For startup founders, navigating this initial stage of building a business can be daunting. Finding the right co-founder, securing your first customers, and obtaining funding are critical steps that can make or break your startup’s success.

This webinar is your roadmap to securing a startup co-founder, attracting customers, and raising capital effectively.

Tooraj Helmi, an experienced entrepreneur, will guide you through the essential strategies for building a strong foundation for your startup. With a wealth of knowledge in the startup ecosystem, Tooraj knows what it takes to achieve early-stage success.

In this information-packed webinar, you’ll learn:

Defining a Founder

Tooraj describes a founder as someone who identifies a common problem and devises a scalable, simple solution. Understanding this fundamental role is the first step in building a successful startup.

Top Three Responsibilities of a Founder

• Excite: Mastering storytelling and pitching to engage stakeholders is crucial. Learn how to create compelling narratives that attract investors and partners.
• Execute: Building a team to turn your vision into reality. Tooraj shares insights on how to recruit and manage a team effectively.
• Excel: Focusing on securing cash and investments. Discover strategies for fundraising and managing finances to ensure your startup’s longevity.

Finding a Startup Co-Founder

Finding the right startup co-founder is about practicality over perfection. Tooraj highlights key characteristics to look for, such as being organized, flexible, having a matching communication style, and possessing proven skills. He also provides strategies to find a co-founder, leveraging networks from previous jobs or academic connections.

Building a Product

Developing a prototype or app requires careful planning and budgeting. Tooraj discusses the critical considerations for building your product, ensuring it meets market needs and is developed efficiently.

Acquiring Customers

The first customer is crucial for any startup development team. Tooraj explains the importance of timing for outreach and how to define and find your ideal customer persona (ICP). Learn creative strategies for customer acquisition, drawing on examples like Airbnb using Craigslist and Zenefits initially selling to HR departments.

To learn more, see if you qualify for membership to join Founders Network.

About the Speaker

Tooraj Helmi is the founder of Apsy Inc., where he leads the creation of AI-driven products transforming software development. With extensive experience in building robust product and engineering teams, and a focus on key performance metrics, Tooraj’s leadership and innovation have propelled Apsy into international markets.

Summary

“Startup Founder Firsts: How to Secure a Co-Founder, Customers, and Cash with Tooraj Helmi,” is a must-watch for any entrepreneur looking to build a strong foundation for their startup. Gain practical strategies to find the right startup co-founder, attract early customers, and secure funding to fuel your startup’s growth.

Watch now and take the first step towards driving your startup’s success.

Moderator:

Pete Crawford

Pete is a 7-year cannabis industry veteran as VP of Supply Chain, VP of Professional Services, and CEO. He is a named inventor on two cannabis industry device patents, and has held multiple technology company leadership roles prior to his cannabis journey. Bend Oregon resident, father, husband, traveler, live music lover, and SaaS enthusiast.

Your goals as an entrepreneur are not always clear. They may be centered on making a profit, which means a lot of decisions need to be made on prioritization. But your goals as an entrepreneur should also be centered on building a brand that can deviate from a script, and consider alternatives. 

“Real estate is a relationship business and at a time when most of our relationships exist through screens, it is more important than ever to have a tool that can enhance those interactions.” - @foundersnetwork
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Julie Leonhardt, co-founder and CEO of Vuse, believes that her understanding of the real estate industry, combined with her listening to the pain points of the agents with whom she speaks on a daily basis, has allowed her to create the perfect tool for the agents’ toolkit. Vuse is a mobile platform that enables real estate professionals to create and share captivating, pro-quality videos on the go. Her former life as the COO of Sotheby’s International Realty Affiliates, Inc. and the SVP of Affiliate Services and Head of Operations, EMERIA region, for Christie’s International Real Estate, and her partnership with award-winning filmmaker, Leanna Creel, creates the perfect team to build a product that the real estate market really needs right now.  

