Fractional
Fractional
Taylor Crane, Founder fractionaljobs.io: Fractional gives you freedom, pricing fractional, and fractional vs. layoffs
Hard to believe we're 50 episodes in already! Thank you for our fantastic listeners and to all of our amazing guests.
On this week's episode we dove in with Taylor Crane, of fractionaljobs.io, and talked about a number of amazing topics related to being a fractional.
- Being a technical versus non-technical founder
- Fractionals in early stage versus later stage startups
- Taylor's definition of fractional and the current market
- Matching fractionals to companies
- Fractional in the world of mass layoffs
- How fractional levels of the playing field with power dynamics
- Compensation expectations for fractionals
Links for Taylor that we referenced:
- https://www.fractionaljobs.io
- https://www.fractionaljobs.io/blog/what-is-fractional-work
- https://www.fractionaljobs.io/blog/how-much-money-can-i-make-as-a-fractional-employee
- https://www.linkedin.com/posts/taylorcrane_how-much-do-fractional-employees-make-activity-7168359685547286528-mLMc?utm_source=share&utm_medium=member_desktop
Episode edited by Caleb Johnson / Embrin.com
All right, hello and welcome. This is episode 50, the big historic milestone. So excited to have a guest here with us, Taylor Crane joining, founder of the fractionaljobs.io product. So this is a big one. I'm your host, Lance, here with Joshua. And we're going to jump right in. Taylor, thanks for joining us. Excited to have you here. Excited about what you're doing. Just tell us more about who you are, where you're at, and how this is going for you. Sure
SPEAKER_01:thing. First of all, thanks for having me as well. I think this is going to be a fun little discussion here. So yeah, I guess brief background on me. I spent my career in tech and startups. So I spent 10 years as a PM across a wide range of tech startups. I then started my first company in 2020. called Clubs Poker, which is an online poker after friends, very different world. And then I ended up selling, like sort of winding down slash selling the company about a year ago. And that's when I entered into the fractional world. I became a fractional head of products. My specialty is in working with early stage startups, particularly actually with non-technical founders. That's kind of where I found my niche for myself. And very quickly in doing the work, fell in love with not just the work, you know, doing the work itself, but with the fractional space more broadly. and began to really believe in the future of fractional and wanting to make a contribution into the space. And so just two months ago, I launched my next company called Fractional Jobs. It's a job board for fractional leaders and for the companies that are looking to reach and recruit them. And the overarching mission here is really just to accelerate the movement into fractional by both leaders like ourselves on the employee side and then companies that are looking to hire fractional. And yeah, that's kind of like the TLDR on my career.
SPEAKER_00:I want to derail real quick and ask a question. It's something I've been thinking about. You said you focus on non-technical co-founders. And that's been a really interesting thing that I've been thinking about for the last couple of years because I am a non-technical person, even though I've been around it for 15 years, right, in product. What I would just love any further thought you would give on that for why you like that area, the differences, because I know a lot of people who are interested in founding, maybe they aren't as technical. So yeah, any thoughts you have on that?
SPEAKER_01:Yeah, I think it's a niche that I found or fell into, I suppose, just based on observing where my skills most aligned with the different kinds of founders that are out there in the world. I am fairly technical. My background is in product management, of course. I'm fairly technical. I've written production code before. And I both find that I seem to be quite good at and also very much enjoy working with non-technical people and bringing them into the software world and so helping them sort of being that bridge that, you know, to bridge the gap and get them, you know, thinking about building their business from a software perspective. And so, yeah, I suppose it's both me still in a need and as a product person, like for example, like if I was working with a technical founder, they will likely be much more product oriented. Maybe they're a prior PM before, or if they've been an engineer, like they definitely work with PM so that they have that mind for it. Whereas when I say like a non-technical founder, I could be talking about a marketer or a salesperson or a in a lot of cases, a domain expert, like a lawyer, let's say, or a mental health expert that really has never, doesn't know anything about software. And yeah, it's fun to like bring them into our world. So
SPEAKER_00:yeah. I imagine there's a lot of things that you're so excited to get to share because you, they're the domain expert, but you get to say, hey, these things that in your brain might be table stakes, they're just excited about every day. Like, whoa, I didn't know. All right, that's how you do that. There's so much opportunity you have probably just to get them excited and teach things that you know.
SPEAKER_01:Definitely true. And maybe the last thing I'll say is like in my career, I started out totally non-technical and entered the PM world from a non-technical background, which I think went itself to me, like empathizing pretty deeply with folks that are like, I remember when I used to not know like what JavaScript was. Right. And so I think that, yeah, that just further helps me like Get on their
SPEAKER_02:level, I suppose, and be valuable in that way. an obvious fit for fractionals in early stage where budgets are low, but need for expertise is high. Are you seeing people who are making careers out of working with like late stage, large businesses as fractionals, or is that just for consultants?
