NEVER outsource your Tech Startup MVP
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- Опубликовано: 3 июн 2024
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When launching a company, it's crucial to assemble the right team. Developers play a pivotal role in this process. While some may opt for outsourcing development work, it often falls short. Check out this video, where I delve into why this approach doesn't cut it.
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There's a lot of talk about how Calendly got its start as a counterexample. I think the main issue is that you as the startup are also operating with the currency of hours. The value your business provides is an estimation until you start completing sales and the product gets used, so you have to spend hours wisely. I'm going to argue that in the particular case of Calendly you have to take into account some amount of luck and the core competency of the founding team.
Tope Awotona is a software salesman by trade with at least some education in CS. The product may have been such a good fit even at ideation _and_ he may have realized that collecting the technical chops to make version 1 would be expensive compared to how much money he could secure by making sales in the short-term. A little bit of money up front isn't good enough to guide a long-term choice. A lot of money up front can make even more money later, so it isn't so cut-and-dry.
He ended up needing a rescue infusion from seed investors anyway in 2013, so I 99% agree that dev shops are a higher-risk strategy.
Freelance dev here with 15 years xp. Can confirm you hit the nail on the head. At least 50% of my work is rescuing out sourced startup projects. A fortune is often spent for a very brittle, spaghetti bug riddled basket of mess.
Tell me more about it.
This has been all my roles since I sold my startup and cam back to development after taking 10 years off
I've seen the end results of all the terrible practices that have been hyped over the last 15 years
I run a dev shop and this is 100% correct. I decided to stop working with the founders who don't already have a CTO because I saw how much effort and money was wasted.
Could you elaborate?
it might sound dumb but whats a devshop ?
@@atyibali6630 dev agency
Hi @kevlems I'm starting an devshop, what jobs you don't recommend to take?
@@atyibali6630 It's a company that make website, apps or other types of software for other company. It's the kind of place you go to if your company doesn't have an internal development team or that team lacks certain skill (like web base company that now wants an app).
Coffee meets bagel is one of many companies who actually succeeded in doing otherwise
They sell a simple, overpriced, failing product that's a marketing play. They'll be sold or in bankruptcy soon.
Absolutely, having core competencies in-house is crucial for the agility and growth of a startup. It fosters a culture of rapid iteration and deep understanding of the product necessary for early-stage success. 👍
I love that you covered this. Too many startup founders choose this path and end up getting badly burnt. Startups absolutely need to be self-sufficient, otherwise they have no business.
Caya, correct me if I’m wrong but Calendly outsourced to a dev shop out of Ukraine. Pretty sure they still do some work with them to this day…
Never say "Never". The reality is that finding the right co-founder is not merely about technical skills but also about finding someone whose vision aligns with yours, which is a rare combination at the idea stage. Many potential founders lack immediate access to a suitable tech co-founder, particularly those outside of major tech hubs or without a background in technology.
Outsourcing the development of an MVP to a reputable dev shop can be a strategic first step. This approach allows founders to validate their business idea without the commitment of equity and the potential pitfalls of partnering with someone who might not be a long-term fit.
Once the MVP validates the market need, the founder will be in a stronger position to attract higher-caliber tech talent, who can see the proven potential of the business, thus opening doors to a broader pool of skilled developers who may also bring in additional resources or networks.
Ultimately, while it's ideal to have a skilled technical team from the start, the practical challenges and risks associated with finding the right co-founder at the idea stage make outsourcing a viable, and sometimes necessary, strategy.
This is exactly how I’m attracting top talent now. A lack of a huge network of devs because I came from the business/expertise of the product side. Outsourcing our MVE has now attracted so many devs who want to be a part, I’ve had my pick. I like Slidebean videos, but I think a tattoo may be in order. ;) If you’re lucky enough to have friends who code and want to live in a shoebox, more power to you. The reality is, nowadays there are MANY ways to build a successful company.
Calendly was also built this way. Listen to the story on How I Built This
My new favorite channel about all things tech growth. Love this guy.
