There are almost no advantages to being the son of a world renowned economist. One thing that keeps it from being a total wash, however, is that I got introduced to the concept of optionality at an early age. I honestly don’t remember when I became aware of it, although I can remember thinking the term “synthetic puts” sounded cool when I was 12 or so. Even though I didn’t understand the underlying math until much later, I grew up with at least a subconscious realization that the ability to choose was worth something.
In my early 20s, I started trading stock options online.
I was horrible at it.
I was buying options, which meant I was paying someone for the ability to make a choice.
I was in my early 20s, which meant that I made really bad choices.
So there I was, paying someone to let me make bad choices. I stopped in my mid 20s after I grew tired of losing money. The concept of optionality stuck with me, however, and I’ve incorporated it into my approach to both software and clients.
On the software side, this often means decoupling. I don’t favor decoupling because it’s cool, I favor it because I’m wrong a lot and want to be able to fix my mistakes as quickly and easily as possible. Decoupling gives you options because it reduces the impact of changes, meaning that you can make more changes. Particularly in business software (and espectially in large enterprise systems), you can bet that change is coming. Requirements change. Systems that need to be integrated change. Business processes change. If your system can keep up with this change, it's a lot more valuable than one that can't.
On the client side, I sell a wide array of options and clients like it even if they don’t realize that that's what it is. Instead of saying, “Here’s the deal: You pay me X and I’ll deliver Y” I almost always offer choices. The actual choices aren't important here, the important thing is that no matter what they choose the work they need will get done. Sometimes that means paying for my own hardware, software, hosting, etc. Other times it means travelling to be on-site with them or their clients. The point is, that by offering them the option(s) to do things their way, I get to charge a premium over someone who simply sells billable hours sitting in front of a screen.
If you can provide optionality that's valuable, you can sell it and collect the premium.
As a bookend to the previous mention of options trading, I returned to it recently for a bit (now in my mid-to-late 30s) and did pretty well. The difference? Instead of buying options, I sold them through credit spreads since I now realize that my value is in providing optionality rather than using it.
Jay, welcome back to your blog! Thanks for starting writing again, let's hope you'll have more time to share with us next year.
Happy new year!
Posted by: Marian Chicu | December 22, 2011 at 06:36 AM