From $0 to $1 million in only a year

A colleague and friend of mine has built an IT solutions provider firm from $0 to $1 million this year. Interested in how he did it? Here is how:

1. He prepared to leave his company (where he worked in IT) for a couple of years before taking the leap. During this time, he cultivated some terrific contacts within his company — people who could help refer business his way, and potential business partners. He also stored up some financial reserves.

2. He didn’t leave until he landed his first big client.

3. He focused on people who had worked in his company but then moved on to become IT executives at other large companies.

4. He developed a big solution set, focusing on enterprise-level applications. He set his solutions apart with an extremely agile development approach, something many companies still lack.

5. He partnered up with 3 other people, all of whom brought outstanding technology expertise or a network of contacts and sales ability to his company.

6. He knows how to talk “business” instead of technical jargon. So his solutions focus on real results for companies.

7. He hustled like crazy to get work, meeting with prospects, cultivating relationships, and delivering fantastic results. I cannot underestimate how many hours he has put in this year, including travel time.

Congratulations!

[Added later: P.S. Please see my addendum about 20 posts down, to clear up any confusion about ethics...]

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  • Aaliyah

    This is real cool, but I have one question: Is his company home based or has a fixed location for his businesses to be processed?

    Would you mind to list some examples of hidden cost that he and his partners are likely to be involved?

  • aneitlich

    He has a small office outside the home.

    Sorry, I’m not sure what you mean by “hidden costs.” They hire some contractors, but other than that, overhead is very low. No advertising, for instance.

  • Sojan80

    I would think thee would be some ethical issues at play here.

    Lets just start with #1 and #3. in #1 you say

    …During this time, he cultivated some terrific contacts within his company—people who could help refer business his way, and potential business partners…

    Now I have done outsourced project work for my employer for over a year now. One of the clients I did work for through this process now wants to hire me directly and bypass my employer altogether which brings us to #3. You say

    He focused on people who had worked in his company but then moved on to become IT executives at other large companies

    I however cannot ethically go into this contract with said client as I gained this contact through my current employer without generating some sort of conflict of interest.

    Furthermore it has been my experience that most employers do have a conflict of interest clause which is where this would clearly fall under if I were tot ake this contract.

    According to our current policy, I can’t take this contract without first giving my employer an opportunity to accept or deny the newly proposed contract.

    So, irregardless of knowledge, experience, or expertise involved wouldn’t taking contracts and contacts he gained from and through his previous employer be unethical, a conflict of interest?

    Did he not just basically steal from his employer, or as the old saying goes “bite the hand that feeds him”?

    As for #7

    He hustled like crazy to get work, meeting with prospects, cultivating relationships, and delivering fantastic results. I cannot underestimate how many hours he has put in this year, including travel time.

    By all means laud him for his drive and hustle. I too was raised with a very strong work ethic so I can really appreciate drive and determination. Regardless of that though I would have balk a bit at the ethics used to get there…..

    Any advice on where to look for answers to ethics in business questions?

  • http://boyohazard.net Octal

    Any advice on where to look for answers to ethics in business questions?

    Inside yourself.

    Terse answer granted, but you are the one that has to live with your desicions. If it doesn’t feel right to you then you shouldn’t do it.

    This is not an advocate for doing anything and everything with the excuse that “it felt like the right thing to do”; common sense should prevail no matter what.

  • Anonymously

    Interesting.

    What is the equity structure?

  • friendsterindia

    i would like to see his website ….

  • http://www.hyfen8.com Viflux

    Aside from the obvious ethical and moral concerns, many people (such as myself) have clauses in their employment agreements prohibiting contact with many of the sources mentioned in the post.

    Granted, it’s unlikely that any such contact would be known by the (former) employer. However, if it did, I (were I to pursue that track) be facing huge legal battles, which I would be quite likely to lose.

  • Sojan80

    Octal, thanks for the response, but you completely missed my point.

    I am sure that since people have been doing business for the better part of two centuries that somewhere in the world there is an established set of norms for what is and isn’t ethical in business. It is this established criteria I am actually looking for.

  • http://learnwebdesignonline.com artcoder

    I agree with Sojan80. When I first read items #1 and #3, I thought to myself, “Hey, isn’t this unethical?”. I know that when most people sign up for a company, they hardly read the HR papers that were given to them. But I do. And from my experiences (at least in the United States), a lot of those paper does indeed have “conflict of interest” clauses and “can-not-steal-my-employees and my clients within a certain time after leaving” etc.

