Neil Davidson, always worth reading, has a guest post today at Dharmesh Shah’s OnStartups blog. The topic is six reasons why now is a fine time to start a software company. I agree strongly with his reason #4 - that constraints enforce discipline. Too many companies start up and grow while times are good, and never learn the efficiency and productivity they will need to survive when times are tough. Companies that are born in turbulent times will not only survive those times but thrive when conditions improve again.
One thing that I’ve been wondering about is the difference between being a full-time employee and being an independent consultant in times like these. Different people have put forth contradictory theories on this. Joel Spolsky has said that when the economy takes a beating, the consultants are the first to go. Others have suggested that full-time W-2 employees are at a much greater risk of layoffs in tough times because of the overhead of benefits, vacation, etc. And also just because of the lower level of commitment involved with a consultant. You can hire one for a few months and if it doesn’t work out you just wrap things up with no hard feelings on either side, as opposed to the emotional trauma of firing an employee. So in a downturn, hiring of employees freezes and any additional work is done through temporary consultants.
I have a lot of respect for Joel’s writings, but my experience more closely follows the second theory. When I was looking for work as a developer in the dark days of 2002 and 2003, there seemed to be few full-time positions available. Everyone was hiring short-term contracts; three months here, six months there.
I’d be interested in knowing whether my experiences were an exception to the norm, or if other people have a similar take on it. Feel free to share your thoughts in the comments.