me. Like saying oh, I've got 10 employees, I'm not interested in impressing people with like how many people report to me, and I'm just not the type that wants to build a team. Some people really enjoy building teams and being a manager and a boss and stuff but I just don't like firing people. You cannot have a business with employees and not have to fire people. So forget it, count me out. So if you don't want to fire people, then you probably shouldn't have a team. To me that kind of growth was not attractive.
Jonathan Stark: And top line revenue, it doesn't really matter if you're making a million dollars a year and losing 2 million. I don't care how much I'm making if none of it is profit, I'm going to be miserable. So to me, the only meaningful metric is profitability. Ideally I'd work an hour a year for a million bucks, that's highly profitable. So I would look for ways to create leverage in my business where I could package my expertise and sell it in ways that were repeatable, low effort to no effort sales and delivery to maximize the value and the profitability I should say, maximize the profitability of my efforts. But I didn't get info products and all that stuff until much later. When I was still just doing services and just doing projects, my entire approach to growth and increasing my profitability was to find bigger and bigger companies that had more and more expensive problems. The more expensive the problem, the bigger the value, and the higher I could set my fee and still have it be acceptable.
Jonathan Stark: So let's say you do logos, just to give you outside of software example, if you do logos and you're going to do a logo redesign for a Mom & Pop Pizza Place, there's going to be very little upside to them. In other words, the value to them, let's say the value to them is $10,000, which is probably even isn't, but let's just say they think it's worth $10,000 for a new logo. Well then maybe you can charge them 1,000, a fraction of that value. But if it's Domino's or instead of a Mom & Pop Pizza Place you have Domino's and they hire someone to design a logo, well, that logo is going to get printed on 10 million boxes in the next six months. And if you have the wrong logo, that's going to be a very expensive thing to fix. Like if it turns out that it's like some kind of offensive symbol in another country or something like that, then they're going to have to do it again.
Jonathan Stark: Well, how much would it be worth for you to not have to worry about that, not worry that this project is going to be a failure and needs to be redone? It's going to be worth a lot more than $1,000. So the way that you grow in a value based system is that you find bigger problems that you can solve or bigger transformations, or bigger expensive problems, or bigger opportunities that you can contribute to, and then your contribution is automatically going to be valued more highly even if it doesn't take you any longer.
Steve Folland: How did you go about finding those companies? Or how did you go about getting them to find you?
Jonathan Stark: Yeah, I wrote books and spoke at conferences full stop, that's all I did. Which worked great while I was doing it, but when I got sick of doing it, then the leads dried up. So for a long time, I guess it was two thousand and... I guess the dates don't matter. But it was around 2009, 2010 I wrote a book called Building iPhone Apps with HTML, CSS, and JavaScript. And it was for O'Reilly, which is the biggest publisher in the space. And I between that and my past, I had spoken about FileMaker at a bunch of conferences before that. So I basically went on the speaking circuit and would do usually about a conference a month. Maybe I'd do like 10 conferences a year all over the world. Spoke in Tokyo, and all over Canada, in New York, everywhere.
Jonathan Stark: And still not New Zealand, have looking forward to that someday. But spoke all over the place and I can think of plenty of occasions where I'd get off stage... I spoke at South by Southwest, like 3000 people in the audience, and you get off stage and people just line up to be like, we need to talk, we've got exactly what you talked about on stage, that is exactly the problem that we have, we need to talk right now. One case, a senior executive from a huge telecom said like, "Let's go over to the bar right now." And over beers, we hashed out a 12 month engagement for six figures that maybe took me 20 hours of work.
Steve Folland: Nice.
Jonathan Stark: So, yeah. So right writing books and speaking. You have to become famous. So if you want to be a solo person who's recognized for your expertise, you basically need to become famous. At least in the world that is going to care about your kind of expertise, not the whole wide world like Kim Kardashian. But if you do... At the time it was mobile for me. So I would speak at design conferences and telecom and mobile events, those sorts of things, Nokia World, and Adobe max, and things like the South by Southwest.