“Launching in March 2020 was definitely a risk,” Leonhardt explains. “However, once everyone realized that COVID was not going to be a minor blip on our year, my phone and email were blowing up with agents begging for Vuse. Vuse combines my real estate background with my co-founder, Leanna’s, amazing filmmaking acumen to create a product that is uniquely designed for agents. Real estate is a relationship business and at a time when most of our relationships exist through screens, it is more important than ever to have a tool that can enhance those interactions. ”

“Are you able to pivot where the industry is pushing you? That is so key to product nimbleness. You may not be able to find full market fit right away. Some companies may have to do a few degrees shift as the market changes so they…
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Vamshi Gunukula, COO of DirectShifts, didn’t have to search hard to find the opportunity in the global pandemic. His team found itself in the middle of the moment. DirectShifts is a tech-enabled staffing platform that matches clinicians with employers. As the need for qualified medical professionals grew, his team pivoted toward helping hospitals and clinicians source from a variety of locations. They also focused on sourcing more specialties.

“We diversified because we saw the market needed it,” Gunukula said. “We always create our product with a vision to serve certain aspects of the industry. But the industry will push you laterally. Are you able to pivot where the industry is pushing you? That is so key to product nimbleness. You may not be able to find full market fit right away. Some companies may have to do a few degrees shift as the market changes so they find their sweet spot.”

“This was an extension of my passion, but also very much trying to solve a problem. And as it turns out, it was a problem that basically every single traveler in the world has experienced or will experience some time in the future…
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Zephyr Seat is geared toward the air traveler who in this new normal seeks more private space, among other benefits. The Zephyr Seat would allow airlines to provide double-decker. lie-flat seating in a 2-4-2 configuration. CEO Jeffrey O’Neill, a frequent traveler and designer, came up with the idea after seeking a way to get some good sleep on a very long flight from at the economy price point.

“This was an extension of my passion, but also very much trying to solve a problem,” O’Neill shared with allplane.tv. “And as it turns out, it was a problem that basically every single traveler in the world has experienced or will experience some time in the future when they travel again.”

While O’Neill’s idea was born well before the pandemic in 2017, it arrives at the right time,  just travelers would appreciate isolation and social distancing. It’s poised to be a significant disrupter in the travel industry, should airlines adopt it. At this stage, the Zephyr Seat team is still hunting for the first taker. 

Hear more about how these founders are moving their products forward by joining our Product Panel on August 24. Sign up to join us in this FREE event and find out if you qualify for full membership and get insights on:

• How to pivot where the industry is pushing you with product nimbleness
• Why you should sell your meaning, not just your product
• How to extend passion to propose a solution
• Attract the attention of customers through experiences 
• It’s not about products, it’s about unmet needs

Originally brought up in India, Vinita Rathi later moved to London and began working at Goldman Sachs. For five years – with initially, no financial knowledge – she worked her way up in the fast paced environment, eventually becoming VP of the interest rate product teams. When her time with Goldman Sachs came to an end, she then started her own company Systango, an end-to-end IT service provider called Systango, which now has 300+ employees and works with names such as Grindr, Dialpad, ResearchNow, Deloitte, Oracle and Porsche. 

Not only does Rathi have 5.5 years in a tier 1 investment bank specializing in trading technology and 14+ years as a CEO of Systango, she is also the founder of Studio Fintech, a company that specializes in dealing with Fintech and blockchain ventures with a focus on blockchain-centric projects. Studio Fintech is arm of Systango focussing specifically on Fintech and blockchain. 

Additionally, Rathi is the founder of WomenHackForNonProfits currently made up of 1200 women in tech who are building open source projects for non-profits and individuals with a cause. She is also the founding director of Women Who Code (London Chapter), aimed to inspire women to excel in technology careers. To top it all off she is a Google Women Techmakers Lead, focusing on helping bolster the cause of feminism in Tech.

All of the above when put together indicate she has been playing this game for a long time.

“You start looking for analytics when you are solving a specific user behaviour problem. Thinking about it as part of product build enables you to solve the initial teething problems faster, quicker and efficiently.” - @VinitaKRathi
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During the early years, Rathi’s experiences at Goldman Sachs and now, working with a wide range of entrepreneurs under Systango and more, have given her some valuable insights about the role data science plays in building product strategy and how startups and scaleups can leverage it not only for increasing the efficiency of their businesses but also deciding the future course. Here are just a few of the takeaways Vinita will be speaking about.

• Planning your Data Strategy
• Data Mining
• Data Visualization
• Leveraging Visualization Techniques
• Other aspects of Data Engineering
  

“Often data during product build is an after thought. You start looking for analytics when you are solving a specific user behaviour problem. Thinking about it as part of product build enables you to solve the initial teething problems faster, quicker and efficiently.” Rathi says.

