Good morning everyone.
A little be about my situation as a business co-founder: From my day job, I developed a specific product in mind; and I identified very specific niche sales channel for the solution. I don't have a tech-cofounder in place at the moment. Based on my research, there are similar products in the marketplace that has the meat & potatoe of the underlying features but targeting slightly different end users/ functionality. (Hence, my guess is that its not too difficult to build.) The alternatives I'm considering are:
Alternative #1 - Just outsource the development to a third-party (and share the comparative products as reference). Seems like there are a lot of open source codes on GitHub that can be utilized. In my simple world, seems like someone just needs to integrate the various blocks of code from GitHub. Once the MVP is in place and its being tested with the beta customers, then I'll bring on a tech co-founder at the time (more upfront cost/risk to me but higher equity % and more control over the direction).
Alternative #2 - Try to contact the startup with the similar product and pitch my vision from the sales side and try to get an equity %. I think from the company perspective, this has the best chance for success. However, I will have very limited control and its possible that I'd end up with very limited equity. (personally, I'm not interested in a job as I have a great job at the moment). Another drawback is that, the original founder would be married to his original idea and would be resistant to change. I have identified one where it seems to be built by one guy who has since started full-time at a different startup. My gut feeling is that while the product is great, he had very little traction.
Appreciate all feedback.
Without knowing that much about the product, my answer may not help. I regularly get asked can a founder get an MVP without a technical co-founder, the simple answer is yes, as you stated you can get a development agency to build it. My advice is never to give them your 'secret sauce' (or USP), which is difficult if the business is built around your USP. Agencies like re-using code and ways of working so it's quite simple for their next customer to receive parts of the work that you paid for. Even with transfer of ownership agreements, it's hard to prove that they deleted your work as requested.
Hopefully I answered a little of your question...
I would be shocked if your #2 option worked. Getting equity for an idea is not normal and the competitor can just say they had already thought of it - so an NDA in advance would not even help. You might get a job there but not a slice of the action.
If similar products are already in the market then you really need to be realistic about sales potential. Will existing customers of your competitors switch to you just for your niche approach? Ask some of them rather than assume. Or can you only pick up new customers in the market place? If your competitors can build/pitch their existing product to compete with your idea, then you will struggle to out-gun them with marketing and trust in the marketplace. I would focus on this product-market-fit before you charge ahead building the solution, as this is where most start-ups fail before they begin.
Most products can be copied quite easily unless you have genuine IP that you can protect - and you invest in protecting it globally. So you need to assume your unique approach will not remain unique for ling once you start selling.
It is always good to have a techie on your side - i.e. do not trust an agency to make all of the right decisions - they are just regular developers at the end of the day that will make choices based on personal preferences. You should have someone help you draw up a technical architecture to work towards. Who writes the code is not that important so long as they are good engineers.
It really depends on the development company you'd partner with. There's a lot of cynicism on this site with development companies or agencies vs going the freelancer/CTO co-founder route. You should be to detect if they're in at as a technical partner or extension of the founding team vs transactional, time and materials service provider who leaves with you a crappy MVP with technical debt. Our development company's CEO is a former CTO, so there's an understanding of product feature set/revenue model fit with the startups we work with.