SPEAKER_01:Okay. Great question. I think when I say early stage, there's a few, so like you're, so you're a hundred percent right. Like in my experience as well, on both sides of the marketplace, there's a pretty obvious fit at the early stage. Startup world, budget being a pretty obvious driver of that. But when I say early stage, it's differentiated from small business fractionals that work with maybe less tech startup-y type companies and more marketing agencies or other kinds of MSPs, which is a term I learned recently, managed service providers. And so... That's one differentiator. But then also, yeah, I definitely know fractionals that are working at more growth stage type startups. I mean, just like a fractional head of product, I think, can work quite well when you have like a CTO of a growth stage startup and then like a founder that's not particularly technical or wants to like step out of the product realm. I think that makes a lot of sense. Fractional CFO is super common to work, I think, at really all stages of company lifestyle, except for like pre-IPO and IPO type companies. So also another great example, like a fractional CISO, like information security officer. Maybe general counsel. A general counsel. I just met someone just this week who's a fractional chief customer officer, which is kind of this interesting blend between chief marketing officer and chief product officer. Kind of sits in between those two. And a company would need to be like super late stage to hire that in a full-time capacity. But I could totally see. And she has a business out of more medium stage work. let's call it growth stage companies taking advantage of that. So short answer, we exist at all and all places in the spectrum of the company life cycle.
SPEAKER_02:That's great. Yeah. So this relates then we asked this to just about everybody because there's so many varying opinions on the reality of like what a fractional even is. Like how do you define what it means to be a fractional? Yeah. So I won't, I won't even like start the answer for you. Like when you hear the word fractional, like, what does that mean to you?
SPEAKER_01:Yeah, so the way I define it is fractional work is part-time work typically billed on a monthly retainer and done by experts in their field. So that's the three criteria that I use. Yeah, the three criteria that I use to
SPEAKER_02:define it. So you don't put simulations around like this has to be a permanent, it can't be a temporary, it needs to be at X level and above. Those things are up for negotiation with you, right?
SPEAKER_01:So I think it is generally a mistake to draw super hard lines around the definition. I think it is never going to be perfectly accurate. And like the reality is like everything is right. And so that definition I gave you, I've written very intentionally and each part of that definition has like sort of gray area room that is intentional. And so the permanence of temporary thing, yeah, I think like, you know, as fractionals are embedded resources in a team that like have typically like no quote unquote end date. It's like indefinite, right? It's an embedded resource, you know, and that makes sense. And I do say that if it's a two month project that has this fixed end date, like probably, you know, not the right term to use fractional, but I shy away from giving a definition that's just like overly black and white because I think it just doesn't disservice. Also, it's going to change also, like whether any of us like it or not, like this word is going to, and it already has morphed and changed. And so, yeah, it's kind of like, it's up to, it's up to all of us collectively. Yeah.
SPEAKER_02:I, I, I like where you're coming from. Like there's true principles getting, getting down into the details. Is it really serving the community too much? Yeah. I like to, to see how we can bring people into this concept as much as possible. And, but yeah, then also realizing like there is a differentiator right between what a consultant does and what a faction does or what a freelancer might do and what a faction might do. Totally, totally. So,
SPEAKER_01:yeah. By the way, Joshua, I'll let you go as well, but like you mentioned earlier about like level of seniority, right? Does that fit into your definition? So absolutely, yes, it does, right? And so that's the third pillar of my definition is done by experts in their field. Now, what is an expert, right? It's a vague word, right? So like that is my gray word. I'm not drawing a black box, but that's a good example, Lance, where it's like I am... defining it as you know a certain level of seniority I'm using the term expert but like let's be honest that like we can you know there's some flexibility there I think that's a good thing
SPEAKER_02:I think the expert I just want to plug this in here Joshua because this is an interesting thing for you and I in that expertise is true whether you're manager managerial role or not because Joshua you're a very experienced expert product designer and because you're not filling a role where you're managing
SPEAKER_00:teams. I'm a maker, not a manager, as we were talking about last week. Yep.
SPEAKER_02:Yeah. Like I hate to see, I hate to see the value of your work diminished because of the demand for fractional to be defined a certain way with certain roles. Yeah.
SPEAKER_01:And that's exactly why I use the term expert and not something like C-suite executives.
SPEAKER_00:Yep. This reminds me of in podcasts and you had the definition of Is it a netcast or a podcast? This was an argument made 15 years ago and podcasts won, even though technically it doesn't make as much sense as the word netcast. And this whole thing of gatekeeping. Also, some people only define a podcast as open RSS. Well, there's podcasts I pay for that are closed and I still consider them a podcast. So it is interesting how inclusive can you make the definition where it still is helpful for people who maybe want that kind of a person? And it's a good question. Exactly.
