• the approach (how do I find opportunities?  who do I talk to? what should I ask? how do I know what I want?)
• the pre-interview process (what should my resume look like? how should I handle a first phone screen? do I still need a cover letter?)
• interviewing (what should I ask the company? what are they really looking for? what kinds of questions are they going to ask me?)
• negotiating (how should I negotiate? how long do I have to decide? how do I give notice?)

We try to be helpful on an ad-hoc basis – we’ve helped at least two people get the jobs they wanted this year in a completely behind-the-scenes way, and helped another company redo their CTO search, which they’re now doing with another company – but we’d like to do more.

Starting next week (5/23), we’re holding open office hours on Wednesdays. Most of our meetings these days are with candidates and companies in South Lake Union, Downtown, and Pioneer Square, so we’re going to switch between two locations:

• First and Third Wednesdays of the month, 1-3pm: Zeitgeist in Pioneer Square, 171 South Jackson St
• Second and Fourth Wednesdays of the month, 1-3pm: Uptown Espresso in South Lake Union, 500 Westlake Ave N

This office hours are open to both candidates and companies, completely confidential, and completely free (of money and obligation).

• Candidates and companies: we’re happy to advise on both your own strategy finding a job, or on how you should find great candidates for your own team – including messaging, job descriptions, etc.
• Confidentiality: we won’t share anything you tell us with anyone else, including your managers. Obviously if you’re concerned about being in a public place, we can try to meet somewhere else afterwards, but trust me – we meet people all the time in these places, and nobody knows why you’re there. We don’t have horns.
• Free: no obligation to talk to us ever again, no salesman will visit you, your email address will not end up on a newsletter list forever (we don’t have one anyway), etc. This goes for both clients and companies. If you want to hear about our jobs and services, we’re happy to tell you about them, but we won’t lead or pitch you.

We’re doing this because a healthy hiring ecosystem benefits us: we see a lot of folks who struggle with these things, and if we do a good job, you’ll probably tell people. That’s worked for us before.

The only thing we ask is that if you think you’re going to stop by, please email us at officehours at roosterpark dot com and let us know, so we know to look for you.

We’re looking forward to meeting more people and being as helpful as we can. Hope to see you soon!

I was exposed to a couple of rank amateurs with an agenda.

If you wanted a code monkey, you should have advertised that fact and not waste my time.

I am not amused by seeing dogs running around in a business setting. It’s unprofessional and quite infantile. Indeed, the  the idom “The Country is going to the dogs” has become more than a metaphor.

I am part of that generation that witnessed the success of one of the greatest engineering projects of all time, the landing of a man on the moon. What we have now, with the current generation of poorly educated engineers and an army of unethical cretins, is scandalous.

Now, GO AWAY.

Rejection? Rejection is hard.

Here are some better ways of handling it.

• Do ask for feedback, and listen to what you’re told. If you’ve built a good relationship with the recruiter, always feel free to ask for feedback. She may not be able to provide it – she might not know what happened, or can’t talk about it, or can’t find a way to communicate it clearly – but it’s always ok to ask, and you might learn something useful for future interviews. It also paints you as someone who cares.
• Don’t argue with the feedback. Arguing with a recruiter about the feedback from an interview or resume review is like arguing with your boss about a performance review: you might be objectively right, but this is a reality v. perception game where perception wins. You’re never going to look better by just trying to convince the recruiter that she or the hiring manager is wrong. Do point out errors of fact, especially for things that might not be obvious to a less-technical person (“you say I don’t have experience with MVC: I’ve worked with Symfony for two years, and it’s an MVC framework” is a perfectly fine point, for example); especially in the early process, that might be useful, and is the only way you might have a decision be reconsidered.
• Do ask for other options. If you’re working with a third-party recruiter who does work with a number of companies, always ask if he has another option for you, or (with a larger firm) if someone else there might. Sounds silly, but we might just forget about the other jobs in the portfolio, and that forces us to take a step back.
• Leave with credibility. This is really the key point. Every conversation you have in the job search is about increasing your credibility. Handling this situation with maturity and an interest in understanding only improves your chances for next time.