  • http://www.lopsica.com BerislavLopac

    since people have been doing business for the better part of two centuries

    You certainly meant millenia, didn’t you. And it’s more like four.

  • lawilson2

    Many companies have a “No Compete” clause that prohibits you from being a competitor for at least a year. It makes sense. However, ligitation is so expensive that unless the company was huge and had powerful lawyers, they probably wouldn’t pursue it. I think they should though, because it’s the principle.

  • Sojan80

    Okay, melenia. I guess you can call bartering business, it is trade and consumables after all.

  • Sojan80

    I admit I have been reading Andrew’s posts for some time. I laud him (Andrew) in that I have yet seen him back down from a stated position. He writes what he believes and he defends it. In short, he stands behind what he says 100%, so Kudos to Andrew for that.

    I hope I am right in saying that by this post Andrew is not advocating poaching, which, from the very descriptions Andrew himself posted, it seems fairly clear his colleague did.

    To Andrew’s colleague I would say:
    You have $1 million. Good. Hire a damn good lawyer with it because I foresee a lot of lawsuits in your future based solely upon your shady business practices. You’ll need the $1 million just to cover legal fees.

    To the clients of Andrew’s colleague I would say:
    If he stabbed his previous employer in the back he will stab you in the back as well. Once a rat, always a rat.

  • Anonymous

    this is probably the worst, most generic article i have ever read. it’s so bad that i just had to leave a comment.

  • Jason Batten

    I think some of you people are still running on heat from the previous blogs. Using this to perhaps attack Andrew is not wise.

    Business is business. Ethics in business seems like only a new thing to me. It’s a dog eat dog world? Either way I am sure his friend notified his co-workers/boss that he had plans to leave.

    Congrats to your friend Andrew, I’d suggest he buy some golf-clubs and/or a nice big boat :)

  • http://www.hyfen8.com Viflux

    I agree.

    It’s a tough world and ethical standards change more than some Sitepointers change their underwear.

    What isn’t clear, however, is that the actions of Andrew’s colleague were completely legal.

    I’m about to start a new job on Monday, as an IT Analyst. My employment agreement explicitly states that I am not to have any business contact with any clients, contacts, or employees of the new company, should I decide to leave, for at least 18 months thereafter.

  • Sojan80

    Using this to perhaps attack Andrew is not wise.

    I’m not attacking Andrew at all. As I said earlier, he stands behind what he says so I respect him for that. It is because of my respect for Andrew though that I am however calling into question his friends business practices.

    It sounds like what Andrew’s friend did was clearly poaching.

    Dog eat dog world or no, that’s no excuse for poaching. It also doesn’t make poaching, right, ethical, legal, or worth congratulations. There is a ton of established law (US and International) when it comes to anti-competition clauses and conflict of interest clauses in employment agreements. In general, there seems to be a two year span that is the norm. After that two years (or whatever term is specified in your employment agreement) you are then free to use, court, and otherwise cajole business out of those contacts.

    I further realize we are in business to make money. I also know that in the case of Andrew’s friend, the prospective client you may be taking away from your employer based upon contacts and relationships you formed while with your employer, have no duty to you, or your former employer to inform them that they will be going to you in the future. Their sole duty is to their bottom line.

    Be that as it may, I don’t poach to get my business. I also don’t advocate poaching.

    All I am asking Andrew for is four things:
    1. His take on the appearant issues based on his post. He is a business professional so he should be fair game to ask, furthermore he is the author so his opinions in this matter should bear some weight and merit.

    2. Is there an ethical issue in what he posted regarding the business practices? i.e.

    …he cultivated some terrific contacts within his company—people who could help refer business his way, and potential business partners…

    Yes or No?

    3. And if there is an ethical issue here, other than Octal’s rather terse

    If it doesn’t feel right to you then you shouldn’t do it

    where or what are some good places to look for information regarding ethical business practices?

    4. As a business professional, would he (Andrew) knowingly do or go into business with someone who had no problems with poaching to get their clientele?

  • Anonymously

    Hi all,

    Would someone point to where Andrew said the consultant had NDA-NC that precluded him from starting the business in the way he did?

    Further, please hire an legal counsel – since it appears that some posters don’t even understand the agreements that they have with clients, employers, investors, et cetera.

  • http://www.hyfen8.com Viflux

    He never said there was any kind of NDA in place.

    However, since such clauses are the norm rather than the exception, the assumption is that one did exist.

    Ergo, the onus is on Andrew to state that there was not.

