Outsourcing · Technical co-founder

Thoughts on founder team with no CTO?

Edward M. Yang

April 14th, 2016

As everyone knows, the ratio of founders with marketing/business experience to technical founders is quite lopsided.

What are your thoughts on a founder team for a SaaS of 2 people, one product concept/marketing, the other sales/operations? 

Neither are coders and would have to rely on offshore developers.

I've used offshore developers for the past 8 years, some truly horrible and some quite good.

My question is, can a SaaS start up successfully with no technical cofounder, relying purely on providing product specs to an offshore development team?

Success stories would be appreciated.
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Bob Graham Engineering and Software

April 14th, 2016

A CTO is more than a CTO. They are your partner. If you are lucky enough to know someone who is business partner material and who is great technically, then I'd work with them without hesitation.

I would also look at the business model and MVP needed. Can you get to customers by hiring an outsourcer to do some simple tasks?

For outsourcers you need to:
-Draw everything
-Make everything as detailed as possible
-Simplify everything as much as possible

You can also hire someone local or a more expensive outsourcer to check over the outsourcers' code.

But really, I think after MVP, you are going to need someone technically skilled and committed to the project to succeed. For that I think you can pay someone way above the average, plus equity to do it. Do you think you can get to that point with an MVP you can get outsourced? If so then go for it.

I think it's never wise to pick up a bad partner, so more than anything, I'd suggest for you to think of any potential CTO as a partner first, and as the guy coding second.

If you have someone who is partner material then there is no question. Work with them. That's what I have and I am extremely lucky, but we make all decisions together and I am not the boss. We are partners in every sense of the word.

If you can't find that, then you can't risk someone bad. It could derail everything. In my opinion, it would be better to get an MVP, some customers and then pay for a CTO.


Assaf Karmon

April 14th, 2016

What's your idea ? Maybe I'll be your CTO.

Jim Hodson Digital Marketing Strategist & SEO Evangelist

April 19th, 2016

As I said, "Can it work? Yes... but you will likely waste lots of money and cycles in the process."  It's simply not optimal for a company whose product is software.  Much can be gained by having a qualified CTO on the founder team and much can be loss by not having one.

Paul Chambers Founder, Nymble Technology

April 14th, 2016

The only useful perspective I can offer is an observed experience where non-technical founders were taken advantage of by the external technical resources they engaged with. They incrementally paid way over the final value of the work product, over more than two years.

After several missed deadlines, still no stable software in sight nor credible explanation as to when, they finally sacked them. Only then did the true depth of the intentional deception come to light. The work wasn't salvageable, it had to be discarded. 

So that's the nub of the issue - if you have no way to verify the competence of the engineering team or the quality of work, how do you know if you will get what you paid for, when promised, at a fair price?

They only way I know of, is to engage with someone independent who you trust to oversee those external resources. Misplaced trust in external resources kills companies.

To be candid, it doesn't matter how detailed and specific a specification is written, there will be questions of technical approach and trade-offs that it cannot anticipate nor answer. You need at least one technical resource you can count on to handle that iteration that's inevitable when product specification encounters the harsh realities of product development.

In my opinion, it's incredibly risky to take on product development without at least one trustworthy, competent technical champion to protect your interests.

David Albert Founder & Principal at GreyGoo

April 15th, 2016

I believe it depends a lot on the idea and the level of technical execution involved. If you have the funds, contracting a qualified technical strategist is invaluable to help you get to a MVP. Perhaps a cash + small equity stake arrangement. If you go this route, you should vet them--make sure they have a proven track record of taking a product from concept to launch and can point to or share real-world success stories. If you plan to offshore, that person should also have worked with offshore development teams--offshore CAN be successful but it's a completely different beast then working with in-house devs.

I have worked with at least 4 startups now where the founders lacked technical expertise and decided to offshore 100% of their product development and it resulted in a complete mess. Not because the developers they contracted were bad--but because there was no technical leadership or project management. The founders knew what they wanted, but didn't know how to properly articulate it. They lacked UX/UI experience, and the baseline understanding of the development process to manage the project effectively. Offshore developers do what they're told: if you give them detailed instructions, visuals, examples, and maintain a constant level of good communication, you can expect good results. Far too often it's the opposite.

In those 4 scenarios: we advised 3 to completely scrap the code and rebuild from scratch. On the 4th, we decided to build on what they had and ended up regretting it--the process to bandaid and build upon what was created ended up taking 2X as long.

Anonymous

April 15th, 2016

I would warn against starting a technology company without a technology co-founder. You can outsource IT work if that work can be eventually thrown away and redone without significant impact, e.g. you're a life sciences company and need a marketing/branding website. But if this is your core technology, you're running a double risk: 1) you've hired consultants whom you can't manage - prob. they will take advantage of that, and 2) even if this does work out, investors will be very unhappy that you don't own your IP.

Bob Graham Engineering and Software

April 14th, 2016

Edward I also should add we have 4 devs on our team. We have myself, our CTO, another local dev who we sit and code with and one dev overseas. 

The overseas dev we have a relationship with and he's a nice guy and quite skilled, but we are constantly having to fix up little errors and he just tends to be a bit on the sloppy side. Not sure why, but just simple things that would be easy and obvious to us to fix in the code he leaves or does incorrectly. He also isn't that cheap compared to the local. 

We pay our local JR dev $30 an hour and our overseas one $22. We are saving $8, but there are grants for the local guy and incentives and we can eventually give him equity and bring him on if he is good.
Also when I say JR I mean he could build a lot of what we have if we needed, it would just take him a bit longer.

So far I lean toward local if you do get it done. 
Something to consider. Having said that we are still using the overseas dev for some tasks too, but I can't really imagine him being our main dude.

Joseph Wang Chief Science Officer at Bitquant Research Laboratories

April 19th, 2016

You are going to have a de facto CTO.

What is going to happen is that either someone on the team is going to end up doing all of the requirements and technical management, or else you'll find that the someone in the company that you've outsourced is going to end up doing that sort of work.

The problem with outsourcing the CTO is that it can get very, very bad if the defacto CTO suddenly disappears.


Paul Chambers Founder, Nymble Technology

April 15th, 2016

I see things a little differently, Chuck. The reward you offer someone doesn't have to be financial, but should be in proportion to the contribution you're expecting from them.

Giving examples of 'captains of industry' who are surrounded by hand-picked people they have chosen to support them seems completely irrelevant to me. One doesn't have to understand widgets if one is surrounded by hundreds of thousands of employees who understand them far better than you ever care to.

But when you're just getting started, and all you have is a vision for widgets, but know little about them, then you're going to need help. Preferably someone as engaged as you are, that can see and embrace your vision.

There are many levels of technical leadership too. You need someone to translate from the 'vision' to an 'execution' plan that those holding the shovels can understand. People with those technical leadership skills would find being referred to as a 'technician' or 'coder' as dismissive and perhaps offensive.

A good portion of the 'leadership' you refer to is finding, hiring and retaining people who are smarter than you in the areas you need, share your passion, and are driven to realize it.

And that can easily be the most difficult, and crucial, part of getting the bird in the air and keeping it there.

(edited for clarity)

Israel Ben-Ishai President at Achive3000 Canada

April 15th, 2016

Dear Edward, I would be happy to discuss this issue with you in private and see how and if I can help you. You absolutely must have somebody on your side. Also, as an Angel investor I wouldn't invest in you unless you have some experienced engineering manager as part of your team. I am heading out of town now but would be happy to chat next week. Will share my "wisdom" with you for free. All the best, Israel