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When You Should Hire a Dev Shop (other than “never”)

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I’ve always subscribed to the YCombinator / Paul Graham ideal that the best companies are built by founding teams of hackers, with perhaps a business guy or two (for example, someone with a strong business development, user flow or marketing background) thrown into the mix. But this often isn’t the way things turn out. Many capable founders aren’t developers, and I frequently meet with entrepreneurs that have taken a very different path. Most disturbingly, I’ve occasionally found myself agreeing with an entrepreneur’s decision to hire a development shop to build their product. Sometimes, it just makes sense.

But for every entrepreneur who has seriously considered the pluses and minuses of working with a dev shop in the context of the specificities of their business model, there are five who are hiring a dev shop because (a) they are lazy, (b) they don’t know any better, or (c) all of the above.

The reasons why I am not a big fan of development shops are too numerous to go into here. In brief, startups succeed because there is strong alignment of interests among all parties, especially with the people who are actually building the product. Development shops who work for $100+/hour and take no equity are poor partners in a startup. They have zero incentive to create a quality product or understand the nuances needed to capture a market and please end users. But all that is for another post.

For you entrepreneurs who are considering working with a dev shop to build your beta, I’ve written a handy guide to help you decide whether or not to pull the trigger. Read the scenarios and give yourself points accordingly:

3 Points: You actually do not know any software developers. I doubt this is the case for anyone who is reading this blog, but if you really can’t think of a single person to go to for introductions or advice, you may need to pay for it.

3 Points: You are pretty sure a LAMP stack is the pile of books on your coffee table, and Rails are what the Acela runs on. You probably aren’t the best person to hire and manage a developer.

4 Points: Money is no object. Don’t laugh. We’ve all seen projects like this.

4 Points: You are an exceptionally poor manager. As in you’ve been in management situations in the past, and you’ve been removed for being so incredibly bad.

4 Points: The development firm in question has some sort of special knowledge that is hard to find. Examples could be (a) experience building Facebook games under the new notification rules or (b) knowledge of how to build exceptionally secure e-commerce sites.

5 Points: You are developing software for government or major corporate clients. Being able to point at a specific development firm as “taking the responsibility” for the quality of the software is often reassuring to many government and corporate clients. I don’t necessarily agree with this bias, but from an entrepreneur’s perspective, it is what it is. Plus, most decent dev shops can point to at least a couple names of well-known previous clients.

5 Points: You have a development shop that will work for equity. This can be a good or a bad thing, and I should probably clarify it by adding “… and will actually get the job done in a timely fashion.” But equity-based work solves the misalignment of interests — there are just few dev shops willing to do it.

6 Points: You have a ridiculous project timeframe. For example, you need a beta built in four weeks. In this case, going through a hiring process is not an option. First, question why you need to get a beta out that fast. Then, really question why you need to get a beta out that fast. If your reasoning still makes sense, go hire a dev shop with the understanding that very little if any of the code that’s written can be re-used.

-4 Points: You don’t know exactly what you want. This doesn’t necessarily mean that your spec is vague; typically, it just means that a product will likely have to go through several major modifications before the dog food starts getting eaten. Unless there’s already a successful product out there that looks very similar to yours, you probably fit in this category. Iterating on a beta is a critical part of the startup lifecycle, and it is where the dev shop / entrepreneur relationship typically starts to sour.

Add all your points up. If you have more than 10 points, you can use a dev shop. If you don’t, you should go hire a team of hackers and build it the right way.

Written by Brad Hargreaves

March 7th, 2010 at 9:02 am

  • http://www.iamvictorio.us Victor Wong

    I would say that if you have a strong development team and need contract developers who can work well remotely and under your project manager, then you can also bring in a development shop. It helps when you want to ramp up development quickly but don’t have the time to locate the right long-term talent — it can even lead to new hires if they work out really well.

  • Brad Hargreaves

    @Victor Wong Good point, Victor. This post is primarily for new entrepreneurs with no product or dev team. I consider startups that already have an established process and project manager to be in a different pot entirely. It’s a different discussion if you are, say, looking to outsource some features to a much cheaper overseas shop.

  • http://viget.com/extend Tony Pitale

    Your initial assumption is 100% absolutely wrong. “They have zero incentive to create a quality product or understand the nuances needed to capture a market and please end users.” False.

    What development shop/agency remains in business doing poor work? The best development shops pride themselves on doing great work. Maybe it’s about reputation, or in my experience at a development shop that works with startups, it’s more about forming a long-term relationship and helping great ideas get off the ground quickly, with a proven team, and proven quality.

