AI Coding Is Here To Stay (Get Ready)

Ever wondered what separates a thriving tech business from one that fizzles out? This week, Michael sits down with David Hirschfeld, the seasoned founder behind Tekyz, a custom software firm that’s been navigating the startup and scale-up world for 17 years. David’s journey wasn’t a straight line to success; he shares candid insights from a previous venture that hit a wall, and how those hard-won lessons – like the perils of not charging early enough – shaped his current resilient business and rigorous client qualification process.

One of David’s most potent takeaways? The critical misstep of not charging clients from day one in a past startup. This experience forged his now-unshakeable belief in rigorous client qualification. He reveals his five-minute method for sussing out serious prospects from time-wasters, emphasizing that understanding a client’s budget and commitment upfront is key to avoiding costly, misaligned projects and fostering genuine consultative partnerships rather than mere vendor transactions. David also dives into the nitty-gritty of building a high-performing team, the delicate dance of business partnerships, and how his company is proactively riding the wave of AI to enhance efficiency and client value.

In this episode you will learn:

• Why delaying client charges early on can doom a new venture.

• A 5-minute technique to qualify serious clients and uncover their actual budget.

• Distinguishing startups from scale-ups and the unique challenges of each.

• Navigating business partnerships: key demands for mutual success.

• Building a core team: hiring and managing A-players effectively.

• How Tekyz leverages AI for efficiency, cutting estimates by 30%.

• Fostering client trust through transparent estimates and reporting.

Welcome to the Consulting Success podcast. I’m your host Michael Zipursky, and in this podcast, we’re going to dive deep into the world of elite consultants where you’re going to learn the strategies, tactics and mindset to grow a highly profitable and successful consulting business.

Before we dive into today’s episode. Are you ready to grow and take your consulting business to the next level? Many of the clients that we work with started as podcast listeners just like you, and a consistent theme they have shared with us is that they wished they had reached out sooner about our Clarity Coaching Program rather than waiting for that perfect time. If you’re interested in learning more about how we help consultants just like you, we’re offering a free, no pressure growth session call. On this call, we’re going to dive deep into your goals, challenges and situation and outline a plan that is tailor made just for you. We will also help you identify where you may be making costly and time consuming mistakes to ensure you’re benefiting from the proven methods and strategies to grow your consulting business. 

So don’t wait years to find clarity. If you’re committed and serious about reaching a new level of success in your consulting business, go ahead and schedule your free growth session. Get in touch today. Just visit Consulting Success – Grow to book your free call today.

David Hirschfeld, a 35-year software dev veteran, transitioned from tech giants (CA, Intel) to entrepreneurial success, scaling his first startup to 800 customers/22 countries before a 2000 exit. Since founding Tekyz Inc. (2007), he advises scaleups on AI-driven workflow transformation & guides startup design/development. His Launch 1st Method, refined with 70+ startups, minimizes risk & accelerates success with less investor funding, leveraging his expertise in AI, workflow optimization, & startup dynamics.

Connect with David Hirschfeld

Discover more about Tekyz

Hey David. Welcome.

Hi. Thanks, Michael. Great to be here.

Yeah. Looking forward to having you share more about your story. I mean, you started a company called Tekyz. Maybe just take a moment and share with everyone the kind of work that you do and how long you’ve been doing it for.

Okay. Well, we do custom software development for startups and scale-ups primarily. I didn’t start there, and I started it 17 years ago, Tekyz, right after, actually right after failure. So I had an early success in the 90s. A company I started, founded in ‘92, and exited in 2000 after it grew to 800 customers in 22 countries. Sold it too. It was a legit software business, logistics, route distribution, inventory management. So we were – before SaaS was SaaS -, we would license the software to people that were in the food distribution business. And then I was VP of Products for the acquiring company for the next few years until I cast about. I had another software startup, and that one failed. So it was in the automotive industry for automotive wholesalers. And I was trying to create a network where wholesalers could source cars for their customers from other wholesalers or dealerships. And I actually was getting a number of people that were on the network, but I didn’t want to charge for it until I had funding. And I didn’t know how to raise money. And frankly, what I should have done is just started charging for it right away and not worried about the funding. And that was a hard lesson to learn.