  • Sojan80

    NDA-NC aggreements are verging on common place these days. I can’t think of a single company without one in their employment agreements. Especially those companies that deal with IT and Software development.

  • Sojan80

    Ibid!

  • http://www.assemblysys.com/dataServices/index.php mniessen

    Either way I am sure his friend notified his co-workers/boss that he had plans to leave.

    IF he violated the no compete clause in his contract, just notifying his co-workers/boss doesn’t make it right, unless his boss explicitely agreed (in writing) that it was fine.
    Telling to someone “I’m gonna kill you” and then doing it doesn’t mean you won’t spend the next years in jail…

    Now, if he didn’t do anything wrong, congrats to him!

  • aneitlich

    Before this blog goes too far astray, please let me clarify. My friend worked as an INTERNAL IT EMPLOYEE FOR the technology department of this company. He had no clients of his own. He was not a consultant working with external clients, or with any form of non-compete.

    He did no poaching at all. Rather, his company had a serious business setback forcing many of its people to go. Those people ended up in other companies as CFOs and VPs of IT. When they needed technology solutions, they already had trust and relationships with my friend and his business partners.

    While the above posts by Sitepoint readers raise serious and important ethical and legal questions for other situations, I don’t see them as relevant to what my friend did.

    Sorry for creating any confusion!

    Andrew

  • Anonymously

    However, since such clauses are the norm rather than the exception, the assumption is that one did exist.

    Assumptions – Something taken for granted or accepted as true without proof…

  • Anonymously

    Sorry for creating any confusion!

    It was not confusing…

  • ejustice

    It’s not unethical to develop contacts within or outside the company, as stated in 1 and 3.

    It WOULD be unethical if his first big client was a client he stole from his old company, but it doesn’t say that, does it?

    Good for your friend, Andrew!

  • http://www.dotcomwebdev.com chris ward

    Well, people here have opened a whole can of worms… and touched on many things I wouldn’t normally consider.

    Good post Andrew! very inspiring :)

  • OfficeOfTheLaw

    Good post Andrew… as always, very inspiring!

    I’ve only been out of college (and in the IT industry) for less than 2 years, but I’m hoping to someday be able to accomplish what your friend did. Perhaps after I gain more experience with a few larger companies eh?

  • http://www.eleytech.com beley

    I am ready to ditch my niche and go with larger companies. Maybe then I can get to $1M a year.

  • hdsol

    Personal contacts are what the business world is all about. When I first started my business it was the contacts I had made in my other jobs that I went to first. It has supplied me with more clients and contacts then I could have dreamed of. I should have done it sooner.

    It seems as though your friend was in a unique set of circumstances that led to his success. Combined that with a strong drive for survival and he is well on his way.

    For the record I was working as a Mechanical Engineer and started in the IT world out of survival. Our IT department was lousy. They are now one of my bigger clients.

  • Anonymous

    friendsterindia Says:
    December 15th, 2005 at 9:29 am

    i would like to see his website ….

  • Anonymously

    i would like to see his website…

    me too = you lose

  • pdxi

    Andrew wrote:

    6. He knows how to talk “business” instead of technical jargon. So his solutions focus on real results for companies.

    This is so important! I’m surprised to see Web sites talk in techno-language when they should be talking action (We do THIS)!

  • mjc

    Before this blog goes too far astray, please let me clarify. My friend worked as an INTERNAL IT EMPLOYEE FOR the technology department of this company. He had no clients of his own. He was not a consultant working with external clients, or with any form of non-compete.

    Non-competes are standard in normal employee contracts. True story: I left one job “as an INTERNAL IT EMPLOYEE” & was approached by a client of my former employer who wanted me to do some performance tuning of their application. My former employer having annoyed the only person they had competant to do this until they quit ;) I was vaguely interested but non-committal. Money was not discussed. A couple of weeks later my former employer wrote me a friendly letter reminding me of my non-poaching obligations under he terms of my old contract and this was 10 years ago. I’m pretty sure he could be giving himself potential issues. How much preparation for this venture did he do using the resources &/or time of his ex-employer? Would this preparation violate the “All your idea are belong to us” clause in most employment contracts (that I always ensure is limited to office hours ideas but often they try to broaden it especially for full time employees because they aren’t supposed to be working for anyone else). Did he “outbid” his ex-employer thus violating a non-compete clause? You don’t have to poach in order to violate the terms of your employment. Also these partners. Are they ex-employees too? Isn’t that poaching as well? If they are ex-collegues that’s probably illegal as well.

