Starting a Tech-based Business
Today, starting a business usually requires backing by some form of technology. In this article I export the different options you have to create a solution when that requirement extends beyond a web site or market place.
On the Internet you will find many services that are designed with non-technical people in mind. Generally these services allow you to create your own web sites and market places by simply selecting a template and filling out a set of information that will be used to build you your online presence.
At a minimum, most businesses will need a web site to provide that web presence. This lets the world know who you are and what you can offer. In the case of your business selling something, you may also need an e-commerce solution that allows your web site to market and sell your product.
The majority of start-up businesses fall into this mould and can leverage the myriad of no/low code development platforms offered through 3rd party online services.
However, as soon as your need goes beyond a web site or market place, you need to look at other options for developing your product platform. Building your own web application gives you far greater flexibility on what your product can offer beyond the mainstream and you can decide where your product will go without being locked into the templates of the generic 3rd party services.
Your Options
Once you decide to build your own platform, you may be wondering how to get one built. You have several options and depending on your level of experience with creating tech-based products, these options may be more or less attractive.
- Using Sticky Tape
- The Offshore Gamble
- The Onshore Gamble
- Call a Friend
- Try it Yourself
Using Sticky Tape
The Sticky Tape option, as I like to call it, is where you look at a set of 3rd party services provided on the Internet and then stick them together to form a product.
In technical terms, this is called service integration but I call it the Sticky Tape option as it can be quick and easy but also messy and does not work in the long term.
This is how it goes.
You decide what you want your product is going to do. You look around the Internet and find a set of service providers that offer the services you need to stick together to form your product. Linking these services can be easy if the service providers offer the right integrations. If not, you may need to go to another service provider to provide the services required to stick them together (the sticky tape providers).
Sticky Tape Pros
- Low cost – the great thing about the Sticky Tape option is that many of these services provide free options.
- Rapid start up – most service providers provide online sign up and this means you can have your product up and running quickly.
- Professional quality – as the service providers rely on the quality of their product to sell them, they are generally highly polished and professional.
- Feature rich – to attract more users, the service providers enhance their services with more and more features, far more rapidly than you can.
Sticky Tap Cons
- High cost – whilst the services are initially free, as soon as you start to scale, you will pay the price for all those independent services wanting a slice of your revenue pie.
- Everything in the box – your solution is constrained by the service providers and you may not be able to work outside of the box.
- Frankenstein’s monster – the branding and look and feel of your product will generally reflect the patchwork quilt of service providers you use, diminishing the value of your own brand.
- Barriers to exit – it can become an expensive and time consuming exercise to try to break free from your service providers as your users expect the same level of functionality as the 3rd party services provided.
The Offshore Gamble
When you decide that the solution you want needs to be fully integrated, outside of the box and having a consistent brand, you realise that the Sticky Tape solution will not work for you and you need someone to develop your product. What needs to be developed is the subject of a different article but for now we can assume that you want a team of software developers to be at your beck and call to build your product – preferably at a low cost.
Even outside of the software industry, people know that labour is cheaper overseas and that a lot of software is developed in places such as India, Eastern Europe, Africa and other places. Many founders are tempted by the low rates and quickly find themselves being courted by onshore agencies offering access to offshore development teams.
Once you decide on a supplier, you provide your requirements, get a quote and receive your shiny new product some months later – or at least, that’s the theory.
Offshore Pros
- Many options – there are hundreds of millions of developers out there and so competition is high and you will find there are many options to get your product built.
- Low rates – with high levels of competition, rates are generally low, even considering exchange rates and commissions.
- One stop shop – the onshore agencies will offer you all the services you require and will deliver you a finished product.
- No single points of failure – if a developer leaves, there are generally many to take their place.
Offshore Cons
- Efficient is low – whilst rates are low, the amount of hours you require to develop your product can be higher, leading to higher than expected costs.
- Hard to manage – different legal jurisdictions, different timezones, different languages can all lead to miscommunications and difficulties managing the build, especially if things go wrong and you are denied access to your product, which frequently happens.
- Developer switching – you may be enticed by the experience and capability of a development team but that A team may be switched out to move on to a higher paying project, leaving you with the B or C team – and you may not even be informed.
- Priority switching – whist your product is the most important thing in the world to you, to the development team you may be one of the lowest revenue making projects and hence a very low priority leading to unexpected delays or even non-delivery.
The Onshore Gamble
Looking at the problems that offshore development can pose, you may decide onshore development is a better option. By using an onshore development team, you can meet them, look them in the eye and make better decisions. Whilst rates may be higher, overall cost may be compatible due to efficiencies, scope management delays and so forth.