Steve Folland: How did you get to that point that... It sounds amazing standing in front of 3000 people, having a book with the biggest publisher sort of thing, but where you're writing on a blog, where you speaking at smaller events. Was it simply that you got lucky and happened to be a transformation for a company that then got reported at a big magazine? I shouldn't use the word lucky, but you know what I mean. How did you get to that point?
Jonathan Stark: Yeah. There's always some kismet that does happen. Everybody I talk to, there's always this weird like they're... I hate these word hustle because it's like Gary V. Like you have to hustle. And it's true though, you got to put in the work, you have to know what you're talking about, you have to be good at your craft. That's table stakes, you have to know what you're doing. So first of all, step one, actually be good. And second, you do need to start publishing, I'd lump all marketing into publishing. You have to publish... It's actually not all marketing, but you need to be putting your thoughts out into the world somehow. And that usually needs to be some kind of writing and some kind of speaking. The speaking could be on stage or meetups, it could be at podcasting, it could be a vlog on YouTube, the writing could be a mailing list or a blog or a book or a regular column in a publication. But you have to write and speak if you want to sell yourself as an expert.
Jonathan Stark: So pick whatever the things are, pick whatever your media, medium is right for you, then pick it. But to give you the origin story for me, speaking and writing both started for me in a small way when I was in the FileMaker world. So when I was at that firm that did FileMaker development with the awesome boss, I basically saw exactly how he attracted clients, which he would write books and he'd speak at the conference. So I was like, I'm just going to copy that. So I really did talk my way into it. My first speaking gig, I basically talked my way into it because I met the organizer in line in the food line at a conference. And I was just like, "I have this idea, it'd be a really cool talk, everybody needs to hear it. And I was so excited about it that I think I just swayed her and gave me a spot and it went great. That was a couple of thousand people as well, my very first one.
Jonathan Stark: But it's luck really, I was trying. If that one didn't work, I would have kept trying and eventually gotten one. So it was persistence more than luck. But I had something to talk about, I was excited about it, I wasn't afraid to be on stage because I used to be a musician so that was fine. And then I was doing some really sporadic, pathetic blogging you know like, ooh, geez, I haven't written anything in six months. What do you know? When every blog post starts with an apology, you know you're not blogging enough. So I did have a few about a very specific technology and a space. It was an emerging technology in this niche market of FileMaker developers, where the company that made FileMaker now called Claris, they released a web API. This is like super inside baseball, but maybe the details help people. They released a web API. So this is a desktop shrink-wrapped software, old style, and they released a web API for their server product. Jonathan Stark: And I was like, that's what I'm going to do because I wasn't a web developer yet, I really wanted to learn it, but I didn't want to completely give up the positioning that I had established as a FileMaker developer. I was speaking at the conference and writing in the magazine and all that. So I positioned myself as the web FileMaker, the FileMaker web guy. And there were only like two other people that had that kind of a reputation. And so I was blogging about that and sure enough a publishing company Sam's, I have no idea how they found me but they found my blog, and they said, "Hey, do you want to write a book about this?" And I said, "Sure."
Jonathan Stark: So again, it's like, I, you could call it luck I guess, but I was doing all the things that you would do to attract a publisher. Speaking of the conference, writing in the trade publication, blogging a little bit about it, I came up in a Google search because it was such a rare thing that I was working on. It was like maybe a 1,000 people in the world even knew about it. So that led to a book deal. And it was nothing to write home about, I maybe sold 1,000 books. I didn't even know, I never made back my advance or anything, and the advance was small, but I had a book. So that those were the scrappy hustle, luck phase of all that. And that was all before I went solo, most of it anyway.
Jonathan Stark: And then when I did finally go solo, I already knew how to write a book. I already had written a book, had been published. So one day I was at a meetup, a local meetup, and I had an idea for a book and I ran into a senior editor from a O'Reilly, they're based pretty close to where I live. And we got to talking he said, "Oh, well, I'll float your idea at the next editors meeting and see what they say." And he floated it. And I don't even remember what that book idea was. He got back to me and he was like, "Nah, nobody really cared about that. Do you have any other ideas?" And I said, "Oh yeah, sure. I've got this idea for an iPhone book." He let them know, immediately got back to me. He was like, "We need to do this, let's do this. Everybody wants to do it." I signed the deal, it was very successful, it's been translated into seven languages.