Preach.
This is something every startup founder should take to heart
I think even if they do manage to create the MVP you were hoping for, and I've seen this happen: if you dont have the developers then, you dont have them once you got your MVP but need to make changes in order to please your first (big) customers.. it really doesnt go a long way not to have the people who understand your actual product present.
Calendly was build in a Devshop in Ukraine contracted by a US based tech sales guy who thought it would be handy. Think he paid less than 20k for it.
Ukraine has the best developers in the world, duh.
Love every video you make!
Hoping that they're useful!
Can't wait to watch the next one!
U may be right, but their is a Fintech company in my country, they have built about 5 apps hiring developers from Uk, Indian, Pakistan and guess what, a bid was made in one their apps for about $12mil, they never sold. They are making it big
Totally disagree with this take. So many SaaS companies bootstrapped their MVP using a dev shop and then hired internally. Calendly is a prime example.
Outliers
If we’re really talking about numbers, how many startups make it in the first place? Not many. So it’s kind of difficult to simply say outliers. Nothing kills startups faster than headcount, so it’s not a simple answer either way.
I was about to add this right here.
@@deverenfogle3201 fair
This also applies to system integrators. The ones that succeed are the ones that are run by hard core real ex devs or tech specialists and then get a dedicated team to support sales and operations. When a sales exec runs a company you end up with a shell company run by smoke and mirrors and clients eventually figure it out.
Calendly did exactly this. Like exactly this lol.
@0:28 Calendly succeeded. Rarity though
I made that mistake myself last year...worst decision I've ever made...the website never run as they promised, full of bugs and a completely disaster that cost me tens of thousands of dollars, now I'm back in square one but I learnt my lesson the hard way, I have my own team of developers and I hope this time it works...had I known better before🙄
bro i love your editing style where did you learn how to do it ?
Calendly's founder is worth over $1billion dollars and the first version of his platform was built by a dev shop based in Ukraine over 10 years ago. Now whose example should we follow? Yours or his?
That's just a single outlier from a sample of thousands of startups
Apart from Calendly, can you mention 5 others
@@Bigjoe11._ Slack, Upwork, Alibaba...
@@Bigjoe11._ Slack, Upwork, Alibaba, etc.
Trust Y Combinator's opinion. They have the stats. It doesn't work well to use dev shops.
You can use a dev shop as long as you can maintain the product and make small changes to it yourself.
I could not agree with you more!!!
Very very very useful video
Which Latin American agency did you use? I’m looking to hire up and augment my team
100% and there's a risk of the Idea itself being Stolen by the Deves
That risk does exist. But if your business can be destroyed by your “idea” being stolen, then maybe your business wasnt as defensible as you taught it was
Sorry but all I hear when I read this is:
"You know who give less of a *** about your idea than you? Everybody."
Don't underestimate selling shovels. Devshops outlast their clients. They wont steal your ideas because 90% of them are stupid and they are better off selling shovels.
Facts. One of my friends had a startup that crashed just because they didn't have devs in house.
100% agree
Lol. I think most people coming up with the "calendly" story are startups without a technical founder and trying to justify to themselves why they are different. I think the bottomline of the story is that you cant outsource your startup DNA. If you are an ad agency may be its fine. If its an app, then you probably should know how it works.
I might be the only dingdong that didn't understand the graphic the first try at 3:13, but I had to pay attention to what Kaya says instead of just following the visuals. It makes it look like $33/hr x 140% = $100/hr, which isn't the case.
160 hr/mo of dev hours is originally priced at $33/hr considering that dev's salary only. Kaya's point is that typically only 80% (or 128) of those hours will be slated for a customer project, and the dev shop will price those hours at $100/hr. (128 hr at $100/hr) / (160 at $33/hr) is a 2.4 multiplier, ergo the 140% markup.
Why do so many people in the comment section bring up "calendly" as if there are no other examples (maybe because there aren't?)
Nice video
No tatto, everything you said makes sense.
