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Outsourcing Development

Should I Use a Dev Shop for My Startup

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When starting a tech business, many young entrepreneurs face a challenging question: Should I use a dev shop for initial product development? This post is meant to offer insights for startup owners grappling with this decision.

Or just watch this video from Michael Seibel:

The Dev Shop Attraction

Many non-technical founders believe they understand their customers and the problems that need solving but lack the technical know-how to create the solution. A common piece of advice is to use a developers shop for the initial product version, gain traction, and then hire a CTO. While some companies have succeeded using this method, it’s crucial to understand the full picture before diving in.

Common Challenges with Dev Shops

  • Time Delays: Contrary to expectations, creating the first MVP (Minimum Viable Product) can take longer than anticipated. This can be due to the founder’s inexperience in gauging software development timelines or because the dev shop is juggling multiple projects.
  • Cost Overruns: While you may budget $15,000 – $30,000 for the first version, it often ends up costing more. This can be frustrating, especially if you’re using precious angel investment funds.
  • Difficulty in Raising Capital: Many seasoned tech investors are wary of startups that outsource their development. They might only consider it if the startup is showing rapid growth, which is rare.
  • Rebuilding the Product: If you hire an in-house developer after using a dev shop, there’s a chance they might not agree with the initial build. The common solution? Starting from scratch.

The Illusion of Progress

Engaging with a dev shop might give the illusion of progress. You’ll see your idea taking shape, and despite the delays and costs, it feels like movement. However, the challenge arises post-launch. If the MVP doesn’t solve the intended problem, iterations become expensive and time-consuming with an outsourced team. Many startups find themselves running low on funds at this critical juncture.

What Investors Really Want

A significant misconception is that early-stage investors prioritize traction above all else. In reality, most are more interested in a startup’s ability to quickly iterate and refine their product. Achieving this speed and flexibility with a dev shop can be more challenging and costly than with a dedicated technical co-founder.

The Technical Co-founder Advantages

Recruiting a technical co-founder might seem daunting, but it offers numerous advantages:

  • Cost Efficiency: Generally, you’ll spend less than you would with a dev shop.
  • Speed: With a dedicated partner, product releases are often faster.
  • Flexibility: You can pivot and iterate based on customer feedback efficiently.

Conclusion

While some startups have thrived after using a dev shop, they are often the exception rather than the rule. If you’re considering a dev shop, it’s essential to be aware of potential pitfalls. Many startups have found that the time and effort invested in recruiting a technical co-founder yield better long-term results.

Remember, every startup’s journey is unique. Make the decision that aligns best with your vision and circumstances.

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