“Having right data strategy and appropriate tools in place early on enables you to learn more about your product and its usage than you can imagine.” - @VinitaKRathi
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This can be integrated into building your team early. Systango approaches its client’s problems with a human-centered and data-focussed methodology. They believe that there are no silver bullets in their space, and that the best solutions come from involving the right people in every step of the process, establishing KPIs for your teams and then tracking them with data you collect. 

Vinita says “When you are a CEO, you need to be able to see Sales, marketing, logistics, product analytics all in one place and be able to connect the dots.” Different departments/teams end up using their own tools, they end up collecting huge set of data but miss out on the holistic view. This has an impact on ability to see trends and spot patterns. You have to make sure that not only you define and collect but also aggregate and analyse the data points to optimise the effort/ROI across each channel. 

“When you are a CEO, you need to be able to see Sales, marketing, logistics, product analytics all in one place and be able to connect the dots.” - @VinitaKRathi
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Data science is slowly becoming essential for a lot of businesses, startups and enterprises alike. It helps organizations with crucial decision-making and helps companies gain a competitive edge in the market by leveraging any insight to increase efficiency and productivity by making the right decisions. It is important to ensure that you have an infrastructure in place that will allow you to monitor and analyze the data you collect.

To learn more about leveraging product strategy, see if you qualify for membership and check out the webinar from August 9.

The first thing to do is to define the data collection of which is going to be helpful to the business. Then collect and aggregate this data in one place.  Data mining (the practice of analyzing large databases in order to generate new information) aids you in learning how to improve your product or service and how to create a better marketing and sales strategy, while predictive models help to monitor customer behavior. In order to keep up with the competition and trends, you must know the activity of the customers. Setting up data strategy right from start allows you to monitor your business KPIs and build on them. 

“Only when you have KPI for your business and teams, you will be able to measure them.” - @VinitaKRathi
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Data visualization gives you the ability to interpret, convert, and eventually summarize data to a comprehensive language that you can also present to stakeholders. 

To learn more about leveraging product strategy, see if you qualify for membership and check out the webinar from August 9.

For Daniel Solomon, employing a Lean UX methodology has been vital. A lean methodology was first made famous by Toyota. Their system had been employed since the 1930’s to minimize waste. It did not gain widespread attention until the oil crisis of 1970’s when Toyota was able to show profits while Japan’s economy ground to a halt. Lean UX is when you take that methodology of maximizing efficiency and apply it to the software world, making it highly applicable to today’s founders.

“Lean UX is thinking beyond just trying to create a quick prototype. It’s more the thought process of a company or the founder, and how they implement those,” Solomon says. And in Lean UX what is key is breaking those ideas down into quick actionable steps. But the other critical component to all of this is time. Are you able to have your team work together in real time so that they are all on the same page? This real time collaboration means you won’t send things out to production needlessly. It means that every part of the team understands how it functions, and for instance, programmers are able to steer design based on what is feasible and a good use of resources.

“Lean UX is thinking beyond just trying to create a quick prototype. It's more the thought process of a company or the founder, and how they implement those.” - @DanielFSolomon
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But Lean UX is not just about early ideas and development. It should also be playing a powerful role in how you handle the company’s MVP. Once again, the timing is everything, and it is critical to allow customers to test the product long before it gets big, and adjust accordingly. Solomon explains that it is a lack of a Lean methodology that is the reason why many companies age and die, because they cease to build something without really understanding whether people really want it, or their innovation slows. But “it is the MVP that differentiates startups with corporate organizations, because you’re able to really speak to your customers and get that early feedback,” Solomon says.

“It is the MVP that differentiates startups with corporate organizations, because you're able to really speak to your customers and get that early feedback.” - @DanielFSolomon
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Building a product where adapting to early feedback is part of the business model means, “most importantly, you’re giving the user the best experience when they land on the platform, which, in essence, keeps your retention rates high once you have a final product, because you actually build a product for the user,” Solomon says. From acquiring new users to keeping them, the methodology of Lean UX is an invaluable tool.

“You're giving the user the best experience when they land on the platform, which, in essence, keeps your retention rates high once you have a final product, because you actually build a product for the user.” - @DanielFSolomon
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It is Lean UX which allows a company to test out ideas and hypotheses without using up valuable resources or creating wasted efforts. It is also critical to seasoned founders because it helps keep the focus central to what the customer wants and needs, and how to build the best product to fulfill those needs.

