Ditching Hourly

[00:00:00] Jonathan: Hello, and welcome to Ditching Hourly. I'm Jonathan Stark. Today I am joined by guest Michael Lynch, Michael, welcome to the show.

[00:00:06] Michael: Hi, thanks for having me.

[00:00:08] Jonathan: So Michael is the founder of tiny pilot and published a blog post, I guess it was last week.

[00:00:14] That's when it came across my radar called I regret my $46,000 website redesign or something to that effect which probably a dozen people sent to me, was at the top of hacker news. It was everywhere. It was everywhere. So congrats on the viral blog post

[00:00:31] Michael: Oh.

[00:00:32] Jonathan: So before we get into the guts of the post, could you tell folks a little bit about who you are and what you do?

[00:00:38] Michael: Sure. I'm a software developer. So I spent most of my career at the big company like Microsoft and Google. And I quit my job at Google in 2018 to start my own business. And so I tried a few different things over the years. And in 2020, the business that really gained traction was a business called tiny pilot.

[00:00:59] And it's a device I sell that lets people manage their computers remotely.

[00:01:04] Jonathan: That's cool. Just like a physical object.

[00:01:07] Michael: Yeah. It's it's about a little bigger than two, two decks of playing cards and you just plug it in,

[00:01:15] Jonathan: All right. Great. And so the blog post was about the website for tiny pilot, correct.

[00:01:21] Michael: right.

[00:01:22] Jonathan: All right. So could you maybe give us a little bit of an overview for the two people who didn't read the article yet? Could you give an overview of that whole situation?

[00:01:31] Michael: Sure. So I had been making little changes to the website. I created the website myself when I first launched in 2020 and it didn't look very good. I'm not a great designer. I had just found a free bootstrap theme online and threw that up cuz at the time I hadn't any sales yet. And I told myself that if the company made it, I would hire a professional designer to make a real design.

[00:01:58] And then about a year later, I, the company was making about $45,000 per month in sales. And so I felt like it was time to actually hire that designer. And I interviewed a few different designers. And the one I ended up going with was an agency. They were the most expensive that I interviewed per hour.

[00:02:16] They charged 1 75 an hour, but they thought it, it would probably take 20 to 40 hours, like a $7,000 job over the course of a few weeks. And then the project ended up spiraling out of control. And if, as you might guess from the title $46,000, it was way more than 7,000.

[00:02:35] Jonathan: So let me, I have a bunch of questions already.

[00:02:38] Michael: Sure.

[00:02:39] Jonathan: The first one isn't is just general from a business standpoint, I'm curious is the $45,000 a month that you were bringing in at the time, was that, is that recurring revenue or that's just straight up sales.

[00:02:50] Michael: That's just straight sales. Yeah. There's not, there's currently not really recurring revenue for tiny pilot or there's a very small amount from people who have custom licenses.

[00:02:58] Jonathan: Okay. So then there was a, but you were reasonably comfortable that was gonna be a stable number. So

[00:03:05] Michael: Yeah. It had been in that area for a few months and it was trending gently upwards, but generally it was increasing.

[00:03:12] Jonathan: Okay. So you're like, all right, I've got some, I've got some money to play with here to get the site done for real. And you said that you looked at a bunch of different. Where did you look? I'm curious where you looked for people to help you with this, did you. Five or ask around, or how did you come up with a list of people that you maybe spoke with or whatever, or investigated.

[00:03:35] Michael: Yeah. I looked a little bit at Upwork and I've used Upwork a lot in the past, but I pretty much stopped using it a couple years ago. I feel like Upwork is fine for certain jobs, but. In my experience, quality tops out at a certain level. Once people get to a certain level of success and Upwork, they tend to leave Upwork.

[00:03:53] And I had some friends that are also indie founders. And so I asked them for recommendations and I looked at a few of those and interviewed some of those people, but they didn't have their portfolios had a style that was pretty different than what I was looking for. And then I looked at the hacker news, monthly hiring threads.

[00:04:13] So people advertise if they were free freelancer or agency and those threads. And so I looked at some of those websites and the agency that I ended up hiring as one that I found through those threads, cuz I thought their website looked pretty good. And then in the interviews with them, they were pretty impressive.

[00:04:28] Jonathan: Okay. And what I mean, I know you said that when you started, you just threw up your own website and it was, you didn't think it was that great. And when you started making real money, you'd redo the website. But what were you looking for? Like the flip side, you could imagine someone thinking I guess it's good enough.

[00:04:46] If you're doing 45 K a month in, in reoccurring revenue why bother? What was the, did you feel like it was holding you back or were you just embarrassed by it? What were the motivations to at the point where you did pull the trigger? What was the motivation?

[00:05:01] Michael: Yeah. I wanted to appeal to more business customers. When I started out, it appealed to a lot of home users who wanted a low cost alternative to some of the enterprise solutions for this. And I think there's a large potential customer base of not enterprise customers, but like small to medium size businesses who don't really need the complexity of the enterprise competitors in a space and would be interested in something like mine. I suspected that they would be turned off by a website that looked more like a project than a business. And I've heard a lot of feedback since the blog post where people are like, oh, it people don't care. Like they just wanna know that it works. And I think that's true to a degree, but I think there are other stakeholders in the real decision making process.

[00:05:48] Like the, it, people usually have to send it to somebody else in their company to get approval, to spend $300 on something. So if they're showing them something like, Hey, this looks like a real business. That's a much easier sell than wait a second. This looks like something, a guy put up over the weekend.

[00:06:03] Is this a real company?

[00:06:05] Jonathan: right. Is this, are we gonna get hacked?

[00:06:07] Okay. So it seems like a reason. It feels like a pretty standard oh, I wanted to look more trustworthy. I wanted to look more professional. Did you think that the website, did you expect when doing the before you decided to redo the website, did you expect that it would have a noticeable increase in sales?

[00:06:26] Like did, were you that sure that it would make a difference or were you just maybe it will

[00:06:31] Michael: Yeah. It's one of those things. I was just going by gut feel like I know there, there are ways of AB testing it to be really sure, but it's hard to do at my scale. Like I have maybe three to five sales a day generally. And so measuring conversion rate on those would take a while.

