This article falls into the “advice for non-technical cofounders” category. So if that’s you, I hope you find my two cents helpful. This article also touches on the relationship between startups and agencies. I’ve recently made the leap from being the non-technical cofounder at a web dev services company to cofounding a startup called Kera.
Strange Bed Fellows
I’m starting to question the wisdom of startups engaging agencies to play a critical part in building their companies. At first glance it’s pretty simple: founders are trying to mitigate the absence of expertise – mainly in the area of technical or user experience expertise. It seems natural that startups would jump at the opportunity to fill in these gaps.
But I’ve come to believe that the interests cannot possibly be aligned. Agencies are built to sell time, maximize hourly rates, increase project timelines, and build their reputation for quality. Startups, on the other hand, are built to discover business models, fail quickly and repeatedly, then scale their operations after various systems starts to “stick.”
This is a Contradiction
Early stage startups have three critical pieces: design, development, and marketing. Each of those pieces have to advance hand-in-hand for a startup to transition across the chasm and into the holy land. They are all equally important activities, and they deserve equal attention.
Yet somehow it’s ok to outsource the UX and development while the founder(s) focus(es) on raising capital or developing the business. Here the deal: if you wouldn’t outsource the vision of your product, you shouldn’t outsource its execution, because those two aspects are inextricably linked. One shifts the other.
Let’s get more specific. How, exactly do Agencies hurt startups? By serving them.
Agencies are Expensive
Hiring an agency will accelerate your burn rate considerably. It’s simple economics – their hourly rate is probably 3-4x what a founder would need to draw in salary. The more expensive your time is, the riskier change becomes.
Agencies also like predictability because resourcing a services company is very difficult. In fact, they create all sorts of processes that attempt to foster and increase predictability. But you just embarked on a very unpredictable endeavour.
And if you’re doing an equity deal, you’ve essentially given away equity at an inflated rate than you would have to a founder.
Outsourcing Tech and UX is Debilitating
I think agile development is more than just delivering new features at the end of an iteration. To me, agile is about pushing new code to end-users early, and refining features continuously. Unfortunately, most of the agencies I know try to get it right before they get it out.
I’m not blaming agencies — they build their reputation on getting it right. Unfortunately, that’s not how it works. As my good buddy Helmuth Karl Bernhard Graf von Moltke used to say, “no plan survives contact with the enemy.” In our case, the “plan” is what you build before you release it, and “the enemy” is a very unkind marketplace.
I also hope that these founders understand how much technical debt they’re accumulating by outsourcing their development. Hopefully it’s within your tolerance. But I’d hate to be the person that launches an app with UX gaps and bad (or no) test coverage.
I’m not writing about solutions on this post. Ian over at 10sheet.com has written a great article about how non-technical cofounders can build an engineering team. He’s a sole founder, but his practical advice can also be used to find a technical person who can become your cofounder. *UPDATE*: Seems like the blog post was taken down.
If you’re thinking about hiring an agency, I get where you’re coming from: You probably just want to get started as quickly as possible. But the perceived short-term gain comes with a lot of strings attached.