What should a non-technical co-founder offer, to attract a good technical co-founder?

Essentially, when encouraging a techie to give up a well-paying job, you will have to convince him/her that they have a better chance of creating wealth as your business partner than as an employee.

Logically, what techies will be seeking from non-technical co-founders are the aspects of business that they may not have an interest in, or may not have the experience or competence in. E.g. understanding of domain, understanding of fundamentals of business, sales skills, operations management competence, etc.

To convince techies to join as co-founders, non-technical founders should be able to convince the techie that he/she has what it takes to create value  & wealth for the team.

Even in startups which are heavily dependent on technology or technology platforms, just technical competence is not sufficient for the startup to become a strong ‘business’. 

Start-ups with well-rounded teams that bring complementary skills to the table are likely to have a a better chance at success.  E.g. a techie + a business person + a marketing/sales person would be considered a fairly well-rounded team.

Is it better to hire a web designer or outsource the design and UI work?

Here are my thoughts –

  • When you work with on outside firm, you save by not having to hire a person and have them on staff for this purpose. The design won’t be too altered, so outsource is a good option. One can maintain the site internally once it’s done and delivered.
  • By hiring an outside firm, you also get the expertise and know how of a firm, that has hopefully been doing this for a living and for a while. They can offer you a range of solutions both in case of information architecture as well as design for the website. And the designs that you will receive are from a group of designers and not just one individual.
  • It is not always necessary to outsource to local firm /freelancer. For most web development projects there’s no need to see someone in person, especially for a smaller site. It can be done via phone and emails.
  • Design work will slow down after a month or two. A freelancer is flexible enough to pick up work as you need. You only need to pay a freelancer for the work they do. There is also a range of skill levels available to suit your budget.
  • If you are a developer, then you should ask the design agency/resource to provide you with static HTML pages. Paying for more (working templates) is not worth it, because you’re going to be modifying those over the life of your business; your employees need to know and love how they work. Paying for less is risky because it can be time-consuming to translate a mockup into a working HTML page (browser, screen-size compatibility, layout issues, etc).
  • Make sure you wireframe before you even think about look and feel. You can do this yourselves if you have prior experience with UX design. If not make sure your designer is skilled in that area and isn’t “just” a graphic designer.

Would love to hear your views…

The importance of a good UI

Just like customers/consumers form perceptions about the company by looking at its office or retail outlet, in the online world, a great looking website/portal/application is the first experience that your customers have with your brand.  How they perceive you is likely to be influenced quite significantly by the quality of your UI and the overall experience of your online property.

Users don’t care about what’s lies underneath, but what they actually do and what they see, feel and experience. In other words, it is the quality of the design that affects the business results.

A good design and interface not only the impacts consumers, but can also influence the decision of potential investors.

From a non-designers perspective: a good, well thought-out and executed design is subliminal, yet very powerful. Product User Interface (UI) and User Experience (UX) – regardless of web, mobile, or software – and it’s ease of use is one of the critical factors with respect to its popularity.

Question by an aspiring entrepreneur: “How do I build a startup with no technical knowledge and little capital?”

Technical knowledge is not a necessary condition, and certainly not a sufficient condition, for starting a venture. A product/solution is an important aspect of any venture. However, it is equally important to have an understanding of the dynamics of the business around that product and the competencies & skills required to implement that business in the market. That will determine the success or failure of your venture. 

two 3d humans keep gears in hands

 

 

 

 

 

 

 

Of course, if you are technically qualified to build the product or service, it is ideal. However, product development resources can be hired, or the product development part could also be outsourced (depending on how critical it is to keep the product development component in-house). One way to fill in the technical skills gap is to find a co-founder who can lead the product development and product management piece, while you lead the business part of the venture.

It is important for you to think clearly about what problem you are solving or what opportunity you are addressing. Once you have clarity on that, and if that area interests you, then you can start thinking about the right solution to address that opportunity. You can then think about what is the most appropriate way of building that product – outsource, build a competent team or get a co-founder who can build the product for you.

Moreover, a great product is not a guarantee for success of the venture. A moderately good product with a great plan for the business around that venture is likely to lead to better chances of success than a great product with no plan about how to convert that product into a good business.

Think of all the critical components, apart from the product, on which the success or failure of your business will depend. Some of these components – marketing (positioning and how you make your message heard by the appropriate target audiences), sales (how do you convert your customers), business model, revenue streams, operations management, and the overall business case, etc. In ventures like e-commerce, aspects like procurement, supply chain management, warehousing, logistics, etc – become important. In certain domains, partner relationship management, after sales service, customer experience (e.g. in a restaurant business) and customer relationship management (especially in categories where the business case depends on the lifetime value of a customer i.e. repeat purchase). Each business will have its own dynamics and key drivers for success. You must have the ability to think through these, make an assessment of what is critical, prioritize it, determine your focus area and then make a plan to implement it in the market. And of course, you NEED to have the competence of executing that plan well in the marketplace. That is critical.

 

Happy Venturing!

 

 

 

What percent of equity can be shared with a company that develops the prototype of the product?

See if you can pay in cash. Only if it is just not possible to make cash available to pay for prototype, then consider paying in equity. At the prototype stage, when the risk is the highest, the vendor should have a significant upside in case the venture takes off as expected. 

