I've heard this question framed in debates online and in offline events. It is as if there is a natural definition of a startup as being exclusively "home grown." If you use anything other than yourself, your laptop, your own team and the funds that you have at your disposal, you are not developing a startup.
Is that true? Can that possibly be true, for all developers and entrepreneurs who are trying to build a business?
We think that this is worthy of discussion. On February 4th at 4:00pm Pacific, we are going to have a discussion about this with one of the founders of a startup. and we are going to use technology created by another founder, FreshTag.
Just enter the chat by using hashtag #bzelance to register. You will be admitted into the chat room immediately, and we will begin promptly at 4pm. That chat is video and text, so you will be able to participate in the discussion and monitor the questions that people ask our founders.
Below are the responses to the questions for Daniel Cowen of Echoer, who used Elance to build his business. We will be talking with Daniel during the online event, and you will have a chance to follow up with questions about this interview and his business strategy.
Microsoft BizSpark members qualify for an Elance special offer. If you are a member, you'll get $100 credit to get started.
BizSpark: What was the first major decision you made to build a company?
Daniel: After we came up with the idea of Echoer the first thing we did was start researching the space. After a month and half of research (which included tech work using other platform APIs) we made the decision to put Echoer on a solid footing and build both a company and a team around it. We'd gotten lucky with Last Night Never Happened, our first app, playing fast and loose. But with Echoer we wanted to take the lessons learnt and build talent, knowhow and channels to resources from the get go. While we knew we were starting small, we also wanted the structures in place that would allow us to grow, both in terms of talent and investment.
BizSpark: Did you ever rely on outsourcing help to build a company, and if you did, what do you say to people who say that’s cheating?
Daniel: We did, and heavily so. We outsourced a lot of our work at first, for example design and early coding. When you are testing ideas and you don't have the funding to hire outsourcing is often the best way to get talent on an ad-hoc basis. For certain capabilities its not sustainable, and you eventually need to bring that talent in-house. But for other tasks you will inevitably be in stop start phase for a while, for example certain research tasks, translation, presentation production, etc. For these and others we have been lucky enough to lean on platforms like Elance, giving us both geographical spread and depth of expertise. There are things we never even expected to do, for example a very targeted PR exercise in Italy, which we could never have done at such short notice or low cost without outsourcing. Is it cheating? Quite the contrary, it's lean thinking at its best, employing just the right level resources at just the right time to get the job done as best it can. Anyone who wants to keep costs down but need to expands beyond their current capabilities would be crazy not to outsource at first. You can always consolidate this later and bring those capabilities in-house, or stop/change the project direction if results point that way.
BizSpark: What comes first in building a company, the design, the idea, the product, or the team?
Daniel: For us the idea came first, then a lot of research, then the design, then the product. The company formed somewhere in middle of that, and the team emerged as and when we need to acquire new skills sets that were beyond our current capabilities. In some senses design should and could have come a lot later, and the product tinkering started earlier. But with Echoer the design is such a core part of the product and user experience that we led with that ahead of the engineering. You live and learn, and in truth it's not this binary. The key is to be lean, adaptable and agile at all times. Validating learning and growing with true and tested needs.
BizSpark: How does outsourcing reduce friction in building a company, and what friction does it eliminate?
Daniel: Outsourcing reduced a lot of time and money related friction. Overheads are NOT permanent and can be scaled as the job scales. Likewise we saved a lot of time not having to interview candidates, deal with employment agreements, etc. That's not to say those frictions go to zero. You still need to choose outsourcers well, but we developed ways of testing several candidates at once, at low time and money cost, in order to find the best person for a particularly job. We were also thrilled in one example where our scaling had zero friction, with one outsourcer training another in the task we had already trained them in. Outsourcing also eliminated geographical friction. In another example we hired an Elancer in Japan for some marketing work. We didn't have to go to Japan. Nor did we have to find a Japanese speaker in Montreal who would have had to market remotely. We were able to find the right person in the right place at the right time with only time differences to compete with.
BizSpark: What happens when the company is ready to launch, do you get rid of our your outsourcing help, or keep them and roll them into the company?
Daniel: It depends. As I mentioned above, you should build the team alongside the capacity needed. That means that as some roles become "permanent" you may want to bring that person in house. Likewise as some projects fail or phase out you may not need that outsourcer. Or you keep going on an ad hoc basis. We haven't yet taken an outsourcer in house, but we would do it if the circumstances were right. And there is at least one person we have worked with who would be ideal if we ever needed a full time candidate for that role. And in other cases we have used outsourcer X for job Y, only to find job Y was no longer needed. Did we lose outsourcer X? No chance. We had built such a good level of trust and understanding that we simply retrained them for the next job, even though very different. If you've taken the time to train and get to know an outsourcer and they are talented and driven then my guess is there will always be a place for them in that company or in other related and non-related projects. Again, why start fresh when you can take yet more friction out of the system.