We have all heard about those inspirational and fantastic startup stories – Had a small garage, the greatest and most innovative minds came together, worked day in and day out, and hacked their way into launching a product that took the world by storm and blew everyone’s mind. We all love these stories, and they are a good source of motivation and inspiration in this ever-expanding technology landscape. However, that’s about it.
In reality, such fairy tales happen so seldom that you probably have a higher chance of winning a million-dollar lottery than being the central part of such a tale.
According to research by Failory, 90% of startups end up failing and never taking off. This means that path is not as ideal as it would seem, and it needs much more than an idea and a plan. You need a team, the right timing, some luck, and a process. While timing and luck are external factors, In this blog I will be sharing my thoughts on building the right team and the process around it.
Bringing the best people together is one of the key challenges of startups. As research from CB Insights shows, lagging the right team is the 3rd most frequent reason startups report failure. Failed startups often lament wrong hires, and not having a board or team leads with equally divided attention on marketing, sales, technology, and so on.
Fig: Top 20 reasons startups fail
For a startup looking for talent, it is not only about money but also being able to create a persona that can attract top people to choose you and be convinced to work on your idea, instead of other offers they may receive.
Given the cutthroat competition for top talent, it is often hard for startups to be able to attract and retain developers. Additionally, building a team and maintaining it takes time and effort.
Not that it is not worth the effort, the idea for any startup founder is to choose the battle.
Many times founders may be spending 6 months to find co-founders and wait to start only after that happens. This may lead to time and opportunity loss when in the end, you just need someone with the knowledge of execution and putting together a plan. Maybe you do not need a cofounder that early.
As the founder of ProofPilot, one of our many clients, Matt quoted
“I do not have co-founders and co-founders are hard to find. No one wants to join when there is no traction with your ideas. It is just so hard to convince people when they have a 2X opportunity in hand”
Matt found Mindbowser through a reference in 2018, and since then, Mindbowser has been able to take care of everything for Matt, setting up a dedicated team for him. Today, ProofPilot is one of the leading applications for participant-centered RCTs, evaluations, and outcome studies at reasonable costs.
While startups are building a new genome combination or are into electric cars, the only way is to build their own team. In fact, any team that would require Ph.D. degree holders to come together has to be built in-house. On the contrary, if your startup is AirBnb for X or Uber for Y- which means it is basically a lot of Python code and APIs put together, outsourcing your development can work.
Here is a decision tree to help you decide between building an in-house team vs. an outsourced team
Fig: Flowchart for choosing between in-house and outsource
In summary, choosing between outsourcing your development needs or not will depend on a number of factors such as availability of talent, founder’s background, type of startup, type of work to be outsourced, priorities for the company, the personality of team members, and so on.
Since the overall decision is based on so many factors, there is not always a clear answer on whether to outsource or not, and if yes, then how much to outsource. Companies have found success in different forms and sizes of outsourcing, from a small part of their overall development to having a completely outsourced technology team.
Here are some points to consider why choosing to go with an outsourced agency makes sense
While building your own team may sound attractive, it takes time to find each resource and hire them. Comparatively, an agency can provide you with the required technical talent from the word go. Moreover, there is no collaboration problem or time required to adjust since these people would have already worked with each other for a long. A simple understanding of hiring practices shows us that typical hiring takes upto 8 weeks for the person to get started in their role. Contrary to this, you could get started within the same week with outsourced talent.
Fig: Flowchart for deciding to do technology inhouse and outsource
Collaborating with an agency can introduce you to technology best practices right from the start as compared to something that may have taken time to learn with time. For example, at Mindbowser, we have the Design Sprint, CI/CD pipelines, automated code review, weekly status reports, etc to make our process predictable for our customers. These processes have taken years of experience and back and forth to evolve. Today, these processes are available to our customers right on day one.
The needs of a startup evolve continuously. Not all the technical expertise that is needed for a project is required on day one. Some roles could be required today, and some of them required later. Many of the roles such as DevOps or testing could only be required a few times. A startup requires a multi-functional team (designer, frontend and backend developers, testers, DevOps, analyst, etc.). Putting a high-performance team and having a superstar in each role can be difficult. While the founders should cover areas that they are apt into (marketing, growth, backend development, domain expertise, network), they can easily use an agency to fill the remaining gaps. Today startups do not need all skills in-house. In an Uber-like world, skills should be used on demand. With an agency, you get the flexibility to pick and choose as you need it. This flexibility is great for any startup which does not need to worry about maintaining a team and continuously hiring. Additionally, the founders can continue to focus on their priority areas.
Your agency partner may have his or her own network and connections that they may help you with. At Mindbowser, we regularly organize customer round tables where we introduce customers to each other and create opportunities for business exchange. We also introduce founders to the Startup Grind Network and to the AWS accelerator. As a successful startup is a combination of hard work, luck, timing, and people, such interactions and connections create a lot of opportunities for the company. Good agencies may even have additional services to offer, such as launch plans, marketing, etc.
