I have been wanting to write about this topic for a long time now, but I have been sitting on the idea because:

a) I am obviously a little biased. We run a software consultancy!
b) I dislike confrontations, and I know this won’t fly with some of you.

Hear me out…

It’s a common belief in the startup world that you shouldn’t outsource the development of your first app. It’s better to hire an in-house team, the thinking goes, because an agency will never care as much as an employee. The quality of work won’t be as good. You’ll be just another client to them.

I couldn’t disagree more.

I understand this argument. I really do. There are a lot of truly terribly agencies out there. Even if you find a good one, committing your app to another company can feel really risky.
But if you’re a seed-funded startup, hiring a full-time developer is even riskier. Here’s why.

The Risks of Hiring an In-House Dev

We have helped 20+ teams by building scalable, maintainable and high quality applications. Some of those companies first approached us with a code base that was “95% finished” and hoped we could hop on and quickly finish the job. When we ask why they haven’t completed and launched the application, they almost always tell us the same story: they hired an in-house developer, and that person left, wasn’t working out, or just disappeared.

Unfortunately, as soon as we start looking at the code base, it’s often full of spaghetti code, hundreds of libraries, crashes here and there, no typing, no linting, the list goes on. We usually have to suggest a full rebuild. (Note: We don’t do this to make more money — in most situations, a full rebuild is actually faster and cheaper for the client than trying to fix the existing code base!)

If you’re a founder, you’re now in an extremely tough spot. You spent most of your seed funding on a developer. That developer didn’t work out, and now you have to start from scratch again with less time and less money than you started with.

The Best Developers Are Already Taken

I know what you’re thinking. Of course hiring a bad developer is a terrible mistake. But what about hiring a good developer?

According to Silicon Valley Bank 2019 Outlook US Report, the number one issue startups are facing is access to talent. “More than 80 percent of US startups say they plan to add employees in 2019, but 29 percent recognize it is extremely challenging to find talent with the necessary skills to grow their businesses”

Sure, there are lots of talented developers out there. The problem is that most (if not all) of these awesome developers, just like startup founders (more on that later), want to minimize risk. They have bills to pay, families to support, and an extremely in-demand skill set. Most of them won’t be interested in working for a seed-funded startup that could shut down at any time when they have the opportunity to work for bigger, established companies that can offer more stability, better pay and huge perks.

Note: If you have managed to find that one developer in 1,000 who’s extremely talented and willing to work for you, congrats! Feel free to ignore the rest of this article… until that person leaves for a higher-paying job. 😄

You Can’t Afford the Risks of In-House… Yet

Startup founders are often seen as people who are willing to take a huge amount of risk, which is absolutely true — working on a startup is extremely hard and the chances of success are slim.
However, in the day-to-day, seed stage founders should be doing everything they can to avoid unnecessary risk.

Seed-funded startups have the time and runway to build and market ONE great application — but not two.
These companies cannot afford to waste 5 months of time and money on a code base that needs to be scrapped. But I’ve seen this exact situation again and again with founders from all kinds of startups.
Hiring an established, reputable agency to build your app is actually the least risky choice.

Why an Agency is Less Risky than a Hire

The product you offer will make or break your company.
Getting users to actually download and use your application is both critical and really difficult to do. A great application will impress your users, keep them engaged and bring them back. A poorly-built application is the best way to make your users uninstall your app seconds after they downloaded it and never look back. Demoing your product to an investor and having it crash (or work in a very limited way) is a very good way to minimize your chances of getting that glorious Series A.
That’s why I truly believe the right choice is to work with a reliable agency, one that’s trusted by other startup founders and the development community.
(The only exception to this is if you or a co-founder can build the product yourself. In that case, I fully agree that you should keep development in-house.)

If you aren’t a technical person, it can be very difficult to determine whether a developer has the specific skills your company needs. Even if you succeed in hiring someone, there’s no guarantee that person will stay long enough to complete your app.
But if you partner with the right agency, you are pretty much guaranteed to come out the other side with a workable, functioning app that you can take to market.
You’ll have a product that’s functional and engaging to end users.
You’ll have a product that will look good and that you can demo to investors.

When the time is right, you’ll have an experienced agency that can help you smoothly transition your code base to your newly-hired engineering team.

When Is the Right Time to Build an In-House Team?

Being seed-funded is a great achievement. It means that the company you are building seems promising to people outside of your team.
With seed funding, you have the capital you need to take your company to the next level, transform your prototype into a real application and start growing. But it is absolutely the wrong time to hire an in-house developer.

So when is the right time?
We believe it’s when you raise your Series A. With Series A funding, you’ll be able to offer competitive salaries, great health benefits, free food, and many other perks to help you attract great developers.
But until you reach that milestone, remember that seed funding is the starting point of (almost) all great tech companies — maximize your chances of success by working with a reliable and established team to build your application.
And when the time comes to build out your team, you’ll have a solid code base that your future engineers will be able to build upon, maintain and scale instead of scrap.