[01:51] – Why Not Charging Early Can Kill Your Business

I was going to ask you, David, is there anything that stands out, I mean, in addition to maybe not charging right away, that you feel separated the success that you had with your first company, which you ended up exiting in 2000, and then the subsequent company that you launched and as you said, kind of failed, right, it didn’t, it didn’t work out as well. What separates those two?

It completely failed, by the way. It completely failed, just to be honest, you know. I ended up shutting it down. So the primary thing was I didn’t charge right from the beginning. That was the reason why it failed. There’s other reasons I could say why it failed because I was offered investment, but at really bad terms. I would have had to give up 45% of the company for like a little over a million dollars, and it just seemed like way too much. And that was right at the beginning of me trying to raise money. Once I turned it down, then it wasn’t a possibility again. But, if I had started charging right from the beginning, I would not- it might have been a little bit harder to figure out the right perfect product-market fit, but people would have bought it. I wouldn’t have had to raise money, or at least not as soon. And if I did go raise money, I would have had revenue and it would have been much easier to do.

[03:08] – What Separates Startups From Scale-Ups

Today you’re running Tekyz, right? Custom software development for startups and scale-ups. Some people have probably not heard the term “scale-up” before. I think everyone’s heard of “startup,” but what does, what does a “scale-up” mean? How do you define that?

Well, I define that as any startup that’s already achieved revenue. They have an ideal customer profile, and they’re generating revenue. And hopefully, they’re generating enough revenue that their cost of sale versus the lifetime value of that customer, that there’s a high enough ratio, that there’s enough profit in there that they can invest back in the business. Because if not, then they haven’t found product-market fit yet.

And I know today you’ve, and we’re going to talk more about this, you built the business to 12 team members, a bunch more contractors. You’re looking to grow that significantly. Let’s kind of pull back though for a moment because your core clients are startups and scale-ups. Startups are a very interesting type of client to have because a lot of people are excited. They, you know, a lot of consultants want to work with startups. There’s the freedom, the excitement, the innovation. But, one of the big challenges is that startups don’t necessarily have big budgets, right? Or they’re very hesitant to make investments. They’re trying to be scrappy as in many cases they should be. How did you view that? Why did you decide to focus on startups and what have you found works or doesn’t work when trying to, you know, build a business where startups are a key part of that client base?

[04:39] – The Hidden Risks of Serving Startup Clients

I got involved with startups because I was already networked in the startup community because I was trying to raise money for my previous company, which was a software, SaaS company again. And, when you’re trying to raise money, you naturally fall into the startup community because you’ve got people, all these people raising money. So that’s how I ended up getting connected in the startup. And when I decided to close down the business, there were a number of people there wanting to do software startups and need- and there were non-technical founders. And so it was just a natural sort of segue for me to then start to take on projects. Which is how I kept the business going for all these years, purely through networking up until recently.

So, there’s not necessarily a good reason to be in the startup community other than the things you said. The problem with startups, aside from the money – I mean, there are startups with money, right? The people get friends and family money when they decide they’re going to start something or, you know, there are plenty of startups that have enough funding to build their MVP and do some marketing. The problem with startups is they don’t have any discipline or understanding of what needs to happen in what order. And so they usually set themselves up for failure, right, in the early stages. And nobody’s telling them otherwise because most people don’t know.

[06:08] – How to Qualify Serious Clients in 5 Minutes

Do you do something to like, qualify people early on? Because I just imagine with, as you’re talking to a lot of startups, some, as you said, obviously will have the ability to fund the work, but others might just be excited about what they could potentially be doing, but they’re not yet serious enough to write that check, if you will. What do you do? What does your sales process look like? How do you make sure that you’re not spending a bunch of time talking to people that will never become buyers?

Oh yeah, that’s a great question. And you’re the first person I’ve talked to on a podcast that’s asked me that question. So, and I love that question because I have a really good answer for it. In the first five minutes of talking with a potential customer – I don’t know if they’re really a potential customer yet, but they’re talking like they want to build something – I always ask them, first of all, I say, “When do you expect to start the project?” And if they say, “Probably in the next year, I don’t have funding yet,” that sort of thing, I say, “Oh great.” You know, I’ll spend another- I’ll spend a little time with you and give you an idea of what this will cost, but I can’t give you an estimate because that’s what they want, is something, an estimate to go to an investor. And I’m not going to do that because we do very detailed, very elaborate estimates, and it’s costly. I’m happy to do it when somebody has a budget and they have the intention of starting, knowing they may not, but still the intention and the commitment’s there.