[00:06:47] And so I felt like I had also had some experience. One of the developers working with me did like working on design. So he had. Improve the design quite a bit since I, my original first draft and that did correlate with increases in sales. It's hard to pin it because there were also lots of other things going on around the same time, but it seemed to be like, as we improve the website the conversion rates seemed to improve.

[00:07:12] And so I expected that if we invested more in that we could expect to see a bit more.

[00:07:18] Jonathan: Okay. All right. Great. So I think that's a pretty good Roundup of the motivations. Now, why did you pick the most expensive one? And when you say most expensive, you mean by the hour, right? Like the highest hourly rate, did you, was it dramatically more than others or were they the second one was maybe 150 and you're like, ah, that's kinda.

[00:07:41] they're more or less the same pricewise. It seems air quotes, price wise, cause an hourly, rate's not a price, but but what, what flipped the bit for you in terms of going with the most, the highest hourly rate? Was it just the interview you had with the person there.

[00:07:57] Michael: It was a combination of the portfolio matched the style I had in mind, and they had a pretty deep bench in terms of talent available. So they had illustrators, they had people that could do 3d imaging. They had people that could do animation if we wanted, they had, I didn't really need developers, but I liked that they had developers because it suggested to me that the designers were used to working with people that like actually had to implement this stuff.

[00:08:25] It wasn't just like they could throw it together. A design. It was, it would be, have to be a design that takes into account the realities of CSS and HTML.

[00:08:33] Jonathan: Got it. Okay. And just outta curiosity, is it like a WordPress website? Is it built on something standard or did you do it yourself or,

[00:08:40] Michael: It's that's, , it's built on a technology called grid sum. It's a static site generator. I really like static site generator. And I stumbled upon grid sum like two years ago. And it's like the view dot JS equivalent of Gatsby. So Gatsby's for react.

[00:08:55] Jonathan: Yeah. Yeah. Yeah. All

[00:08:56] Michael: And I was like, wow, this is a great thing.

[00:08:57] And I was really excited to migrate my stuff over to it. And so that was the natural thing to use when I wanted to launch a quick website, cuz I didn't wanna learn a whole new thing. And then two months after I switched over to it, the maintainers abandon the project. So now I'm stuck with on this tech stack that's but it's not too bad.

[00:09:16] It's still just view. So if view, you can work with the.

[00:09:20] Jonathan: Okay. So yeah, pretty good reason to, to think eh, maybe it's good that they work with developers. It's not like you're doing a WordPress theme.

[00:09:28] Okay. So you pulled the trigger, right? Did they give you anything in writing? Was it like. Or is it just a over email?

[00:09:35] You're like, okay, this sounds good. Send me your invoice when it comes. Was there a deposit, anything like that?

[00:09:40] Michael: Yeah. There, so there was a contract that said I'm just paying them by the hour. They're. It was boiler plate agency or freelancer agreement. It wasn't a statement of work. It was just like, they're gonna do the things that I asked them to do. And then, yeah, they required a payment up front of each 30 hour block.

[00:09:59] So I'd buy 30 hours at a time and then they would do the work. And then when they ran out of hours, they would ask me to pay for another block.

[00:10:07] Jonathan: Cool. And were there regular, like regular weekly meetings or anything like that? Or was it just they let you know when they had an update or some something to review.

[00:10:16] Michael: They wanted weekly meetings. I think that's what a lot of their clients are used to. I'm pretty anti meeting. Especially like a recurring meeting where there's no specific agenda ahead of time. So I pushed for we'll meet and we'll go over the updates, but I don't want us to just be like, meeting for you to tell me whatever you did that week.

[00:10:33] Jonathan: Okay. Okay. So they started and as we know, from the blog post, things started to go wrong. What was the first warning sign?

[00:10:41] Michael: At first it went really well. Like we were making good progress. They started making a logo that I really liked, but the first red flag was they started to go beyond the scope. So when we initially talked, they said, Hey, like you actually shouldn't do a redesign. You should just do a rebrand. You should focus on the logo.

[00:10:58] The color is the fonts. And that was a thing that won my confidence because I was like, wow they're scoping down the project. Like I was willing to give them more money and they're suggesting something that is better for me. But then as we got into it, they started doing things that were beyond what I thought of as a rebranding.

[00:11:16] They started showing me different versions of the website with different icons and things that I think are went a little bit beyond just a rebranding. But it was a little hard for me to tell because this was my first time working with the design agency. And so the distinction the boundary between what's a redesign and what's a rebrand because they were, when I would ask, they're like some.

[00:11:36] Some brands don't work on your old design. So we're gonna, we're gonna tweak the design a little bit to, to fit the brand, but we're still doing just a redesign or just a re rebrand rather.

[00:11:46] Jonathan: Okay. That does sound murky. Yeah, so I don't want to, I don't wanna tell the story. So what, because I know what happens next, but, so what did happen next? So you must have gotten, some sort of notification like, okay, your 30 hours are gone.

[00:12:02] Michael: yeah, so they went through the first 30 hours and at that point it felt pretty fine, cuz we, they were nearing the end of the logo. It feel, felt like they were making pretty good progress and then they started the next batch and then that ended up going a lot slower. So they stopped responding to.

[00:12:19] My, my questions, they stopped responding to my notes and things just got really slow, but at the time it was December. So I was like, it's the holidays, me, people just out and they'll pick up again in January, but then in January, things got worse. And I would, I remember was one instance where I said something like, oh, can we increase the contrast?

[00:12:37] And the background of this dialogue box? And they, it took three back and forth before they understand they understood what that meant. And I was like, I felt like that's a pretty straightforward request. And so it was such a, it was such a difference from the earlier discussion where I felt like we were very much in sync and they were almost reading my mind with the logo where they were going in, the direction that I wanted.

[00:13:01] And then it was suddenly like, they felt very distracted and were not as engaged as before.

[00:13:07] Jonathan: Now were you dealing with the same person, like at one contact person or did they keep changing or you'd work maybe directly, sometimes you'd communicate directly with a designer and not an account manager or how did that go?

