First, thank you for all the very thoughtful answers.
I wanted to update my question based upon some answers I have read.
Clarification Equity v. Pay: We plan on paying the agency. Equity is an option too if it makes sense to both parties.
Clarification on question #2: We will likely have our own CTO but was wondering if Agencies can fulfill this type of role.
More about us and why we are leaning towards hiring an agency/outsourcing our platform build:
- We are very early stage and likely cannot afford salaries of developers but the plan is to find a way to get to an MVP and then bring in-house once we have additional funding.
Our startup team is seriously thinking about hiring an agency to develop our new e-commerce platform. So here are my questions:
- Do agencies partner with startups to build/test prototypes and launch MVPs?
- Can they be effective as "acting CTO?"
- What are the dos/don'ts of finding the right agency?
- Are there any pros/cons that we should be aware of in taking this course of action?
Ultimately, how do you find the right agency if one decides that this is the way to go?
Thank you for your insights.
I ran a top software development shop, maxing out at 50 developers before we were acquired. I've also used several software development shops for my own projects as a CTO or founder. So, I've experienced both sides of this relationship.
A person working work for dev shop can act as a CTO but there will be substantial shortcomings that you need to consider. A CTO provides several things to a startup. Let's see which of these a dev shop employee (or owner) would or would not likely do well:
Now, not every startup needs a CTO. It depends on how hairy the problems you're tackling with software and how innovative your solutions need to be. Many "tech-enabled" startups will do fine with just a dev shop starting out and eventually hiring an in-house team led by a "Director of Development" type person.
I think some people get confused with what a CTO is. It is not just the senior coder on your team. It is a strategic person (usually) with a deep technical capability. It is the "strategic" part that ultimately it is hard for a dev shop to fully provide, as they'll never fully invest in being experts on your domain and problem.
While agencies do partner with startups for what you are seeking, my advice would be that you should hire an agency only if you know exactly what you want to get developed, including the logic and process flows and the screen by screen layouts. Otherwise it can become a mess very quickly. It does depend on the competency of the agency for sure and hence it may not be right to paint all with the same brush, but the risk of time and cost overruns are very very high. Moreover, in my experience, the product concept itself goes thru lot of changes once it comes to the design board and that where things go wrong. changing the scope of work is often an unpleasant experience and one that takes time. At the starting stages, you need all the flexibility you can get. My recommendation would be to hire your own team (esp a Tech cum Product guy) or hire contract resources. We wasted one year trying to work thru agencies and finally after a massive opportunity loss and missed deadlines and friction on scope of work - decided to build our own team.
Should you still choose to go for an agency - i would suggest that break your work into separate projects. Let exhaustive designs and a prototype be the first project with its own milestones and cost. So that you retain flexibility of scope. Once designing done - then ask quotations for development of the same including any design enhancements which surface only once the product goes into development.
Also - always insist on knowing the actual resources that will work on your project. Often the tech lead is the one is put forward to win the project, but subsequently junior resources are put on work and quality as well as understanding suffers.
And definitely deliberate on the development paradigm you want to follow - waterfall or agile. The entire scheduling and sequencing of deliverables will depend on this.
Hope this helps.
1. Yes agency often can partner with startup
2. They can be even more effective, since they have experience working together. They are more productive
3. they need to have experience in developing and marketing, since ecommerce is best of both ..
4. Yes, right agency should have great buissines portfolio.
ecommerce is not only nice design, great ui/ux or marketing.
So to hire some experienced team who knows how to play is just right choice. But worst part is picking great team...
i know that, because i have been several times there ... doing same thing.
Your project plan must be perfect..
No. If you are depending on hired guns to develop your platform you will always be at a disadvantage. The moment you stop paying, they stop working. They won't pivot and they won't be around at 3 am when systems break down.
Of course, it could work - especially if your idea is so great and sales team amazing. But you will also likely be unfundable since investors like to see an actual tech-savvy person on the team.
My advice is to find a team-member who can help you customize an open source platform so that over time you can bring the essential tech management in-house.
- How do you find the right agency? Use a referral from your advisors or other entrepreneurs who have had successful results.
- Do agencies partner with startups to build/test prototypes and launch MVPs? Not all agencies are created equal - make sure to look for agencies that have worked with Startups and in helping them create a measurable product that can be used to acquire users and grow revenue.