Jonathan Stark: It was a pretty big deal at the time. There weren't really any other books about it. And it was in 2010 when the iPhone was really, really catching on, so it was just perfect timing. Again, you could call it luck or eventually I would have had some kind of luck though. So yeah, if you just keep putting yourself out there, you keep writing, you keep at it, you're passionate about the subject, and you're not afraid to speak and write, good luck is going to probably find you.
Steve Folland: What was work life, work life balance that is, like for you during that period when you were working as a solo consultant?
Jonathan Stark: Yeah. So I didn't have kids at the time so the flying around to conferences wasn't that bad. It was post 9/11, so flying was still a pain but I wasn't missing my kids or anything. I have kids now and that's how that whole thing fell off because I was like, I'm not flying around anymore, I didn't want to do travel anymore. But in that phase, in that period, it was really exciting. People were paying to fly me all over the place and speak at giant, giant rooms of people. And you feel smart and it's good for your ego and all that stuff. In terms of the work, and then I would get these projects and there'd be work to do. But a lot of it was advisory, so I wasn't coding as much. It was a transition, so at first I was coding all the time and then it slowly transitioned into more advisory work where I was just consulting with the business owner. So either the lead whatever it was, the department head or the owner of the entire business, consulting about what their team should build and how they should build it.
Jonathan Stark: So it wasn't actually building it and I wasn't even managing it, I was just overseeing it and being available for important questions that need to be answered quickly. So that was great, I'd sit around, swan around town stopping for coffee and whatever and occasionally post YouTube videos about my subject area, occasionally once a month probably I'd fly to a conference, and then I would wait for emails and phone calls from my clients, and then periodically I'd have to fly to a meeting with a client. So for a long time I had a client in the Cayman Islands, so I would fly down there, I think it was once a quarter poor me. I had a client for a long time in Berlin, I only had to go there once but it was nice.
Jonathan Stark: So it was like being a researcher and a consultant all wrapped up in one. I spent a lot of time listening to tech blogs, real cutting edge stuff. I basically did what you need to do to stay cutting edge in an emerging technology. So I was always one of the best people to ask maybe in the world about a particular technology because I had time to consume everything that was coming out about it, do my own research and testing. Steve Folland: That's interesting, of course. So it's not just doing the work, but you had plenty of time in which to stay at the top of your game researching and thinking.
Jonathan Stark: And marketing myself. Yeah.
Steve Folland: Obviously at the beginning I introduced you as a business coach. So at some point, this started to change presumably.
Jonathan Stark: Yeah. So a few dominoes fell along the timeline. It wasn't an overnight thing, but we started having kids, I didn't like flying around as much, I started to really detest it as a matter of fact, and I stopped being interested in the technology. So mobile technology reached the top of the S-curve if you're familiar with that. It was just every new iPhone a little bit better than the last one and things weren't changing that much. It wasn't exciting anymore. And one of the key moments was I got a third... I had to book deals after the iPhone book with O'Reilly and then I had a fourth and I signed it and they sent me the advance and I started to write it. And I was like, I would rather do anything than write this book. I'd rather go to the dentist than write this book. I was like, okay, this is a sign. I can't even make myself write this, I don't want to research it.
Jonathan Stark: So I said, "You guys, I'm just going to send you your money back. Let's just cancel this or find a different author, somebody else to write it." I recommended another person that could write it. So I was just like, well, that's a sign. And so I stopped writing and I stopped flying around speaking. So guess what? I stopped getting leads. And I stopped having people running up to me and say, hey, you need to take our money right now. And at that point, kids were born blah, blah, blah. So we're talking about 2013 or 14-ish. And I had some longterm clients that were paying me on retainer so I was still doing okay financially, but it did make me nervous that I wasn't getting new clients. And of course these longterm retainer clients eventually they're going to be done. So geez, I'm not getting any leads anymore. I used to get leads like magic.