So if they say, “No, I want to get started right away,” then I say, “Do you have the budget for this?” or “How much have you budgeted for this?” They usually say, “Well, I don’t know how much the budget is,” or “I want you to tell me that.” And I always say, “I understand, and if I were you, I’d want the same thing. However, you’re asking me now to do a lot of work for you, and I’m not asking for anything in return other than understanding what the feasibility of this is.” So, they say, “Well, I don’t really know what my budget is.” And I say, “Yeah, I know.” Most people know what they can’t afford if they don’t know their budget. And then I just say, “Is it 10 to 20,000? 20 to 40,000? 40 to 80,000? 80 to 100?” And I will not stop doubling until they stop me. And they always, always stop me either at a one above or two above where their budget is.

So I get to 160,000, they go, “Oh no.” I could, there’s no way I could spend that much. Because that’s what they hear, and somehow the last thing I say is what they think I’m expecting them to pay. I don’t know why. They say, “I could never- I couldn’t go above 80,000.” Every single time. I can’t tell you how many hundreds of times I’ve done this, and I’ve had three people not give me a number, not give me the number. And the only reason- and when they don’t, I won’t, I won’t do the estimate. Even if they have, even if I believe they have a budget, I just won’t. Because if they’re not willing to give me that, then I can see this is going to be a vendor relationship, not a consultative relationship, and I’ll exit the call.

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I think what you just said right now is incredibly important. And I want everyone who’s joining us to really pay attention to that. I mean, you’re willing to turn down, kind of walk away from potential business when you see a sign that even though you might take that business on, you probably would end up regretting that you took it on because it’s not going to be the kind of relationship that you want to have. You know, the market is full of more opportunities than any one company can handle. And so saying ‘no’ to the wrong things so you have the availability to say ‘yes’ to the right things is incredibly important. It’s scary for those who haven’t yet built their business to the level of confidence and pipeline. But you know, take it from what David has built, what, you know, my experience as well, this becomes very, very critical.

Okay. So let’s kind of move forward in this story a little bit. You, you launched Tekyz. You were networking in the startup community. And anyone that’s done that before, and I remember what that was like as with previous businesses that I had, you just start meeting a lot of people, going to similar events. You see the same people over and over, right? There’s just referrals. All that kind of stuff is, is happening. At one point, you brought on a partner or you had a partner in this business. You no longer have a partner today. What worked? What didn’t work? What kind of lessons did you learn? What would you caution somebody or suggest that somebody really think about if they are considering a partner relationship or maybe they’re already in a partnership? What lessons? What can you share?

[11:35] – Why Most Business Partnerships Don’t Work

Well, first of all, I recommend people not get into partnerships because it is the rare partnership that works really well in a synergistic way for years. Some partnerships can start out strong, but then eventually somebody is going to feel like they deserve more or that they’re being put upon by the other partner. And it is just impossible to keep that parity forever. In rare cases, there are examples of really successful companies that have maintained these kinds of partnerships and, and or create enough of a wall between the responsibilities that- but in general, it just is really difficult to make it work.

So, I was looking for a partner to help me do business development, right? Somebody I knew that was already in the business, and he had his own consulting company and we were looking at sort of merging the two things, although his was much smaller than mine. But I didn’t care. What I cared about was that he had a lot of contacts. And so, some he had known for years. So we took him on as a partner, and we worked that way for four years or so. And I recognized that, you know, he was waiting for things to fall in his lap, and he wasn’t doing the business development, the outreach, and being creative about trying to figure- Anyway, it just wasn’t happening. And so we weren’t growing, and he was taking half the business. So I- but it was still in my name. And so I agreed that when I did split, because I was careful not to tangle myself up too much here, I said, “Anything that business that you’ve brought in, you’ll continue to get the same kind of share of that business. But going forward, it’s, you know, I’m taking Tekyz back.”

And what would you have done differently, David? Like with the benefit of hindsight, if you were to get into a partnership – I know you said you don’t necessarily recommend partnerships, but for some people, there’s lots of value in bringing in a partner. If you were to, you know, do that one over again with a partner, what would you have done differently in terms of like structuring agreements, expectations, like anything?