[00:13:19] Michael: It was mainly the same person. It was mainly their lead designer. Sometimes it was the project manager and then the project manager disappeared. I later found out that he quit in November. And so that was part of the reason that the things went off the rails, but usually it was the lead designer.

[00:13:35] Jonathan: Okay. All right. So then January you're, they're like, they're not reading my mind anymore. But still sending invoices, presumably. Did they didn't do anything in December. It sounds like really? And then January they come back and they're like contrast what's that. And what, like financially, what, how much have you burned through at this point to have nothing done?

[00:13:59] Not one thing done.

[00:14:01] Michael: At that point, it was probably around 20 K.

[00:14:04] Jonathan: Okay. And what happened next?

[00:14:07] Michael: Then I finally reached out to their CEO and was like, what's going on? The quality is very different than how we started. And it, it seemed like there was only 10 or 20 hours left in the project. Like we were almost done with the logo. We had picked new fonts. So that part actually was done.

[00:14:22] They had delivered me the name of a new font, and I was able to purchase that. But just in terms of finalizing the design that was gonna fit with the new logo and color scheme and everything, it was just like, everything was like 80% done. And I talked to the CEO and he was like, yeah, like we've had some troubles because the project manager quit, I've been trying to fill in and we've got like a lot of new work from our bigger clients that are on retainer agreements with us.

[00:14:49] And so we've been trying to fit you into the cracks, but that's probably why you're noticing that, like the communication isn't smooth as before. And so I was pretty upset at that point. Like you, you just left me with a half finished thing or not even a half. It was like 80 to 90%.

[00:15:08] Most of the stuff was done, but it was just like, I didn't have anything that I could really use.

[00:15:13] Jonathan: And he is telling you when you've called to complain, not in advance when he could have told you in November that the project manager quit and he was gonna be SCR, it's like really that's real weak,

[00:15:22] Michael: Yeah

[00:15:23] Jonathan: okay. So you've got at this point 20 grand into it, it feels like stuff's only 20 hours from being done.

[00:15:29] So you're carrying a huge sunk cost. So I can imagine the, you said yourself, you were upset at that point. Did you consider firing them or was it just so close? It was like, so close. You were like, oh, if we could just get across the finish line, I'll just never talk to these people again.

[00:15:46] Michael: I considered firing them. The problem was I was also in the middle of launching a new product. And so I wanted to do a marketing push when I had the new product ready. So like I knew from the experience of trying to find a freelancer agency, it wasn't easy. I'd probably spent 30 hours on the process of interviewing and then just like bringing the company up to speed.

[00:16:08] And I really didn't like the idea of having to do that again. And it, it was a tough call. I, I didn't, I felt like I was being taken advantage of, but at the end of the day, like I wanted the website done. And. The thing that seemed like it was gonna get it done. The fastest was just letting this agency finish out the last 10 or 20 hours.

[00:16:30] Cuz I felt if I brought in somebody else to finish out the work, it was just gonna be so much work of finding them, trying to bridge the gap between the old and the new. And then I with this agency, at least they were a known quantity. Like I, I knew what I was getting, whereas with, if I brought somebody else, they could be even worse and I'd have to fire them.

[00:16:49] And then maybe it's a year later before I finally get somebody that can do this work. And so I felt I'm close enough. Like I wanna just, the thing I wanted is just to wrap it up and then I can put this whole thing behind me.

[00:17:00] Jonathan: And so I want to call out the mental calculus going on here for someone in your situation, cuz frankly a lot of people wrote in about the situation and I was like, oh, this is a good example of something that happens all the time. Like your nuances were very specific.

[00:17:13] The retainer thing is very interesting wrinkle, but it happens all the time. And people like you end up in this situation where it just, you know, where they're unhappy upset spent at this 0.3 times more. Than the estimate. And, but the cost of switching is, feels higher than the cost of staying and just sticking it out.

[00:17:41] But you're from, you've got a software background and we all know the joke. How's the pro how's the project going? Oh, 90% done. 90% to go.

[00:17:49] So how, did it end up from that point moving forward, did it end up that it really was 10 or 20 hours or what.

[00:17:57] Michael: it really was. So my initial plan was to have them do the design and then have my in-house developers do the development work. And so it really was tend like that was. Correct. There was a very small amount of design work left at that point, but the problem was I couldn't get them to do the design work because they were like we just, we really don't have any time for hourly clients right now.

[00:18:18] And so if we, if you want us to do this and you want us to have the same focus that we had in the beginning of the project you need to either wait indefinitely. And I was asking like is it gonna be done within the next two months? And he's I really can't say, but like the thing that can

[00:18:36] Jonathan: is the owner.

[00:18:37] Michael: yeah, this is a CEO, but he was like, one way you can do it is if you sign a retainer agreement with us.

[00:18:42] So that way, like you'll have guaranteed hours with us. And then we can finish the remaining work. For sure. Like you, you don't have to worry about being preempted cuz we'll have guaranteed time.

[00:18:54] Jonathan: This is ridiculous. Does this so what he's saying is we haven't got time to work on this, but if you pay us more money, we have time to work on this.

[00:19:02] Michael: And that's something I brought up with him is you're saying you don't have time. So like, why would you have time if I had a retainer? And he is the thing that we're gonna do, if you sign a retainer, we're gonna reorganize our staff so that we have permanent people working on your project.

[00:19:15] We wanna I actually found his explanation re reasonable. They're like we wanna build long term partnerships. And so we want to dedicate consistent workers to the people that have retainer agreements with us. And so if you're just on an hourly, it's hard for us to tell a retainer client, know the lead designer isn't available, cuz they're working for an hourly client.

[00:19:35] But if you're a retainer client, then like it's much easier for us to justify to the cost of okay we're giving you 10 hours of our lead D designers time per month. And like denying those 10 hours to other clients, which. Not great for me as a client, but like at the same time I get I do get that they wanna reward people that make long term commitments to them.

[00:19:57] If it were my position if the roles were reversed, I hope I wouldn't put somebody in a position where like the project is half done and the only option is to do a retainer, but I did get the idea of we can, it made a little bit of sense to me.

