Monday, July 30, 2012

I Like to Work With The Best - But Sometimes..

I like to work with the very best teachers in almost any subject that I teach.  Typically we are so much better than our competition that my consultants are some of very best in the market.  My consultants are sought after for their skills sets, soft and hard.

When you come for training with us, you almost invariably end up getting trained in multiple modules with us so that your overall skill sets are tremendous.  I encourage my consultants to constantly keep learning, and I make my classes available for free for all my consultants.

There is a teacher I had in the past that is tremendous, and he is in all likelihood the very best in his field.

I asked for him to start teaching for us again and here was the reply that I got from him:

For either BA/Architect Level courses,

1) An initial amount of 5000$ per person will be charged and this needs to paid out on the very first day the student joins the class. (This includes training fee and other infrastructure cost for the setup I have to do in India)
2) After the candidate is placed,another 5000$ will be charged as soon as the PO is received. (In case if the candidate looses the job, I will work with the student until another placement, free of cost).
3) In case of any paid candidates, total fee to be shared in the ratio of 60-40% (??-Vijay). 

Besides the weird $ after the number the answer was pretty clear, he wants to be paid $10,000 per student before you generate 1 dollar of revenue.  Even if could guarantee a 50% placement rate, there is not a single company that would take this deal.

Let us assume that 10 students join, which would mean you pay an immediate $50,000 and no matter how hard you vet the group you will likely lose 2 candidates before completion.  So we are down to 8.  Assuming a placement rate of 90% you would place 7 students.  Which would mean that you would pay another $35,000 when you get the PO.

For the new consultants you have to cover 3 months of payroll before you generate a penny in cash flow.  Each consultant will cost $20,000 just to cover 3 months of payroll.

So by month 4, I would have paid out $225,000 ($85,000 plus $140,000) just to train and place 7 consultants and this is before I have gotten 1 dollar in revenue. 

Like I said, I like to work with only the very best, but sometimes even I have to pass.

You know what the funny part is to this whole thing.  This same teacher when he taught his first class for me, we paid him $2500.  Next class we paid him $3500, since he was so good.  Then we became partners and he was paid $40,000 for one year of work, and then $180,000 for another 1.5 years of work.  I taught him the value of his work

He is also teaching others in India, and he told me that he charges Rs. 20,000 (About $400), to teach others.

He asked me if this would work for me as far as his rates.  I looked at his email and after being in shock at the rates, I replied within 10 seconds, that this proposal does not work for me and here we are.

Sometimes people only see what we make on an individual basis and do not see the total costs involved in running a company.  Our small little company has a running cost of $500,000 per year.  To do everything as perfect as possible, I spend about 50% of our revenue on just running the company.  I do not mind the high costs, since I believe it is necessary.

I maybe generous, but I am not stupid.

So, yes I do like to work with the best, but sometimes that is simply not possible.