Yeah, yeah, I would. What I would have done is look for somebody who was willing to make a big commitment in terms of personal investment. So, here’s- I’m going to hand over half the business to you, or whatever the partnership arrangement is, as soon as you reach these milestones. But you’re going to commit to reaching these milestones within a certain period of time, and they have to be big enough that our business has grown as a result, significantly. And if that happens, and there’s enough evidence that they can continue to do this, then- so structure it like that. I’d structure it so that once they reach that milestone and they now are officially vested partner, the process of getting that proof, their ability to, to bring in the kind of business or whatever it is you’re bringing them in for and to continue to do that.

This is your third business that I know of at least. Maybe there’s others before.

Before, before and during. Yeah, I’m still involved in a partnership in that which was one of my clients from very early on at Tekyz, and I’m still the acting CTO for that company. That one’s been a real struggle in the healthcare industry. And we’re launching some SaaS products this year, which will spin off as independent companies.

So let’s, let’s come back to those. What I’m interested in really looking at and hearing from you is you, you went through acquiring clients through, through referrals. What was the first kind of big challenge aside from the partnership kind of struggles, if you will. But what was the big first challenge that really stood out for you? Something that was made a little bit challenging to overcome or really made you start to kind of wonder – if you did at any times – like, “Is this the right business or am I the right person or do I need to make any changes?” Anything kind of come back for you in terms of-

[15:36] – From Contractors to Core Team: Building for Scale

Yeah. Yeah, yeah. Well, I mean, I can talk about that really clearly because I have an arc in my mind, what we’ve gone through. The first thing was being able, you know, originally I was taking projects on, and I was contracting people to do delivery, and I would project management. And I have technical skills too, but I’m, you know, we’re taking on projects where I need a team. So I wasn’t going to be doing the work, and I was trying to grow a business beyond my ability to just deliver stuff. So at first, it was trying to figure out how to identify contractors who had quality and commitment and integrity and all the things you need. And eventually I realized you have to have core team members in your, on your own team that are driving this.

What you realized was that you need to have full-time core team members as opposed to just contractors.

Yeah. Yeah, some, you can have a blend, but you can’t just have contractors unless you are really lucky. But for the most part, most contractors, especially if you’re contracting a firm, your chances of them really delivering on time and quality and with the level of detail that’s really necessary for you to build any kind of brand is very, very small there chances that that will be successful. So, I started basically some of the independent individual contractors, I found an outlier in one of my testers. This was 12 years ago. A woman who was just incredibly detailed and seemed to be holding a lot of pieces together. Anyway, I found her, I hired her, and I, and every two years or so I’d move her up because I would give her more responsibility than she thought she could handle. And she’s now my director of operations and runs all the development. And finding people like that. So we have somebody like that as our lead architect. We have somebody like that as in a couple different technology verticals.

Let me ask you before, so before you go on in the story, let me ask a question about this. One of the the challenges or I guess questions that people have as they’re in a similar position where there’s kind of the the roller coaster of work is coming in, they need more team members or to expand the team, but sometimes they, you know, don’t feel comfortable going out to try and hire somebody when they don’t have the revenue to necessarily support that new person. What was your mindset and how, you know, what do you recommend now to people or, are you on the side of yeah, hire before you even need the person and figure out a way to make it work financially? Or build your bench of talent that you can pull on when you need them? Or do you think about it in some other way?

I think about it that you’ve got to have the revenue to be able to support the person, otherwise you might hire them and then fire them later on because business turned down. So you have to have at least enough revenue that you feel comfortable, even if you feel comfortable that you can carry that person for, you know, a year or so, and with the intention of growing your business to then get beyond it. That may delay your ability to enjoy profits from the business, right? You need to make a living from it. You may just not be growing that living much while you’re bringing in some initial core people. But you have to have enough to fund them.

Yeah. So would you stay with contractors in that position? Like let’s say you, you need people to help you with projects, but if the rev- if you didn’t have enough of a revenue runway to support hiring somebody full-time, as you’re saying, is your suggestion then or your experience to just use contractors as needed until you get the revenue in the business to a point where you can comfortably bring on more full-time people?