[00:20:11] Jonathan: Here's and it makes sense to me too, but here's the problem. It happened four or five months in and it's, that should have been the discussion in day one.

[00:20:20] If this was gonna happen, then it should have been a conversation today. This is my opinion. It should, he should have said, no, we had not taken you on hourly because you're gonna get a crappy experie.

[00:20:31] Or said, we'll take you on as an elderly client, but I it could take a year, we're just gonna, you're just gonna getting drips and drives of time. There might months might go by which they did, where you get nothing done. You didn't really have all the information to make an informed decision at the point where you had to make the decision before you had this massive amount of sunk cost.

[00:20:50] And okay. Maybe he thought things would be better than they turned out. That's probably what happened,

[00:20:56] Michael: Yeah. That was my sense.

[00:20:57] Jonathan: yeah, but for him to not make it right when he's supposedly the expert and he made a promise that he couldn't keep

[00:21:04] Michael: Right.

[00:21:05] Jonathan: that's real, that's the kind of thing. So now, like dear listener, imagine being the client and being on the receiving end of this kind of a situ.

[00:21:19] it's, I'm telling you, it happens all the time at ask anybody that hires people by the hour, especially design stuff, especially web stuff, or maybe that's not fair. It's I just talk to a lot of people like that. So that's probably just, that's probably just confirmation bias but it happens all the time is this is one of the, one of the things I hate about hourly.

[00:21:38] I used to run an agency. I was the VP of an agency and this happened all the time. Like every project, it wasn't a surprise. when it happened

[00:21:47] how come these, how come, these clients are telling us to do all these different things, so like they're, the scope is creeping everywhere.

[00:21:53] Cause the client keeps changing their minds. So fingers are pointing in both directions. That's not what happened with you, but this kind of thing happens all the time. And then to blame the client for being too small, when that was totally. On the table at the beginning of the deal. And then things go sideways and the owner of the firm is no, I'm not gonna make this right.

[00:22:13] You need to become like one of our big clients and then magically we'll get this 10 or 20 hours across the finish line. It's just really uni impressive and kudos to you for not, not dragging them online. Anyway. Oh, okay. So how did it feels like we're nearing the conclusion of the tale?

[00:22:33] So what happened.

[00:22:35] Michael: So yeah they wrapped up once we started the retainer, the design work went really smoothly. It was really like going back to the beginning of the project where everything was smooth. The dev work was a lot bumpier. I think they, they weren't really used to working for another developer. Like when I, I have freelance developers that work in house in a tiny pilot.

[00:22:55] And we all do code reviews. I typically review when somebody's first starting, I review all their code before it goes in. And then they move on to just doing peer reviews among the other developers, but I was reviewing their code. I think they didn't have experience with that. I think they also underestimated like what they wanted to do.

[00:23:13] They ended up wanting to completely throw away the theme that we had and redesign a theme from scratch to implement the new designs. Took a lot longer than they expected. So I was expecting the work to be done that month. I figured like I was buying 60 hours for March and I figured okay, 10, 20 hours to wrap up the design and then maybe 10 to 15 hours to implement those designs on each page.

[00:23:34] Cuz every, I only needed redesigns on three pages. But then it ended up being, they through some miscommunication, they ended up fixing bugs instead of like minor bugs on the site instead of starting the design work, then the whole theme thing took another five weeks and then it wasn't until. And then by that point they were dragging for so long and I was so deep in that.

[00:23:57] I was just like, okay, like I have to terminate the project. So I, the, fortunately the retainer only had a 28 day notice period. So if it had been a longer commitment, I wouldn't have done it, but one month wasn't too bad. And so I told them like, Hey, it's over. This isn't going the way I wanted.

[00:24:11] And then it was surprising that's the point where the project went really smoothly. They, after that they did finish each page in about a week each. And then at the end of the month the project was done.

[00:24:21] Jonathan: So here's another reason why I think the owner's logical, but unpersuasive story about you needing to be on retainer is ridiculous. He knew you weren't gonna be a long term client

[00:24:35] Michael: it was possible that we could be like he also wanted the, to redesign. So there's like the website and then there's the web. In the product itself. And from the beginning, he was like, we could redesign the web app for you. Like we're really interested in doing that which I was open to and it could have been like, that was the other thing, keeping me going that This did have the potential to be a good relationship like within the team.

[00:24:59] There's no UX experts. One of the developers on the team is pretty good at design, but whenever we do have to do something, that's very UX heavy. It takes us much longer than I think a professional UX designer would take. And so just having a designer on retainer for 40 hours that we could offload some front end work to offload some design work to when we needed to, like that had a lot of potential.

[00:25:23] And so he wanted that to continue. Like he wanted us to be a long term client. He also wanted I think he was also hoping for us to grow to the point where maybe we are doing like 20 to $30,000 with design work. If the website really takes off the changes make a big difference, then we become a big client for him.

[00:25:41] Jonathan: Okay. That makes sense then. Okay. So there was some hope.

[00:25:44] Michael: Yeah.

[00:25:45] Jonathan: Okay. But you did, ultimately you did pull the plug, they finished the work. I don't think there was there anything else there? The site went live, right? And then the month. And then what happened the month after the first 30 days after the site, the new site went.

[00:26:00] Michael: So it did seem to increase sales. So the first month I think it was like a 30% increase in sales. And then the next month it was something like I think a 20 or 25% from the previous month. So I think the in month two, it was like 60% higher than the month before we launched the new designs.

[00:26:17] And again, this it's not rigorous, so I don't know how much of that is due to the new design or, but it was like a record high in sales and there was no other. Usually like when we have a big record sales, there's some event that explains it and like really nothing else had happened. So it did seem like it was contributing to, to sales.

[00:26:36] I did invite the CEO to do a postmortem. I told him I wanted to write a blog post about the experience and say, like the things that I learned and I told him I thought there were a lot of things that both of us could have done to improve the outcome. And so we had that conversation

[00:26:50] Jonathan: Okay. And. The here's something I found interesting in the, about the blog post and the people who sent it in, cause I wrote a, you inspired me to write a, a highly summarized version of the classic situation. So I used some of your numbers, for example, anonymously.

