“Everything hinges on us being able to find a great VP Engineering,” I said to Dave Epstein. Dave was a partner at the VC firm that was thinking of bringing me on as Entrepreneur in Residence (EIR).
EIRs are brought in by VC firms to start companies in an area the VC firm is interested in. The firm wanted to build an Analog Semiconductor company which happened to be my area of expertise.
Before I could officially join the firm, all the partners had to interview me. My interview with Dave was critical because Dave was the firm’s semiconductor expert.
It was the first time we had met, and Dave was trying to understand my thought process. Dave said, “I’m glad to hear you say that.”
You can’t build a technology startup unless you have a great VP Engineering or CTO.
Let’s say you somehow build an MVP by outsourcing the development. And, let’s say that the product even sells. Ask yourself this question, “How are you going to scale your technology team without a VP Engineering or CTO to run the team?”
The answer is you can’t scale without a technology leader to run the team. Don’t delude yourself into believing you can do it on your own. Don’t delude yourself into believing that you’re being prudent with your equity.
Managing an outsourced development team is HARDER than managing your own development team.
I’ve managed internal development teams during my career, and I’ve managed outsourced development teams during my career. By a wide margin, managing an outsourced development team takes more skill, and a lot more time and effort, than managing your own development team.
I know it looks great on paper. You’ll save money and time. However, the risk are higher. Here’s why:
A. An outsourced development team has other priorities than you.
Most outsourced teams are managing multiple projects at once. You may be on schedule one day, and then find your project delayed for weeks on end.
You call the project manager, and you ask what’s going on, and you can’t get a straight answer. You’re committed to working with this group, and what kind of leverage do you have to get them moving?
The answer is less than you think. All it takes is one customer who is paying more than you, yelling louder than you, and your project loses priority.
B. You have to get your project specs perfect.
Now, you can argue that you need get your specs right regardless of who is going to develop your product. However, your mistakes are magnified with an outsourced development group.
A really good outsourced development group will interact with you and ask you questions if they see something is wrong. That’s what a really good outsourced development group will do.
Will you be so lucky to hire the best, especially if you’re not technical? It’s murky at best you’ll be so lucky.
So, your mistakes may not be caught by the development team, and your product is doomed before it starts.
C. You need to over-communicate to have any chance of success with an outsourced development group.
By over-communication, I don’t just mean calling the team lead more often. That’s a given that you’ll have to up the number of times you interact.
I also mean that the goals and project milestones you set will have to be ultra precise. Let’s say your project has an estimated schedule of six months.
You decide that you’ll set six monthly milestones to keep the project on schedule. That’s a recipe for failure.
You’ll want to break down your project into much smaller chunks of subtasks to manage. Ideally, this would be between one and three days for each subtask.
Then you’ll know if you’re project is moving off the rails before things get way out of hand. Read Eli Goldratt’s great book, Critical Chain, for more.
Have I scared you maybe a bit about outsourcing? I hope so.
So when should you bring on your CTO or VP Engineering? Say it with me…As soon as possible!
If you’re not a technologist, then you’re going to need a CTO or VP Engineering to be your partner. Waiting because you want to save equity or money is the wrong way to think about things.
That’s why I told Dave that my priority was finding a VP Engineering to be my co-founder. I knew that it would be impossible to build a technology company without a great technologist.
I started looking everywhere I could to find a great VP Engineering. It took some time, but I eventually found a great partner in Jeroen.
That doesn’t mean I put the company on hold while I was looking. On the contrary. You need multiple things to get a company off the ground.
I focused, in parallel, on finding a great VP Engineering and developing the rest of the company. I even did a little bit of outsourcing as a proof of concept.
Whatever you do, don’t delude yourself into believing that outsourcing is an easy, risk free path to startup success. It’s not.