Building a team from day one for a startup can be a great experience. I’ve learnt, however, that it can be an uphill struggle when you have no previous experience managing a tech team. I’ve often faced this issue running my own startups, the first a social restaurant reservation system called Table & Friends and my current startups Altar.io & 10kstartup. A Software Development Agency can be a great option to avoid this struggle.
Let me take it further, building a team of top talent more expensive than you may think. It’s time-consuming and a lot will go wrong, especially if you are trying to find a “rockstar CTO”.
On top of it all, hiring early removes your focus from doing the thing you are best at – proving that you can disrupt an industry.
The fact is that once you have good metrics you are in a position to show your product or service works. That’s a better time to hire and share equity with hires and investors in a position of strength, not of weakness.
There is much misunderstanding about the role of technology in startups because startup schools vaunt the ideal of the multidisciplinary team of founders (tech, business, marketing, development).
Startups are often started by specialists in one field who have a pretty good idea on how to disrupt it with the use of technology. But that shouldn’t mean they should go on a hiring spree before having an MVP (Minimum Viable Product) ready.
The Minimum Viable Product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.
As a co-founder of a Product and Development agency, I primarily work with people who are exactly that: specialists in a field looking to bring disruption.
My advice is to be honest with yourself, what you can and can’t do and focus on achieving something meaningful sooner rather than later. Don’t waste precious time shopping for talent endlessly in a shrinking pool of tech talent. If you actually can successfully hire well-motivated technical people (like your “Soulmate CTO”) in your venture’s first days then it is an opportunity not to be missed. In any other situation, you will find that agencies can be a good option, assuming you find the one that has the right fit for you. As well as the right experience to plug your talent gaps in terms of delivering Product and Technology.
From personal experience, I’ve created a list of 10 reasons why a Software Development Agency can be the perfect choice to help your startup succeed.
1. It’s a proven model.
From early 2000 names (like Skype and Alibaba) to ones that are now hot (such as Slack, Upwork or GitHub) startups have relied on agencies and freelancers for their early days’ first builds. And they are not alone.
Don’t get me wrong, legendary companies like Apple, Microsoft, Airbnb were started in a garage with a mix of Product and Tech people. Having a “Soulmate CTO” from day one is, of course, the most idyllic option. Unfortunately, this rarely happens.
2. Validate your value proposition first. Then validate that you are a great people/startup manager and fundraiser.
Does it sound reasonable that you should be managing a board of directors and a large team of developers before you actually know that your product stands a chance?
Not in most cases. Unless what you are developing is very complex and you are packed with hundreds of thousands of dollars worth of funding already.
3. Money is Short
Money is always short. Unless you belong to the Olympus of second-time founders who’ve exited and have the confidence of investors to back their new ventures. Hence, running a startup with under $ 1 Million is always a challenge. And with salaries anywhere between $50–100k per employee time and cash flies.
4. You always need the best talent but you don’t need it all the time.
It’s easy to calculate the premium of having an agency to build something for you.
A good software development agency will build a high-quality product with a team that already works well together – reducing your startup’s time to market and allowing you to focus on growing your business. Moreover, you will not need to manage them yourself as you will have a dedicated Project Manager to do it.
Whereas if you hire yourself you will need to be the maestro and dedicate a reasonable amount of time to managing the development team in a SCRUM setting.
5. Hiring In a Rush Is Counterproductive
Hiring badly is worse than not hiring. Doing it quickly and clumsily is a big startup killer. As a result, there is a ton of literature about it and how to do it properly.
There are, however, many ways to mitigate this. Starting with applying a vesting schedule to everyone (including yourself and avoiding 50/50 splits in equity that stop decision-making processes).
Hire slowly but surely, lookout for great people with a good culture fit. If hiring developers also lookout for great work done – for example, check out their GitHub Repository with a techie friend.
6. Time and Priority Vs. Design and Tech
Not having all the design and tech skills in the founding team is not a big problem. Not knowing how to manage time and priorities is.
If you are a single or a couple of business development executives trying to disrupt an industry via technology that’s not a problem, that’s an asset.
You know your customer, you have the right relationships, you’ve possibly even pre-sold prospective clients. You are on the right track and you just need your idea and project neatly designed and executed. At this point, you’ve just got to weigh what your available options are in terms of building a team or getting quotes to build your project in outsourcing by agencies with the right skills.
7. Don’t underrate HR.
You might carry on with an Agency as you start headhunting but are you confident that you can headhunt and hire well?
If the answer is maybe or no, then you definitely should consider the peace of mind that hiring an HR firm to advise you on interviewing and searching for key hires. Some portals, like Landing.Jobs offer a comprehensive service – unfortunately, most don’t.
8. Look for Knowledge and Hunger
Look for people who know more than you do about UX, Tech, Product. And are keen to learn more with your challenge.
Agency people build a portfolio of work fast, which means their UX and UI guys never rest in the search for tomorrow’s eye candy and functionality.
Their client-facing Product people become specialists in the businesses they advise, from Fintech to Online Travel, Marketplaces and E-commerce. There is a wealth of expertise to bank on.
On the other hand, if you’re hiring a team, do look for people with a track record in your target field of expertise. This allows you to capitalize on their experience, avoid mistakes they know to be commonplace and enhance your company’s profile.
9. Use Their Knowledge For Your Benefit
Assuming you’ve found an agency with smart people then pick their brains!
It’s not advisable to just ask them to execute on your ideas. It’s healthy to ask them to come up with ideas to answer tactical and strategic questions that will impact your business positively:
- How can we improve our conversion?
- How can we know what works for our customers and what doesn’t?
- How can we get more traffic?
- How can we have a leaner investment in tech keeping or enhancing results?
- How can we solve problem X?
- How would you come about creating feature Y?
- Which feature would be more meaningful to be built now and why?
- How can we build a meaningful roadmap to stay ahead of the competition?
On the other side of the coin, be wary if a Product Manager says yes to all your ideas.
Great PM’s are not Account Managers. They will often see differently from you and come up with candid advice. They may have contrary ideas on how to be more meaningful to your target audience.
This is great for you and you should take full advantage of it. After all great agencies have highly experienced people who care deeply about the success of their projects. Which now includes your project and success.
Success is shared and it means mutual gains. For the agency client’s success means better portfolio, excellent word of mouth, larger contracts, etc.
10. Protect your assets.
If you are building tech you must generate and protect your Intellectual Property assets and know exactly what belongs to your company.
Do exchange a mutual NDA with a prospective agency. Use a good lawyer to read a proposed agency contract or redact yours.
In most cases, an agency will be using a good percentage (40–80%) of code that belongs to them or to open source communities. You will be entitled a free perpetual license to use it.
For all that’s unique to your product, you should negotiate shared or exclusive rights to its Intellectual Property.