SPEAKER_02:Super curious what you're hearing since you get to sit on both sides of the table, right, as the matchmaker between the talent side where Joshua and I sit, a lot of our listeners are sitting, and then the hiring side, the founders who are saying, I need to work with a fractional. What are some of the insights you're picking up that you think would be juicy for our listeners to
SPEAKER_01:hear? Well, so yeah, I spend basically all my days evangelizing fractional work, primarily talking to companies. And so I spend a lot of time talking to companies that are on various levels of this spectrum towards making either their first fractional hire or maybe even multiple. And there's a lot of interesting things to talk about here. I think a few that stand out to me, number one is the awareness problem. Just literally just a lack of awareness. I actually have a really good story about this. Okay, so I, when I launched Fractional Jobs a couple months ago, I had a founder friend reach out to me after he saw the launch and was like, this is awesome, I'd love to chat. And we booked a call. And I'm going into the call thinking, awesome, like he is interested in making a fractional hire. He's the CEO of a seed stage, soon to be series A stage tech company. And yeah, I could, Joshua, I think I saw your, I think you know where this is going. So I did the call and yeah. Within five minutes, he's asking me about what I'm building. I'm giving him the pitch. And he says, awesome, I'd love to do some fractional work, some growth work. Do you know any companies that would be interested in hiring me for a few hours a week as a fractional leader, growth leader? And I was like, okay, not what I thought we were going to be talking about. I thought we were going to talk about your company. Turns out not. So I gave him that whole side of the pitch as well. And then now I thought it was a lost cause. Like, okay, like this, he's not interested in hiring a fractional leader, you know, totally fine. Let's just catch up. But then like later on in the conversation, I'm giving him examples of like sort of how fractional works. And like, I gave him the example of like a fractional head of partnerships. He's in, his work is in like the gaming entertainment space. And as I'm talking through this, like theoretical fractional head of partnerships kind of role with like a deep Rolodex of people in the industry, his eyes light up and he's like, whoa, like I've never thought about that. Like that, we need that. That's exactly what we need. And so that was like a light bulb moment for me to realize that like, you can know what fractional is. You can even be excited about doing fractional work yourself. And if you're in the position of someone who's hiring, you still might not put two and two together and realize that it actually might make sense for your business. I think that was so interesting. And so the awareness problem is like a really interesting problem. And then the second part, if you guys want to jump in, feel free, but the second part will mislead us
SPEAKER_00:all. One thing I want to just touch on, there's a really great book, which I highly recommend to anyone in the startup space, The Cold Start Problem by Andrew Chen. We referenced it a few times. And one of the things you've just called out here is when you're trying to build out a network, you have the hard side of the network. So Uber drivers, they determined at a good stage in the company that the drivers were the harder side of the network than the riders. And you have to figure that out pretty quickly because it's the chicken and egg question problem. You can't focus on both and you can't focus on neither. You got to pick one. So I'll kind of throw this question at you. It may be kind of obvious, but is the people hiring or the people offering their services, which do you see as the harder side of this network right now?
SPEAKER_01:I'm actually reading the book right now as well. So it's such a good bring it up. And the hard side of the problem in the fractional work marketplace is the company side. We call it the demand side actually versus the supply side, which is the fractional employees. I think that's the case across all of hiring right now, likely, but definitely, and probably actually exacerbated in the fractional world because there's that awareness problem, but then there's also an excitement problem. I mean, not problem, but there's an excitement opportunity on the fractional side and there's an awareness problem on the company
SPEAKER_00:side. All right. So I know you want to get back to your other point, but maybe we'll stick a pin in this one. How do you think that the major tech shifts, layoffs in the last year and a half, do you think that will positively lead toward more fractional jobs being offered? Do you see a connection starting to happen there?
SPEAKER_01:Absolutely, yes. There's several things that have led to these mass tech layoffs. One of them is the interest rate phenomena. We refer to the past times, like the ZERP era, like the zero interest rate phenomena era. and how you built tech companies in that era is very different from how founders are building and being told or instructed. I was
SPEAKER_00:working at a tech company that had to make that transition right then and I was let go as a result of they had to make some big shifts and that directly affected my family.
SPEAKER_01:So I think for several reasons, there's definitely a focus on being a weaned, mean startup machine, more burn conscious, more thoughtful about your hiring, for example. And so fractional is such an obvious term. fit for what we're seeing here. That's on the company side. And then tech layoffs are also, I think, contributing to a large number of folks in the tech industry, employees that maybe have been working in the industry for 10, 20 years even, and are really now learning, perhaps for the first time, that the company they thought was like, that was equally loyal to them as they were loyal to it, actually That's not the case. So like the veil, whatever the phrasing, like the myth is broken and employees and mass are learning that they are but a resource for companies to be utilized and then to not be utilized. And I'm not speaking from a place of judgment at all, but I think it's just given that reality, I think people are now saying to themselves, okay, well, like then maybe my work should be more transactional as well. And then I think that's another push towards this fractional concept.