To learn more about Lean UX, see if you qualify for membership and check out the webinar from September 21.

In September, Eroe CEO Solomon hosted an event on how and why Lean UX can help startups where he covered. 

• What is Lean UX?
• Why it should be central to building your product
• The importance of timing and the team
• How to remain true to core principles as a start-up pre-funding
• Why it is so important to validate hypotheses with data

To learn more about Lean UX, see if you qualify for membership and check out the webinar from September 21.

According to experts, about 90% of startups end in failure. In many cases, entrepreneurs simply run out of money and are forced to quit. However, according to consultant and coach Holly Woods, there is a deeper reason for insolvency: Founders lack clarity about what matters to them and what they want to achieve. For several decades, Woods has been helping them find their purpose, which, in turn, leads to profit and success. “When you are focused on why you got into a product or niche, you can make decisions that result in more optimized strategies,” says Woods.

Having spent 35 years in human and organizational development as well as 30 years building and scaling businesses, Holly Woods, Phd is well poised to help clients discern their business intentions. She is the founder of The Emergence Institute, which guides visionaries, innovators and changemakers to get deep clarity about purpose and build products and business rooted in it. An Integral Master Coach, Purpose Guide, Professional Mediator and Facilitator, Master Energy Practitioner, and a Stages of Consciousness developmental practitioner, she is also the author of The Golden Thread: Where to Find Purpose in the Stages of Your Life (2020).

“When you are focused on why you got into a product or niche, you can make decisions that result in more optimized strategies.” - @hollykwoods
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At an upcoming Founders Network event, Woods will demonstrate how more precise clarity about purpose helps you create products that represent the true talents you bring to the world, enables you to stay inspired for the long-haul and more easily course correct, all while guiding your next steps toward profit.

To learn more about persevering through challenges, see if you qualify for membership and check out the webinar from August 12.

Register at Founders Network and check if you qualify for full membership to: 

• Explore the Golden Thread that led you to your product/ innovation and business
• Become newly inspired about the WHY behind your product/ innovation
• Gain clarity, focus and flow to guide your next steps
• Reap the benefits of your precise purpose for yourself, your business and the world

For those doubting their ability to make a success of their current projects, Woods initiates a process of rediscovery. “Once founders reclaim their purpose and get reenergized, they can truly commit to their startup and persevere through any challenges that come up,” she explains. 

“Once founders reclaim their purpose and get reenergized, they can truly commit to their startup and persevere through any challenges that come up.” - @hollykwoods
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Using your Origin Story to Explore the Golden Thread of Purpose

Many of us live unintentional lives and are unaware that our impulses and the things that excite us are rooted in our origin stories. Woods helps people “unpack who they are” and look through their personal history to find the common themes and motivations. “The golden thread is really the thread of purpose as it weaves itself through your life and helps create clarity and focus about what would be your next best step.” Many people set out on a path because it seems like the most viable alternative for them, but don’t know why. Woods believes that becoming conscious about one’s deeper intentions will help refine efforts. For entrepreneurs, this knowledge helps them to best market their product or service and to become aware of the next step to take for the company’s growth.

Staying in Positive Motion with the Purpose Flywheel

Coined in the book Good to Great by Jim Collins, the term ‘flywheel effect’ refers to the concept that successful enterprises are characterized by a process that resembles pushing a flywheel, a mechanism once used in large machinery to keep them going. Companies operate successfully by creating systems that enhance stability, resilience and momentum, even in volatile growth phases.

“The golden thread is really the thread of purpose as it weaves itself through your life and helps create clarity and focus about what would be your next best step.” - @hollykwoods
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According to Woods, the “perpetual motion” mechanism suggested by a flywheel also mimics the notion of the evolutionary impulse to improve as a means of filling the ever-expanding universe. That requires iteration, which requires feedback. In our own lives, we must continuously experiment, fail and receive feedback from the system in order to learn – a process that Woods knows well from working with clients.

Inspired by her experiences setting up “virtuous cycles” for her clients, she created the Purpose Flywheel, “a continuous series of learning loops” that enable startup founders and others to find clarity about their direction and keep experimenting toward success.   