Im convinced.
How do you feel about no-code app builders; that you build yourself as a founder?
The problem there is the platform lock-in keeps you tethered and limits your growth... the companies see what you are doing and what you are making and will price it accordingly... and if it's good enough, just take your idea and do it themselves... like Amazon
@@ChrisAthanas Damn! That's cold. I guess a partial solution would be use no-code app builders to validate an MVP and raise funds. Then quickly pivot to an in-house full-time development team. That way, money is not an excuse to not start; but still be weary enough to do the right thing properly by building code in-house.
Well said!
This surely doesn't work for tech and physical products so please be more concise.
You are talking as if every product is app, every startup is SaaS and every engineer is software engineer.
I'd advise you to better use terms like app, software startup and programer/developer because people might get confused.
Startups, products and engineers existed long before internet was a thing.
I love this content, but what do i do if i'm midway into building my MVP with an Agency and spend already around 10K on it. i'm launching soon in two months. How to recover from this ?
Quit now and look for a CTO who aligns with your vision. You can't get that money back anyway.
Tope Awotona calendly outsourced Eastern European developer many more
Well explained, solid points, you should still get a cool tattoo :D
We got whacked in the head by this for my startup.
Pretty much everyone does, which is why the rate of failure for startups is nearing 4 9's... ie: 99.9999%
HDR on Apple MBP M3 looks weird. The video is just too bright in dark mode. Is there an option to disable it?
not a supporter of outsourcing, but now you have to get a Calendly tattoo
In San Jose (California) starting total cost of hiring a software engineer is $500,000/yr not $48,000
Was talking about the other San Jose 😅
@@StartupClubTV ahh, that's San José, Costa Rica
Box did this
He just got that shirt lol.
Definitely disagree with this one. Calendly, Alibaba, Skype, Coffee meets bagel, Groove, Slack all outsourced in the early days.
The narrative that equates having a technical co-founder with startup success ignores the plethora of technically endowed startups that falter because they lack a compelling business proposition. It's high time venture capitalists and the broader market prioritize the inherent value and innovation of the business idea itself rather than continuing to bet on the pedigree of its founders.
Well 9 out of 10 startups fail anyway 😂.
I think 9/10 is being generous 😅
The question is whether the 1 which succeeded was built by a dev shop.
It's way, way higher than that. I think Y Combinator said 97% of their companies fail without making a single sale, and that's the best startups in the world screened and assisted by successful ex-founders. So industry wide it's probably 99.9% failure rate-ish.
don't get a tattoo .. this makes so much sense
The whole video just sounded like "they are taking er jobs" to me. Anyways here are my two cents
1. Yes, usually non-technical people hire devshops/freelancers as they cannot find technical people or even CTO willing to work for them at the price they can afford. Which is a big no-no if you are trying to become the next google, not so much if you are a car salesman and you need to fix your wordpress website.
2. A lot of these dev shop packages are self contained, they have their own product lead, tech lead and so on. So, you can just send your vague idea for an MVP and they usually deliver on something and then you can decide whether you want to take it forward. Hiring good CTOs locally costs a fortune and is a serious commitment.
3. Good founders listen for feedback and ideas from the whole team, but most founders are not "good". They just want to play the king. Devshops deliver what you want, not what you need because that preserves the ego of the founders.
4. 300,000$ number looks sus. They start from a high price and you are supposed to bargain it down. 100$/day at median salary gets you a team of 6-7 developers.
Great vid...don't get a tattoo (my opinion) people just look a lot better without body modifications
Agree re tattoo but bc they're cheesy and ubiquitous. The only body mods I think I like are earrings.
man I have been listening to you for while now but this vlog is completely off, one example you need to read about his story calendy he develop the first version fully outsource. A hybrid model for startup can be very helpful
no product market fit. never ask peoples
Calendly, Vivino and bunch of others were developed in Ukraine.
More credence for AI Agents
Don't get a tattoo.