[19:30] – Creating Delivery Playbooks That Drive Growth

That’s what I did. I don’t know that I would change that. Either that or- yeah, because the problem is you just don’t know your ability, until you’re in a predictable growth model, you don’t know your ability to bring in new revenue and to grow your revenue. And if you’re hiring people with the promise, with a promise that this is a, you know, a job for them, or a career for them for the next 10 years, but you’re lying to them because you only have enough money to carry them for three months if you don’t get that next project, then to me that’s an integrity issue. So it doesn’t feel right to me to do that. Because then if I do end up having to let them go, then I have to be honest with them. You know, at that point, and then everybody else on my team’s going, “Why did you hire them in the first place? Am I safe?” It’s just, you know, I don’t want to be caught in a lie ever. So I just don’t lie. And that’s the only way not to.

And, and that’s a whole philosophy around our business, actually. So in terms of how we’ve grown it. So, the biggest problem we had initially was being able to ensure quality and consistency and delivery from build to build, release to release. And it took us a while to build the team where we could guarantee that. But then we did it by brute force for a while. And we kept building the protocols and the disciplines and the playbooks on how to deliver. Because the idea is, if you can’t- if your customers, you can’t use them as references and the kind of reference that say, “They’re amazing. If they say they’re going to have it done on this day, it’ll be done on that day. And it’s going to be if it’s not bug-free, it’s going to be really well tested.” And if you can’t get your references to say that, then it’s really tough to grow your business, right? But to do that, that requires, you know, a lot of things.

So you’ll know on my website it says “hyper-exceptional software development team.” That was like, of the 17 years we’ve been doing that, it probably spent the last 10 years really building that capability. And it’s- and anybody who really runs an exceptional team has artifacts they produce that typical teams don’t produce. And those artifacts are your evidence when you’re talking to somebody new. I say, “I don’t want you to believe me,” because saying “trust me” is code for “you can’t trust me,” right? So let me show you what I mean. And here’s how the things that we do that people have told us make us exceptional.

[22:13] – Building Client Trust With Radical Transparency

Give everyone an example, David. Like what are one or two things that you do? Because I think that, that is powerful to have those points of distinction and differentiation kind of at hand. So what does that look like?

Okay. Yeah. And there’s a- I’ll give you a few only because I think it, it kind of triangulates it a little bit. One of them is how we do estimates. Our estimates are very detailed. It’s big, we have, you know, make a big investment for a project that we don’t yet have anytime that we do an estimate. But we want the estimate to be accurate. We want it to reflect the requirements, the thing we’re going to build, to the degree that we can possibly know what we’re going to build before we get started. And usually we’re pretty good at our estimates. So we’re not off by a factor of 2x or 3x or 4x like what is typical in the startup contracting world. We’re off by a factor of, you know, 10 or 15% or 20%, depending on- And we build those buffers into our estimates so that all those buffers are visible too. So when we build an estimate, we have a low and a high, and even the low has a buffer in it, and it’s broken down by all the modules we’re going to build and a detailed description of each of these modules. And a component, a module is a component that can’t be more than nine days of development.

So that’s one thing you do differently. Most say, “Here’s, you know, we’ll get you quickly whatever,” but it’s way off, way off the mark. You take more time, it’s very detailed. It costs you obviously more money then, as you’re not charging for it. But for you, that’s a point of differentiation. What else?

Okay. And we continue to do that throughout the project because we’re capturing actuals versus what the estimates were on small pieces, on the project, on how much burn we expect on a monthly basis. And we report on it weekly with the client. Here’s what we estimated, here’s the actual, this is where the time went in each of these different areas – DevOps and development and testing. I don’t know other companies that do this with the client every week, you know, in a quick 15, 20 minute status.

Another big one, and I think it’s big because every time I tell other development shops, they go, “Oh no, we don’t, we don’t have the, we’re not tracking things to the level of detail where you can do this.” I used to do blended rates like a lot of development shops do, where you charge one rate and that’s sort of your blend for all the different skill sets. But then people would get uncomfortable towards the end of the life cycle of a big module because most of it’s testing. And it seems like you’re charging a lot for all these testing hours when all the developers aren’t focused on your- And I thought, okay, you know what? I could easily make an argument why that shouldn’t be the case. But I can also see if I were them, I might feel the same way.

