If you’re a tech startup, bootstrapping your own R&D may be a bad idea. The current IT landscape makes it a risk that may doom your company. Really!
As a founder, you are surrounded by challenges and need all the help you can get. Your technical team cannot be a source of concern.
You should think about your startup R&D the same way as most companies now think about their infrastructure. You have a choice between on-premise or ‘As a Service’ (aka Cloud) compute options. I believe these options also exist and need to be considered for your R&D if you want your startup takeoff telemetry to be firmly in the green.
Scarcity of Talent
Talent has never been as scarce as today. The big FAGA (Facebook, Amazon, Google, Apple) type players can and will acquire all available top talent. The few remaining A players will choose well-funded startups that can pay top dollars and offer an equity plan. If you are still early with only love money to spend, these people are out of reach. You’ll be left to choose amongst below average candidates. To successfully launch a tech startup, you need senior, multi-talented, creative and high throughput developers who will make the right decisions and can attract other developers through their own networks.
Immediacy and Cohesion
Even if you are the lucky one and have deeper pockets, finding and hiring this team of initial developers will take time. Time your investors may not care for. You are probably asked to deliver your MVP over the next 3 to 6 months. And if you have the network or attractiveness to create this core team of 3 to 7 members, cohesion will initially be low and may never emerge. In a professional sports league, the annual all-star game players would not be able to defeat the best team in the league.
Post MVP Transition
After the MVP phase, you will need to do things differently. You proved that your business model makes sense. Now, you need a solid solution to accelerate your growth.
You may want to divert startup R&D budget toward marketing and sales. If you then let go of developers, you will lose your internal IP.
Moreover, the creative types you relied on to wrap together an early MVP may not be the best profiles to scale the business and optimize the operational aspects of a technical product.
The Advantages of a Thrusted Technical Partner
Startups now universally opt for a public Cloud provider over an on-premise infrastructure. The availability, diversity, immediacy, quality and costs are unbeatable.
Could you approach your R&D needs the same way?
Partnering with a specialized R&D provider can kickstart your startup with access to an elastic pool of high-quality DevOps teams. When you factor in all the hidden costs required to build your own teams, an R&D partner makes a lot of sense. You can get, for a fraction of the costs, a workforce with:
A proven track record at launching a startup
An immediate availability
Team developers with an 18 months life expectancy that stay with the company when they are rotated off your project
A team that can rely on other, nearby experts instead of an isolated team of internal developers
A team that can benefit from constant exposition to other projects and technologies
The flexibility of temporarily offloading team members after the MVP phase
Part-time profiles such as CTO, chief architect or security officer
Access to other talented developers who can provide temporary help or expertise on specific architectural, scalability or performance problems
Operational human expertise, located in a secure environment, that can easily launch and manage your MVP
Established companies are now doing the same and cooperate with external partners when tackling new technologies they are not familiar with, such as mobile, Cloud or AI development projects.
How to Mitigate the Risks
As a manager, you must ensure that this partnership will incur fewer risks than having your own R&D. In fact, part of what you will be paying goes toward this specific benefit.
You should ,therefore, look for the following:
Autonomous, cohesive teams… do not go with a body shop that only provides ‘people’
Technical AND business leadership, from a partner that will coach you toward a successful outcome
Internal oversight on your side to learn from your partners instead of managing them
Instant exit clauses with knowledge transfer protocols
Company history including success stories and low employee churn rates
References to past and current customers
What About Investors?
How this will be perceived by investors will vary but is generally well received if:
They are well educated on this approach
Your partner complies with the risks management checklist above
You have a plan on when and how to migrate to your own internal developer teams
I have been involved in a number of technical audits and seen a lot of companies fail at reaching the MVP stage or negotiate the post MVP transition. Lack of technical leadership, including operational acumen, is often to blame.
Investors can quickly become wary of the startup ability to execute on the business plan. The perceived lower costs of the initial, in-house development team eventually made the costs of reaching MVP status misaligned with the expected pre-money valuation of the next round.
A stable and mature R&D, provided by a trusted business partner, can alleviate many insecurities from current and potential investors.
Can You Answer YES to These Pre-Flight Checklist Items?
Will your R&D department rapidly provide you with a team of 2 to 7 developers?
Will your team be composed of experts 10X more productive than the average developer?
Will the team be proficient at DevOps and true Agility?
Will the team have strong expertise at SaaS, scalability, code quality, evolutionary architectures and net security?
Will the team be senior enough to make product and business decisions?
Will the team be trustworthy enough to be given administrative access to all the development tools and production environments?
Will the team get you to MVP status and beyond?
Will the team be considered an asset instead of a liability when you pitch to investors?
Be the Revolution!