  • http://venturehacks.com Nivi

    The guys at Pivotal Labs address “-4 Points: You don’t know exactly what you want” very well. Actually any shop that does agile development with daily and weekly releases should. Scissor.com is another agile option.

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  • http://pivotallabs.com Michael Schubert

    @Nivi I concur. Being an employee Pivotal Labs, I am biased :-) but I would say yes that -4 should be a +4 if not more because if you do not know what you want, precisely what you need is an agile dev shop that will quickly iterate over your idea, kick out something and validate whether there is life to this thing. In my experience, hiring a gaggle of hackers may result in the same thing, but later… or fearing for their jobs they may prolong the situation. Agile dev shops should bring discipline and quicker results.

    Good (experienced) agile dev shops will show you very quickly if you should pull the plug sooner rather then later. In the end, it is better for a dev shop’s reputation to do the right thing versus the short-term profitable thing (e.g. prolonging a bad idea) so they have financial motivation to do what is right for the startup not what is right for them. A group of contractors or motley crew of devs probably won’t just due to conflicting personal interests.

  • Brad Hargreaves

    @Michael Schubert There are certainly great agile dev shops (and Pivotal is one of them), but most of the entrepreneurs I’m addressing here aren’t debating between great agile dev shops. In fact, there are a lot of entrepreneurs with money and an idea who don’t even know what agile development is. I’m talking to them.

    @Tony Pitale In my experience, there are a lot more dev shops out there that focus on a quick buck than good ones that try to build lasting relationships with entrepreneurs. That doesn’t mean the latter doesn’t exist, and I pointed out Pivotal above as one that bucks the trend. Your mileage may vary.

  • http://www.brainstech.com Website Design Company

    This is our experience that in some cases customers are not clear themselves that what they want, they just tell the company that what is the objective of this app development and know this is depend on the designers and developers that how the convert their idea to reality.(and customer always has the right to change the design as its imaginations).

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  • http://www.demarketplace.com/blog bonnie sandy

    I actually see both sides of the issue. There actually need three elements The entrepreneur who can see opportunity and is willing to do the work necessary to develop a company that “solves the pain or adds pleasure’, the web developer who understands the technology, and someone with experience and expertise in the particular area being addressed, who can guide the development of the product to meet needs. Too many web startups are creating products without any real knowledge of the understanding (or definition) of the consumer and how they will use this product. They focus is on getting “investors’ without addressing who where and why of the consumers component… vital info for actually building an app that works. They then expect the developers to create a product meets the needs of their users! I have seen promising products fail simply because of the notion that the developer would solve the (wrongly -identified) problem. NYC is full of small businesses with expertise in many areas, who need the products that the tech community can design. the challenge is “bridging the divide” and getting the startups out of the tech bubble. I met recently with a startup that has an interesting and potentially lucrative product, the problem it was difficult for average consumer to use! The developers worked with their sole focus on “early adapters and the tech proficient” for a product they hope to eventually sell to the mainstream market! On the other hand I’ve heard some brilliant idea from folks with no connection to the tech startup community, but have needs for the survival of their businesses, and when the option is a web host(or reseller) or a developer I’ll direct them to the developer!

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  • http://shadowcat.co.uk/blog/matt-s-trout Matt S Trout

    I was mulling over this, since I agree that “never” is definitely a good answer for core product development and yet a lot of the companies my team helps improve their development process and surmount technical challenges -are- startups. I ended up writing my thoughts up at:

    http://www.shadowcat.co.uk/blog/matt-s-trout/hire-a-dev-shop-too/

    Hopefully they provide some perspective from the POV of a different sort of development shop.

  • http://twitter.com/S79L S79L

    Isn’t “hiring a team of hackers” the hardest part of all this? If you just have an idea and need an alpha version just to attract talent, a dev shop seems like a logical way to go, no?

  • Debbie Madden

    I run Stride (www.stridenyc.com), an Agile development consulting shop. I think this is a GREAT article. It’s critical to understand why you are hiring a dev shop like Stride. If your points do add up to 10 and you do decide to outsource, the risks don’t end there. It’s still vital to choose a solid shop, one that will deliver what they promise. Here are my thoughts on “4 Mistakes to Avoid when Outsourcing Development” – http://www.stridenyc.com/blog/2014/7/11/4-mistakes-to-avoid-when-outsourcing-development