Onshore Pros
- Local – you can meet the team and make your own judgments on their ability, capability and capacity.
- Better communications – the same native language, same or close timezone and the same social context leads to less mis-communications and greater transparency.
- Easier to manage – you will have greater ability to influence the local team and to apply legal pressures if required.
- Greater passion – the team gets to meet you and this provides you the ability to instil a greater sense of passion, urgency and motivation towards your product.
Onshore Cons
- Hourly rates – hourly rates will be higher and even with greater efficiencies, the overall cost of the project may be higher too.
- Offshore by a different name – enticed by the lower rates overseas, your local developer may use offshore developers to complete ‘the boring bits’.
- Premium service – by selecting onshore development, your developers may consider you have a higher budget than most and they may provide premium levels of service that you do not need rather than the budget service you can afford
- Fewer suppliers – it can be difficult to find onshore developers that want to work within your budgetary constraints.
Call on a friend
Both onshore and offshore development teams may be well outside your budget or may present a level of risk you are not comfortable with. In many cases, founder are well connected. They have friends and friends of friends and in that network someone is likely to say that they are a developer and would be happy to develop your product for you.
Many products start this way and it can be very successful strategy. The developer brings the technology and the engineering experience to the product whilst you bring the subject matter expertise, user requirements and sales and marketing capability. Such a team can be formidable in what they can achieve.
Call on a Friend Pros
- Rapid – by being in sync, ideas can rapidly evolve from the ideas stage through to production.
- Cheap – friends may do it for free, for a token payment or for equity, lowering your cashflow requirements, which is critical in the early days (note that equity deals can be problematic and are the subject of another article).
- Flexibility – you can define your own way of working with your friend that suits both them and you for maximum throughput.
- Agility – working with your friend, you can rapidly change direction without worrying about contractual commitments, fixed scope, quotes and lost productivity.
Call on a Friend Cons
- Single point of failure – should anything happen to your friend or your friendship, you can be left with a half built product that can be expensive to restart or, worse still, no product at all.
- Time poor – if your development is being done as a favour by your friend, you may find their availability is highly variable and sometimes does not fit in with your plans.
- Lack of experience – being a single developer, the range of solutions that your friend can provide is limited to the range of solutions they have experience building and they may not have time to learn anything else.
- Lower quality – the limited team size can result in lower quality as many ancillary processes are not put in place to produce a professional result.
Try it yourself
Facing the difficulty of finding someone to build their product, some founders believe they can build it themselves. In some instances, you may possess the technical skills to do this. You may have already built a prototype and now want to make this into a saleable product. You may decide that, having the skills, you are going to do this yourself.
Doing it Yourself Pros
- Your product your way – you get exactly what you want with no need to influence, argue with or convince others.
- Highest priority – you decide the level of effort and the priority of the development without having to consider the needs of others.
- Lowest cost – particularly true if you have another paying engagement and you are developing your product in your free time.
- Flexibility – you can define your own ways of working and change them at will.
Doing it Yourself Cons
- Start-up myopia – without external input, you can build the perfect product that no one wants or needs.
- Perceived skills – may people who have written Excel macros believe they can write code but, in practice, professional quality development takes much more than simply writing lines of code.
- Flexibility – with no one to hold you to account, your development can drift, hit dead-ends and end up on the shelf or never being finished.
- Too much to do – as a founder you will soon find that the work to nurture and build your business leaves little time for development and vice-versa, leading to a failed business either way.
Conclusion
This article has looked a the different options that are available to you as a tech-business founder to build your product. It has presented 5 options for building that perfect product and looked at the pros and cons of each.
Requillion Solutions was started to help out a friend. Since then it has worked with many start-ups that have faced different problems in getting their product to market and that have used each of these options.
They have tried the sticky tape option and found the complexity of data flow, process flow and decentralised user management difficult to manage and later found the cost of the barrier to exit prohibitive in moving forward.
They have tried the overseas gamble and lost, finding offshore interest can quickly wane in their project and have been faced with continuous delays and even the threat of holding their code for ransom.
Several have tried it themselves only to find that the actual level of technical skill required is much higher than they thought and that the learning curve has been so steep that it has held them back from promoting and selling their product.
Deciding on a way forward can feel like an impossible task. If you do not have any prior experience with software development, it can be a minefield with many unknowns.
There is no silver bullet and a lot depends on your level of cashflow, funding, conviction and the commercial viability of your product. The option that is right for you may be wrong for others.
If you are unsure what to do, book a confidential, obligation-free consultation with me here and we can discuss your options.
website: requillion-solutions.com.au