SPEAKER_00:It's interesting. One of the power dynamics that I saw for myself is when I went from working for one company to working essentially for four companies at once, I was able to actually push back on CEOs. And there was this one CEO I was working with that did something that I believed was unethical. And because it represented 25% of my income, I actually... And I understand there's a moral imperative for me to speak up regardless. However... When my family is like, when the mortgage and the bills are on the line, I'm a little nervous. But when it was 25% of my income, I spoke up and I said, hey, I don't know if you realize, and I said this privately, I don't know if you realize, here's the impact that I think this is having on the company. Here's some concerns. And he partially addressed that and apologized and said he had a lot of respect for me as a result. And I ended up a couple of times saying, oh, I can speak up because if they get upset, I'm not going to lose 100% of my income. It just... made me actually a better designer for that. And it's really hard when you go back to 90 to 100% of your income from a single source. There's just a power dynamic there. And Lance and I talk about this all the time, actually.
SPEAKER_02:Yeah. I mean, I totally, totally agree. And we'll keep the confidentiality of that particular CEO.
SPEAKER_01:You know, I found this myself. I also have spoken to many other fractionals that agree that it doing fractional work, being a fractional leader, levels the playing field considerably when interacting with companies. Suddenly, it's less of an employee-boss relationship and more of an expert company or expert-founder type relationship. And it's much more of a partnership. Or at least it lends itself to be that much more easily. And I think it's super important and also speaks to what we were just talking about. We picked the tech way off from the transactional nature and this feeling of you know, oh, I, you know, I did not, I thought, you know, we were more loyal preachers than we actually are, you know, so I think
SPEAKER_00:all of this is super true. And in that case, I had one that I was working with that I could see the writing on the wall that they needed to pause working with me. And yeah, I actually enjoyed working with them, but I was totally fine because at the time, again, it was about 20 to 30% of my income. I was okay It meant I need to pick up the sales cycle again. And maybe you have some advice on that because that's always a struggle for fractionals. But it wasn't this, oh, we won't pay our mortgage this month because this engagement is pausing.
SPEAKER_01:Yeah. We get to hedge our bets, is another way of saying it. I come from the poker world. I was a poker player for four years. And you earn this very deeply, right? The opportunity to hedge bets is really important.
SPEAKER_02:You know, it took me a second here to sit with this topic and realize there's something about it that I feel like I want to say is that I don't think a lot of people are entering fractional work as this overconfident person who's reached the pinnacle of executive leadership, nowhere to go. And so they're just going to go ahead and hang up their shingle and become a fractional. I think we've got a lot of people who have had kind of rough experiences as senior managers and leaders and are looking for something different. And the confidence to say no isn't necessarily inherent for the fractional. But I think there's a bit of a self-realization, self-actualization process that folks that are stepping into this fractional experience are starting to have or have the opportunity to have that maybe they didn't in the corporate world to where I can say no without fear. I can be confident enough to say no. I can actually be who I really am in this role. And my employer can't hurt me as bad. And it's sad that it's the... that I think that's a reality. But I also think it's a really neat opportunity for people who maybe the corporate world would have squished a bit to actually exercise their best skill set in the
SPEAKER_00:marketplace. I've had a few instances where I'm, and Lance knows this about me, I may feel internally very reticent to do something if a company is demanding it. And I'll talk to Lance about it, I'll talk to my wife about it, but I don't often say something publicly that's not my personality. And when I've been fractional, I started just saying things more. And I found that unless you're working with a narcissist, this is my personal opinion, most people really appreciate that. They appreciate the candidness of you not just being a yes man or a yes woman. You actually say, no, I disagree. And you become a much more valuable, to use the term, resource for when you're willing to do that. So I don't know, that's my pitch for Fractional. And we had a Greg story on here a couple months ago, and I just bluntly asked him, can you do that if you're a W2 employee? And he had a lot of concern, like, probably not. So I don't know if you have any takes on that, but I'll get off my high horse.