[00:27:08] But but so a lot of people wrote in were like, oh, I saw that article too. Like they, they knew cause it was like the same day yours came out or the same day I heard of it. And I, there was a lot of conversation about it. And a lot of people didn't get all the way to the conclusion where you said something I found really interesting, which was that, like you just said, it seemed like it contributed to a significant increase in sales, maybe 60% increase in sales for the first couple of months and that which.

[00:27:44] Almost I'm trying to remember the numbers. It didn't quite cover the 46,000 you spent, but it was pretty close to recouping your money in two months,

[00:27:51] Michael: right.

[00:27:52] Jonathan: but then you, and presumably that would continue at those levels. Who knows? Maybe not, but it could. And you said if you were going that you regret it, the whole in the title, it says you regretted it.

[00:28:04] It's but it worked out great. So like, why what's the thing you regret? You know what I mean?

[00:28:10] Michael: Yeah. I regret how much time it took up. I think I probably could have gotten 80% of the benefit with 20% of the effort. I think it really should have been a much more tightly scoped project. I think that we didn't talk about this too much, but it kept growing in scope like the, they wanted to the boundary between the rebrand and the redesign was blurry.

[00:28:33] And then the line between what's strictly necessary to implement this design and then what's necessary to maintain good coding practices like that continued like bloating this, the scope of the project. So I think it was, I don't like to take huge bets and I don't wanna just spend $45,000 and then just say oh, let's see if I make it back.

[00:28:53] I'd much rather make a much smaller bet. Something like that's gonna take 20 hours of my time and maybe 10, $15,000. And then see if that. Has an impact on sales rather than this big bet that like really has to pay off a lot for it to be worth the time. But I think I probably could have gotten, there's an opportunity cost in all the other things that I was doing when I was dealing with this agency for eight months.

[00:29:20] Jonathan: So if they had come to you, day one, when you were looking for agencies and they said, oh, it'll take about eight months and it'll be $46,000.

[00:29:26] Michael: Yeah, definitely not.

[00:29:27] Jonathan: So you got. And you said in the, in, in the post and here that you feel like both parties could have done things differently to improve the experience, but you did get, you got dragged through it.

[00:29:40] There's, it's not, and I'm not pointing fingers at this mystery agency. Really. I think the, a huge contributor to the situation is hourly billing, which I know we've discussed somewhere. I think it was email that you still think our you disagreed basically. You were like I still I'm a fan of hourly billing and I'm, but I'm here to tell you that hourly billing's the reason this happened.

[00:30:10] Michael: yeah. So I'm interested in your case for why hourly billing was at the root of it.

[00:30:15] Jonathan: Because the incentives are misaligned it's financially beneficial for the seller to take longer. And bloat the scope

[00:30:24] And it's and that's the opposite of what the buyer wants. The buyer wants it done in 20 hours for $10,000. And the problem is that it's insidious, I used to go by the hour, we weren't, immoral or trying to cheat anybody,

[00:30:38] Michael: right.

[00:30:39] Jonathan: but the fact that we are, we would be punished financially for being fast,

[00:30:44] Causes you to not think of ways to be fast.

[00:30:47] Michael: right.

[00:30:48] Jonathan: So you just don't come up with ways to be fast. And to your point, when people are really good at estimating, when the seller is really good at estimating their hours and the sellers really good at controlling the scope and is always trying to do less scope, not more you can create customer satisfaction, you can have a situation.

[00:31:06] The the client is happy. The estimate that was given up front ends up being the price and not some other higher number being the price. It's true that you can do that, but you are, you're playing on hard mode as the seller. If you're selling hours, you have zero incentive to be able to do better work quicker.

[00:31:28] There's just none. I don't even understand why people buy faster computers. What's like, why would you do that? Invest all that money to lose money.

[00:31:35] So it's not that, I agree that yes, probably even in this exact same model, things could have been done differently. Maybe those weekly meetings would've been a good idea so that you could spot them scope creeping, or get clarity between the boundary lines between get clarity between the rebrand and the redesign or whatever.

[00:31:56] Michael: right.

[00:31:56] Jonathan: but it is when I was running a firm, I had these problems with dozens, scores of clients. It was extraordinarily common and everyone's just mystified, like how come this keeps happening? And no one could we're doing our be we really genuinely trying to do our best.

[00:32:14] We're trying to hit the estimates, but you're not penalized other than getting angry emails

[00:32:19] And occasional tough conversations. Like your post mortem or like your conversation when he told you needed to buy a retainer. That was a normal occurrence in the it's a normal occurrence in the, in this model.

[00:32:31] And as soon as I realized that it was certainly a root cause if not the sole, cause it was a major cause I was like, oh, that would fix everything. So what if someone had, so imagine if someone came to you. Or if even this agency, it doesn't matter if it was this one or another one, really. But if they came to you and said, oh what are you looking to do?

[00:32:52] I feel like the site doesn't look professional. I'd like it to look professional. I think it'll, I'm pretty sure it'll contribute to an increase in sales. Maybe 10% would be nice, 10% increase in sales. I feel like that's reasonable. And they said, okay, 10% increase in sales, that's, four, $5,000 a month.

[00:33:07] If you give us 15 grand we'll get you that 10% increase in sales by redesigning the site,

[00:33:13] Would that have been, and boom, just give 'em 15 grand. They go do their thing. They come back with the designs and maybe you guys have to work together to implement them, cuz it's a, an unusual website architecture.

[00:33:24] Is that, would that have been an attractive thing or would you not have even been able to wrap your head around someone who didn't have an hourly rate?

[00:33:32] Michael: No. Like some of the people that I interviewed pitched an hour or pitched like a milestone based plan and I was

[00:33:41] Jonathan: with prices for each milestone or?

[00:33:44] Michael: With prices free milestone. So I don't have anything against milestone based pricing. The biggest problem was just that the agency wasn't willing to do that, like to, to them, I'm a small client, like for them to commit to milestone based pricing, they have to make predictions about me and.

