My last article showed why the pace of innovation and startup activity in the US has been virtually snuffed out… Good quality, experienced technical talent is just not available at a sustainable business building cost.
So, to get innovation and startup activity moving again I proposed the idea of outsourcing technical work and showed how this can be more budget friendly and lower risk than filling a row of desks with a US based technical team.
Now don’t get me wrong here… US programmers are probably some of the best in the world. The problem is that because companies like Google, Facebook, Uber, and AirBnB, US based technical talent is being snapped up with unprecedented annual pay packages. Why would they ever want to work for an untested high-risk startup like yours?
There are many ways for startups to percolate during their first critical year of existence but let’s focus on two different ways startups begin their lives… Starting on their own from a garage or as part of one of the hundreds (maybe thousands) of startup Accelerators.
First… The Garage Startup scenario…
Let’s say you’re an intrepid fearless entrepreneur toiling away in your garage on the next possible unicorn. You have to start somewhere. But it’s just a good idea right now. You’ve sketched out how your brilliant service/product might work and how some of the screens would look.
Unfortunately, you’ve had no luck finding someone who is not a seventeen-year-old hacker to write the computer code you need to bring even your Minimum Viable Product (MVP) to life. Even though your pitch is exciting and investors seem interested they want to see more so they can give you a reasonable valuation and see that you can actually manage a technology team.
You need to find a way to get the MVP built that won’t require a second mortgage on your house. It would also be nice if you had a development plan less risky than counting on a teenager taking short breaks between video gaming and studying AP European History.
What about those outsourcing company offers that flood your email box ever since you bought your website URL? The ones from people with names like Sally Stevens, Roger Samson, and Steve Baker? But they all seem to be strangely written in a different form of English than you might see or hear anywhere in or around the good old USA. Who are these people anyway? How do you know they can deliver?
Well… Those people flooding your inbox with cheap ways to get your great idea to MVP stage might be the answer. But then they may not be the answer. They may be just a time waster.
The risk is that you commit to the project and even though it is a fraction of what a US based development team might cost, they just may not be able to deliver what you need. Then you have wasted precious time.
How can you know who could really get your MVP done?
Here is a five-step plan to identify an outsourcing resource that can get your project done:
- Recommendations – Talk to other startups, search the internet, look for development company names on websites you like.
- Know your MVP’s deliverables – Once you identify a few potential outsourcing companies tell them what you need. Don’t put too much in this first version. Keep it simple.
- A test project – Pick one outsourcer for a small project that is a component of your MVP but can be completed in a month or less. You will see what they can do. Payment only on delivery by a set date.
- Look for signs – Things like asking questions to help you improve your idea, identifying ways to get things done faster, and positive chemistry are good indicators.
- Measure Success/Failure – The test project may work out but better to fail on a no financial risk test project.
Second… The Startup Accelerator scenario…
Congratulations! You pitched your Next Big Thing and won a coveted spot in one of those hot startup Accelerators. Maybe they even gave you a little cash to push your company to the next level and get ready for the big investor pitch day.
One thing is for sure… As you go through the Accelerator’s program, they expect the technology side of your business to evolve quickly. Even if you have the next great thing in Designer Socks you will need a web page to uniquely attract customers and display the innovative aspects of your company. Could your customers take a cell phone picture of their feet and get the most comfortable perfect fitting socks for the first time in their lives?
As you look around your new Accelerator home you will see ten or fifty other companies just like yours. They may not admit it, but they are all hurting for technical talent to get their MVP or next dazzling version on its feet in time for the big investor pitch event in three months. You get one chance to impress those investors. Your idea is solid or you would not be in the Accelerator so it’s up to the slick technology your team creates for a fraction of the expected cost to close the deal.
Nothing impresses an investor more than a team that wows them with technology created on a shoestring… The first thing they think is, “So this is what this startup did with a little bit of cash on a short deadline, they will really going to do great things with my money!”
When you sit in this bright shiny new Accelerator there will be another ten or fifty companies on the same tight “demo day” deadline with too little cash to do what they want and need. Maybe everyone should circle the wagons and work together?
Have you ever heard of something called a TechCoAccelerator?
While you sit knee deep in tech starving startups someplace like New York City, Chicago, San Jose, Seattle, or St. Louis maybe there is a way to pair your Accelerator with a large IT firm in a much lower cost geographic location.
Sure, your Accelerator is stacked with benefits to help you get your company launched… Things like free Amazon Web Services accounts and a $50,000 credit with Stripe but what you really need right now is five experienced programmers to crank out the code you need for your MVP.
This TechCoAccelerator will work as your technology development team. Your Accelerator managers have vetted and tested the technology talent so they know they can deliver. You get the skills you need when you need them. And at a fraction of the cost you would pay in the USA.
This TechCoAccelerator strategy gives your startup a deep bench of technical talent. You definitely need a technical cofounder sitting next to you in the Accelerator to manage the talent in your TechCoAccelerator but you will not depend on any one person to create and manage the technology side of your company. If one programmer drops out for any reason the TechCoAccelerator will have ten more waiting to take that person’s place.
Now it’s up to your Accelerator to light up a TechCoAccelerator so you can spend your time on the other million details needed to launch your company and rest assured that the technology side is covered.
And… One more thing… What if it the work done for you in this TechCoAccelerator did not drain any of your precious cash? Ask me how to do this…