As a designer (and having hired other designers, both contract and full time) I agree with all of the answers so far. It really depends on your companies needs. I would need more details to give you a more specific answer (by all means pls message me if you want this and I would gladly help), but my generic answer is try before you buy. I've gotten all of my startup jobs based on contract to hire. I prefer to work this way and I think its a great way to "date" your designer before fully committing.
Especially in the early stages, if the cofounders dont have a clear view about what the design needs to be (visual OR UX) it can be difficult to find a designer who can translate what theyre looking for immediately. What you absolutely do NOT want to do is spend time hiring a full time designer, who after a few weeks, you realize isnt on the same page / cant meet your needs. If you hire a contractor, and it doesnt work out, you havent wasted that much time and neither has your designer.
Heres a list of what I think are pros and cons. This is based on designing for a startup:
Contractor : Upsides
- the hiring process for a contractor tends to be faster - you look at their work, give them a project, and see how it goes, so you save time interviewing extensively, making sure they fit in with the team, etc.
- you pay them for the work they do - if youre strapped for cash, you will most likely agree on an hourly or per project amount. this allows you to budget your money and time.
- less management time used - you give them the spex, let them do their thing, meet in concentrated times. this keeps things focused for them and for your company. less time is wasted going back and forth.
- you might not have enough work for a full time designer
Contractor : Downsides
- they arent in the office and may miss those "Ahaha" moments
- if you havent managed a contracter before it can be tricky to sync schedules etc
- youre contract worker may have another job and you might not be their # priority - its best to set clear expectations of time commitments up front
- if they dont nail it the first few times you could loose time waiting for their iterations
Full time : Upsides
- they may help you take your brand to the next level if you are ready
- they are around all the time and can quickly switch gears if you decide a path you were working on is not longer the desired track
- you dont waste time on iterations / directions the team doesnt like - you can go over initial ideas and iterate much more quickly
- they can work on multiple projects - youll save time by being able to move much faster as a team on product and anything else the designer may need to work on (presentations slides, business cards, random things youll forget you need designed)
Full time : Downsides
- if they arent a good fit you might feel guilty about letting them go since you have spent so much time hiring THE designer that you will most likely try to make it work even when its not
- they will most likely (at least any good designer) point out all of the design flaws in everything and want to change it all (this isnt nec. a downside, but youll have to manage their expectations more)
- they will need a full time manager - managing a designer isnt always easy (it can be but usually isnt in the early stages)
- youll have to pay them a full time salary. right now prices for the good ones are super inflated and most startups arent willing to throw down that kind of money with out knowing if the designer will be what they need.
In any case - before you do any type of hiring make your expectations of the designer clear. There are lots of different types of designers (visual, UI, UX, web, marketing, branding, advertising, print, etc) who all have specialties and things they are willing / able to do, and things they arent. (I know this was already said before but its SUPER important.)
I've seen success from both, and learning to be had from both. While I am of the same mindset as Danny, where design SHOULD be a priority, I know for a fact that in all startups it just isnt, and cant be for x y z reasons. Decide what kind of culture you want and that will influence your decision.
Wow that was long winded but I hope it helped....as you can tell this is something im passionate about....