So now I went to actual rates for each skill set, right? Every person on the team has a certain rate. And then sometimes they would feel like, well, somebody worked 180 or 190 hours because we had a big delivery and it was a weekend. And they want to know what they spend all their time on that month. And I was like, and that always feels like they’re questioning my integrity. And I know they’re not. They’re asking the same questions I would be asking. I just don’t want to be in that position. So we just started attaching the daily time sheets to every single monthly invoice so the client can audit us, full transparency on what everybody did every day.

[25:36] – Why Tekyz Uses Hourly Rates Over Fixed Pricing

Question for you on that. So you, you’ve chosen to use hourly rates, right? And you have a value assigned to each team member. Why hourly rates? Why not project rates? Why not a monthly retainer? You know, why not other- some other form of, of pricing where for a lot of people, and you know, we look at this, it’s like, it could be harder to scale the business, harder to grow the business beyond when everything is tied directly to time and not necessarily as much to value. So how do you think about that connection between hourly fees and value and potential limitations or maybe in your mind, benefits of using that approach?

We used to do exclusively fixed price. But then it’s very difficult to control scope of a project when it’s fixed price, because you have to anticipate everything that you believe that the customer implied in terms of the requirements. And we’re really good at documenting requirements in a lot of detail, but it becomes a huge overhead factor in terms of our time and in terms of the client’s time to go back and say, “This is a change,” and then estimating the change, which we do anytime there is a change, we estimate the the effort, right? But it just becomes a bit, it becomes a messy process to do it fixed price. We still do some fixed price, but much- but rarely. You know, the 90% of our work is time and is hourly.

The problem with doing like a monthly retainer is that’s like even, that’s even more abstracted than blended rates. Because basically you’re saying, “Our guys are this much rates, and we’re going to spend on average this many hours a month, and so that’s how you come up with your retainer number.” Right? “And if you get above a certain amount of hours, then we’re going to have to charge you some, some accelerated fee on top of that for every hour they work.” And now the clients are feeling like they’re being taken advantage of because you’re nickel and diming them instead of giving them- And so I didn’t want to get into that. I never get- nobody ever questions me on an invoice because there’s, because they have all the information and evidence that they need. They have access to the project management systems. They can go digging through that all they want from the beginning of the project till whenever. So, and I find that transparency is one of those levels of being exceptional, which is hard to do unless you’re tracking everything at that level of detail.

[28:11] – Moving From Referral Growth to Scalable Sales

You mentioned, David, that the business has really grown just on the back of, you know, referrals and, and your network, word of mouth so far. But recently, you’ve looked at expanding beyond that to, to grow the business. Can you talk a little bit about why now you’re, you know, open to doing things a little bit differently? And what are you doing if anything is working yet? Love to hear it.

Okay, sure. And my goal is and the reason I want to do it now is because I’m ready to grow the business beyond myself. So I want it to be able to run and sustain itself without my involvement. But that means I have to have enough infrastructure and ownership in that infrastructure to be able to to drive the business forward, right? Which means I have to have enough revenue that’s supporting that infrastructure. So that was the motivation, and I gave myself a few years to achieve that. And for me to do that, I have to create some kind of predictable, scalable model that I can predict that we can achieve this level of growth every quarter or every year in a predictable fashion, which means being able to identifying potential, you know, a growing amount of of business during, you know, and in a way that if we add more energy to the system, it will grow, it will grow that rate. So that’s what I’ve been working on over the last year is building that system.

Makes sense. You talked about kind of the arc of the business and, you know, having somebody come in early stage, every couple of years moving them to a new role that challenges them. Is there anything that you’ve, you’ve learned in, you know, over the years of running different businesses, and especially this one, that you use when it comes to hiring people and really making sure that you’re getting people that can, you know, play at that- like as an A-player and and really perform for you?

[30:10] – How to Identify and Keep A-Player Talent

Yeah. Also another really good question and, and something I say very often is only hire somebody if they’re smarter than I am. And my director only hires somebody if they’re smarter than her. And it rolls uphill, so to speak, because what you want to do to be in a position is the people that are your, in support of, you want to be getting all their impediments out of the way so that they can build the business and build value, not having to carry them and nurture them so that they can perform well enough to your standards. So, so we look, number one, above anything else, we look for intellect. They have to be smart enough so that everybody in the team feels like this person’s added value.