 

If on an equity model, I would suggest you look at the total amount required to build the prototype, and give a 3x – 5x of that in equity value at the time of the 1st round of funding. E.g. if the estimated cost of prototype is $10,000, and if the equity is agreed at a 5x, then if the angel1st round is raised at a valuation of $500,000, then the vendor should get 10% equity at the time of the funding. Ordinary shares.

(The negotiations get complicated and difficult to value if the equity if the basis of returns are for the 2nd round of funding… i.e. if the vendor and you agree that he should get about 5x or 10x of the cost of prototype development in the 2nd round, then the amount of equity will vary significantly based on what the expected valuation of the venture at that stage would be… and that’s a difficult one to agree on… the entrepreneur, naturally, will be super optimistic while the vendor may be a bit more modest in estimating valuation in 2nd round).

However, before you embark on your prototype stage, I would urge you to think hard about the business case, validate the concept with potential customers/users, work out your cash flow and fund flow needs, think of what this is likely to scale to and see what the financial outcomes of this are likely to be for all involved… including the vendor.

Hiring technical resource for Startups

Many developers love working for startups and some who will only work for startups. Good startups.

Hiring for a startup is like any hiring: your network is easiest, resumes hardest. You can do a few things to limit the field and attract the right folks if you’re gathering resumes:

  • Find places to post your requirments  frequented by startup types
  • Remember being a startup is major selling point, say it loudly and often, and ask for startup experience.
  • Ask for technology experience popular in startup circles, i.e., not .NET, not JEE.

Elance can work for assembling a programming team, but it’s not a great solution as their contract requires you keep Elance as a middleman for future work between the same two parties

If you’re looking for alternatives for finding outsourcing, try also asking on Quora who are all the great developers that build early product versions for early stage startups.

 

Should a start-up outsource Software/App Development?

If coding/ development is not your core competitive advantage or the driver of your business you’ve no resource capabilities and time for that, then you better outsource it to some good firm, specialized in serving start ups.

However if the technology is fairly off-the-shelf development, say wordpress customization or a standard shopping cart application, then it might make sense to outsource it to a firm which specializes in that area.

But being a start up, do a lot of scrutiny and analysis of the company you are going to work with, remember outsourcing is not a simple customer-vendor relationship, it is more of a partnership, and an engagement which is based on mutual trust, needs understanding, and team approach.

Also it depends on the startups expertise in managing outsourced projects. If it’s something you’ve never done before then it can be much harder to do it well.

But make sure that you are pretty clear with your specific project as well as business requirements before you outsource, and ask as many questions as you can if you are new to this; for example ask questions and details about proposed project management and planning to the payment modes, to the payment mediums, or calls/ meeting schedules and so on. The more clearly you share your expectations beforehand with your potential vendors, the more likely you win with a successful outsourcing campaign, and then you can reuse that.

Astartup is based on the vision of the founder(s). Success of this vision depends on how clearly the founder(s) is/are able to articulate his/her/their vision to the team including the developers. Having a development team in-house constantly absorbing the founder(s)’ vision, and possibly even providing feedback to the founder(s), is invaluable.

Initially it may seem like a good idea because of the money saved on benefits that would normally be paid for a full time employee but if your startup will be doing any amount of coding, it’s not wise to outsource this function.
But, if you’re truly seeking the commitment of a team member, then outsourcing may not be the right step for your start up.

 

Startup should outsource if:

  • you don’t have any in-house talent in the first place and have found the ideal outsourcing partner: one you can trust like a member of your team. one that can scope your project and meet your vision. has a track record of delivering on time/on budget, can bootstrap an in-house team for future iterations..
  • you are in a hurry (it takes time to build a team)
  • you don’t want/can’t commit to the long term cost of an in-house team too early or your product once built won’t require the same level of talent to maintain
  • you own the code/IP outsourced and can bring it in-house at any time
  • your tech lead is used to dealing with outsource partners

Startup should hire if:

  • you have a tech lead that already knows how to build software in-house (processes, environments, etc…) and is good at finding top engineering talent
  • you have the money and time to hire and equip the team
  • your product is going to grow in complexity and will require long term in-depth expertise that is hard to pick up
  • your vision of the product and its purpose are not settled (ie. you need a lot of prototyping)
  • your startup is all about software

Is it prudent to consider SAAS platforms for startups?

SAAS or Software As A Service platforms like MartJack, Shopify, etc. provide a quicker and far less expensive way to test your concept. However, many of the SAAS platforms may not be appropriate as your business scales up. The most common reason for not using SAAS platforms is because by its very nature platforms are ‘generic’ and not ‘custom designed’ for your needs. I.e. you may have to live with some of the limitations, or forgo some of the features that you needed.

As always, your decision should be a well-thought out with pros and cons debated thoroughly, and the final decision should be taken purely on the business needs.

In the 2011 and 2012 time period, we have seen a number of e-commerce players using the SAAS platform to launch quickly, get traction, build the foundations of their business – indlcuing customers, and then raise the next round of funding to build a more robust and customized product.

This startegy also allows the startup to test the concept, understand better their tech needs as well as gather the resources to build the most appropriate tech platform. Of course, it allows them to launch faster.

However, if the tech platform is going to be the core of your business, obviously a SAAS solution may not work.