WhoBuilt

Should I Use a Dev Shop?

Apr 25, 2019· 6 min· 58K views·Watch on YouTube

Speaker

Michael Seibel of Y Combinator explains when using a development shop to build a startup’s first product can create problems.

Why founders consider a dev shop

Founders without technical skills may understand a customer problem but be unable to build a solution. Seibel says some are advised to hire a dev shop, gain traction, and recruit a CTO later, though he has seen many founders struggle with this approach.

The cost and fundraising risks

A dev shop project can take longer and cost more than founders expect: an initial budget of $15,000 to $30,000 may not be enough. Seibel says investors focused on tech startups may be reluctant to fund companies that outsource development unless they are already growing unusually quickly.

Why the first product may need rebuilding

A later hire may disagree with how the outsourced product was built, so the team may need to rebuild it. Because an MVP often needs several rounds of iteration, founders can run out of time and money before they find a solution customers want.

Investors value the ability to iterate

Seibel says many early-stage investors care more about a team’s ability to build and improve a product than about its initial traction. A technical co-founder can typically release a product faster and make customer-driven changes at lower cost than a dev shop.

When the advice applies

Recruiting a technical co-founder can feel difficult, but Seibel urges founders pursuing venture-scale tech companies to consider whether the time spent recruiting is worthwhile. He acknowledges that some companies succeed after buying an initial product from a dev shop, but says that is the exception in his experience.

Takeaways

  • Budget for multiple product iterations, not just the first release.
  • For a venture-scale tech startup, weigh the cost and speed of recruiting a technical co-founder against outsourcing.
  • Expect some investors to scrutinize outsourced development, especially before strong growth.
  • Treat an MVP as a starting point that will need customer-driven changes.
  • A dev shop may suit some situations, but Seibel considers successful venture-backed examples uncommon.

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What was claimed 4

  • feature
    Dev shop: Building an initial product often takes longer and costs more than founders expect.
    “it often takes longer than you might think to get the first version of the MVP out”
    YouTube
    Unverified1 source· Talk
  • feature
    Dev shop: Outsourcing development can make it harder for a startup to raise money.
    “it's often harder to raise money when you use an outsourced dev shop”
    YouTube
    Unverified1 source· Talk
  • feature
    Dev shop: A hired developer may need to rebuild outsourced work if they disagree with how it was built.
    “often the solution is to rebuild it”
    YouTube
    Unverified1 source· Talk
  • feature
    technical co-founder: Compared with a dev shop, a technical co-founder can help a startup release sooner, spend less, and iterate more easily.
    “You have a product that's released far faster”
    YouTube
    Unverified1 source· Talk

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