[00:34:02] Especially for something where it's like very open ended, create a new logo, create a new brand. If I'm just unsatisfied for weeks at a time, then like it's a terrible deal for them. Cuz they're stuck in this thing. That's $15,000 is a pretty small amount to them and they've, they're stuck on this unbounded contract.

[00:34:19] So like for this, I would've liked if they had said we'll do like a package deal where it's a flat fee. That would've been nice. But it also, if I had insisted on that, I wouldn't have gotten the agency that I wanted.

[00:34:35] Jonathan: And let, you're extraordinarily empathetic with their situation in this particular, in this particular agency. But for, just for the listener the comment that you just made about the unbounded scope, it's like how do they know that they could satisfy me?

[00:34:47] It's if they're good at it, if they had a financial incentive to get good at picking clients that they could satisfy with their logo package, then they'd probably, if they had the, that financial incentive, then they probably would get better at it. But since they don't have that financial incentive,

[00:35:06] Michael: What.

[00:35:06] Jonathan: better at it.

[00:35:07] Michael: I don't think it's like me being, especially empathetic. It's from working with a lot of freelancers. Like I've worked with graphic designers before and I've interviewed a lot of them about I wrote a blog post about hiring a graphic designer. And so I interviewed a lot of them. And one of the things that surprised me was how reluctant a lot of them are to start working with a new client, especially on a platform like Upwork, where it's biased in the favor of the client, because the client does have a lot of power.

[00:35:34] Once you sign the contract with them, they will try to expand the scope and make you do more than you agreed to. And I'm not trying to protect them from me, but I think if you, as the client, if you're limiting it to agencies that. Only do flat fee billing for a project like this, then you're eliminating the agencies that are good, but that are afraid of a terrible client.

[00:35:59] That's gonna ask for the moon for a $15,000 flat fee.

[00:36:04] Jonathan: Yeah, that's true. But I don't see the downside of that, but yes, it's true. Like some you that will, it will limit the number of it will limit your choices to the people who will give you a price instead of giving you an estimate and then turning out later, the price was what, five times more,

[00:36:23] Michael: But I think I think for a business of my size, you don't generally have that luxury. Like I didn't have that luxury. I, it's not like I had 20 agencies to choose from. And I went with the one that, that had hourly. Like I found one agency that I thought was a good match and they, because they have the luxury of being choosy about their clients.

[00:36:42] Like they wanna protect themselves with an hourly contract. So I can't. I can't both have the agency that I want, or that seems talented enough to do what I want and have a flat fee.

[00:36:54] Jonathan: Okay. But if you, if there was one though, would that have been prefer.

[00:36:59] Michael: Yes.

[00:36:59] Jonathan: All right. That's the important piece. So I grant you that most people who do stuff like this bill by the hour for the exact reason that you just said, which is that they're protecting themselves, they're not protecting you,

[00:37:13] They're protecting themselves from you.

[00:37:15] So it sets up this dynamic where it's from the jump it's people sitting on opposite sides of the table like a lot of agencies will talk a big game, especially dev shops will talk a big game. We're your partner trusted advisor, all that stuff, but we don't trust you.

[00:37:33] We don't trust you to not abuse our time. So we're gonna bill by the hour. It's are you a partner or not?

[00:37:39] Michael: I think it's hard. If with a flat fee, the client doesn't quite have skin in the game, like it costs them nothing to keep asking, to see more revisions to see different versions of ideas. So there's perverse incentives with that as well.

[00:37:52] Jonathan: So here's my, this is old news to people who've listened to the podcast or my mailing list, but revisions are not what you want a client. What you want is the outcome. So if I don't know, IDEO comes along and is Hey, we've got a package for $15,000. We'll do a complete rebrand, give you everything you need ensure that it's something that can be implemented into your site, architecture.

[00:38:16] You, your guys do the implementation, but we'll give you just a design, not a gorgeous design, but a design that gives you the outcome that you want. So imagine how attractive it would be for an agency who is PROMIS promising you like an increase in sales

[00:38:31] Would you really be worried about revisions if they were able to do that?

[00:38:36] Michael: I'm skeptical that an agency can guarantee any particular increase in sales. Like I think, like 10% is maybe modest, but if they're going for more than that I think it's hard for them to guarantee. And then I don't really love the idea of I have to blindly take whatever they give me.

[00:38:55] The outcome is the only thing I, I care about, like

[00:38:58] Jonathan: Go into that more

[00:39:00] Michael: the outcome is a thing that I care about, but I still want it to feel like my site, if they said, okay, to get to 10%, we're gonna have a big thing that flashes and lots of animation and stuff. And it makes it feel like a totally different company.

[00:39:12] I don't want that. I still want to be able to have some creative contribution into what makes the site feel like authentically my site and still my brand.

[00:39:22] Jonathan: sure. Yeah. And a good agency will do that too. That would be, they were no agency was gonna come along and be like, oh, we're gonna completely change your brand to increase sales prob. Yeah that's totally

[00:39:33] And I wouldn't, I would just, I guess that's a tacit assumption, but it's good that you made it explicit.

[00:39:38] So if someone came along was like, I've literally when I was doing development I had one client toward the end where I knew it was introduction through a friend, it was I, it was a referral and I was, I felt like I was doing him a favor. Probably shouldn't have taken the client on.

[00:39:56] I knew it wasn't a great personality fit, but I knew I could do. I knew I could do what he wanted, which was make his desktop site work great on mobile because and because, and he really wanted that because he could see that his in his analytics that the mobile traffic was going through the roof and the site was literally unusable on a phone.

[00:40:17] So I gave him a couple of options to three options to choose from. And one of the lower options was that, I would inherit the styling color fonts and all that stuff from the main site, but there would be no design review. He was not allowed to, he could give me feedback about stuff, but I was not gonna be if I thought it was a good idea, I might do it, but I might not.

[00:40:37] The goal was to decrease abandoned cards on mobile. And we weren't, it was just gonna be a waste of everybody's time for him to be like, oh, could you make that red a little redder?

[00:40:48] Michael: right.