- Can they be effective as "acting CTO?" If you have a technical VP of Marketing or Growth Hacker you can bypass the CTO part for eCommerce at the early stages.
- What are the dos/don'ts of finding the right agency? Do find an experienced internal PRODUCT manager if you plan on using a remote agency. Don't use a remote agency if you don't have a qualified product manager on your team.
- Are there any pros/cons that we should be aware of in taking this course of action? Pros are you get to market much faster and do not have to worry about having to have a CTO - cons are obvious if you don't have anyone technical enough or has gone through the agency procurement process.
Hope this is helpful - I have experience raising money utilizing an agency for an ecommerce startup and also manage procurement process of $30M/year ecommerce consumer electronics company. I'm also a Product consultant for multiple Silicon Valley based "CTO-As-A-Service" agencies.
Let me answer your queries one by one.
Yes agencies do partner with startups to build and test prototypes and launch MVP's.
In case you lack on technical front your agency can act as "CTO". My personal advice is to select from your own team. In that case you will be direct control of your project. You will be aware of the exact work flow of your project. If anything is not included or things going of-course then it will be brought to your attention immediately.
Take interview for Tech lead from an agency
Take interview of all developers who are going to be member of your team
Evaluate and assess their skills in depth.
Checkout their linkedin Profiles
Finding the right agency is a tedious task.
You have to post your requirements at various portals.
Carefully screen each option you come across.
Checkout their portfolio of existing projects.
I like the top comment here & most of the others. If you do want to explore working with an outsourced team to handle the bulk of the MVP work, feel free to reach out. I run a service, much like a recruiter, where I'll help you find a great dev partner for the project based on needs/budget/stc. I have teams all over that I work with (San Francisco, Florida, India, Ukraine, etc) but as others mentioned, you'll want to do this only if you know exactly what you want to build etc, or it may be a little more expensive than originally planned. i.e. for my app Bobber that we built with a team in Ukraine, we built a native iOS application from the ground up; design, wireframes and all, with original quote around 28K, but finishing around 55K.
With regards to my own experience, I could help you do as I did and connect with a few teams in order to develop a few quotes so you can see what the decision and undertaking looks like. In my opinion and how I plan to execute my next app, will build a supporting co-founding team prior the MVP build, so that they can influence, monitor and partake in the creative process. This will also set them up very well to take over the project, once completed and continue pushing it forward. I also have experience in equity-recruiting should you need assistance building a team around your idea. Anyhow, Best of luck! If you need to reach out for anything, Rob@refereeit.com Cheers!
I believe that for an agency to be able to provide "CTO as a service", it must start with that focus and mentality. It can't just wake up one day an be able to offer these services at the level of quality and involvement that is needed.
My advice is to look at agencies that also have startup experiences or already have partners for whom they provide these types of services.
We are a team of tech development and product management skills with experience in working with startups and building our own products.
Knowing what it means to begin a startup, we look to partner up (first as payment for our services but if everyone is happy and in sync, we look to add our business and tech management expertise in exchange for equity).
Our main objective is to help startups more than just getting a service in exchange for money.
If you are still interested, would like to talk more about your startup.
Co-Founder@ Rockstars Development
I do agree with some of the answers already provided but I have to add a few thoughts I need to add.
Agencies, like consultants, are doing this for a living. It's probably their main income source. And, they do have a lot of clients knowing on their doors.
So, what would you do if you were in their shoes? Would you give up a low-risk contract over a high-risk one? Of course not. It's silly to think that.
The bright side though is that both agencies and consultants have done this many times before and thus they have way more experience than a regular CTO.
There are a lot of gotchas when starting out, and it's very easy to spend your time and money on things that are not important. Hiring either an agency or a consultant or an experienced CTO can help a ton. See my post about 5 Things You Need To Know Before Building Your First MVP, it might steer you in the right direction.
Mix & Go - Helping early-stage startups bring new products to market
Yes, hire agencies, which are more specialized than normal services. One caution is never put your pressure on them by saying wish everything in the world for the little cost and time you have. Better to be open and ask, what best they can deliver/engineer for a given budget and time. Make sure you do everything for your partners to deliver most professional & ethical work to you.
I would always, say every startup should have few external vendors or consultants, who are more specialized than the internal teams. Then only many gaps can comes out faster. In order to keep the cost low and max value in return, hire them for limited days a week. This way both sides wins too.