Lastly, in order to improve our long-tail SEO ranking, I’m repeating “army of unethical cretins” here. “army of unethical cretins.”

Well, since then, Dave’s gone from a little macher to a big macher, and I’ve had fun watching on the sidelines. I’ve bought into the 500 Startups model from the beginning – in particular, the idea of a quantitative, high-volume investment strategy that both forces data-driven decision making and makes allowance for the fact that nobody knows anything. I have some friends in 500 Mentors who are impressed with the talent and investment choices Dave and the 500 team have been able to bring together, and it’s clear that they can avoid getting caught up in the current frothy valuations coming out of Y Combinator 2012 – which may or may not be a signal of a bubble, but certainly reduce IRR in everything-but-heroism (when you won’t care anyway because you’re rolling in money).

I’d been thinking for a while about committing us to investing in startups, and so when I learned/realized that 500 was raising a second fund - from Todd Sawicki, another Gnomedex 2007 alumni - I figured I’d see if they would take our pittance (even though it’s still larger than our 10% commitment). Well, our money might be tiny but it’s still green, so we’re in: Rooster Park will be a Limited Partner in 500 Startups II.

I’m very excited for us to be part of #500strong. I’ve always wanted to be part of a cult that takes my money, after all, and this one allows me to stay married. (I think? I didn’t read every page.)

My only regret about this choice is that the investment isn’t centered in Seattle, which is where the majority of our business is located and where we’ve chosen to live. While 500 Startups is likely one of the largest non-local angel funds with investments in Seattle, and this fund is committed to 25% of its investments in non-Silicon Valley US locations, I’d like to provide more direct local support next year.

That stuff’s all good, but I wanted us to do something more directly beneficial to the community, so we have a new plan. Starting with 2011′s results, we’ll be investing at least 10% of our net income in technology startups. That is, >=10% of our income that we make in a year will be invested either directly in individual startups (as angel investments) or in angel or venture funds. We’ve already committed the 2011 investment: I’ll write about that in the next few days.

This is not a charitable donation: it’s a high-risk investment strategy which I believe will pay off. It’s also not a behind-the-scenes play for business. I know of some local angels who are also service providers, and deliberately conflate the two when talking to entrepreneurs: that makes me squirm, and we’ll go out of our way to avoid these conflicts. (We don’t ever pitch our services to startups: 100% of our startup clients are inbound, and we turn down many more than we have time to work with.) Today’s post about angepreneurs was timely: the plan is for these investment decisions to be made quickly and decisively, so that my business focus remains obsessively and single-mindedly on Rooster Park.

We do still occasionally get the candidate who refuses to answer: “I just want to see what the market will value me at” or “I’d rather not give a range” or something like that. I’m here to convince you this is a bad idea with a bit of empathy. (Note that I’m talking mostly about agencies here, though most of the arguments apply to in-house recruiters as well.) Here’s why:

• The recruiter’s goal in this conversation at this point is not to nickel-and-dime you. They care more about the placement in general than the specific margin at this point (just like a real estate agent wants the sale, not the extra $10K on the sale price). The recruiter’s goal is to figure out if she has a chance of making this position work for you. With that number, she knows; without it, she doesn’t. You become a more difficult candidate at that moment, and will be prioritized behind other candidates – not because she will make less money, but because you have either created more risk for either the client (“turns out he wanted more money and didn’t take the job”) or for the recruiting firm (“she wanted $80/hour and we can only bill the client $75/hour”).
• Your goal of any conversation with a recruiter is to make sure that you aren’t wasting your time. If they can’t pay you what you want to make, you are wasting your time. If you have five more conversations, and then you get an offer, and then it wasn’t what you were hoping for, you have wasted a lot of your time. You need to know if this will meet your pay goals.
• You sound like a newbie. Some candidates seem to think using these sorts of lines makes you sound savvy: it doesn’t. Knowing what you want to make – i.e. your interpretation of your worth in the market – makes you sound savvy. Great contractors say “I made $59/hr on my last job, I’d like to make $62-65 on this next one.” Everyone knows what the equation looks like at that point. I promise you that executive candidates do not go into negotiations without an anchor price. You should have one as well.