SPEAKER_01:No, I think this is all true. It speaks to like a... a level of confidence that is inherited when you step into a fractional role. If we think back to the definition of fractional from earlier in this episode and it being performed by experts in their field, right? So all of us that are adopting the fractional title and stepping into this world are telling ourselves and telling the world that we are experts in our field. And, and, and then, And then we're hired as a fractional head of product or fractional lead designer or whatever the title is. And so there's that agreement that, yes, I as a company am looking to bring you in as an expert. And then that gives us the confidence to do exactly what you're describing, Joshua, to have those more real conversations. Actually, interestingly, earlier on in my fractional journey, myself, I was working with, I think my very first client and a couple months into the relationship, I asked him for some feedback on, you know, how, how I was doing, how, how the relationship was going. And he said to me that he sometimes wasn't sure if I was just telling him what he wanted to hear and not telling him what I actually thought. And that he, and he reminded me that, you know, I have hired you because of your expertise and something that I do not have. And so if there are times when you think I'm doing something incorrectly, or you think if I've taken a route that you recommended against, I don't want you to support me. I want you to actually call it out and tell me. And that was a really helpful reminder to me that, no, yeah, actually he is like, you know, I'm not cheap. He's paying me for my expertise. And therefore my duty is to be honest. And that comes naturally. inherent with the relationship and yeah i think it's important and also goes back to leveling the field right and making and so yeah this everything is
SPEAKER_00:so intertwined here and what's interesting too is when you're a w2 it's easy to say that your identity is an employee of that company that's who you are when you're at a party someone asks what you do oh i'm employee for this company it's it's it's not how i think it should be but it's what so many of us do Versus if you're a fractional, you're an awesome expert who helps companies make a difference. You help things happen. And that shift, when it was something that, and maybe you have some, we can probably move into this now, the pipeline of how you keep fractional coming in, because that was a real problem that I started to face. Like, how do you get more projects? But there was just a certain confidence I had in just really my identity was I'm someone who helps instead of I'm someone who works at.
SPEAKER_01:Yeah, and on top of that, I think like that, like almost the ability to step back as a fractional or as a fractional leader and sort of rethink about your why and why you're showing up to work. And when you are working across multiple clients at a time, I think it allows you to divorce yourself from being Do you know the phrase company man? Have you heard that term before? The company man. So like you started with me, company man. And now, and actually not only in concept, but also in practicality, we are our own business. We are solopreneurs. We are our own business, right? So like both in theory and in the practice of it, we have an opportunity or we are now thinking about our business as like, across several different clients and a pipeline, which you just referenced, in addition to what we all have previously experienced as being basically a company man or a company woman working for one company at a time.
SPEAKER_02:I'm curious how the folks that are coming to you say, hey, I want to hire a fractional person. Are they thinking that fractional resources are going to be at a discount because they're fractional? How are you seeing the expectations of the hiring side of the market? conflicting with or matching the expectations of compensation from the providers?
SPEAKER_01:Yeah, it's a good question. I have two insights here. And you could, yeah, because I'm now sort of in the middle of this marketplace and being able to watch both sides. A lot of companies, we go back to the awareness problem, right? The awareness problem within companies is not just awareness and fractional, but it's also awareness of how fractional works and how it works successfully. And so... A lot of companies, when they think about compensation, they do some very simple math in their head. They say, what does it cost for a full-time role? Okay, I'll look for someone for about 10 hours a week. Therefore, let's divide that number by four. And then if I need to get to an hourly or a monthly retainer, I'll do that further math just to get there, right? Now, that does not create a successful relationship long-term with fractionals. And so I actually speak to it. quite a few companies, more companies than I want, frankly, that have these like morphed or warped ideas of like what a compensation benchmark looks like for a fractional leader. Another point to make. So I have a blog post and it's called how much money can you make? How much money can you expect to make as a fractional employee? And it goes through a lot of the stuff on the fractional side. But one of the, one of the sort of the sections is about like how to, as a fractional, how to, how to like rule of thumb into what your, hourly rate your monthly retainer should be. And the very short of it is like, take like what your full-time salary might be. Let's say it's$100,000 a year or$200,000 a year. And literally just like chop off three zeros and that's your hourly rate. So if you're$100,000 a year, roughly equates to$100 an hour,$200,000 a year, roughly equates to$200 an hour. Now, one asterisk here is that like, this is more of like a goal. It's more of like what you can get to, not again in the near future, not like what it's going to be on day one. Because we also have to deal with the dynamics of a pipeline and getting started and stuff. And so there are things that affect that number. But what's important to note here is that that is basically double what many companies are thinking going into a fractional conversation. And companies aren't realizing that, or oftentimes they're not realizing, and I'm having to provide some education, that with a full-time hire, W-2, you're paying... That's just the base salary, right? You're paying also, you're paying bonuses. You're paying equity in some cases. You're paying... which you're not paying for fractionals. You're paying payroll tax, which so many companies don't even think about when they do this equation. Payroll tax, 10, 15% sometimes, depending on the state you live in, on top of the salary. Also things like vacation time. That's a whole other conversation, but if a fractional takes two weeks off, they're not getting paid for those two weeks. And so these are all factors that sort of necessitate that long-term healthy economy situation. or Walter Healthy Fractional Economy, fractional should be shooting to make roughly that equation I gave, like take your cutoff three zeros.
