Technical Co-founder Vs. First Employee Vs. Contract it Out

March 5th, 2014

Hi,

I'm going through an ideation accelerator and I've gotten my idea to a point where it has be vetted by customers and advisers and I'm ready to start building. Just one problem, I lack the development and Design skills needed.

I've worked as business lead on 2 rather large corporate technology projects so I'm comfortable I can speak the language to get my product built I just am unsure which route to go.

From what I can tell, my three options are:

1. Find a technical co-founder.

2. Hire a first employee who has technical skills

3. Manage the build process by myself by leveraging a build-shop.

What are your thoughts on pros and cons of each as I go through this decision making process...?

Michael Brill Technology startup exec focused on AI-driven products

March 5th, 2014

+zillion on @Kirsten's comments. I think my all-time favorite FD post.

Kirsten Lambertsen Founder, CEO at Kuratur, Inc.

March 5th, 2014

Having done both 2 & 3, my experience is that 2 is far superior to 3.

If you have the $ to hire someone, do that. I know very few startups who've contracted out with great results (though there are some). If you know someone who has, and they can recommend their shop, then maybe it will be ok to contract it out.

I've learned over the last two years of working on my second startup (and going through an accelerator and networking with tons of other startup founders) that there's really no such thing as "finding a cofounder." It's like finding a spouse. Who does that? Cofounders happen when two or more people come up with an idea *together* and decide to go for it.

You are a solo founder who should hire people to work for you (with generous equity options). You don't have cofounders because you came up with your idea on your own, and you will never find a cofounder as passionate about that idea as yourself. But you will be able to hire people who love working for you, for a startup and on your idea.

You do have a 4th choice: learn to program by building your prototype or MVP, yourself. This is the option when you don't have budget for paying an employee. It's what I've done, and I'm really glad I did.

Rashad Bartholomew Change Everything

March 5th, 2014

The more complex and data intensive the application the more you should look for a CoFounder. If it is a simple application it is likely cheap and should have fewer places a contractor could make a costly mistake. A first employee is also an option and in many cases I view that as a compromise to the two extremes.

Bill Hludzinski

March 5th, 2014

Hi Matt, It's Bill Hludzinski from FI - if you want I can meet up with you or do a Google Hangout and spend an hour or two with you to help you further clarify your tech needs. Some portion of it may be sensible to outsource. If the amount of work is small enough and your path to revenue short enough, you may not need a tech co-founder. Bill Hludzinski (215) 499-6368 billh@geocera.com

Don Daglow 3-Time Inc. 500 CEO, Technical Emmy® Award, International Speaker, Advisor at Founders Space accelerator

March 5th, 2014

I agree -- @Kirsten nailed my experience and perspective.

Kirsten Lambertsen Founder, CEO at Kuratur, Inc.

March 5th, 2014

Thanks, @michael and @don :-) Nothing like a few scars to form strong opinions!

Jake Carlson Software Development Manager at Oracle

March 5th, 2014

What it comes down to is that you need someone technically inclined that you trust in your corner. I don't agree with throwing around stereotypes or giving broad advice. Every situation is different.

Speaking as someone that has contracted with startups and helped them create viable platforms for a fraction of the cost of hiring an employee or co-founder, out-sourcing it can absolutely work as long as you are careful with how it's managed. If you outsource, I highly recommend getting someone you trust to manage the project from a technical standpoint to ensure that it's foundation is solid. The time commitment can be minimal but he/she should have proven development experience and should be a trustworthy proponent of your best interests. This is a great option if you want to get an MVP out there ASAP and don't want it to cost a ton of money.

If you find a great technical cofounder that shares your vision and is adept enough to develop it on his/herself, great. But it will be much more costly for you to jump into bed with the wrong person out of desperation for a technical cofounder only to find that he/she is completely wrong for your business. A cofounder divorce is much more difficult and costly than firing an outside firm. Same goes for a first developer employee, but to a lesser extent.

Yes, a cofounder usually trades salary for equity, in which case he/she has more skin in the game. But an employee or outsourced firm can be fired if they don't perform (especially if you are smart about the way the contract is worded), which should really be motivation enough for them to do a good job. Anyone (even a cofounder that came up with the idea jointly with you) can lose interest. And anyone (even a contractor) can get fired up by the idea.

About the only general, solid advice I can give is that you need someone technical that you trust to manage the software project. If that person is the cofounder, an employee, or someone that just manages an outsourced firm is less important than how good that person is technically and how much you trust him/her to protect your interests.

Monica Borrell CEO and Founder at Cardsmith

March 5th, 2014

I'd vote +1 for finding a co-founder. If you can't do that, then an employee, and one who will work for a combination of money and equity.

I guess I got lucky because I found a technical co-founder (via this site actually) who got my vision and is just as passionate my idea as I am. I started down the contract-it-out path and that failed. I paid way too much, way too early. I really needed a technical partner to help architect and create the concept. It is a little like finding a spouse, personality, maturity and trust are key. But, it can be done.

Don Daglow 3-Time Inc. 500 CEO, Technical Emmy® Award, International Speaker, Advisor at Founders Space accelerator

March 6th, 2014

I agree that having co-founders is the ideal and worth trying for -- on my first company I had co-founders and it absolutely made things work better. As Kirsten said, it is like finding a spouse and you can radically improve the odds of it happening (that's why we're all here) but you cannot control the where and when.

If that doesn't happen on the necessary timetable I read Kirsten's point as being that you still have paths to success, and that the odds on that success are far higher when you work directly with the people who are creating your prototype.

Over the course of 30+ years I've had software projects succeed and projects go wrong in both models and I continue to use both. I've run the outsourced team that successfully built someone else's dream prototype. The teams I currently advise are using a variety of models.

That said, when you get only one shot at making your dream project come to life your odds of success are far higher working directly with people who owe their loyalty and income to you than working at a distance with a team that is probably working very hard to please you but nevertheless has a "center of gravity" of its own.

I agree with Jake that you have to work with people you trust, and I have done far better with direct relationships I trusted than with outsourced ones I trusted.

Hope this helps!

Don

Keiran Betteley

March 6th, 2014

I think it depends on whether the technology is something innovative that you're going to rely on as the key asset for your business, or something generic that enables your business to operate. An acid test might be whether the IP is patentable (and you're willing to spend the money on patent lawyers). I think there's a lot of hand-wringing about the power of technology which comes down to the belief by non-techies (in the words of one of my old technical architects) that technology works through the power of 'magic pixie dust'. There's no magic. It's just a basic logical system and in most cases the skills required to build what might seem complex to someone without the technical experience are actually perfectly gettable from an average junior dev. i.e. Unless you're trying to do something that's so revolutionary that the average contractor is not going to understand it, then you probably don't need a technical co-founder. Use a build-shop to get to v1. If at that point you realise you're doing something so technically tough then that's the time to bring in someone who specialises in technically tough stuff. And building the thing will probably cost you less than the time you spend trying to find the right 'CTO' at this stage.

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