Should you find a technical cofounder or outsource?

Should you find a technical co-founder and give them 50% of your company, or should you outsource? Having now started or invested in >70 companies, here’s what I’ve learned…

I believe I’ve tried all the options.

I’ve had technical cofounders; Employed developers in-house; Outsourced to teams in… …Singapore …Vietnam …Poland …Ukraine …Myanmar …the U.K.

The key learning is that the best approach has two parts:

PART ONE

Before you recruit ANY help at all, make sure you know what to build.

Most aspiring founders do NOT know this.

If you are designing a solution using your imagination, this is you.

Please stop.

It’s almost guaranteed—unless you are an expert in solving problems with software (which you probably aren’t)—that you are wrong.

Instead, the best way to design a solution is:

1. Find the people you intend to sell to;
2. Understand their problem in minute detail;
3. Commit to solving their problem ONLY if…
4. they agree to:
   • Pay you something; and
   • Help you create what they need.

The key is in the word “solution”. There’s no solution without a problem, and by far the best person to help you design the solution is the person who has the problem. Or even better, 20 people.

PART TWO

If you already have a technical cofounder—with whom you’ve worked well before, and who is willing to commit as much time as you in exchange for half of the business—you’re in luck.

If not, I recommend not giving half your company to a stranger.

…and certainly not without a founders’ agreement. (You’d be surprised how many people do this.)

~60% of startup failures result from founder disagreements.

Instead, find a reliable tech partner, who can build something simple and replaceable, which will help you validate your assumptions and generate your first revenue.

This is absolutely possible – we do it on repeat at DQventures.

The best way to do this is as follows:

1. Get referrals to the very best tech providers.
2. Only accept referrals from people you trust.
3. …and who have worked with these people before.
4. Make sure they understand what’s required (see PART ONE).
5. Ask for a discount on the first phase of the project.
6. Agree to make up for that discount, with interest, in phase 2.

(Bonus: if they agree, it’s another sign that your idea may have legs.)

I don’t mind sharing that these days I only recommend the following:

1. For startup founders without a technical team: Blue Mongoose
2. For people looking for bank-grade, pro-code solutions in Southeast Asia or the UK: Elemental Concept
3. For people seeking bank-grade, pro-code solutions in South Africa or Australia: Warp Development
4. I haven’t found better but obviously do your own research.

Any other tech providers I should add to my list?

Good luck!