The key is to make sure to answer both parts of of the question – what you make/made now and what you hope to make. If you say “I make $40/hr right now, I think I’m underpaid for my skill set, I think I should be making $60,” we can tell you if you’re right – and we’ll write both down. By the way, if you don’t know what the market will bear – you’re in a new city, you think you’ve been underpaid, etc. – it’s ok to ask. We get no value for lying to you, because you will go somewhere else.

The consistent argument I hear about keeping your own pricing opaque is that you might you end up in a scenario where you quoted too low a number, and so the recruiter will take advantage of you and pay you less than you might have made if you hadn’t said anything. I’m sure that can happen. But that’s why you ask for what you hope to make – so that you can make a contract with yourself about what matters to you, rather than just relying on a system that spits out a number without your influence at all.

In the end, if you don’t trust a recruiter to make sure you’re being paid fairly, you should walk from the role. It’s a sign about the people you’re working with or the people that the client chose to work with – either way, bad scene, get out. But if you do trust that person, then answer the question.

Quick Version

If you’re a US citizen or green card holder and you don’t require a group health plan, there’s no functional difference between being an employee or an independent contractor. There’s a financial difference, explained below, that you need to factor into your personal budget, but there’s nothing financially “safer” or “better” about being an employee.

Definitions

An employee is someone who is (duh) employed by a company: that company puts the employee on payroll, pays federal and state employer taxes for the privilege of employing that person, withholds taxes on the employee’s behalf, and sometimes provides benefits to the employee. Your paycheck is always smaller than the actual rate you’re being paid based on withheld employee taxes, federal income taxes, and other withholding: e.g. if you work 200 hours at $100/hr, your paycheck will be <$20,000.

An independent contractor is someone who works for him/herself, and is paid by a company for performing a service. That company does not pay employer taxes and does not withhold employee taxes. Your paycheck matches exactly your rate x # of hours: 200 hrs x $100/hr = $20,000 paycheck. (I’m assuming hourly here, but monthly/weekly pay would be the same.)

You’ll often hear employees called “W-2s” and independent consultants called “1099s” – this is shorthand and refers to the end-of-year IRS tax form that the employer/agency needs to provide the employee/contractor. (There are different rules for international contractors.)

Finances

The primary question for people making a choice is “what’s the difference in my pocket.”

Independent contractors carry a set of financial burdens, plus have some financial opportunities. Let’s walk through them so you can understand your negotiation points. The primary piece to understand is the costs and benefits for being an independent contractor.

1099 Federal Taxes

When you’re an employee of a company, the company pays employer taxes and you pay employee taxes; as an independent contractor, you pay both the employer and employee taxes.

Here’s how these numbers break down for 2012 (these numbers change every year, and there’s some conversation now about reducing the social security taxes):

Here’s what this looks like in practice:

You can see that as your income increases, the relative difference between being an employee and a contractor lessens.

1099 State/County/City Taxes

This is something you’ll need to look up in your area: you may have a B&O (Business & Occupation) Tax for being in the service industry (currently 1.8% in the state of Washington and 0.45% in the city of Seattle), a real estate tax for the privilege of using your own office, etc. In my experience, if this adds up to >2.5%, that would be very high.

1099 Health Insurance

Health insurance as an independent contractor is likely more expensive than as an employee. While it’s likely that an employer will bake in the costs of health insurance when calculating your rate, the cost of insuring you and/or your family in an employer’s plan is almost certainly less expensive than buying your own plan on the open market. If you left a job in the last 18 months, you may still be eligible for coverage under your previous employer’s health insurance in a program known as COBRA. Plan $200-$1000/month more to start.

