John Reel’s Blog

I once had enough money to do whatever I wanted thanks to a successful start-up.  Sadly, like most lottery winners, I was unprepared for this and mismanaged my new-found wealth.

This is what I learned from being rich for a little while:

1.  I can get rich.
I think one of the biggest things holding people back from getting rich is the belief that it is possible.  I did it once, getting past this roadblock by finding mentors to guide and inspire me.  I will do it again soon, better, and with more ease, simply because I know I can do it.

2.  Success begets dangerous opportunities.
When you do well, suddenly a lot of doors open up to you.  May I humbly suggest that you ignore them unless they are directly part of your plan.  Otherwise, you may find yourself distracted, spread too thin, and losing ground.  Related, I suggest flushing out fully everything to do with what made you successful in the first place before moving on to something else.  There probably are other ways to take what you’ve done to greater success, riding on the wave you’ve started instead of starting a new wave from scratch.

3. Money does buy you happiness.
To all the people who say otherwise, I say hogwash.  There was a dramatic change in my personality when I had money.  A tremendous weight was lifted when I suddenly went from a low income to (apparent) financial security.  In a society ruled by money, no longer having to worry about money is something very worthwhile that money can buy.  (Note:  I know very happy people with no money, living off the grid.  Money is not the only route to financial security!)

4. Stuff does not buy you happiness.
There is an image that our society as a whole seems to subscribe to of what it means to be rich, and a good part of that image is attached to buying stuff.  With a lack of a different role model, I found myself subscribing to that belief system, even as I questioned why the heck I needed these things.

Next time I’m rich I’m not going to attempt to fill holes in my life by purchasing stuff.  I’m going to use the money to do good and live a more extraordinary life, defined by what I do and experience, not what I own.  Stuff just ties you down and forces you to make yet more money.  You can be rich with a lot less money if you stop buying lots of stuff!

Very inspiring quick read: 10 Unexpected Costs Of Owing Things

[As an aside:  It seems almost a right of passage with many Internet entrepreneurs to buy a really expensive car.  Why?  Why?  Why?  If I really wanted to spend that kind of cash on myself, I would get a full-time personal chef.  Now that's a luxury!]

5.  It’s important to know why you want to be rich.
Money is a means to an end, not the end in of itself.  With the pace expected of Internet entrepreneurs, the means tends to become all consuming, and when the money comes, I think many people forget what the point of it all was and continue doing what they were doing, just on grander scales.  That’s what I did. I squandered the freedom of being able to do whatever I want, and it took (temporarily) losing the option to allow me to discover what I really want to be doing with my life.

I’m actually glad that I have had this experience of gaining and losing wealth.  It has given me more balance to my life now.  It has also prepared me to gain wealth again, keep it, and live my life in a much more intentional way doing things that really make me happy.

By the way, in future posts I will write about all the things I did right and wrong in my start-up, and the lessons I learned in the process.

I figured I will start off with a somewhat interesting post to the marketers who might still read this blog, and for any startup people who tune in.

First, a back story & update:

A year ago, I made a video post (since deleted) asking people if they wanted me to review a software outsourcing product that had been mailed to me.  (I never found out how they got my real address.)

That was the most commented post I’ve ever had.  I didn’t follow up on it because:

1. Much of it was an out-of-date repackaged product.
2. The people behind it were using fake names.
3. They lied to me when I confronted them on these counts.
4. It took a long while to sort all that out.
5. As far as I know, they never sold the product, making it all irrelevant.

I could have given a comprehensive review (though not favorable), as I have a great deal of experience in this area.  I have been a high-end professional software designer since I was 18.  In the last six years I have worked with about ten different outsourcing providers from India, China, The Ukraine, and elsewhere, all found on www.elance.com.  Budgets for these projects have ranged from $200 to $200,000.

Pitfalls of outsourcing:

On the surface, it sure seems to makes sense.  Many North American companies consider outsourcing, lured by the low cost for developers in other countries. Rates range from $8 to $15 per hour, with the majority at just $10/hour.  (Rates in USD.)

Here are seven things to consider before going down this route:

1. Language Barriers: Oh, sure they can read/write English, but the subtle things can be lost in translation, which means you spend a lot of time explaining things to them on Instant Messaging.
2. Sleepless Nights: Since all of these companies are on the other side of the planet, you’re doing all that explaining at night, which leaves you tired and much more likely to make mistakes.
3. Too Literal: Most of these providers try to do exactly what you say like little coding drones.  It is rare to find someone who can see the big picture and will check in with you before doing something “stupid”, even if you asked for it.
4. No Continuation: It is very hard for these outsourcing companies to keep their staff.  The competition is fierce for programmers.  Their rates have doubled in the last year and many programmers switch jobs frequently, using the demand to continually increase their rates.  Even if they can keep their staff, if you’re not keeping them busy full-time, the people working on your projects naturally get reassigned to other clients, and you might not be able to get them back when you need them.  Long projects and outsourcing don’t mix very well.
5. Undocumented: Good luck getting well documented code that someone else can easily take over.  So, when you lose your programmer, there is often a long delay while someone else gets up to speed.  Make sure to ask for excellent documentation as part of the quote and get examples.
6. Bad Quotes: Many providers have no idea how to quote.  One guy quoted me $200 for every project, no matter how big or small.  Unless I want something really small done quickly, I work with teams with project leaders and testers, etc.  They have an idea how to quote.
7. Dishonesty: When I first started searching for providers I would ask for samples of their code.  I would then search the Internet for any identifiable bits from that code, and usually I would find it was part of some open-source project.  I would then check if the developer(s) were part of that project, which of course they were not.  I then got in the habit of hiring them for small projects and split-testing two teams against each other to see which provided the best results before going on to bigger projects.

Disasters of Outsourcing:

While I’ve had some success with this route, I’ve also had two massive disasters, amongst all the regular day-to-day challenges of outsourcing.

1. Company Vanished: I worked with one Indian company for a year who seemed awesome.  Then they vanished one day, when the project was about 95% complete and paid for.  I had no way of getting hold of them.  About five months later, they reappeared, asking if I needed any work done.  The project was abandoned by then.
2. Abandonment: After spending about $75,000 with one company, they shut me down with no notice, redistributed my team, and almost put me out of business.  Why?  They had invoiced me 10 days ago and not heard from me.  I had never missed a payment, and when they invoiced me I was on my first vacation in years and returned with a flu.  By the time they got paid, my staff had been reassigned to other projects and that project got delayed by a year and counting.  (It’s almost done now.)

Conclusion and recommendations:

I started outsourcing because it seemed so inexpensive, but I have my doubts that it is the best answer in the long run.  For future projects, I will try hiring well recommended, extremely talented, experienced, high-end local programmers. I’ll give them shares in the company to keep them around.

The theory is that they will produce better, more transferable code, and I’ll get more sleep.

Of course, I’m still working with an outsourcing team for now.   The code is good and the project leader is very competent.  It’s just a matter of keeping staff on board.

If you are considering creating software and have a limited budget, I recommend hiring someone experienced in your field to design/manage the project and to manage the outsourced developers.  It probably will save you money.  If you’re planning on a big project, I would be very wary of outsourcing.

What are your experiences?