There’s an assumption that all startups must build everything in-house.
But as competition for technical talent increases, more founders are hiring external development teams to deliver their products to market faster. In fact, many of these startups continue to work with an external development team even as they grow their internal team.
I’ve been fortunate to see both sides of this dynamic. At Google, and during my time at startups, I often worked with external development teams to build new products. And today, my team has been hired to build products for both fast-growing start-ups and large tech companies. These experiences taught me how to identify when it’s the right time to use an external team and how to pick the right partner for your company.
Below are some of the most common reasons for choosing to build your product with a ready-to-go team and how to enhance the relationship.
WHEN YOU WANT TO MOVE FAST, BUT DON’T HAVE A TEAM READY TO GO
Founders who raise money early on can often find themselves on a timeline to develop a product — without having a team in place. Once their funding goal is reached, their focus shifts to the true milestone: converting those funds into a successful product launch.
One way to achieve this is by building an in-house team. This process usually begins with the founding team, which are some of the hardest roles to hire for. They are people who are highly sought after, who work well in ambiguity and are willing to take on a big risk. It’s not uncommon for this process to take six months or more to find the right people. And since these are key hires, they are often a gating factor to hiring the rest of the team. As a result, hiring an internal team can add significant lead time to launching an MVP.
For most startups, long lead times present a significant hurdle and slow down the process of establishing product-market fit. Hiring an external team cuts this process short. With a trusted network, the right external team can be found in a matter of weeks, and deliver a fully working product in a few months. While the product is being built, you can work to build your own team.
WHEN THE PROJECT IS OUTSIDE YOUR COMPANY’S CORE PRODUCT
At a former job, we had a bias toward building everything ourselves. With tens of thousands of engineers, we thought that if it was code, we could do it better. Before too long, we started building contract management software and shuttle scheduling systems, training software, and menu-creation systems. These systems and tools helped support the broader company but were outside its products. For this reason, they were rarely properly staffed and engineers were frequently pulled back to work on core products, leaving many projects unfinished. We quickly realized it was in the company’s best interest to work with an external team to build solutions outside of the main products.
We see this pattern a lot with platform companies. While their engineers focus on building the platform, external teams are often brought on to build applications or integrations that sit on top of their platform or manage deployment for customers. As your company scales, it’s critical to focus on your core product. For everything else, consider buying an existing product or hiring an external team.
WHEN THE SKILLS YOU NEED TO HIRE FOR ARE NOT ONES YOU CAN EVALUATE
Not all startups have a technical co-founder. Many founders are brilliant in consumer goods or marketing, but haven’t had any experience in hiring and building engineering teams. This can lead to hiring people with the wrong skill set and could delay the product significantly. One startup I worked with needed someone to design mocks of their product. Without prior experience hiring designers, the founder hired a UX researcher. They ended up with a great research paper, but no UI design for the engineering team to execute on.
Product development teams often have years of experience working with each other, and a disciplined process that results in fast go-to-market speed. Their work across sectors and industries means they can see common patterns, build a first release rapidly, and switch experts in and out as the project develops.
WHEN NOT TO BRING IN AN OUTSIDE TEAM
These are some of the most common situations where I observed companies find benefits in hiring an external development team. There are also times when bringing in an outside team might not be ideal. Do you have clarity around your product vision? What pain point does your product solve? What market are you targeting? Fundamental questions like these should be addressed before you engage a development team. Similarly, for later-stage companies, is hiring one of your company’s core expertise? Or furthermore, is your hiring running ahead of your product? If you have engineers and product leads in-house who are available and have the required skill set to lead the next project, it would be more efficient to staff internally.
While these are some of the most common examples, it’s important to remember they are not hard and fast rules as every company will have its own unique needs and circumstances.
Co-Founder and CEO of Fluxon, a global product development company that helps startups build and launch their product to market.