What I Learned from Indie Consulting¶
If you think this writing style is strange, this is because much of this writing is actually a collected batch of voice memos transcribed into an essay using betterdictation.com's distilled whisper model. There will likely contain errors, as there are pieces and fragments of some of the thoughts I have on the topic. I welcome all most all edits and comments.
I specify indie consulting as something that is completely and wholly separate from the big-time consulting we hear about from those ridiculous institutions. Check out this video roasting McKinsey From John Oliver to understand how I feel about many of these folks. Theres another great video that I saw on tiktok.
The failure of big time consulting
The difference between Indie Consulting and Big Time Consulting as I define it can be captured in one simple idea. Something that Steve Jobs once talked about:
"I don't think there's anything inherently evil in consulting. I think that without owning something over an extended period of time, like a few years, where one has a chance to take responsibility for one's recommendations, where one has to see one's recommendations through all action stages and accumulate scar tissue for the mistakes and pick oneself up off the ground and dust oneself off, one learns a fraction of what one can. Coming in and making recommendations and not owning the results, not owning the implementation, I think is a fraction of the value and a fraction of the opportunity to learn and get better."
I strongly believe that if you're a young person you should not be consulted. You should join a big company or a small company and just eat shit and develop the scar tissue that develops over time.
Fellow indie consultant Hamel Husain has another perspective
People without meaningful work experience in a particular industry don't add much value (and often negative value) as a consultant. Large consulting companies like McKinsey, BCG, etc. peddle a dangerous form of intellectual masturbation for dysfunctional management and organizations. Ask yourself, what iconic companies have made impressive pivots or disrupted an industry because of the advice of McKinsey?
: I was there.
On the other hand, good consultants can offer specific services and add value in unique ways that employees cannot. Let me give you some examples:
- Procurement specialists who will re-negotiate all of your contracts and leverage the fact they are negotiating on behalf of many companies. I knew someone who did this for large restaurant chains and was able to cut the price of everything from toilet paper to rent by 15% on average. The suppliers wanted to play nice because this consultant had lots of clients. Similarly, Cory Quinn will do this with your cloud bills.
- In my consulting practice around LLMs, I often provide vendors with their first customers, broker deals between open source maintainers and commercial platforms, introduce highly qualified candidates that get hired, and other strategic activities that involve working with many different organizations simultaneously. These activities are in addition to specialized engineering work I do around LLMs. I believe that the the engineering work alone, while valuable, would NOT justify me as a consultant in the long term.
Confidence is the memory of success
Most of my training did not come from obtaining a PhD. Instead, it primarily stems from my 2 years worth of experience at 7 internships, from time spent in academia like NYU Epidemiology and Public Health all the way up to Facebook, and from companies that worked on marketing and sales and machine learning. All of this built up to my 5-year tenure at Stitch Fix.
I've managed machine learning projects that have spanned at least two or three years. From collecting the data, to data labeling, to deployments of models, of monitoring those models, of active learning to improve those models. I worked on the data science teams to prioritize both the features and the model development. I work closely with VPs and PMs to plan and determine the roadmap. I've worked with the infrastructure teams to optimize system performance through caching and measured the revenue impact of these latency changes.
Realizing the need to scale myself, I developed a framework that started with just 100 lines of code but eventually became the driving force behind the recommendations for nearly every pipeline at Stitch Fix. I witnessed the success and longevity of the abstractions I created, as well as identified and addressed any mistakes.
It's through all these experiences where I've witnessed the consequences of my decisions over many many years that has given me the confidence to know that I can actually help somebody, to improve their condition.
Why I started consulting¶
The TL;DR is that in 2021 I had a pretty serious career threatening hand injury. I effectively got tendonitis in both my hands and can't code it as much. And so I took a year and a half off to unwind and I'm slowly ramping up again. Consulting for me offers a much more flexible lifestyle where I can wind up and wind down the hours depending on how I feel. Without worrying that I'm going to go back to working 80 hours a week and messing up my hands again.
How is this structured?¶
- I'm going to first try to define what value is, and use that as a framework to justify everything that we do afterwards.