Right, to interrupt, David, how do you, how do you identify that? How are you identifying intellect? Like certain questions, assessments? What’s-

Yeah. So we go through an assessment process with people. We always have them do some coding for us, usually in a contract role. So we’ll just say, “Here’s a weekend of work or two weekends of work or whatever. And we’ll pay you for this a fair rate if you want the job.” But you’ve got to do it because we can’t tell. And if they deliver it and they can explain the work that they’ve done, that shows that they really understand the work really well, then, and that’s clean and it’s well documented and, right, it’s structured properly and they built it really quick, then we know that we’re dealing with somebody that’s, that’s skilled, but really smart as well, because there’s a big difference between just being skilled and being smart and skilled.

However, if we hire somebody, and it has happened where they cheated on this, and we find out in the first week or two they’re not performing anywhere near as well as they did, we fire them right away. Not because we can prove they cheated, but just because it’s obvious that this isn’t the right person. And we do that because, and this was a difficult thing to teach my team, but the longer you carry somebody that really isn’t a good fit for the team, number one, you’re delaying their ability to move on to and find something that’s a good fit for them. But you are sending a message to your team that you don’t value them enough to protect them from somebody that isn’t to the level of quality that you’re asking everybody else to deliver. And so yeah, they won’t make it two or three weeks at the most if they truly weren’t a good fit, except in the rarest cases, you know, where it’s like not quite sure, we want to give them just a chance. But for the most part, it’s pretty fast. And the rest of the team gets to be- becomes brutal because they want to protect the team.

Okay, so that was one. I think you were, what is to share maybe one other thing that you do in the hiring process or to really bring on those A-players?

You know, it has actually evolved beyond me at this point. So I couldn’t tell you all of the steps that we go through anymore to hire our-

Let me ask you then another question. I’ll take it in a different direction, which is AI, right? Everyone’s talking about AI, right? And coding is something that AI can now do. There’s, you know, Cursor and Replit and all these other services and sites and so forth that people are using. How, how do you view that? I mean, you’re, you’re doing custom coding. There’s now AI that can do coding for you. I’m sure it’s coming up in sales conversations. I’m sure you’ve talked to your team about it. But what, what is, not just your stance. I’m, I’m more interested for you, David, as a leader, has this changed your- well, how’s it changed your strategy, your positioning? How do you think about building a business that is based on something that AI is, you know, from the outside at least, it looks like starting to eat into quite a bit.

[34:06] – How Tekyz Is Embracing AI to Stay Competitive

It’s changed everything, and it’s changing everything. And for the last year and a half, I keep thinking, “How do I position us so that a year from now or two years from now, it’s relevant, whatever I’m positioning, right?” And I’ve had a lot of philosophical conversations with my team and my customers as well. And I, you know, I embrace AI. You know, I look at it like this. It’s a hundred- you know, I live in the San Diego area, so of course, surfing metaphor’s what I’m going to use, right? You know, and the typical development team can surf comfortably in a three or four foot wave. We call ourselves hyper-exceptional. So, you know, metaphorically, we’re surfing in 8 to 10 foot waves. And here’s a 100 foot wave coming in, and everybody can see it. And you have one or two choices. You either have to swim out, paddle out as hard as you can and try to stand up in the wave, or wait till it comes and wash over you. And if you get up into the wave, then you stand on the tip of your board and you just try to stay ahead of that crest. So that’s how I look at AI, metaphorically. And that’s what we’ve been doing.

We’ve been testing and benchmarking different ways of building things, and AI is involved in every single one of our projects with our clients in terms of implementing AI as well as what we’re use- how we’re using AI to help us develop software. Replit, Bolt, v0, tools like that, none of them build good code yet, you know, and none of them can build the code without a trem- anything of sophistication, even a little sophistication, without you wanting to pull your hair out because they get, you know, it gets stuck in loops, it breaks something that was working before. You have to figure out how to prompt it so that coach it along very delicately. And we’ve spent a lot of time in the last six months, especially in the last three months, on those exact tools that you mentioned.

[36:02] – Cutting Project Costs 30% With AI-Powered Development

So it sounds like, David, you’re saying like right now, for in, in your space, there’s a lot of, there’s immense potential, but to really get the most out of it to the point where somebody could say, “Hey, we can build- instead of working with you guys to do this in a custom fashion, we can just do this ourselves with AI,” it’s not there yet or nowhere near there.