Taking the Next Big Step Amid Doubt

When you have created something successful, the next step can feel daunting. Woods recalls working with a serial entrepreneur who had successfully built a $500M environmental cleanup company. He was about to exit and had no idea what to do next. During his work with Woods, he became aware of his next desired direction, an area in which he had been volunteering his services, but he had a crisis of confidence about his right to turn a passion project into a business. After working through those doubts and getting precise clarity about his purpose, he immediately started building his new venture, this time in an arena that reflected his purpose. 

“It is difficult to move forward in things that matter most, to reveal ourselves to the world, so we choose something that feels easier.” - @hollykwoods
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According to Woods, “It is difficult to move forward in things that matter most, to reveal ourselves to the world, so we choose something that feels easier.”  But, she adds, it is only when we are in alignment with our purpose that true innovation can happen.

In that spirit, she has created the Purpose LaunchLab Incubator for innovators and founders who want to get more clarity about their purpose and product.  By approaching new initiatives this way, many entrepreneurs are finding they can improve efficiency and profit, leading to more startup success stories.

To learn more about persevering through challenges, see if you qualify for membership and check out the webinar from August 12.

Put most simply, a moat is a competitive advantage which will make it hard for another company to compete in the market with the startup in question. Stein explains that “a moat can be legal or regulatory, or some other advantage that gives the company an edge in gaining and keeping market share.”

However, being able to keep that market share is key. “In defining the moat, the important thing in the description is it’s not just competitive advantage. It’s a sustainable competitive advantage. The word sustainable is really important.” It is this sort of moat combined with a good gross margin that signals a business’ long-term viability. To investors, Stein recommends identifying the moat from the earliest stages of consideration. Stein makes it a part of his own due diligence.

“A moat can be legal or regulatory, or some other advantage that gives the company an edge in gaining and keeping market share.” - @MichaelStein16
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Different Kinds of Moat

There are several methods for achieving a moat, some of which are industry specific, and some which can transcend industries. For technology companies, IP protections are one of the most important types of moats. Patent protection can serve as both a powerful competitive force as well as leverage in case of a potential buy out. For software services that exist in the cloud, trade secret protection can serve as an effective alternative to patents.

For pharmaceutical and medical device companies, FDA approval can serve as a sort of moat. While FDA approval does not eliminate competitors, having it can guarantee an invaluable head start in getting a product to market.

“In defining the moat, the important thing in the description is it's not just competitive advantage. It's a sustainable competitive advantage. The word sustainable is really important.” - @MichaelStein16
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Another kind of moat is being able to sell products on regulated markets, such as the military’s, overseen by U.S. Department of Defense or on commercial airlines as regulated by the FAA. An investor who sees approvals in place for the sale of products in these limited markets can be assured of an advantage.

There are also moats that are unconnected to regulations and laws. For instance, a company’s software product might be complex enough that it would be impossible to reverse engineer by anyone but the largest company. Additionally, a company can build a network or platform that is so large that it serves as a moat. This can occur when an economy of scale is achieved, so that the increased size decreases cost of production, increasing the moat as the cost to competitors remains higher.  

In Achieving a Moat, Differentiation Is Key

In establishing a moat, it is in product differentiation where companies will find the most success. But this is more than just offering a unique set of features or reportability options. Rather the differentiation that matters is that which will make a true difference to customers. Without IP this can manifest as pricing power. If your product is truly different to your customers, you’ll be able to charge a premium as customer lock-in comes into play and people don’t want to switch to an inferior product.

“As we begin to come out of the COVID-19 crisis, it is critical for investors and company founders to understand what the company’s moat is or will be.” - @MichaelStein16
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Moats have the potential to grow larger with network effect moat. This occurs when a product becomes more valuable the more people who use it. There are several different types of network effect moats. These include:

• Marketplace Network Effects: when the company benefits from bringing buyers and suppliers together.
• Data Network Effects: when the company benefits by gathering and providing user data.
• Platform Network Effects: when the company creates a platform and can offer a set of products for use on that platform.

Stein urges investors and founders alike to carefully consider moats from the earliest stages. “As we begin to come out of the COVID-19 crisis, it is critical for investors and company founders to understand what the company’s moat is or will be.”

Join Michael Stein at the upcoming Founders Network event presented by our Seattle Chapter to learn answers to key questions including:

• What is a moat?
• Why are moats central to early stage investments?
• What are the primary roles of moats?
• How can companies leverage the power of moats?

Register now or request an invite to see if you qualify for membership.