- I'll give an example of what I did 10 years ago
- How I now think about clients
- Why I think creating content is very important to market and provide value
- What I actually do after the first call with a client
What is value?¶
This is actually completely stolen from Alex Hormozi:
- Dream outcome: What is the dream outcome that you want to achieve?
- Perceived likelihood of success: How likely do you think it is that you will achieve this outcome?
- Perceived time to success: How long do you think it will take to achieve this outcome?
- Perceived difficulty of success: How difficult do you think it will be to achieve this outcome?
All of this breaks down into how much someone is willing to pay as a function of how much value you bring to the company. Everything you do must contribute to increasing or decreasing some of these variables. If you can figure out how every single action you take as a consultant can contribute to one of these four outcomes, you'll be able to give value.
Here's an example of a workout program.
- Level 1 Workout
- Level 2: Achieve Your Dream Body
- Level 3: Achieve Your Dream Body in 6 Weeks
- Level 4: Achieve Your Dream Body in 6 Weeks Without Changing Your Diet
- Level 5: Achieve Your Dream Body in 6 Weeks Without Changing Your Diet. Here are the before and after pictures of my previous clients.
You can see that as you specifically address each of the variables in the value equation, what you present is different. This is also how I think about writing tweets now. The hooks should speak to one person, talk about their dream, and give reasons why it would be more likely to succeed, take less time, and require less sacrifice. If I want to include a list, each of the items in that list should address one or two of these variables.
Stop offering to work for free
I know a lot of people in my DMs offering to work for me for free. But what they realize is that working for free is not good enough because they actually provide no value.
- Dream outcome: You have not shown me that you understand what my dream outcome is, and so you have no way of capturing what exactly it is I want.
- Perceived likelihood of success: You have not shown me that you have the skills to actually achieve this outcome.
- Perceived time to success: You have not shown me that you can do this in a timely manner. If anything, if you work for free, I have no faith that I can even control or manage your time.
- Perceived difficulty of success: More often than not, I need help because I do not have enough time. There's a good chance it might take you 8 hours to do something I could do in 1 hour, and instead now I'm stuck reviewing your work and trying to clarify something, wasting even more of my time.
Personal anecdote from 10 years ago¶
While, I formally just started an LLC in November of 2023. I would say my first few clients came in 2016. I had a bunch of friends who were Thiel fellows and starting their companies and they would often come to me to ask me for advice. At that point I'd already been very deep in a lot of machine learning and data science applications and spent thousands of hours reading papers over the years. I often worked for free or for dinner or every once in a while a couple hundred dollars on venmo.
I didn't have much to offer except the knowledge I had built up, later I realised that I provided value on was decreasing the perceived time to success. I had already done thousands of hours of research. And if you would have spent 30 minutes to ask me a question, I could give you an answer that might take you a week to figure out. That was it. I was just saving them time.
Value of time saved
Imagine my friend had a researcher whom he paid $120,000 per year, and I also earned the same amount. If the call lasted for 30 minutes, it would cost me $30 of my time. However, if the researcher took a week to provide an answer, it would cost my friend $2,300 of his capital. So, if I could save him $2,300 by spending just 30 minutes, it would be a great deal for him. I only charged a 1% commission!
Considering that most realtors charge a 6% commission, I could have charged $240 per hour for that 30-minute call.
The lesson here is not about the specific amount to charge, but rather about understanding that when dealing with people who allocate capital, the exchange rates work differently.
Who are you selling to?¶
I was fortunate to work directly with the CEO and CTO for most of the people I collaborated with. In the past decade, the majority of individuals who approached me initially were founders from my network.
In cases where I failed to make a sale, it was typically because I didn't understand who the actual buyer was. Sometimes it would be a PM or a data scientist seeking my assistance. I would engage in lengthy calls and provide valuable advice, tactics, or pre-existing content. However, after submitting a proposal (which I'll discuss later), I would hear the response, "I'll present this to my boss and get back to you." Unfortunately, I wouldn't receive any further communication, the deal would fall through, and I would be left wondering what went wrong.
