Confessions of a Contractor

Once upon a time there was a company called XYZ. It was founded by some of the brightest contractors in the heydays of contracting at ABC Corporation. These people were really something. Some of them billed their time out at hundreds of dollars per hour, and could have worked anywhere. What they chose to do was form this partnership — “a flock of eagles,” their president, Clinton Wexford used to call them. Putting aside the fact that this is an oxymoron, since eagles don’t flock, and a cliche taken from some management textbook, it is nonetheless an interesting image, representing Clinton’s wish more than fact.
Now, it should not be surprising that Clinton might express his wish in such a way, given his interesting history and character. It turns out that he was himself a fallen eagle of sorts, having once made himself a millionaire in the glory days of the Texas oil business, lost it just as quickly, and then rose to vice president of a big six accounting firm in Houston before quitting to found XYZ, at least to hear him tell it. I have since learned to take his claims with a grain of salt, but I’ll get to that in a minute.
How he got hooked up with these contractors is not exactly clear, but he probably met Bill Mackerel at some party or country club somewhere. Bill was a brilliant guy, with a PhD. in physics and a zero handicap on the links.
Bill also had an ego that wouldn’t quit, essential for anybody who wants to get anywhere in this business. Bill used to say you had to be an idiot not to make piles of money — there were any number of ways to do it these days — and there were so many morons out there to make it off of. That gives you a flavor of the sort of person he was. His preferred method was speculating in the stock market. Having the mind of a physicist, he developed his own mathematical model of stock performance and used it with some success. I later found out that he took a beating, several of them in fact, but he attributed it to bugs in his model, which he had since corrected. Time will tell.
I knew none of these guys except by reputation when I was working for Hank Rankley. Hank was another Texas character, sort of a match for Clinton. He had been head of the Texas Department of GoodOlBoys or something like that for twenty years, and after retiring, went into the business of recruiting contractors for ABC. In those days there was something of a gold rush going on. ABC had declared that their line of Unix workstations were critical to the future success of the company and were pouring money into developing the software that would make it happen. Since they were late to the party and didn’t have any real Unix experience in house, they tried to recruit programmers. But in keeping with the downsizing and outsourcing trends in the business at the time, the effort was halfhearted and ultimately unsuccessful.
The best people in the business would not work for ABC at any price, and said so. The corporate culture alone would stifle their independent nature, but the rigid salary structure did not come close to the rates they demanded and got elsewhere. So the only way to bring them in was as contractors, paid time and materials. This led to a huge demand for recruiters to scour the market for people who could spell Unix. Since there was very little quality control — the people at ABC were themselves unqualified to judge the good ones from the bad ones, the recruiters were tempted to exagerrate the qualifications of the people they brought in. Sadly, but perhaps not surprisingly, the recruiters’ ability to resist this temptation was limited.
Now Hank was a Texas businessman of the old school, and liked to work through inside contacts. So one of his closest advisors was Lucy Mondragon, wife of the head purchasing agent at ABC. An interesting coincidence, perhaps. Lucy used to get the inside poop on when ABC was letting out big contracts, which gave her, and therefore Hank, a jump on the competition.
It was just such an occurence that brought Lucy to call me when I was at Hemisphere Corporation. She called me again and again. A short time later, my old friend Bob Periwinkle from Wackem (a well known recruiting firm) started calling as well, and from the job descriptions they gave me, I could tell they were bidding on the same contract. Wackem, it turns out, had pretty steep margins, 35 to 100 percent in some cases, which led them to have a problem handling the “bags of money they had stashed under their desks,” as a Wackem accountant once put it to me.
I was coming to the end of my project with Hemisphere and I was losing confidence in their ability to adapt to the market they were in, so I started warming to the idea of going back into ABC as a contractor. I had learned a little bit since my first experience as a contractor with Wackem, so I thought I would try to play this little game myself. I told Bob what I wanted as an hourly rate, due to the high risk factors and poor working conditions attendant with this sort of work. It was a relatively high rate. Bob balked, and I could tell that it was because of their very high margins. I gave Lucy the same rate. This led to a call from Hank. He told me that he had a simple principle. I could go for whatever rate I wanted, he said, and he would tack on a 14 percent margin — the same for everyone he had working for him. If ABC went for it, then everyone would be happy. If not, then perhaps I should reconsider the market conditions. In any case, the onus was on me.
I liked Hank. He was affable and accessible, a tall Texan with a charming drawl and colorful mode of expression. Later, when I was recruited by XYZ he said, “now you tell ol’ Clinton to stop raiding my stables, ya’ hear?” “I love Texas,” I said to myself, but I just smiled and said, “I hope we can do business again.”