SPEAKER_00:And that actually works really well because I keep a timer for everything I do. I've been doing this for about a year and a half now. I run a timer if I'm working. I did too. And when I was a full-time fractional, I would look every week for how many, and I wouldn't count marketing and sales hours, more hours dedicated to the client. And I would look every month and I would do the How much they paid me versus my hours. What did my hourly rate come out to? And it was really insightful when it was roughly the equivalent of my highest salary I'd ever earned. My clients were happy. Retention stayed good. Even if it was 25% better than my highest salary I ever earned. There were some months where the hourly profit was double what I'd ever earned, which I was really happy about. But then retention would just drop. I would lose those clients. And so I saw also... There was one or two months where it was half of what my top salary had ever been, and I would come away burned and stressed out and angry at that client. So what you just targeted there, I saw in my own data, roughly the highest salary you've made cut off three zeros. That's a pretty good space to be in.
SPEAKER_01:Yeah, exactly. And comp is the top topic in general. It also is so dependent on the role and seniority and all this stuff. I think these are very... broad rules of thumb that I'm seeing across the board. I also, on my LinkedIn, I'm happy to link to this as well. I have a LinkedIn post that goes into some comp benchmark data from a study that this guy named Matt, I forget his last name, right? McFarland. Yes, thank you, McFarland. Yeah,
SPEAKER_02:yeah. We're going to get Matt on here before too long. Matt's a great resource for comp benchmarking for fractionals.
SPEAKER_01:Highly recommended. So you're one step ahead of me. And those benchmarks also align with that heuristic that I gave. Now, the extra interesting thing, so I'm going to take this one step further, is I am working with companies that are looking to hire fractionals. And as I said, comp expectations are kind of run the gamut. But what I'm noticing is that we are... Because at the end of the day, I'm not deciding their comp for them. They decide themselves. I can just guide them. And so some companies are going with comps that I think are probably less than what I would consider the quote-unquote market rate. And When this started happening, I was super nervous. I was like, there's no way that they're going to be happy. They're going to be successful. You know, expectations mismatched. Instead, what I'm seeing, and this is just, I'm just laying down here, is that the applications that are coming through, I call them intro requests, by the way, I don't use the word application. So the intro requests that are coming through are mind-blowing, stellar, incredible, incredible talents. So I was working on a role for a product analytics leader to come into an early stage startup to basically own analytics, coach the founder and the team on how they should be thinking about analytics. And the early stage startup, a super cool company, didn't have a ton of money. And so they priced it at 80 bucks an hour is what they were looking for. And I'm thinking to myself, okay, you're just not going to, this is going to be unsuccessful. Instead, the people, the candidates that requested intros were just simply seller. And they ended up making a hire to someone that afterwards he and I were talking to, you know, trying to like, I'm trying to do some backfinding. And it turns out that he was like, oh yeah, like I, you know, I typically charge 150 an hour, but this just seemed like a little cool company. And like, I just wanted to, it just seemed like a cool idea, cool company, cool founder. And like, I just wanted to do it. And I, and he's also former Fang as well. And so, and this is a interesting thread is that I'm noticing a a contingent of new fractionals that are entering the space from perhaps, you know, bigger tech companies that are maybe less, at least in the short term, they're optimizing for other things other than maximizing their earnings, right? And so it's, you know, I had a LinkedIn post yesterday about how the talent that I'm seeing in the fractional talent pool is so incredibly impressive. And if only companies would wake up to this fact and realize, like, you know, how much talent they could be tapping into. But it creates dynamics that I'm describing here where even roles that we would think of as perhaps underpriced, and I do hope it corrects long-term, the reality in the short-term is that there are people that are, for various reasons, willing to jump on different opportunities even when they're not maximizing for their own earning potential. And one example just being like, I just want to get out of the corporate world and I want to get into a fractional practice and this is a cool way to start doing it. And like, yeah, like, you know, the comp may not be what, you know, what I want it to be long-term, but like I'm down for it anyway. And
SPEAKER_00:it's really interesting to see. That's a great point because if I wanted to maximize for comp, I wouldn't be living in North Idaho. Thankfully remote has taken off in the last decade, but for my wife and I, we just wanted to like live out in a little small town and not be close to big city and raise our kids out in the woods a little bit. And I, I like that. And I know that, that the total compensation I can make in my career will be diminished, but we are completely fine with that trade-off. We've made that decision that that makes sense. So yes, I love having money. I think it makes for a lot of things easier, but I'm okay with some flexibility on what that money looks like because of the trade-offs that I care about.
SPEAKER_02:Yeah, and I'm noticing in some of the, like there's a Slack community I'm part of, I think there's like 500 people there. Just for like HR and people leadership fractionals. And I think somebody said the other day, like only a third of the folks in here even have an active contract, right? So the other two thirds are hungry for contract number one. I will never forget the feeling of getting my first contract as an independent fractional. Joshua, you were with me when that happened.