    He did no poaching at all. Rather, his company had a serious business setback forcing many of its people to go. Those people ended up in other companies as CFOs and VPs of IT. When they needed technology solutions, they already had trust and relationships with my friend and his business partners.

    And a company that’s just had a setback is the one most likely to try blaming it on successful ex-employees…

    In summary he could possibly (based on his old contract of employment) be sued for:-
    a) Competing with his former company for his clients.
    b) Using company resources to develop the products he’s selling (thus making the products their I.P.) Or, depending on the contract he signed it could be his ex-employers I.P. regardless of when he did the work so long as he was still employed by them at the time…
    c) Poaching one or more of his partners from his former employer to work with him.

    Can of worms – hire a lawyer to find out if & how he violated the employment contract before it comes back to bite him…

  • Anonymous

    Anonymously Says:
    December 15th, 2005 at 9:21 pm

    i would like to see his website…

    me too = you lose

    Don’t understand exactly why, but ok I loose.
    So where is the website?

  • http://www.craigonthe.net craig_

    Well, I would just like to say, well done! Making $1 million this year is great. No matter what any of these people say, you should enjoy your new found wealth!

  • MarkB

    You are assuming that this gentleman worked for a company which offered the same services as he is offering in his new venture. NOWHERE DOES IT STATE THIS! Simply, he was IT employee who then started his own IT company.

    How do you know his old employer didn’t make furniture? YOU DON’T.

    I see too many people trying to find fault with Andrew’s posts; it’s rather pathetic.

  • wildscribe

    I think that the gist of Andrew’s excellent article is here is someone who worked for a company and while he was there built up a list of contacts and partners.

    Andrew’s friend then managed to land a large client – a company that would provide him with enough work and income so he could safely leave his job. (Note that no where does Andrew state this is large client was taken from his former employer.)

    Then once he was on his own, he focused on a niche, developing enterprise applications, which Andrew correctly points out that most companies do not have the staff to do themselves and usually hire outside contractors. He then hustled to get more work.

    I find this very inspiring. I currently work in the IT department at a small company. I am paid very well and just got a nice holiday bonus. But my boss is an egotistical idiot. I would love to move on and start my own business, but I am now in my mid 40s and I am afraid of the drop in income.

    Andrew’s story shows that it can be done. My New Years’ resolution is to find a niche, write a great business plan, hook up with a few good partners, and then find a big client to provide me with work and financial support while I try to get other clients.

    Thanks for the inspiration Andrew!

    - – - Wild

  • Kyle

    Quite honestly although its probably not ethicaly correct to steal clients (assuming thats what he did) think about what your reason is for starting up your own business. Take out the money factor. You start a business beacuse you think/know you can do better then your competitors. One competitor being the company whom you are currently employed with.

    Now think about it from a helping the customer standpoint. If you can steal….I don’t like that word, if you can direct the client to your newly formed company that will offer them more/better/quality services all while saving them jack, then you have done something ethicaly right for them, but probably violated your ethical commitmnet to the company you work for.

    So is it a wash? Hmmm….

  • Anonymously

    Andrew’s story shows that it can be done. My New Years’ resolution is to find a niche, write a great business plan, hook up with a few good partners, and then find a big client to provide me with work and financial support while I try to get other clients.

    Great – Good luck!

  • joe

    If he is a consultant then no NDA is required. The fiduciary law applies. His employer hired him to help him with his client not compete against him. Morality or lack thereof is irrelevant.

    http://en.wikipedia.org/wiki/Fiduciary_duty

  • Anonymous

    Is America drowning in lawyers. How many people does a lawyer feed. How many children to they educate. How many ways of staying warm or traveling faster have they found.

  • jkramer

    I stopepd reading after #1.
    Clients/Contacts is EVERYTHING.
    If he got client even before starting a business, it’s paved way.

  • PA

    Here is a question for you. Bob worked for employer X. During his time with employer X, Bob developed a product. Bob later accepted a job with employer B. Employer X was not happy but wished him well and offered him the chance to work on the product moving forward.

    Bob starts his new job with employer B. He tells employer B about the project he was working on and Employer X’s wish that he continue on if possible. Bob arranges a meeting with Employer X and Employer B to discuss the possibilities. During the meeting, Employer B acts like an ass and totally turns off Employer X. After the meeting, Employer X asks Bob to quit his new job at Employer B and work as as outside contractor on the project he developed while working for him.

    Question: Do you think this was unethical? This is a true story and Employer B in this case wants to sue Bob for the revenue to be earned on the project.