[00:40:49] Jonathan: And that was the one he picked. So that's what we did, and it was like,

[00:40:57] And it was like it, that, and it, and I didn't do, it was, and it was the kind of site that you could have flashing animations and be real gross and, and real salesy, cuz it was like a low ticket, lots of low ticket sales, but yeah, no, I, so there's a little bit of assurance there that it wasn't gonna look like a different site, like it needed to still match the desktop version.

[00:41:14] Michael: sure.

[00:41:16] Jonathan: Yeah. And I gave him a fixed price for that and it was fine. It was not the greatest, but it was fine

[00:41:21] Michael: Was yours, was it the price just for the design or was it the implementation as

[00:41:25] Jonathan: implementation as well.

[00:41:26] Michael: I think that's a little bit of a factor here as well, because it is possible for the designers. If it's a fixed price, it's har it's possible for the designers to introduce complicated designs that are like, look nice, but are not actually easy to implement.

[00:41:43] And that shifts work onto the developers. So that, that was a bit of a factor too. Like I wanted to make sure I was still protecting the dev side and not letting. If they just say okay, we guarantee you, if you implement these designs, you'll see a 10% increase. But then they'd give me a design where desktop looks one way and mobile looks completely different.

[00:42:02] It's like very hard to make a responsive design that does both then

[00:42:06] Jonathan: How does the hourly help with that though?

[00:42:09] Michael: With the agency doing dev work.

[00:42:12] Jonathan: How does hourly help with the situation where the designers come up with a design that's hard to implement.

[00:42:18] Michael: Oh, because I still have feedback into the design work. Like it sounds like you're talking about a situation where you say I'm gonna guarantee you this outcome, you don't give me feedback or I don't necessarily have to take your feedback. But I'm gonna guarantee you an outcome.

[00:42:32] I think that would've been a problem here. If they say I'm gonna guarantee you a 10% increase in sales. And so you don't get to give feedback into our process, but the end result is designs that I have to hand over to my developers and then my developers have to do the work of putting it up on the site.

[00:42:48] Jonathan: Yeah. I see what you mean. Okay. Yeah. That is it is you have a, there are a bunch of, there's probably three or four interesting nuances in your particular version of this story. One being that you're on a deprecated platform in the first place, which is or, if it was WordPress or Shopify or something, then an agency really would be able to come along and say, yeah, like they could just look at your site and be like, the call to actions are all wrong.

[00:43:11] We can fix this in two days

[00:43:14] Michael: the platform, I don't think was too big of an issue. Like it's basically just a view site. So it was view and bootstrap, which are pretty commonplace,

[00:43:23] Jonathan: was there. So then why not have them implement it?

[00:43:27] Michael: Just because I felt like I. I'm good at managing a dev team already. I didn't need to pay a much higher rate to get their devs as opposed to mine.

[00:43:37] Jonathan: Gotcha.

[00:43:39] Michael: But I'm curious about the if you were, if the rules were reversed and you're like soliciting bids on this project and you're, you feel very strongly that hourly is the cause of many problems in projects.

[00:43:53] Like what do you do in my shoes? If the agency that you want is only willing to do hourly and you're too small a client to have a lot of influence over them to change the pay structure. Like what are your options at that point?

[00:44:06] Jonathan: If there's no option, there's no option, but I would not enter into a relationship where the power dynamic put me in such a weak position.

[00:44:13] I don't care how good their stuff is. I'm not gonna, I don't wanna be the small fish. I wanna be the big fish.

[00:44:19] Michael: Yeah. I agree with

[00:44:20] Jonathan: my, does that make my search much harder?

[00:44:22] Yeah, probably

[00:44:23] Michael: yeah. Yeah. Yeah. Like I'm in a, sort of a weird position, like a company, my size, like any agency that I can find if I like Google search or something is generally gonna be too big for me. And then the agencies that proactively reach out are like very low quality overseas. Like we'll do it for $500 or something like very unreasonable.

[00:44:42] Jonathan: That reminds me, you had some interesting follow up in, at the end of the article where it's like a whole bunch of people were like, why didn't you just do this, do that, do the other, so what were some of the things that like, like, why didn't you just move the whole thing to Shopify?

[00:44:57] Why didn't you just, what were some of the other ones? Why didn't you just, get, 10 of these? Oh, we'll do it for $500 people and throw away nine of them.

[00:45:07] Michael: Yeah, I'm just so skeptical that they like do it for $500. People can produce anything. Good. I don't know if you're a fan of Joel Spolsky, but he wrote this article that has always stuck with me called hitting the high notes where if you, he was talking at the time he was talking about like zoom versus iPod and he was like, iPod is just so clearly a better design than the zoom.

[00:45:29] And if, even if you gave Microsoft like 50 years to design a better zoom, like they would never get to the iPod just cuz they can't hit the high notes. And I feel like that's true with design and development. If I hire like 10 low rate designers and developers, like I'm probably not gonna get any good results and I'm gonna burn a lot of time in, in working with them.

[00:45:51] And so I do I feel like you do have. You do have to find that's the thing that's hard is like the people that claim that they can do good work and the people that can't, but are expensive, are hard to distinguish between until you start actually working with them. Some people have like fake portfolios or whatever.

[00:46:09] And so you have to invest time into working with them. If you're Google or somebody who can throw around like a hundred thousand dollars and not care, like you, you can work with like bigger players who have a better track record. But at my scale, you're working with people who you can't really, you can't really get a lot of information about them before you start working with them.

[00:46:28] And so you do have to make a bit of an investment. And so for something like where they're saying, like it's a pretty small project, it's hard to get 10 or 20 hours in and then say eh, actually, no, like you're not ideal. I'm gonna start over with somebody better. Or and then going back to your question of like, why not 10 of the low quality I think it.

[00:46:43] I've never had a good experience. Like I've tried hiring like low cost developers and it's just I just always get garbage. And so it's not really worth it to me.

[00:46:51] Jonathan: All right. So you're basically, it's like buying the entry level BMW. That's what you did.

[00:46:58] So you're like I'm not gonna, I'm not gonna, I could buy two Kias or three Kias. But I want to be, I want this website to be like a luxury purchase.