Offering Everything for Free¶
This section can also be titled "Social Media." As our follower count grows, social proof becomes undeniable. A larger audience provides more opportunities to monetize and convert them into customers.
The general structure for content creation is as follows:
- Hook: Identify the problem you're addressing.
- Retain: Tell a problem-solving story.
- Reward: Offer a benefit for reading the content.
The hook should foreshadow the reward, which should align with one of the four elements in the value equation. By creating content that aligns with these elements, you can effectively engage your audience.
When creating content, consider the following:
- Does my hook foreshadow one of the four elements in the value equation?
- Does my story increase the likelihood of delivering value?
- Does my reward address something valuable to the reader?
Consistently producing content that helps readers achieve their desired outcome, increases their chances of success, reduces time and effort, provides value. By consistently delivering on these four key aspects in your content, initial conversations become easier because readers have already gained value. You become less of a commodity and more like a brand or a luxury good, as their perception of you increases based on the value you've already provided.
One of my most popular blog posts, RAG is more than embeddings, has attracted interest from over a dozen companies.
Hormozi also has a really great comment on how important it is to sell to hungry people.
If you want to make the most money selling hot dogs, what should you focus on? Is it a better bun? Or a better grill? Or a better sausage? No. To make the most money selling hot dogs, you should just position your stand in front of the stadium right after the baseball game.
One of the things I do now is also just really ask myself how hungry this client is. Are they a new seed company that just raised money (full, a bit bloated)? Or do they need to find someone to make a prototype that they need in order to raise the seed money to begin with? You can imagine that if the dream outcome was to raise money, the value is different. There's definitely a skill in identifying how hungry the customer is. Since you're in the world of consulting, revenue is always a great way of measuring things. If they're losing a bunch of money or have a payday in the distant future, again, we can use the value equation to figure out exactly how to get there.
If you are trading your time to build them a prototype, you're likely just charging an hourly rate. But if you can confidently look them in the eye and say, "What we build together today will close a $5 million seed round in the next three months, and I can help you get there," it's a completely different story.
First Call (Sales?)¶
The job of the first call is to identify which variables we can capture value on. The first thing we should do ahead of the conversation is to understand what their dream outcome is. Then we just have to demonstrate that we can reduce the effort, reduce the time, and increase the likelihood of success. If you've done enough work in stuff like content creation, then it's very easy. They've probably found you because the content that has already delivered some value. And one of my favorite things to do personally is to always share two or three blog posts that I've written that address the concerns they've mentioned during our call. Again, helping for free.
I also try to make a good attempt at guessing exactly what their outcomes are and guessing the problems they run into to highlight my expertise. For example, one of the best things you can do is guess one of their problems and then tell them the solution right away. Usually, if the response is something like, "Oh yeah, we've been thinking about this for a couple of months now and we arrived at the same conclusion," then what you've been able to do effectively is to show that you understand the dream outcome and could have reduced the time to success.
The Situational Assessment¶
Undoubtedly the most significant aspect of my own practice, the situational assessment provides me with a valuable opportunity to effectively highlight and showcase my knowledge about the business. It allows me to demonstrate my understanding of the desired outcomes, such as reducing churn or improving performance, and present a methodology to achieve them. Although it may take two or three hours, I find it extremely valuable for both personal growth and as a sales tool.
Structure of the Proposal¶
- Situation: What is the current situation?
- Objectives: What are the desired outcomes?
- Values: Frame it in terms of the value equation.
- Metrics: How do we measure success?
- Terms and Conditions
Some key points to consider:
Metrics: If measuring success becomes challenging, it will be difficult to identify value and charge for it. In such cases, focusing on milestones and implementation may result in trading time for money, rather than delivering results.
Situation: This aspect can be quite challenging, requiring active listening and the ability to assess the client's situation effectively.
Some Stuff I've Learned So Far¶
Time for Money vs Capital Allocator¶
The more high-level the client, the more I realized that they think in terms of capital allocation. They are not trading time for money; they are trading capital for time. And so, the exchange rate is different. Just like minimizing the time to success is important. If you can really capture the value of what you do, you'll likely always be charging too little. If you believe that you can actually drive a business outcome, for example, increase $100K ARR in 3 months, then you should be charging a percentage of that. It could be a deal if we see it as simply spending money to make money. Really, companies are throwing around so much capital in hopes of improving talent, their revenue, their product, and their valuation.