Unbiased, readable information about individual health plans is difficult to find: NAHU is unbiased but challenging to parse, insure.com provides more optimistic information.

1099 Financial Benefits

So far I’ve only covered the costs side. Here’s the positive side of the equation.

First, all that stuff above – that’s all tax-deductible, meaning that when you calculate your income at the end of the year for tax purposes, you can remove all of those costs. That has some value to you now.

Second, all of a sudden, things that you might buy for business (computers, books) or spend on business (mileage, meals) now become deductible from your federal taxes. Bankrate gives a solid breakdown of areas you might be able to deduct.

Generally this comes to a single-digit percentage of your income during the year – say 3-8% depending on how much you do. So that generally reduces your taxes by 1-3%.

Wrapping Up The Math!

OK, so what’s the incremental cost to be a 1099? Let’s walk through an example, assuming somebody offers you $50/hr as an independent contractor.

So there you go. It’s about 11% more expensive to be a 1099 than to be a W-2 – assume some margin of error, and as the hourly rate increases, the percentage difference decreases, as you hit taxable income caps and amortize the costs of health insurance. If you’ve been making $50/hr as a W-2, ask for $55 as a 1099: $100/hr as a W-2, ask for $108. (Well, ask whatever you want.)

Q&A

What if I’m not a US citizen or green card holder?

You can’t be a 1099: you have to be authorized to work in the US to work as an independent consultant. You might be able to find a company that might help for a fee – i.e. a company that might hold your H1-B and bill you out to the hiring company for ~25% of the cost (including those taxes above). If you do, research that company very carefully – that’s a subject for its own post.

You say it’s about 14% more expensive, but my accountant told me to hold on to 25% of my income. Why?

14% more expensive doesn’t mean that you’re paying 14% total in taxes. As an employee, there are taxes being taken out of your paycheck that you aren’t thinking about, but appear when you’re doing your 1040: your accountant is helping you cover both the regular taxes and the 1099 add-ons.

Don’t I have less security as an independent contractor?

No. (This is the opinion part of this post, to be sure.) There’s no fundamental difference from the employer’s perspective – there’s just a cost difference, in that if a company fires you, it may have an increase in its unemployment costs – and they’ve probably factored that in. This is a risky business – there are no gold watches in consulting, employee or contractor. (Of course, it’s not like there are gold watches anywhere else.) On the flip side, an employer that’s invested in keeping its people will do so, regardless of their type of work.

Here’s what I tell every candidate who thinks this way: the job search process is not like the college admissions process, where every letter arrives at the same time. It’s easy to understand why you would want to wait until you had all the data and then give every company an answer on the same day, but that’s not how the real world works. You’re going to need to make decisions with limited information.

From the company’s perspective, letting you wait a month doesn’t make sense.

• In almost all cases, the company or the group you’re talking with doesn’t have unlimited headcount. They’re slating you for Job X. When you are holding Job X, they can’t put someone else in Job X, and Job X is not getting done. They need a decision. (Google’s the only exception in the software industry I know of here, since they hire for the company and place you later, at least at the individual contributor level.)




• It’s not in their best interest to give you a month. Yes, they know you’re asking for it to finish other interviews. Every company knows that you might be interviewing other places, but once they give you an offer, they don’t want you to have infinite time to consider every option, and they don’t want to be the oldest option in the book. They also don’t want to be part of a protracted negotiation for the “best” offer.

So you’re not going to get to investigate every single job offer you might get over an open-ended period. You’re going to have to make a decision.  Accept, embrace, plan.

Also keep in mind that asking for more time is a negotiation point, and you might get that instead of something else with more long-term value (like salary). You can sometimes reverse this, as referenced in a previous post about negotiation, by making the trade explicit: “if you can pay me $5K more, I can decide now, else I need a few days.”

BTW, you probably can’t plan ahead on this, by scheduling your interviews in your assumed order of interest, because the followup steps won’t come together that cleanly.