Anonymous

April 14th, 2016

A couple of product companies have offered to help me build a working prototype of my idea. They have asked for a low upfront cost. I did some research on these companies and reached out to other founders who had products listed on their portfolio. I am waiting to hear back on their experience. They are claiming that they will build the prototype and help me market it to investors. They will also provide me a technical team as part of my company's team.  Has anyone done anything like this before and if so what is your experience? I am looking at this as alternative to finding a technical co-founder. 
You have an idea. Now it’s time to turn it into a brilliant and beautiful product. In this course, you’ll learn specialized tactics to study your user, create testable wireframes, and transform them into fully functioning features and products.

G Vachon Corporate Development and Investor

April 14th, 2016

Investors would be more impressed if you found a technical founder and built the product yourself. Hired guns have no loyalty.

Doug Winter Founder and Director of Isotoma

April 14th, 2016

We have done this for startups in the past and it absolutely can work.  We have some very satisfied startup customers with successful businesses.  There are loads of caveats though.

Having a technical co-founder is certainly preferable, but they aren't necessarily easy to find and they don't always do a great job in any case.

What you will get from a good agency is a consistent level of quality and access to specialist skills for all of the specialisms you need - this means you should get good design, UX, architecture, build, QA, hosting, support.  Technical co-founders will often be good at some of these, but nobody is great at all of them.

The primary problem with using an agency is your runway - companies like mine are not cheap. This is why we can deliver high quality with lots of specialists.  We don't take equity and we are very keen on actually being paid cold hard cash.  That is often a real problem for startups.

Also it will be impossible to tell you how much you are going to need to spend to get to investment or positive billing.  This is because you do not know what you need, really, so we don't know what it costs.  

Non-technical founders are in my experience hugely optimistic about how much this will cost.  I suspect you need to be a wild optimist to start a tech startup.  Anyhow, what we see is people run out of cash before they expect, then they scrabble around for more money, and this whole process is very distracting when you really want to be finding customers and proving your concept.

If you have an in-house team who are incentivized at least partly with equity then there is an extent to which you can just whip them harder and they'll deliver more for the same money.  This does not work with us.

So, well-funded startups, or ones with very clear scope, can work really well with agencies. 

If you are on a shoe-string or are going to pivot five times before you get to money? You are going to find it very hard.

Thomas Petersen International Trouble Maker

April 14th, 2016

I built and ran my own product design company for 7 years. And I have helped more than 100 startups with solving these things. I have since sold my part of the company and always give the same advice to non-technical and non-creative founders: An agency survives either by billing for their time hour to hour or by delivering on budget to a project price. The difference is that the former tries to add as much features and functionality as possible the latter tries to do as little work as possible. No matter what, having an agency doing a product which require a technical solution is always a big risk. What if they can't solve it? What if you run out of money before they finish. You should at all cost avoid agencies because they are normally going to have an overhead. If you can't find a tech co-founder (which you should try to anyway) then you should find a tech-freelancer and make sure you know exactly what you want. If you have technical friends make sure they look through what you want to have built. The claim about marketing it to investors is a big red flag. Not just with regards to this agency, but with regards to your idea of how things work. You don't market to investors. Providing you with a technical team sounds like your prototype is way way to big. 1 max 2 people should be able to build this unless it's different platforms (like web and ios or android). And make sure you chunk it in very small sizes. Solve the most essential first.

Murali Neelameghan creating hethi-digital business process platforms & RPA

April 14th, 2016

You should be balanced.

As a startup principal and an architect wish to share this

- we should spend 60% of planned cost for the first 10 months (assuming 16 months launch)
- 70 % to be outsourced with tech confounder on board (launch fast, less training)
- hire at 5th month or decide to re-badge 50% of the vendor employees  (put that in contract)

Typically if you need 10 folks to bootstrap, you actually need 4 to sustain after 6 to 8 months (you can have young engineers who can be trained at 1/3 of the cost for even 4 months prior becoming productive is a good game to play

Let me know of you need more clarifications


Doug Winter Founder and Director of Isotoma

April 17th, 2016

Believing that fixed-price protects you from time or cost overruns is a common misconception, but is completely untrue.  There are four reasons for this.

1) Change.

The reality is that you do not know exactly what you want.  If you go fixed-price with anyone competent they will then need a change control process, and every change you introduce will be costed and will add time.  The final cost and time will not be what you started with.

2) Time

Things take as long as they take.  Signing a contract doesn't magically make it quicker.

3) Cost

There is only one way a supplier can safely offer a fixed price on a high-risk project (all new product builds are high risk from a supplier POV) and that is by pricing in the risk.  Want to pay 50% more? Go fixed price. 

4) Quality

The thing that you actually care about but assume will be present.  It will not necessarily be present.  If a supplier is working fixed price and the deadline looms with a lot of work to do, they are likely to rush. If they rush they will produce dogfood. 

If you launch your shiny new product with dogfood it will fail.

Once you have a big pile of shit code it is virtually impossible to remediate.  I speak from bitter bitter experience here.  You may well have to throw it away and start again.

You really really actually care about quality, assume it will be present, often it isn't, and it is one of the hardest things for you to control.

Work on an incentive structure with your suppliers that helps you deliver on your real requirements - which include change and quality.


Anthony Miller

April 14th, 2016

I'm curious to know who the company is. We've built products for clients in the past. It would be a good idea to have some founders that have the same technology stack experience as the team who's building MVP for you. Investors like to see that you have founders who are committed to your idea, and not just a hired team. We've delivered some good products over the years and we try and infuse this same ideology of having someone with experience who can actually understand what is being built and lead a team after we're out of the picture.

Sreenath Kurupath Sudhir

April 14th, 2016

I second Anthony on this one. Very curious out here :)

Steve Owens

April 14th, 2016

This is a pretty common thing.  It all depends on the team and terms.  It can work very well for a startup in particular.  Best practice is to hire one PD company and hire another PD company to help you manage the first.  

Abdourahmane Baldet

April 14th, 2016

Hi,

I'm Abdou Baldet, a french mechanical engineer which aim to launch a startup. Can you explain us in what consists your project idea? I'm alone and also want to find a cofounder, non-technical would be better for me. If you're interested, please feel free to contact me to discuss about opportunities. 
Otherwise, I think that work on tehcnical solution with an agency is a bad idea cause the agency will be more advanced on the techno and can do the same than you.

Stan Podolski CEO at Nimble Aircraft.

April 14th, 2016

I have a company like that - Dev team for hire. We, for example, are specialized in early MVPs, making it to the playstore in 2-3 months. So nothing wrong with hiring a dev team, yes, we can build, yes, we did it before. 
As for the marketing, I doubt they can market it to investors, it is not their core