At the beginning of any startup, the focus is always going to be on closing the deal. It is a new startup’s job to prove the viability of its business model. But past a certain point, the focus must move from viability to growth.

It is true that SaaS companies are reliant on customer acquisition and retention for this. Mickey Alon explains, “product success can be measured based on product adoption and customer engagement metrics.” It might seem like the way to achieve this is via product-market fit, but that alone is not enough. “Building a new and innovative product with well-defined requirements, on time and on budget, does not guarantee success.”

“Building a new and innovative product with well-defined requirements, on time and on budget, does not guarantee success.” - @mickey_alon
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Rather, to achieve success, it is imperative that marketing and customer success are tied into product development from an early stage. Timing is everything, and nowhere is that more true than with customer engagement and product development. It is critical to tie the two together to accomplish real growth. Alon explains that it is a “product-led approach that allows your product teams to deliver valuable features to the market sooner.”

“Product success can be measured based on product adoption and customer engagement metrics.” - @mickey_alon
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Join Founders Network as we host Mickey Alon’s Global Keynote where he will discuss in-depth these critical considerations for all SaaS companies:

• Why timely engagement is critical to driving growth
• Why product-market fit is not enough on its own
• How to deliver a winning customer-centric experience
• How to implement a better product-led go-to-market strategy
• How to use product teams to lead your company’s growth

Learn more about the many upcoming events hosted by Founders Network and request an invitation to see if you qualify for membership.

To learn more about considerations for SaaS, see if you qualify for membership and check out the webinar from July 21.

The goal of the Founders Network Peer Benchmarking Reports for Tech Startups is to make these decisions faster and easier by seeing what decisions your peers are making.

About Our Members

For these reports, we surveyed Founders Network members. Our members come from all over the world and have gone through the Founders Network’s approval process, which vets founders for prior experience, expertise in their field, and their ability to add value to our community.

About 50% of our members are serial entrepreneurs and average 2.4 startups per person, so many of the founders we surveyed are likely to be on their second or third company

About the Payroll, Accounting, and Banking Report

For the first of the peer benchmarking series, we report on which payroll platforms, accounting firms, and commercial banking platforms our members use.

You’ll find insights like which stage your peers begin investing in specific financial services and platforms and which banks and payroll platforms founders reported the highest level of satisfaction with.

You’ll also find tips for how to get ahead of your peers by developing relationships with vendors that offer specific services and benefits for startups. 

Here are some of the insights we learned from the report:

The most popular platforms or service providers do not have the highest customer satisfaction ratings. 

Especially for younger startups, folks use brands they know, such as Quickbooks or Chase Bank — but these are not ideal for startups. In the report, we explain why.

There weren’t strong vendor preferences by sector. 

In all three categories, we didn’t see strong sector favorites. Enterprise and consumer startups were just as likely to use the same payroll platform or bank. In future peer benchmarking reports, we expect to see sector differences show up more starkly in areas such as legal firms and cloud computing platforms.

Download the report here! 

According to Alvaro Chacon, founder and CEO of the creative and technical digital agency Stateside, developing a long-term product development plan is important from the start. He recommends founders ask questions like: “How does your product development strategy fit into your business model? What is your technology roadmap and how important is security to you?”

Alvaro is equal parts business manager, strategist, and developer, having worked both on digital production as well as on marketing in ad agencies. Alvaro created Stateside to leverage his international networks and fuel global demand for high-quality digital solutions and talent.

During a Founders Network event, Alvaro will offer insights and advice about choosing development partners and/or building an internal development team.

To learn more about building an internal development team, see if you qualify for membership and check out the webinar from April 29.

Register at Founders Network and check if you qualify for full membership and get actionable advice on:

• Building a long-term growth plan and technology roadmap
• How to choose a development shop
• Advice on scaling a development team

What follows is an overview of Alvaro’s thoughts on choosing development partners and planning a product development budget.

“It's very important to think about your product development plan long-term. How does it fit into your business model?” - @foundersnetwork
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Freelance Developers Versus Development Shops

For founders interested in outsourcing development, the first decision they might make is choosing between freelance developers versus full-fledge development shops.

“There are a lot of startups that are bootstrapping and just want to build something real quick,” Alvaro explained in an interview. Money-conscious founders might go to Upwork or find cost-effective freelance developers outside of the U.S. to build out an initial product. And there are several known problems to this approach, such as unreliable quality and hit or miss deadlines.

