Heh. Fascinating how they used to say that they could afford to keep Tracker free because their meat and potatoes was "software consulting":
How can you afford to offer such a service, completely free? What is your business model?
Pivotal Labs is a software development consultancy, we get paid to build software, from web applications for startups to large-scale enterprise systems. We built Tracker to support our own projects, and now share it with the agile community, but it is not a primary source of revenue for our company.[1]
Interesting. Twitter seemed quite enthusiastic about their two "Pivots": When we began working with Pivotal last year, we knew they'd be a big help but we didn't expect how much they would contribute to a healthy and attractive work culture.
On the other hand, Pivotal's price is steep, and you have to hire their programmers in pairs: It’s about $15,000 a week for a pair. And so what we came up with was, “Look. You don’t have much money...” But we came up with this idea that if we do a six week run, and he gave me a very slight bit discount, so like a six week was going to be $84,000 we could get a minimum viable product up and launched.
Given the price of hiring Pivotal Labs, it sounds like Twitter and Laura Fitton were pretty enthusiastic. I wonder how to reconcile that with what you've been hearing—has Pivotal Labs gone through a growth spurt in the last year or two?
Hi, I'm actually a Pivotal engineer (in our Singapore office) and while I can't comment on either of the examples above I do want to clarify that clients don't have to hire Pivotal engineers in pairs. We do pair on all production code and our strong preference is for mixed teams of client engineers and Pivotal engineers. We strongly encourage even team sizes so that there is rarely an odd engineer out.
I know many people here charge $150/hour. 15k/week for two persons working 40 hour each is about $187/hour which doesn't look unrealistic to me. That's not to say they're cheap, they certainly aren't, but if you consider that a company has many expenses beside employees salaries then it's not that high.
Perhaps the biggest thing here is that you must hire a pair, so it actually comes to about $374/h, but if it's true that you get the job much more quickly with a pair then I don't see the issue.
Twitter is a unique case in that their engineers in 2009 were even worse than the ones at Pivotal. They still had outages every day, so how good could the "pivots" have been?
But my point still stands as Twitter did not renew their contract...
It's also not what I've "been hearing"... I've had to work directly with Pivotal people.
I was curious about Pivotal's consulting work, because even very good software consulting companies go downhill quickly when they try to scale. Joel Spolsky described it perfectly: I don't need to name names, here, this cycle has happened a dozen times. All the IT service companies get greedy and try to grow faster than they can find talented people, and they grow layers upon layers of rules and procedures which help produce "consistent," if not very brilliant work.
If Pivotal has a nucleus of really talented people, it makes sense for them to become a scalable product company. (Although I'm not really convinced by Pivotal's proposed pricing plans, at least for consultants with several smaller projects going on at once.)
I can't speak to your first-hand experience with them. But do you think they made this pivot because their contracts were not renewed? Or is it possible -- I'd speculate, probable -- that developing a business model around Tracker is a much more appealing prospect for them than software consultancy?
Software consultancy gets old quickly. You trade your steady paycheque being told what to do, for a not-so-steady paycheque being told what to do. Even at $15K per week, the revenue is not as scaleable as the potential revenue from charging for Tracker would be.
Again, I can't speak to your first-hand experience. But it struck me as sounding a bit mean spirited. I'm not sure if that was your intention. If they can churn out Tracker, which is pretty good, but are doing a mediocre job with some contracts, there's a correlation there. It doesn't mean they are necessarily the cause for the mediocrity. The cause might boil down to "fit" and this may be the reason why the contracts were not renewed.
EDIT: Actually, on further investigation (which I should have done before posting this), Pivotal Labs is a lot bigger of a consultancy than I thought. It's more than probable that only a small handful actually touch Tracker. I was always under the impression that their consultancy was a lot smaller, so they could ensure consistently high quality.
The speculation here is certainly understandable. The reality, though, is that Pivotal's consulting business is growing stronger than ever - we're over 100 great Rails developers now, with offices in SF, NYC, Boulder, and Singapore, and we are completely booked. All of our business comes from word of mouth - mostly existing and past clients. Check out some of them here: http://pivotallabs.com/clients.
Many clients do come back to us, but we actually try hard so that they don't ever "have" to - by leaving them with a maintainable, tested codebase, and effective engineering practices like TDD/BDD, pairing, aggressive refactoring, etc. We even help hire and train their own developers.
We kept Tracker free for almost three years, and over 180,000 people have signed up for it so far. We use it on all our projects, and the widespread adoption has been a great calling card for our consulting business. The decision to begin charging for it was not an easy one, but the reason is simple - we want to make Tracker better, faster, and establishing a revenue model for Tracker will allow us to devote more resources to it, including a larger dev team, support staff, and operational/hardware capacity.
Our goals are not to transition from a consulting company to a product one, but to do both equally well, and it's hard to do that when one side of the business has to fund/support the other.
Making money with a product >>>>>>> making money with consulting, and I say this as an owner of a consulting company. If we had a product like PT (which is excellent, and we use it daily on all our projects), we would stop accepting new clients and gradually make a switch to a full-fledged software product shop, which is what 37Signals did, and looks like PL are doing. Best of luck to them.
How can you afford to offer such a service, completely free? What is your business model?
Pivotal Labs is a software development consultancy, we get paid to build software, from web applications for startups to large-scale enterprise systems. We built Tracker to support our own projects, and now share it with the agile community, but it is not a primary source of revenue for our company.[1]
Wonder what changed?
[1] http://webcache.googleusercontent.com/search?q=cache:V05_lTO...