SPEAKER_00:Yeah. Just to look on Lance's face when he ran up and... Like I was hanging out, he, his wife and I were talking and just seeing like that relief. I hope you don't mind me saying this, like just that relief and excitement of, okay, I, I feel validated that this idea I've been trying to talk to people about someone is willing in the market to pay me. And that's just been so cool watching Lance on this journey.
SPEAKER_01:That was so
SPEAKER_02:cool.
SPEAKER_00:Humongous.
SPEAKER_02:And it's the stress of, I know a lot of folks are, are, are taking fractional because it's like me, like a result of a layoff. And what do I do next? Like, all right, so my income, my future, like is tied to this. So I think, you know, folks who are taking fractional jobs through like through your job board, even at maybe half of what their target is going to be, if it's that first thing to get you going and get you started, power to you. Land that first gig.
SPEAKER_01:It's like, as you're talking, it's reminding me that like in any market, two-sided marketplace, there's sort of this like price discovery thing that is going to happen, and there's this volatility. We see it even in financial markets as well. And I think it's basically the same here. There's a compensation volatility that's happening, and there are different reasons why different people are jumping in or jumping on board at different prices. I've run through the economics enough to know that where it's going to settle out is that heuristic that I gave earlier about the chopping off three zeros. That is... where, frankly, it will need to settle out. But in the meantime, yeah, there is this volatility that's happening. And it also presents opportunities. It presents opportunities for fractionals to get in early and start just doing the work and building a practice. But it also presents opportunities for companies to hire, frankly, insane talent. and talented would never be able to hire on a full-time basis, especially at certain salary points.
SPEAKER_02:I hear you giving the example of like the shaving off zeros, the advertising$80 an hour for X number of hours. And like when I see, if I see a job ad like this, like a request like this, I'm honestly like probably just passing on for a couple of reasons. One, As an independent, I don't want to work with a customer who dictates the level of time commitment that I'm to them, right? And the other is, well, I don't want to be committed to working that number of hours to attain that level of compensation. So I'm curious, you're seeing some employers take this path of, I want people to commit hours and dollars. Is there a different direction? Because I take a different direction, but are you seeing employers receptive to a results-oriented or an outcomes-based, outcomes-driven retainer model? Because retainer was part of your early loose definition there.
SPEAKER_01:Yeah, yeah. By the way, when I often sort of quote compensation in terms of hourly... because I think it's like the most empirical way of talking. If I said like 5,000 a month, it's like, it's impossible to know. It's always associated with some amount of time, right? We can quantify time, we can report time or not, but like, so I always go to the empirical hourly, but it does not, I do monthly retainer, most fractals do monthly retainer. And so I want to be clear about that. And so back to your question, your question I think was, am I, among companies, am I, again, I'm definitely, oh, I see what you, it was like, are they, open theory of value-based pricing or are they really in this time-based pricing mindset, I think the easy answer is that most are thinking time-based. It's really interesting. I love this topic, this value-based versus time-based. We talk about this so much here.
SPEAKER_00:We've had so many discussions and we don't have the answers either, so I welcome what you're thinking on this.
SPEAKER_01:I also don't think there needs to be a one answer. I am on the fractional side. I'm also on the founder side. In my previous company, I hired a fractional engineering leader as well. And so I see it from both sides of my points. And I think it's very natural for companies to think with a time-based mindset. A lot of founders see themselves at the end of the day as capital and resource allocators. And you kind of want to know, what are you buying? And there are certain types of roles where the outcomes are easily quantifiable, if you will. Like you can measure that, I guess, for a sales role. This is why sales roles are so often commission-based because it's like very easy to tie one-to-one, right? But it's also why like engineering roles are so often not commission-based. Like really, what commission, like I just said, it wouldn't really make sense. And so I think it's very role-dependent. I can tell you from personal experience, like when I was the founder of my previous company and I hired that engineering leader I'm referring to, he committed to about 15 to 20 hours a week. He tracked all of his time. And he reported this time to me. I paid him on a monthly retainer, but I saw his, he sent me like a, what are we, a chart, a graph. Every day he had a bar chart, right? And as a founder, like at least my, like me personally, I loved that. That was, it was awesome to me that I could like see that level of detail and like where my money was going. I was, you know, it was a, I was a pretty safe startup. Money was not, you know, I was not just like, I didn't have infinite capital. And it was very important to me. I had very specific goals that I was trying to achieve and like every dollar counted. And so I get it. From the company side, I get thinking about things as tight, you know, as tight, sort of in a time-based manner. On the fractional side, I also get the value-based argument. It's like, I am a quote-unquote expert in my field, right? I am selling my expertise to you. And If I work one hour or a hundred hours to achieve a certain outcome, what does it matter? I