With an on-demand team set up, a startup can quickly add resources at will that may be crucial for success. Lower time to market means quicker pivots, which can make or break success chances. As a startup, you have to launch, take feedback, quickly learn, prove your value proposition, and so on. There are enough moving pieces. Not that the internal team cannot pivot quicker, but a wait for hiring can derail the plan. In fact, a rush for hiring and then making a wrong hire due to pressure can make the situation worse.
Glassdoor suggests that a US-based CTO salary is $150K-$200K yearly. A full-stack developer costs $120K. To be able to afford such costs, you need investment. Not all startups can get investment ideas, but rather they have to prove before themselves raising. This period is for bootstrapping and making things work within a limited time and budget. An outsourced agency can provide you a breather with lower costs and a longer time to afford a team and build your idea versions.
Fig: Glassdoor costs survey
A good agency would always have its own experts who would have worked on multiple products and have years of experience under their belt. There are agencies who are development partners to even FANG companies. How great it would be if you could have a piece of a product manager who is versed with Google’s development methodology or Netflix’s way of moving fast. Such expertise can be invaluable. Additionally, there could be agencies that have worked on many products in a particular domain. They become specialists in these domains. From healthcare, fintech, marketplaces, e-commerce, and so on, you actually could enjoy this knowledge right in your team.
At Mindbowser, personally, I am involved with our customers to bounce off ideas and share learnings. My customers tell me that it has helped them a lot in their journey. Here are some of the areas in that I have helped my customers and I believe any good agency does that as well
👉 Finding Mentors
👉 Feedback on design decisions
👉 Technology strategies
👉 Prioritize feature list
👉 Build product roadmap
👉 Access to other founder networks
Working with an agency practically guarantees an educated second opinion from a reliable partner. With a good agency, be ready for debates and discussions, contrary ideas, and candid advice. Take full advantage of this ecosystem.
Once you have decided to outsource, the next important thing is to know which is a good agency partner for you?
As outsourcing requires you to trust an outside individual or a company with your business information and data, you need to have a close relationship with your outsourced team. Hence, when outsourcing, there are many aspects to look for and consider while considering a team.
Good communication is the key to the partnership. A qualified team should be able to understand your needs and make you understand their thoughts. Throughout the development stages, there is an incessant flow of information between teams and if communication problems exist then the team could quickly run into a stream of rework, wrong instructions, loss of productivity, and so on. The right agency will have people not working in silos but actually connected directly to you. Communication traffic would not be in one direction but there would be continuous discussions, thoughts, and debates. Be mindful of working with teams that agree with everything that you say. It is a sign of either not understanding or not thinking through with you. When assessing the team, check how comfortable you have felt discussing your idea and how participative they have been in the whole process.
Team Size does matter. Small and large teams have their own advantages and disadvantages. While working with a small team you always run the risk of overwhelming them once your startup takes traction. Maybe your startup is their boundary of technology competency. In that scenario, you may have to be soon looking for alternatives. The other problem is their own ability to attract and retain top talent or the talent beyond the founders and their ability to drive a process once they grow to be a midsize team. Working with a large agency does not have the issues mentioned above as a larger company must already have the processes and team. The risk with larger companies is to receive personalization, get a good team, and not get lost among the many customers they may be serving. The right team size I consider is between 100-250 people which is led by the founding team every day. Here the team is small enough to give you the attention and large enough to be able to set up a decent size team for you.
Startups are run by the fuel of imagination and creativity. Hence you need a partner who is aligned with these startup requirements and not just a development shop. You need to look for a partner who is as much looking to build success as you are. The agency partner should not be a “follow your instructions type,” but is like a true partner that debates, analyzes, and suggests alternative approaches with you. Startups do not have one finite path to follow and hence your agency teammates should think similarly. Discussion with your agency should simulate ideas and not instructions. If your agency too is driven with similar passion and motivation, it will make the chance of your success high and the need for an internal team low.
One of the reasons to seek an agency is for them to drive your idea at a higher speed with their experience and processes. You should not have to invest time to build practices and define how things have to be done. It’s like you are going to a restaurant to have food. Now you should not be investing time to educate someone on how to cook better food. If you had to take that much effort, you could have rather cooked yourself. Similarly, a good agency should have the process ready for taking your idea, converting it into a blueprint, dividing it into smaller deliverables, checking for quality, including feedback as it comes, and making it launch-ready.
Choosing the right partner should come down to the confidence you have in them. You need to have constant confidence that whatever situation comes, it would be tackled by the agency and would not result in any sort of failure. It is critical to define your expectations from your relationship and to have confidence in it. This confidence comes from assessing the experience the agency has, its methodologies, quality benchmarks, team members, their past client stories, domain expertise, and so on. You need to adjudge your choices on these various parameters and make your choice.
At Mindbowser, my CTO and I teamed up to build an agency that can bring the best of tech and knowledge to founders.
In case you would like to discuss your options further, feel free to get in touch at firstname.lastname@example.org or book a 30 minutes free consultation call!Get Free Consultation!
Now that you know the points to consider while hiring an outsource team, you can quantify the assessment and make an informed decision.
Mindbowser is excited to meet healthcare industry leaders and experts from across the globe. Join us from Feb 25th to 28th, 2024, at ViVE 2024 Los Angeles.Learn More
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