This video is so far off from reality. Maybe this is the case sometimes but hiring a development shop is probably the smartest thing any company can do.
1) Software development is a commodity. Most people are not building insanely complex products like OpenAI. They are building B2B software to automate business processes or some basic consumer app. In this situation, the product isn't your competive advantage. Solid sales, marketing, and go to market is what matters. Uber's advantage isn't their app, it's their business (driver network, marketing/brand, operations etc)
2) There are thousands of super high-quality development shops with insanely passionate individuals.
3) Most dev shops don't work on an hourly model. You literally just pay a monthly fee like you do for employees.
4) Development shops allow you to scale the team up down as needed.
We have built our B2B product purely using 2 development shops and the engineers we started with are STILL the same ones working on the product.
We would have spent 3 to 4 times as much if we hired employees in the USA for this.
Doesn’t apply completely to hardware!
I strongly disagree with this. I know a lot of people who built their startups with dev shopsThe ones that fail really would have still failed if they bootstrapped or hired developers onsight because these founders believe all that matters is development. They don't care about the end user, they don't have frequent meetings with developers, they don't have any plans for the business and that's why they suck. Just because a common factor in failed startups is offshore developers doesn't mean that's really what caused it.
So basically what you and commenters are saying is that (not criticism or finger pointing, just an observation) is that regardless of what new tech related stuff someone wants to do is off limits to people who don’t have a cto friend to suck it up with little to less pay and only tech savvy people can reap the benefits of SaaS businesses?
Your tech co-founder doesn’t need to be your , but you do need to find one in your network.
If you don’t have a good and strong network of connections on multiple disciplines, you are going to have a hard time building a business anyway
Yes. That is essentially statistically accurate. It's equivalent to opening a welding shop with no welders. You are in the technology business, creating and selling technology. Someone in the leadership team should know how to make it.
I guess you could in theory solve all the problems you brought up and then outsource it to save time and money with your developer business partner as project leader. So never say never especially if you're in competition with an inevitable idea and you just have to be the first to get there. But you're not wrong.
No, you don't need a tattoo. This is all perfectly sensible and valid. Only an idiot would argue against that.
I love the video! 😁❤️
And yes, you should get a tattoo - but make sure it's a cool one. 👀🤩
MVP shouldn’t have all the bells and whistles, hence the ‘Minimal’ in MVP. If you’ve $300,000 laying around then why would you go with a dev team? What are you building that requires so much initial funding just for a MVP.
One dev can cost like $150k a year lol
I was with you until you said that developers who work for a dev shop "might not be the really creative type, or willing to go the extra mile for an idea". This is a very "employer's" mindset. You are an engineer, you are an employee, you have to work where it's best for you at the moment. And maybe, for whatever reason (better pay, flexible hours, access to clients around the globe, whatever) working in a dev shop is better for you.
From experience, that has never been the case. Good developers have good jobs even if they’re self employed
That's why he said "might".
And it's safe to say that your average dev shop employee is less talented than your average "googler" or whatever they call it.
With broad brushstrokes what he says makes sense to me.
U lost me brother. Am sorry. I see a lot of people getting lost 😅
One company, Calandly! They outsourced the initial product to Ukraine. Obviously, if you are looking to raise £10million and are a tech-first company, then sure. But if you are building an MVP and don't know any dev person, I see why not. Also, if you manage to build an MVP, you can attract technical people to come onboard rather than selling them "I have a great idea, help me build it".
You are sounding too much like Y Combinator. Success for a company isn't about becoming a unicorn and bust. Blank opinions like this really aren't helpful.
Good explanation= NO Tattoo
Took a gamble on that one.
Please no tattoo!!!
Tattoos are for try-hard kids. You're a switched on adult. No, no tattoo! 🤨
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Calendly
What is that awful "music" at 3:40? It sounds like someone chewing with their mouth open?!
LOL you so-called developers will be replaced by the robots. They work 247 and dont munch abocado toasts all day.
Sure at least on top of a food chain, better than nothing.