You should niche down sooner rather than later. In the beginning, I was just trying to help anybody. Startups, I considered banks, I did technical writing, dev rel, application development, and more. However, the more specific your positioning is, the sharper your message is, and the more likely you are to be able to capture value.
Lack of focus is fun, but context switching is expensive. I made 40k working with 4-5 clients, but I could easily achieve the same with fewer clients and charging more if they were more focused efforts.
I've now drilled down my niche to be around the thesis that "RAG applications are subpar recommendation systems, and I can bring years of experience to help you build a superior one." The second thesis I now have is that many teams have traditionally hired software engineers who are unfamiliar with building probabilistic software. Since I've also been doing that for many years, I can help them sidestep some of the pitfalls and mistakes that I've made.
Now, I focus on working with experienced founders who have experience raising a Series A and are looking to build a RAG application and reach an ARR of at least $500k. They are prequalified based on 'hunger' and are thus well-positioned to benefit from what someone can bring to the value equation, unlike less 'hungry' clients who may simply be looking to hire a contractor as a form of labor arbitrage.
These days, there are a few ways to scale your business. While I'm choosing not to, I cannot properly comment on this. I do recognize that there are a couple of ways to scale your business: by building a product or by productizing your own knowledge, or scaling out with labor. Here are my thoughts:
Product: Unless we are niched down to a specific industry and build a product that serves that industry, it's going to be hard to build a product that makes sense. I'm not interested in productizing instructor.
Knowledge: This is probably closest to what I would do. You can imagine writing a book or giving out food content as a way of marketing my own services and increasing my value, or producing educational content with a partner. I can definitely imagine selling a $15 PDF or some video series if it made sense. But as a function of recurring revenue, it's not worth what I can make. This is probably in line with the Reagon Beta Paradox, but I think in the long run, a book of my consulting experience could make sense.
Services: Since my goal is to only work about 25 to 30 hours a week, it doesn't make any sense to come around here and take on more responsibility.
Hate to say it, but it works. You just gotta provide substance. Long-form articles will get fewer views than your 300k-view dumb tweets. However, the biggest revelation for me was how often I would share my blog posts after first calls as a "look, I've thought about this problem before." Also, these blog posts are frequently recirculated in the Slack channels of the companies I work with. It's a great way to build trust and demonstrate expertise.
Most of my presence is now in long-form content:
If they get the value, I don't think most people care where it comes from. But you have to make sure there's enough identity attached that this is 'something I read that Jason wrote', vs 'something I saw on Medium', that light brand attachment is pretty valuable. You can give the knowledge away for free but keep the implementation paywalled. Obviously, talk to your clients and make sure IP is protected for any definition. But I think it's a great way to build trust and demonstrate expertise, especially if this is how they found out about you in the first place.
Things I've Not Figured Out¶
- Pricing is still challenging, especially for educational content that has different leverage mechanics.
- Increasing prices is easy since asking is easy, but I'm reaching a point where pricing might be a function of demand.
- I don't have an exit plan. Unless I end up joining OpenAI, there's no opportunity to sell the company to someone else at a multiple. While that's not the goal, it's something to think about.
- Outreach: I do zero outreach as a function of my public speaking or content creation. It's important to remember that you have to eat what you kill. I'm pretty stable right now, but I definitely acknowledge it as another 'leverage' point that I can improve on.
A lot of this post is really about understanding and defining what value is, and pricing against that. The situational assessment is something that communicates your understanding of what is valuable and presents a plan to capture that. All of your content creation and marketing should be focused on delivering value in one of the four ways:
- Dream outcome
- Perceived likelihood of success
- Perceived time to success
- Perceived difficulty of success
If your content addresses one, great; if it addresses two, even better. If it addresses all four, you're golden. If you can demonstrate that you can deliver on those four things... you're winning.