5 Tips for Startup Outsourcing, by Fernando Pizarro

Founder Feedback gives you insights from the startup trenches. In a story originally posted to the Cinecandy Blog, Fernando Pizarro, founder of Cinecandy, shares his lessons learned from outsourcing the development of his MVP.

"Ok – so you decided to outsource because you figured out in my last post that you have enough money, know a good developer, and have a very clear vision for your product, among other things. It’s not all over. Managing an outsource relationship is not a hands-off thing. It is far less forgiving than having a co-founder or an employee, and requires at least as much work, though the work tends to be skewed towards the requirements gathering phase and deliverables review.

Here are several things that I’ve learned along the way.

1. Get a fixed price bid

I’ve heard this argument go both ways – hourly bids properly compensate developers and keep clients reasonable, while fixed bids can lead to unexpected consequences. To me it is clear, however – as the paying party your interests lay with a fixed bid. Of course you should be careful – anything that sounds too good to be true usually is. But within the realm of the reasonable, a fixed bid protects you, and also incentivizes your vendor to work quickly – the longer it takes the less money they make, after all.

2. Spend twice as much time doing requirements as you normally would

Successfully outsourced projects hinge on well written requirements. There is no figuring things out on the fly. There is no pending features queue a la Agile. You need to figure out what you want built and define it at as high a level of granularity as possible. Do this after you have paper tested, done your customer development, figured out your theoretical MVP parameters, and settled on your design. Mock it all up – in detail. I confess that I did not do as much work at this stage as I should have – and it definitely added both time and money to my final bill.

3.  Don’t be tempted to add features – MVP rules still apply

This is possibly the most underestimated pitfall to working with an outsourced developer. You will usually have arrived at a scope based on a set of requirements, and that scope will include a fixed price bid. However, you will find yourself tempted to slip features in as part of the natural process of sharpening those requirements. Don’t. The issue with new features isn’t so much that they might cost you more (they don’t, necessarily), it is that they distract attention from the key focus of your product. You should be as disciplined about feature creep when working with an outside developer as when you are managing your own resources. If not more so.

4. Schedule regular check-ins

Outsourced developers handle multiple clients and prioritize work, much as you do. You don’t want to get put in the “difficult client” bucket by complaining all the time, but you also want to make sure that your vendor knows you are on top of things. The best way to do this is to schedule weekly reviews during which you ask after the various aspects of development. Because iterations are more widely spaced when you outsource, not knowing about a problem can have a larger impact when you only find out about it come deliverable time. So, even if your developer is out of sight and out of mind…have a call and encourage them to talk about what they are doing.

5. If you are not technical, make sure you get someone who is to review the product

Presumably one of the reasons you hired your developer is that you do not know how to code yourself. If that is the case, you are completely blind when it comes to the deliverables you get. Beyond the obvious – things that are broken – can lay many issues which will cause you problems later – everything from non-standard implementations that subsequent developers will have a hard time with, to structural issues that will affect your ability to scale. For this reason, you should absolutely get a friend or even hire someone to do a code review for you prior to signing off on the final product.

One way to think about the outsource relationship is that it hinges on the three variables that affect all development projects:  Speed, Quality, and Cost. A fixed bid caps your cost, detailed requirements ensure quality, and regular check ins encourage speed.

Good luck out there!"

Cinecandy is a website and suite of mobile applications that enable socially collaborative video, using the capture power of smartphones and webcams connected through social networks. They are a Graduate of the Silicon Valley Founder Institute. Follow Fernando Pizarro on Twitter at @fapi1974.