Hank had an interesting business. He had an office in Austin, primarily focused on ABC, but he also had people working for the state and elsewhere around town. He also had an office in Pheonix, supplying people to Outel Semiconductor. What was odd was that his only other office was in Zurich, Switzerland. The Swiss office only lost money, lots of it. He made regular visits there, and complained about how he had to keep pumping money into that operation, and how difficult it was to do business there. When I told this to my accountant, he practically jumped out of his chair.
Later I read in the paper that Hank was under investigation by the IRS. It seems that he had categorized some of the people in his “stable” as independent subcontractors rather than as benefitless hourly employees as they were. As a result, he wasn’t paying his half of their social security taxes as he should. I couldn’t believe it. After a long investigation, trial and conviction, he was sentenced to eight years in prison. As part of the settlement (he might have gotten twenty years otherwise), he was obliged to sell his company and make restitution of the missing tax money. You should have seen the Wackem people gloat. He eventually sold the company to his daughter for a fraction of its value as claimed in the settlement, but most of the money was never found. What a business.
Now Clinton may have been too clever to ever be caught, but he was just as dishonest. He paid himself $75 an hour plus expenses, which were staggering, but he spent most of his time with Bill on the golf course, doing “bizness.” He complained about competition from offshore companies like PuPu, the Indian consortium partly owned by ABC, which put good people in all the places he would like to put them for a fraction of the rates he liked to charge. What he wanted, he said, was to beat them at their own game, importing “slave” labor on sham 401k visas and continuing to charge “flock of eagles” rates, pocketing the difference, of course.
About this time, I began to feel my position in XYZ weaken. When I started, I said I wanted to eventually become a partner. Partners got a higher hourly rate and shared in the profits made off of the “slaves.” What were the criteria that needed to be met in order to become a partner, I asked in my interview over lunch at Fertilizer Creek Country Club. A long term commitment and contribution to the company was the response. Are there objective criteria, or is it purely subjective, I asked. There was a moment of indecision, a shifting of the eyes, perhaps a computation whether to lie and what lie to tell, before he mouthed a weak “subjective.” “Bad sign,” I thought.
But I went with them anyway. They paid me my highest rate up to that point in my career, higher even than Hank did, paid benefits and promised bonuses for productivity. It was such a good deal, I couldn’t pass it up. I later regretted it, but not that much.
I worked for a fellow named Barry Burgermeister. Barry was a tall, toeheaded dropout with less than a year of college. He was also a genius. He loved to windsurf and might have been a champion, but he had some serious emotional problems. He once told us over lunch that he was born somewhere in Latin America, and had never known his father. His mother was a heroin addicted artist who regularly hit him up for money. When your boss tells you this over lunch, you don’t know what to think. We all glanced at each other around the table, but none of us said anything. It was a moment, let me tell you.
By coincidence, I suppose, I later had an opportunity to meet another very bright contractor who also did not know his father, had left home at an early age, and had some emotional problems. Do two instances constitute a pattern?
Now for one reason or another Barry had a very competitive nature. He could not stand to be bettered at anything. If anyone was more productive than him, that person had hell to pay. It was probably for this reason that he hated Ira. Ira was more productive than Barry on a regular basis, but could not make partner. It was widely understood that Barry was blackballing him, because Ira was a match for him intellectually, and called his bluff on several occasions. Ira Goldstein was born in New York, but moved to Israel with his parents in the early seventies. His parents it turned out, were radical Zionists who lived in the contentious West Bank. His brother lived on a kibbutz in the even more contentious Golan Heights. They regularly experienced close calls with Palestinian bombings, and Ira served as a Captain in the Israeli army. He didn’t take shit from anybody, and Barry was no exception.
Well I have a high opinion of myself at least as a programmer, but I couldn’t compete with these guys. My head actually hurt from hitting the ceiling. Productivity was a big deal with XYZ. Contribution, measured as the difference between your revenue generation and your cost was the subject of regular and prolonged discussion. I used to joke that we spent too much time measuring dick length and not enough time making sure our customer was happy, but the irony was lost on Barry, at least. Or perhaps he took it as an insult.
I was prepared to admit my humility, privately, anyway. One day, I asked him how he did it. “I mean, how do you really close one IDR (itemized deficiency report) a day?” At that time an IDR was worth $2000. Previously, it had been even more. Closing an IDR meant that you had to understand the problem, which meant reading the problem report, sometimes contact the customer, acquire the test case, run it, observe the problem, hypothesize a solution, look at the relevant code, come up with a fix, make the code change, test it, and if you were right, get authority to drop the fix, do some clerical work to actually enter the new code into the source code control system, have it built, test the official build and do some more clerical work to arrange for ABC to pay you.
