a big consulting company and then build a software company inside a consulting
company?” The consulting company was a means to an end. It was to get
cash flow, so that you could build a real software company. And when you were
done, the theory was you’d still have these consultants, but software companies
often need consulting arms.
The basic economic model for us and ArsDigita and those kinds of companies
was that you could get a bright MIT grad or whatever and give them a
salary of $75,000 to $125,000 a year, depending on experience. That comes out
to, at most, $60 an hour, and the billing rate was $200 to 250 an hour for building
database-backed websites.
Livingston: Wow.
Spolsky: Yeah. Obviously it was just an arbitrage condition that all these startup
companies were trying to take advantage of.
The question is, how do you get the bright MIT grad to work for you and
not somebody else? What was astonishing at the time was that none of these
companies were making any effort whatsoever to make the work environment
pleasant and to treat the people that they were hiring with enough respect that
they would be able to attract people.
You would go into companies—there were a lot of them in New York:
Scient, for example—and they would have millions of desks crammed into the
most crowded room where they would pack people in like herrings and treat
them as interchangeable cogs. It was not a fun work environment. There was
not a lot of respect for the developers. There was not a lot of treating developers
well and making them feel like they were the hotshots in the organization.
Things that to us are basic: Aeron chairs; private offices with doors that
close for every programmer; letting programmers report to other programmers,
so that your boss will understand you. We had 4 weeks of vacation and another
week of holidays, which you can move I think. For the consulting business, we
had a rule that you fly first class and that you never be away from home on a
weekend.
We actually figured out the entire business model, and we figured that, if
we spent 4 percent more or 8 percent more giving people a better work environment
in these particular ways, everybody would want to come work for us
and not go to the Scients and the Razorfishes of the world. And that was going
to be our business model. Everybody is charging $250 an hour for these consultants
and paying them $60 an hour. We would pay them the equivalent fully
burdened of $64 an hour. That was our clever trick that we came up with, and

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