It won’t, well, I, you know, I say nowhere near there. No, it’s not anywhere near there yet. But at the rate things are accelerating, I don’t expect it to be too much longer before a lot of those gaps are starting to be filled, and it’s not getting into the loops and it’s able to structure code much more intelligently and things like that. I mean, you can try to prompt it along, but if you ask Replit to build an app for you, a simple app, right, it’s going to be really poorly coded. And that’s true with Bolt, and that’s true with, you know, with all the tools that I’ve used. They just don’t- So Cursor is a really great tool. Same problem, though. I mean, you still have to be a coder to manage an app, and using Cursor to help you with the coding, but it speeds things up a lot. So I’ve just recently reduced most of my estimates by 30%, which is a huge amount when you think about building a first app. And that’s being a little conservative. I think that it’s actually even more than that.

But you’re saying that you’re doing that because you’re able to increase your efficiency and effectiveness by you and your team using these tools. So you’re passing on some of those savings to your clients.

[37:41] – Redefining Dev Teams With Automated Testing and Delivery

Right. And we’re also shifting our whole approach to development. Our objective is to have developers be independent delivery agents as opposed to being the developer and have separate QA and have, and instead, the developer is responsible for a certain func- portion of the application, and they’re building it, they’re building their own test scripts because they can automate all this. We already automate all the check-in and automated testing parts. And now they’re just creating the test scripts themselves instead of us having somebody that’s a separate QA automation person that builds that. And that way, a developer can make, create a new function, add it to the app in three days, push it to the library and automatically goes into automated tests. And if it passes everything, it goes to smoke testing for somebody in QA just to touch everything to make sure that there isn’t anything wrong before it goes into production. And eventually they won’t, we won’t even need that. It’ll get, we’ll get smart enough where they can push it right into production.

[38:47] – Two AI Questions Every Consultant Must Answer

Yeah, I think the big thing, yeah, I think the big thing here for everyone, because not everyone is going to be following along with all the technical stuff and the process that you laid out, but it’s that you could view AI in two ways, right? You can either view AI as, and, and I think these are both important questions for everyone to ask themselves and, and to talk to their team about and their clients, as you’vebeen doing, but first is how, what’s the impact of AI on our specific business and, and industry, right? Is it a threat? Is it an opportunity? But how does it change the landscape, if at all? And likely there are going to be some changes that you want to take into account. But then the second one, which you’ve also been doing, David, which is great, is looking at how do we use AI to be a better company? How do we use AI to be more effective for our clients?

And so I think for everyone, if you haven’t considered those two questions and come up with clear answers for them, then that’s something that you should definitely be doing because AI is only going to get better from here. It’s not a question of is this the future or like, is this real? It is real and it’s not going anywhere. It’s only going to continue to evolve and improve.

David, I want to thank you for coming on. I want to just, you know, conscious of the time that we have in the calendar here. And so I want to make sure that people can learn more about you and Tekyz and everything you guys have going on. So, where’s the best place for them to go? Can you kind of, can you give the URL or domain that people should go to check that out a little bit more?

Yeah. Yeah, thank you for asking that too. Michael. They can go to Tekyz.com, which is how we spell ‘techies’. So I’ll say it again: Tekyz.com. You can email me directly, which the email link won’t be in the show notes, but I will say it for anybody that makes it to the end of this podcast, right? It’s [email protected]. And if you look me up on LinkedIn, it’s easy to find me on LinkedIn, just David Hirschfeld. Or search for Tekyz. So, yeah, please give me a call. If you just have any questions, I like, you know, being helpful. Even if there’s not a project there, you know, I’m happy to be helpful if somebody’s struggling with another development team, they’re not sure what to do, or they’re considering a new project and they’re not sure how to approach it. You know, if nothing else, I can at least give you some direction.

Well, we’ll wrap it there. David, thank you again so much for coming on. We’ll have the website linked in the show notes over at consultingsuccess.com. And thanks again for coming on.

And thank you for having me, Michael.

Important Links:

David Hirschfeld LinkedIn
Email David
Tekyz Website
Tekyz LinkedIn
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