Now, admittedly, XYZ had refined this business down to something of a science, and the clerical work was somewhat automated. But the tools were pretty much a hack job and didn’t always work, and the testcases on average tended to be pretty tweaky in and of themselves, not to mention the customers. In any case, we were responsible for covering not less than six million lines of code — not counting comments and whitespace — in the graphics area alone. (I later had opportunity to have one of my people count them.) Six million lines of code! Only a programmer can really appreciate what that means. Even with a great deal of experience, which I had, and a brilliant mind, which I knew Barry, Ira and my fellow XYZers had, and I apparenty lacked, that was a daunting quantity of logic.
How did he do it? Barry just looked at me with a mysterious gleam in his eyes and said, “I cheat.” He had a way of laughing with a nervous sort of laugh, when nothing really funny had been said. I didn’t get it. I would later figure it out for myself. The way I did it was by devising what I called the “bullshit meter,” and running it against the billing data associated with everyone in the area. The bullshit meter was a program that queried the problem tracking database looking for anomalies — billing entries called IDRs that did not have associated code drops. What I found was that XYZ was apparently overbilling ABC by a factor of four or five. That is, four out of five of their “IDRs” were closed without code drops and all the associated work required. This explained their mysterious “productivity” of one IDR per man per day, even though another XYZer, Sunil, for example, actually worked about six hours a day. (Sunil once told me he had decided to “give himself a raise” by billing XYZ for forty hours, while only working thirty. Ironic, isn’t it?)
What they had been doing was exploiting an idiosyncracy of the arcane database system ABC was using along with the lack of policing on the part of ABC management in order to artificially inflate their billings. Some portion of these sort of problems occurred as part of the normal operating procedure, and we were occasionally allowed to promote a lower-cost customer reported problem called a CAR (customer associated problem) into a higher-cost IDR to compensate for those very tough problems that could only be resolved with several days of work but without changes to the source code base. Thus, by definition, there should not be more than one or two such problems billed in a given week.
Later, when I had a team of my own, members of my team scored on average, 10-20% of this sort of problem on the bullshit meter. I was the most aggressive of the lot at about 30%, as compared with Sunil’s 80-90%.
What was particularly galling was that once I was in competition with XYZ, we would occasionally get called into weekly or bi-weekly meetings with ABC (my “weekly floggings,” I called them), and we would be taken to task because our “productivity,” as measured by closed IDRs, was so much lower than XYZ’s. Perhaps I could have called them on it in public — I had the data by that time — but what would I gain by it? I didn’t see the benefit, and even in the interest of objective justice and defense of my team, I really didn’t expect ABC to even back me up when I revealed how their own stupidity and laziness allowed them to be cheated so easily.
One day, it finally happened. The company was sucking wind, because overall productivity was declining and expenses were exorbitant. We essentially had one customer, ABC, and they were starting to figure out the game that they had themselves established almost ten years earlier. They reduced their rates several times and brought in competition from other companies like Wackem and PuPu. They restructured their billing from hourly time and materials to unit billing — paying a fixed price per bug fixed, about the time that I joined them. The fixed price kept decreasing, and the difficulty of the work kept increasing due to a variety of factors, until XYZ’s position, or my position at any rate, could not be maintained.
Clinton and Bill Mackerel came to me on a Friday afternoon. “Bad sign,” I thought. “Is there anything I can say that will change your mind?” I asked. “No.” Bill said. “This is a new experience for me,” I said, trying to my best to save face and find something positive in this. Sometimes people say that getting laid off was the best thing that ever happened to them, since it forces them to make a move they might not otherwise make, or it forces them to look at themselves and what they’re doing in an entirely new light. As it turns out, this would be true in my case as well, but at the time, I was naturally concerned. I was also a little bitter because I knew that Barry was behind this, but he didn’t have the balls to talk to me face to face.
I spent five weeks without a job that year. I knew that this was a risk that came with the territory. Contracting can be an uncertain business, and we had plenty of cash to cover the flow, but we had huge exposure — even though we had just bought a new house, and held two mortgages, our monthly outlay was not much more than what it had been before — but it was plenty. I looked around for work, but in Austin things seem to go in waves, and the wave was going out just at that time.
Then Ira called and told me that Wackem was going to pick up half of the work that XYZ had been doing alone, and no one was more qualified to do that work than me. For the same reason that XYZ felt they no longer needed me, Wackem needed me badly. So I called the guy in charge of that operation, Mark Mangly, and told him I wouldn’t mind working for him. The truth is that I didn’t really want to do it, but I didn’t seem to have much choice. After all, I did know this business, plus I knew all of XYZ’s secrets.
I talked it over with my brother Jim. Jim had been very supportive through the whole episode, and I will always be grateful for it. He said I should go back there and go kick Barry’s ass. The way he put it, I kind of liked that idea. When I went back, I went back to the exact same organization I left, and occupied a cubicle on the aisle adjacent to where I had been working for XYZ, right across from my former boss. Not only that, but Mark put me in charge of the group, which made me Barry’s opposite number. He didn’t like that one bit, and I took some bitter joy from that knowledge.