[00:47:07] This redesign wants to be a luxury purchase, but I can't afford the top of the line

[00:47:12] Or don't want to, it sounds like you could, because you did you did go for the retainer eventually. But it was like, yeah, I didn't really didn't want to do that. I would've never done that front. So they it was like the used car sale or the car salesman and being like, oh, do you want the undercoat?

[00:47:25] Do you want the, heated seats? And like all of a sudden you're into,

[00:47:28] Five times more than you're expecting to spend or, yeah. That's a reasonable place for a buyer to be coming from.

[00:47:34] Michael: Yeah.

[00:47:35] Jonathan: And do you feel like they did hit the high notes?

[00:47:39] Michael: I like the logo. I feel like they did a pretty good job with the logo. The design. Yeah. Like I think, I don't think the design is amazing. I think a lot of the feedback I got from the article was like, oh, it looks like the average bootstrap site. And I think there's validity to that, but it's definitely better than what I could have made.

[00:47:57] It's better than the portfolios I saw of the other people I interviewed. So I wouldn't say they, they really hit it outta the park, but I think if this was like a $15,000 job or a $20,000 job, I'd be very happy.

[00:48:11] Jonathan: got it. Yeah. I think it looks good. And the sales, if the sales can be attributed to the redesign, which it seems like they can be, it was worth every penny. Yeah, it's just, it's it's like the experience of, taking a train. Taking the Ello from Providence to Boston and, you, whatever it costs, 150 bucks or whatever it is and you get there and they're like, oh no, you go to sit in like the quiet car.

[00:48:35] And they're like, oh no. You're gonna be strapped to the front of the, and you still get to Boston. What's the big deal, it's you get the experience of the journey was

[00:48:46] Michael: right

[00:48:46] Jonathan: Yeah. And you got backed into a price for predictable reasons that you wouldn't have agreed to front.

[00:48:56] Yeah.

[00:48:57] That's how they get you. These hourly billers

[00:49:00] They lowball you and then you have some cost and now you're, they, it seems like the easiest thing to do is keep, when you find yourself in hell, keep going.

[00:49:07] Michael: right.

[00:49:08] Jonathan: All right. In your, in, if I was gonna give you any advice, cuz you did ask if I were in your shoes, what would I do?

[00:49:14] Because you're right. It is tough to tell people who are talking a good game from the people who are actually good. I would only work with someone. If I was planning on investing a significant amount of money, I would only work with someone on a real small sort of test drive basis first, which would, which sounds like wouldn't have been an option with this, the people you wanted

[00:49:35] And same thing.

[00:49:36] You're not allowed to test drive a Ferrari.

[00:49:37] You either want, or you don't get outta here, but if it were me, that's what I would do. I would find maybe two or three developer, sorry, eight designers, maybe three or four and say, okay, I want to here's 500 bucks or a thousand bucks or whatever it is.

[00:49:53] And I want you to pick one thing. , read, suggest a new color scheme, typography from my site. Just tell me how I should redo the type I'll do it. You just tell me how

[00:50:06] Michael: sure.

[00:50:07] Jonathan: something like that and see what the working relationship is. See if they're responsive, see if they're see if they do what they say they're gonna do when they say they're gonna do it.

[00:50:15] See if they keep their promises is basically what it boils down to. It's have them make a promise and keep it, make a promise, keep it, make a promise and keep it. That's how you build like trusting business, real, any kind of trusting relationship, but that's a trusting business relationship. And maybe this is maybe I'm going out on a limb here, but I feel like a really good designer.

[00:50:37] Pretty good designer who understands you inside out is gonna do a better job than like a prima Donna designer who comes in is you don't get any revisions. We're just gonna make it the most beautiful piece of,

[00:50:50] Michael: right.

[00:50:51] Jonathan: it's like this, I feel this sort of similar with employees.

[00:50:53] It's I'd rather hire somebody who can get on base every time. Not someone who's always swinging for the fence, maybe that's just me.

[00:50:59] Michael: Yeah. Yeah. I think that would've been a reasonable strategy. I think the thing that was limiting is I didn't have a large source of designers to, to ask. So I guess that could have done Upwork, but I. I reluctant to use it, but like of the designers I found like I in only interviewed probably four or five.

[00:51:20] And I felt like I could tell from the jump that a few of them wouldn't be a good match, but I've done bake offs before actually the illustrator that does my does all illustrations for my blog. I found her through a bake off on Upwork where I just hired like several different designers to make one illustration.

[00:51:38] And then I liked hers and she's been working with me for five years so that I definitely think that strategy can work.

[00:51:45] Jonathan: Have you had a lot of people reach out since the article to say, oh, I'm if you ever need somebody to,

[00:51:49] Michael: Yeah. I got a lot of, but it's like those it's, it's all kind of meaningless cuz they're like, oh, I could have done it for 3000 and okay. But yeah, I'm still in the position of I can't really verify those claims. Try paying the money and like trying to get them to do a project.

[00:52:04] But at this point I'm burned out on, on touching the websites. I'm putting out on hold for a while,

[00:52:09] Jonathan: Yeah. But hopefully this attention, is gonna also in creating, see now you're not gonna be able to attribute it to the redesign. You're gonna have to say, oh, I was the top of hacker news for two weeks. Or whatever for entire weekend.

[00:52:23] Michael: Yeah.

[00:52:25] Jonathan: Cool. All right. This has been super helpful to me.

[00:52:28] I hope the listeners got something out of it as well. And I wonder where could people go to find out more about you, maybe check out your blog. Maybe they need to buy a tiny pilot for their server

[00:52:37] Michael: Sure. So my blog is Mt. lynch.io. And my website for tiny pilot is tinypilotkvm.com. And I'm on Twitter at @deliberatecoder.

[00:52:54] Jonathan: Cool. Great. Thanks again for joining me, Michael.

[00:52:58] Michael: Thank you.

[00:53:00] Jonathan: All right, folks. That's it for this week. I'm Jonathan Stark and I hope you join me again next time for Ditching Hourly. Bye.