Jonathan Stark: So that started to make me nervous. I started to get really bored with the technology. And all along, so now if we're talking about 2014, I think in 2009, I had also started blogging about the way I ran my business because a lot of the folks that knew me... I had a lot of friends in the FileMaker world and they all billed by the hour at the time. And they were like... I imagine when I went solo and they knew why I was going solo, it was like, "Why are you leaving this awesome firm?" And I was like, "Ah, I'm going to try this value based pricing thing." And they're like, "Okay, good luck with that." And I think they were surprised that it went so well. And so I started getting invited to meet ups and stuff of other developers. They were like, "Can you explain this to us? How does this work? How are you crushing it with no employees and no time sheets?" And I was like, "All right."
Jonathan Stark: So I started explaining it, I started blogging about it. I blogged about it on a weekly basis for some period of time, maybe 10 or 20 weeks in a row. And so that had all happened, people were always asking me about it, my colleagues were always asking me about it. So then by 2014 or thereabouts, I was really sick of tech and not getting any leads and didn't really want to get any leads, and I was getting more and more questions about value pricing. So I started to focus on that more and then 2016... I'm probably getting the timeline a little bit wrong, but in 2016 I collected a bunch of those essays that I had written in those blog posts and I released a book called Hourly Billing Is Nuts in the summer of 2016.
Jonathan Stark: And that was the milestone where in my mind, that was the beginning of my new business coaching stuff. So business coaching for software developers and other independent professionals, basically any professionals that bill by the hour. And I started an email list, a daily email list when that book launched. So I just went hard on that since then and went through a transitional period of probably about three years of ramping down the mobile consulting business and ramping up the business coaching.
Steve Folland: Wow. And do you still do a daily email now? Jonathan Stark: Yes. I'm on number 1,700 in a row or something like that.
Steve Folland: It's amazing. Do you sit down and write a block of them? Jonathan Stark: Nope. Just I have an idea during the day and blast it out and the next day I do it again and I do it again.
Steve Folland: Wow. As you were doing that as well, you started podcasting, right?
Jonathan Stark: Yes. Yeah, that's another thread that I forgot about. So I can't even guess the year, but a long time ago, somewhere in there, I started podcasting with a good friend of mine named Kelly Shaver. And we started a tech podcast called Nitch, N-I-T-C-H and we did 254 episodes or something like that. It was pretty steadily weekly show doing tech, but it was just us hanging out and recording it and talking about what bugs did you come across this week? Or should you write an API first or you should do the interface? It was really, really nerdy developer stuff. And then we stopped that after a while and we switched that into more of a futurist, future of tech podcast called Terrifying Robot Dog. Did that for another 250 episodes or so and that was a little bit more topical. So it was very tech oriented, but it was much more topical. We talk about things like self driving cars and autonomous robots and stuff.
Jonathan Stark: At that point, I was extremely comfortable podcasting and probably in the teens, like 2013 or 14, maybe 2015, I started a solo podcast about the business coaching stuff. So as I was ramping that up, and that was called Ditching Hourly. So that was probably after Hourly Billing Is Nuts came out, so maybe that was 2017 or something. So got a few hundred episodes there. And then three years ago, I started a podcast with Rochelle Moulton called The Business of Authority where we talk about the high level strategic aspects of running an expertise based business where you're trying to have a big impact on the world, you've got a big idea and you're trying to present the word in a way that it will spread on its own kind of thing. So how do you fund your mission when you are a thought leader type of person?
Steve Folland: And you still do that podcast now?
Jonathan Stark: Mm-hmm (affirmative).
Steve Folland: Right. And you still do Ditching Hourly now of course as well.
Jonathan Stark: Yes.
Steve Folland: So those first attempts with the Robot Dog and the one before that, the Nitch one, did they help your business at all or were you just enjoying them? How did it fit in?
Jonathan Stark: The very first one was definitely just for fun and I don't think it ever helped me business wise. It was very scattered. The Terrifying Robot Dog interestingly enough, that was when I had a lot of solo clients, a fair number. I had plenty of work back then. And I know that a lot of them listened to it and it was we had a humorous rapport so they would laugh. They'd be like, "Ugh, that was so funny on the show when you talked about that." And I thought it was so weird that my clients were listening to my podcast.
Jonathan Stark: That seems strange to me, but then it did make sense after a while. But it was not intentional, it was more like I just miss talking to Kelly every week and we were like, yeah, we should just keep podcasting if only to have a weekly phone call and catch up. So it was mostly just fun but it did build some trust with existing clients. I don't think it ever brought me a client, but that is definitely not the case with the newer Ditching Hourly and with TBA, The Business of Authority. That definitely is right on the nose of lead generation.