achieve the outcome and you should pay me for the outcome. It's kind of similar. It's like when you walk into a store and you buy, I don't know, a coin, a stupid example, but you buy something. It's like you're paying for the product that you're receiving in the store, regardless of how much manufacturing inputs or outputs went into creating that item. And so I get that as well. Now, you know, Maybe it's because I've been on the other side and I know what it's like to be a founder and receive that kind of granularity. And so for me in my own practice, I actually do. So Joshua, you mentioned you track your hours. I'm a nut about this. This is not only just for my fractional work. I do this across my whole life. It's kind of weird. I track a lot of different things hourly. And so it's actually very easy for me to tell a client of mine, hey, I work 10 hours a week. And I think that's value add for me because I think the sounders want to hear it. And so that's what I do. But it's not what everyone should do. Certainly not. And if your flavor of fractional is to be more value-based and like, you know, roughly quarter time or roughly half time. I do, by the way, think it's important to get guidelines. I think it's a... terrible mistake. And I was speaking to someone about this earlier who was very adamant about this value-based side of the spectrum. And I made the argument that it's a terrible mistake to... If a client or a company thinks they're getting you for roughly, let's say, half-time in their mind, whether or not it's true or not, and it turns out they're actually doing only about two hours a week of work for them, there's no scenario in which that's going to be a successful relationship. It's just not going to happen. And so... Like using time, even if you want to be rough about it, to sort of guide what the expectations are of the relationship, I think is critical. And then whether you price like down to the hour or whether you report hours, I think that is totally dependent on you as a fractional and what your value is and what you want to provide. And then the last thing I'll say is for me personally, I find that part of my value add is being able to provide that transparency. And so I do. But that is not, that is a me thing, not like an all-fractional thing.
SPEAKER_00:And I love that take because it's a, I would consider it a hot take and it's very, it's going to be controversial. And I struggle a little bit with it because I've, I do know all my hours and I know when I've been full-time fractional, I can do a really good job with a smaller amount of hours than anyone else thinks. And if I spend too many hours, I actually get burned out and I'm like not valuable. So, I've hesitated. I've always basically always just sold on monthly, no time, whatever. It's you'll renew the next month if you're happy with me from the previous month. That's how we'll work together, which also means there's high opportunity for me to get turnover. But that's just how I've been selling it for the last year and a half, which also could lead to some problems I've been having. But with that said, I've noticed that if someone with a fractional role thinks I'm going to work 20 hours, that's actually a lot of work for a And so I would expect to be compensated very well for that. But then, I don't know, there's just this whole challenge of if I'm being compensated well enough, yes, it makes sense. But often I'm not.
SPEAKER_01:I see what you're saying. Like there's almost a premium you need to place on your time as a creator, the more time you work. It's almost like the opposite of some roles. It's like, well, I'll give you a discount if you book me for X number of time. I don't want that, no. Yeah, and you're the
SPEAKER_00:opposite, and I get it. And I think engineering might be similar. I have three to four good hours in me a day where I'm at my top level. Right, totally, totally see that. I
SPEAKER_01:think that's a really interesting point. I don't even, like, I think that's really interesting. And maybe that leads to, like, yeah, maybe that, you know, exactly, that means, like, it's price, you know, you find a way to price that, you know, kind of thing in. I, you know, There's a fractional design leader that I have looked up to for a while, and he is adamant about doing weekly retainer. He refuses to talk about hours. Refuses. And it works really well. He does amazing work. He has amazing clients. He does extremely well. And so it is absolutely possible as a fractional to sell more value-based pricing. And I think it's just up to the fractional to decide how they want to package it up.
SPEAKER_00:What I've found is it works well if it's something I've done a bunch of times, like, oh, you need an app with an onboarding flow and initial accounts and all this. I did that three times in the last six months, and it took me between one and three months each time to do it. Here's the variables for if you're going to be on the high end or the low end. And all right, my rate is this much a month. When I've been able to have that kind of conversation, I see this almost sigh of relief from the other side of the table because they understand that I'm quite competent and I understand how much time this stuff typically takes. And then they generally don't have a problem with my rates. So it's like there's a lot of nuance that goes into if you're going to try to stray away from strictly hourly. That's a great topic.
SPEAKER_02:Yeah. I think we're ready to wrap this up based on the time. We're keeping Taylor overtime. So take it away, Joshua.
SPEAKER_00:Yes. Hey, thanks for joining. I definitely want to have you on here again. This has been fantastic. We'll put a bunch of links into the show notes. You referenced a bunch of things, Taylor, so I'll find them. And if you want to email them to us, that'd be great. And then if anyone has questions or feedback, feel free to ping us at email at fractional.fm. And thanks for listening in to the 50th episode.
UNKNOWN:Thank you.