But there’s a larger issue that Alvaro points to, as well: scalability. When your project is a one-off assignment for a freelancer, how sure can you be about the quality of the app’s databases, for instance? 

“Something that you’re never going to find with a freelance developer or somebody from Upwork is a QA department. So, when do you have to integrate quality assurance into your practice?”

As opposed to a freelance developer, a true development shop can have more skin in the game:

“The thing about a freelancer is that they can leave at any moment. And if you get ghosted by somebody in Argentina, you’re not going to get on a flight and try to find them. But when you work with a dev shop, at least there’s the accountability of a centralized place who will assume responsibility. And if that shop has a presence in the United States, that’s even better because they’re like legally bound and liable — they are under contract.”

The bottom line is that you want to build a long term relationship and “a freelancer is never going to care about your work or your company as much as somebody who is in-house or a partner.”

“Look for a serious dev shop that has redundancies, that has DevOps, that has not only quality control, but quality assurance.” - @foundersnetwork
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So, Do You Build An Internal Team or Partner with a Development Shop?

So, a dev shop is the way to go if you choose to outsource, but should you outsource at all? Or is it better to hire internally?

There are pros and cons to building an internal development team versus starting a long-term partnership with an existing dev shop. For instance, if time is important, how quickly can you find and hire quality talent? How many misses do you have to endure before you can find the right people?

Either way, you want to be thinking long term: having a growth plan in mind that includes things like how you’ll handle quality assurance or what might happen when you reach an enterprise level. 

It may seem odd to be thinking so far ahead, but the path you choose now will have a major impact on your ability to scale in the future. And these big picture questions are things that founders often don’t think to talk to dev shops about in detail.

Founders may choose to work with a development shop because they need the time to create a successful product and revenue model in order to attract investors. This approach can work well but, Alvaro warned, “Once you reach a certain critical mass, you might have to get rid of what you have and start from zero, and that will be more costly in the long run.”

If you do decide to outsource to an independent development shop, you want to look for “a serious dev shop that has redundancies, that has DevOps, that has not only quality control, but quality assurance.”

A hybrid approach that Alvaro often sees executed well is to keep the technical leadership in-house and to outsource junior work that is less pivotal to the product’s core functionality.

“I always say approach product development as you would approach building a house. There are going to be changes and new features that you don't expect.” - @foundersnetwork
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Tips on Developing a Product Development Budget and Growth Plan

1. Include maintenance and enhancements as two separate needs.

“A lot of people think that they’re just going to launch their website or app and that’s it. But in reality, there’s always going to be security updates, browser updates, and product enhancements.”

2. Budget for a project manager. 

Alvaro often sees small startups thinking they don’t need to pay for separate project management, believing that developers can manage themselves. “Ninety-nine percent of the time, you end up missing deadlines because there’s an underestimation of the amount of work needed to build something robust and large scale. A good project manager (and QA team) will help raise flags about potential problems much earlier.”

3. Budget 25-30% over what you think you’ll need.

“I always say approach this as you would approach building a house. There are going to be changes and new features that you don’t expect. Then once the product is built, you will want to incorporate all early-stage feedback as soon as possible which should be included in maintenance and enhancement fees.”

4. Make sure you own your own code and data

I have gotten calls from potential clients telling me, ‘We already did all of this work, but don’t own it so we don’t know how to retrieve it. Can you help us with that? We don’t want to pay for the work we already did.”

There are often many reasons that businesses end up in this situation, such as building off of existing platforms.

On the data side, folks try to save costs by building on a platform like Shopify. “Which is fine,” Alvaro said, “But do you own the data? And how can you migrate that data to other platforms? Because at some point, you may want to migrate that data to your own platform that you’re hosting yourself, but that could be an issue when you reach a certain level.”

5. Budget for a CTO or take the time to understand the basics of software development

“If you’re bootstrapping as an entrepreneur, it’s always good to just read a little bit about Github and code repositories, for example,” Alvaro said. If you’re able to hire a CTO, they can help you avoid pitfalls like not owning your own code or the dangers of not having quality code backups. But if you can’t afford a CTO, then, as a founder, it’s your responsibility to understand things like code source control.

When building a long-term plan and forming relationships with developers, Alvaro recommends you keep in mind that “there’s no such thing as a one size fits all, but the bottom line is that you get what you pay for.”

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