Steve Folland: Which do you... You do one solo although you interview people and some of them are totally set of episodes, but you also do that collaborative podcast as well. What's your experience with both of those? Do you find it easy to keep going when somebody else is there or you're just perfectly well driven anyway?
Jonathan Stark: Ditching Hourly, if you look back, you might notice that it's sporadic the way that I release Ditching Hourly. Ditching Hourly for me is like an outlet for thoughts that are just better suited for audio. So it's a real grab bag. It's all focused on a specific topic of course. So you stop trading time for money, that's the focus at all times. But you might get a four-minute long episode, a one-minute long episode, you might get an hour long episode, you might get four in one week, four drop on one day and then four weeks of nothing, so it's pretty unpredictable. But I don't really care about it in terms of subscribers, it's more like I want to get these thoughts out and then when someone discovers it, they'll go back and binge listen to a bunch of episodes. It's not like people are sitting around on Tuesday morning waiting for the new episode to come out. It's hard to describe. I just don't care about being consistent with it. I don't know, it's hard to describe.
Steve Folland: It sounds like it serves you in a way to clarify your thoughts on the topic.
Jonathan Stark: Yes, exactly. It's almost like I have to get something off my chest or figure something out and I can't do it in writing for some reason. So it's almost like a lab, it feels like a lab to me. It's just like an idea lab. But the Business of Authority that I have, Rochelle Moulton is my cohost, she's a very organized person compared to me. And she likes to have two episodes recorded in advance so we don't have to rush, she likes to have everything set up and the I's dotted and T's crossed. And we get along great. So it's real natural, we get a subject matter, figure out what are were going to talk about this week and we go through it and it releases like clockwork. They're usually always right around an hour, so it's real consistent in that way.
Jonathan Stark: But the subject matter and the purpose of that show are very different. So ditching hourly is me, I guess I'm realizing right now, it's me the Petri dish for ideas where Business of Authority, I originally conceived of that show as a venue to speak to New York Times bestselling authors. The whole point of that show, it was not about building an audience or selling anything, it was about being able to talk to Seth Godin for an hour. So I wanted to have something to invite people like Dan Pink and Seth Godin and whatever Jill Konrath and bestselling authors, I wanted to show that they would want to come on so that I could pick their brain for an hour. I was totally self serving.
Jonathan Stark: And then right around the same time, Rochelle reached out, we didn't know each other, she reached out to me and she was like, "I feel like we should meet. Your name keeps coming up in my circles. Let's just jump on a Skype call." Which is so totally Rochelle, it's super hilarious. I would never do that in a million years, but she did and it was great. And we totally hit it off. So right after we got off the Skype call, I chattered it back and I was like, "I've been thinking about starting this podcast, but you'd be a perfect... I wasn't thinking of having a cohost, but you would be perfect. It'd be so much more fun if we did it together." And she jumped at it because she had never podcasted before and was looking for a way to ease her way into the pool with some assistance. So worked out great for both of us and in fact we're about to have our 150th episode.
Jonathan Stark: And we're going to try and do a lot more interview shows. We've had about 10 or 12 interviews over the past three years. So we don't do tons of interviews which is mostly out of laziness. So we're making a concerted effort, now that we've got some big names that have come on the show and we've got a track record that we are consistent, we show up every week, we're going to start inviting more and more people. So probably we have... I would love to have every show be an interview every week, starting with number 151. So we'll see if that happens.
Steve Folland: So if we look at your business today, basically I'm thinking where is the revenue coming into Stark tower now?
Jonathan Stark: So I've got a series of things. So there are... I'm slowly morphing into more of a product business than a service business. And I think it's good for any freelancers listening to have a diversified revenue stream. You're an expert at a thing, you're good at it, people give you money to do the thing so you must be pretty good at it. And assuming that's true, you can come up with different ways to help different people at different price points. So like package up that expertise in different ways so that people who maybe don't need it as much as your regular clients, but needed a little bit, can spend $29 on an ebook or a three video self paced course.