After a while, our numbers started looking pretty good, while XYZ just kept sinking. People were starting to depart for work elsewhere. Eventually Barry stopped showing up altogether.
I had taken a hit, but I was now making just about what I had been making at XYZ, I was in charge of the group, and Barry had run off. I had done it!
Soon better opportunities arose for us, and the decision was made to pull us out. It felt like the freaking army. My new company would disband the whole group and reassign us to more interesting and profitable work elsewhere. We had plenty of it, that was certain. The word got around, and that’s when the final act in this melodrama came. One Friday afternoon after work Anita and I were sitting around the pool, drinking and relaxing, when the phone rang. I answered, and almost choked on my drink when I heard the voice.
“Tim, this is Clinton.” I could tell he was on the speaker phone. “Bill is here with me.” Those fuckers, I thought. They have no soul! “We heard about your situation, and we want to have lunch with you.” What a business!
“What do you want?” I said, trying to keep my voice level, and also trying to restrain my rage. I had learned that much at least. “We want to see if we can find some mutually agreeable arrangement,” Clinton said. My mind raced. I really felt vindicated, but there wasn’t a snowball’s chance in hell I would ever work with those guys again. I had really been waiting for this, but I didn’t have the right words to say. I stalled. “Let me call you back.” “If you call, make it before Monday afternooon.” It was now Friday. They obviously had a meeting with ABC coming up, and wanted to bid me on their contract. This business can make you feal like a cheap whore, except for the cheap part, I guess. “I’ll tell you what,” I said. “Here’s my work number. Call me Monday morning when you get in. I’ll be there.”
Normally, I don’t take calls from competitors or recruiters at work, for ethical reasons. Don’t smirk. I really mean it. One time, years ago, I said as much to a manager from Ersatz Pacific, who got my name from a recruiter and wanted to hire me. I told her to call me at home, and gave her the number, because, although I had a private office and could talk, it would not really be fair to my current employer. She said that she had spoken to dozens of people for various positions, and I was the first one who had ever said that. She said she was impressed. I was surprised as well as gratified, but that’s another story. Anyway, I figured this was an exception, since there was no way I would ever say yes to these guys.
I had all weekend to gloat and think of what I was going to say. I have to admit, I relished it. I was doing very well, thank you, and I liked my new boss. I remember my father’s words. I didn’t always listen to him, but in this, he was right. He said that nothing is as valuable in your career as having a boss you like and trust. If he likes you, and you are earnest, you can do nothing wrong. If he doesn’t like or respect you, you can do nothing right. A mentor is a very valuable thing.
I have often reflected on that advice, and had opportunity to experience both varieties of bosses. In this at least, my father was most absolutely right!
On Monday, I had my revenge. I was lucky, in a way, because Sherry, a contractor in the graphics group, and someone whom I had helped several times in the past, was with me, asking my advice on a problem. It was kind of ironic, really, because I didn’t get paid for helping her. I got paid by the piece. I was just being professional, and ABC was getting something for nothing. A fact which we had noted in our negotiations, without effect.
I liked Sherry. She was charming and friendly, and soft spoken in a typically Chinese way. But she was smart. Smarter, I think, than she thought herself. But with us leaving, she would have a hard time of it, and knew it. I knew she knew, because she had used me as a reference for another job she had applied for. They had actually called me for it, which was a surprise to me, since she hadn’t asked me whether I was in fact comfortable with giving her a good reference. I had since tried to tell her as gently as possible, and as I had once been told, that of course I gave her a good reference, but it was customary to check with the reference before giving it.
One of my teammates, Jack, was also my office mate, and happened to be in when the phone rang. I knew what to expect, and put the call on speakerphone. They had taught me well.
“Tim, I wonder if you’ve had time to think about what we talked about.” It was Bill. “What do you want?” I asked curtly, and thinking we hadn’t really talked about anything, had we? “I want to buy you lunch, and talk things over.” I raised a finger and winked at Sherry. She was noticeably shocked. Jack had also turned around. I was inwardly gleeful, and thought to myself, “is it a sin? I don’t care, this feels too good!” “What do you want?” I repeated, and by now I’m sure Bill knew it was all over, but he was stuck with the phone in his hand. I just wanted him to say it, and now I even had witnesses!
“I want to explore the possibility of you working together with us again,” he said. I took a breath. “You have some balls to call me up now after what you did to me,” I said. “I can’t do business with people I can’t trust.”
“What would it take to get you to come back?” He asked. I hadn’t anticipated him to be so insistent. It was flattering, but I had to be frank. “First you have to get rid of Barry” I said. I knew this was impossible, due to the structure of the company, even though everyone hated him. But Bill just said “that is a very perceptive comment on your part.”
“Perceive this,” I thought.