Scott Gerber of The Next Web recently published an interesting collection of insights from 8 successful young entrepreneurs, reflecting on their past experience of work with an offshore development team.
As you have probably noticed, most of the negative experience of entrepreneurs come from one main field: COMMUNICATION. Indeed, complicated, fragmented and delayed communication is the main disadvantage of a remote team, when compared to an in-house one. Small offshore design and development boutiques simply cannot afford a skilled project manager and larger outsourcing companies usually charge significant premiums for PMs’ work, thus making their services too expensive for a startup.
I stumbled upon this problem a couple of years ago, when I faced a similar dilemma with my own startup – and quickly realised that it can be easily seen as a market opportunity for a new type of firms in the industry. Those firms will act as a link between startup founders and remote teams, but are more than mere intermediaries or deal-brokers. They provide consulting services to the founders helping to shape the product vision and smoothen their cooperation with the team, while developers outsource to them the processes of sales and customer relationship.
The closest example from the neighbouring creative industries are talent agencies, which work with actors, artists, musicians etc. on one side and advertising agencies, media and movie producers on the other.
From this perspective each piece of feedback quoted in the aforementioned article can be seen as a requirement to such an Agency:
You Will Spend Extra Time Managing
The main HR asset of an Agency should be experienced project managers able to develop a decent product vision and control the working process on the ground level. This will largely free the founder from the need to micro-manage.
There Will Be Communication Problems
To solve this the Agency has to focus on hiring people who are both native speakers in the team’s language and fluent in English. Also the Agency’s front office has to be based in the same geographic location as the founders are – to make regular personal meetings possible. Cultural and communicational difference between the founder and developers is also a crucial factor for consideration, so it is important to constantly work on keeping both sides comfortable with the workflow.
You Must Clearly Define All Deliverables
This is almost impossible if your startup is any bigger than a single landing page. Startups need flexibility to allow the product scope evolve along with the founder’s understanding of the market. The only way to achieve this while working with the remote team is developing the product vision together – so the founder and the team effectively ‘co-own’ the product. This is why own startup experience is a key strong point in a CV of anyone looking for a PM job in such an Agency.
You Will Pay More Than You Expect
The relationship should be based on clearly designed contracts. Small projects with just a limited-scope MVP go better with a fixed-price contract. Larger projects can only be done on a Time & Materials basis – with the budget being regularly revised. The truth is that an advance accurate estimate of an innovative product is almost impossible.
You Need to Set Up a Regular Check-In Schedule
Ideally a founder should be able to see the work progress in real time. Fortunately there are lots of tools for this: Jira, Basecamp, Asana, Trello – to name a few. The Agency’s task is to make sure everyone in the team – including the founder stays on top of the progress to ensure effective communication and feedback.
You Need a Great Screening Process
The Agency must work only with carefully selected high-profile professionals with a minimum of 3 to 5 years of experience in the tech industry thus providing the first tier of staff screening for the founder.
Paying a Premium Can Go a Long Way
The Agency’s pricing strategy should not aim for the lover end of the market. At the end of the day, it needs to earn its margin. The cost efficiency should be achieved through carefully defining the scope of work, getting rid of all unnecessary features and perfecting the business processes. The consulting component of the Agency’s work should focus on carving the proper MVP – an ultimate challenge for founders – who tend to fall in love with their ideas and decorate them with more and more extra features.
Define the Goals, Expectations and Specific Tasks Your Team Will Take Over
In practice this is hard. Firstly because as a founder you have plenty of other things to do, apart from training your team: talking to customers, looking for cash, developing the business model, etc. Secondly because if you’re building a startup your product vision cannot be static. The only way is, once again, “co-owning” the product together with an experienced PM.
Startup is an extremely risky endeavour. According to the US Small Business Administration, only 3% of startups eventually survive and become profitable businesses. The founders of the other 97% may have a hard time returning to a “normal” job after having caught that almost incurable entrepreneurial gem. Work in this new type of company – a Startup Agency – may become for them an opportunity to use their unique startup experience to help other founders – and at the same time perfect their product development skills and earn money for the next attempt.