Jonathan Stark: So experiment with some of this stuff, creating info products or productized services, it's a great way to diversify your income to stop being dependent on well clients. But to answer your question specifically at the high end, I have a private coaching program. It's four months long one-on-one that currently is priced at $10,000, but every year I raise the price, people seem to keep coming. So that's the high end of what I would call my helicopter option, that's the most expensive option. And then I've got group coaching, which is significantly less expensive. But it's not private, you're in a group and we meet every other week on a video call and I take Q&A for an hour or more and just help people with whatever they're stuck with. And then there's a Slack community that goes with that. So you can think of it like a paid membership community.
Jonathan Stark: What else? And then I've got one-off coaching calls where people can just have a very specific tactical situation or maybe they've got a big proposal that they're trying to put together and they've got a fish on the line, or they're trying to write a proposal and they just need to talk to me to get a second pair of eyes on it. So those are the high touch not one on one, but those are the high touch things that I guess we'll call them synchronous where I show up. And then I've got a couple of seminars, the pricing seminar. And I've got a five day podcast challenge course. And I've written, self published four books, I'm working on a fifth. So in those I've got info products that are as little as, I think the audio book of Hourly Billing is like 19 bucks, all the way up to $10,000 for a four month coaching program.
Steve Folland: How do you stay in control of your time when I feel like inside your brain, you might always be thinking about things and wanting to maybe do new things? Yeah, how do you stay on top of life and work?
Jonathan Stark: Okay. There's almost like two questions there. But I think from the outside, it looks like I do a lot more than I do because everything is so focused on a particular central theme, which is stop trading time for money, that every little thing I do increases the flywheel, it's I spin the fly wheel a little bit more and then I can take my hand off of it and it keeps going. So it creates this flywheel effect because I've got a central theme. So all of the content that I create, all the podcast episodes, and all the interviews, and all of the eBooks, and all of the email courses, and all the daily emails, they have a center of gravity, so it becomes a body of work very quickly. So it looks like a lot from outside because I didn't have to throw anything away because I don't do that anymore. You know what I mean? So it accretes and it gets bigger and bigger and bigger, it never really shrinks. So it looks like a lot.
Jonathan Stark: So there's that, but then there's a productivity question in there which is still how do I do it? And I've got appointments in my calendar, but in a given week, maybe, I don't know they're not that many, like maybe six or something in a week where a thing like this where I'm going to be interviewed on a podcast and there's a particular time I have to do something. But most of the time I just have a daily to do list and it's a recurring daily to do list. And right now it's got 15 things on it, and every day I do the 15 things and I check them off. And then the day after, they all come back and I do the 15 things and I check them off. And the next day they all come back seven days a week.
Jonathan Stark: I don't really separate personal and business calendars or email or anything. I've got one calendar, one email, one to do list because if I've got a thing I have to do, it doesn't really matter if it's for work or for my kids or whatever it just has to be done. So my daily to do list has things on it, like do 100 pushups, floss your teeth, drink three glasses of water, but it also has write your daily email, what are some of the other business ones? I actually don't have that many business ones on it, I have to look at it. But the big one is the daily email on the daily list.
Steve Folland: Well, 100 pushups. Now, if you could tell your younger self one thing about being freelance, what would that be?
Jonathan Stark: Oh, this is easy. I don't know how brief I can make it but when you go out on your own, so you've got this skill, you do it in house, you learn how to do it in house. Maybe you get good at it and you get sick of your boss or whatever, you're not getting paid enough and you go out solo, freelancers don't realize they just started a business. You're no longer are you a designer or a software developer or a copywriter, you are now a business owner. And business owners have to do certain things like marketing if they want the business to stay alive.
Jonathan Stark: There's a reason why basically every big company has a CMO or something like it. Marketing is one of the most important functions of a business bar none. Innovation being the other one. If you aren't doing marketing and innovation, you are not running a business that's going to be successful. So yes, do you still have to be a good copywriter or a photographer or software developer? Sure. But you're not going to get any business if you're not doing marketing and innovation. So that is the thing I would say.
Steve Folland: Awesome. Jonathan, thank you so much.
Jonathan Stark: Thanks so much for having me, Steve.