Why you should NOT hire in-house developers when starting a software business
Starting a software business without hiring in-house developers! Am I nuts? Last I checked, social distancing has yet to make me crack.
If you have been cooking up startup ideas (while staying home), and on the way to assemble your A-team, read on.
When you are in the early stage of working on a software product idea, hiring developers should not be your top concern… yet.
The most obvious reason is cost.
Hiring developers can cost an arm and a leg (literally)
Unless you have co-founders who are software engineers, willing to burn the midnight oil for free, even without COVID-19 and the impending recession, keeping a few developers on a payroll can burn a hole.
The average software engineer salary in Singapore is S$ 56K a year, or S$4–5K a month.
At the bare minimum, you will need a few: one or two to do frontend, another one or two more to do backend. The expenses quickly add up with more people added to the team.
In addition, there is usually no lack of well-paying and fulfilling career opportunities for good software engineers to pursue at established companies. The competition for people with this skillset is fierce, which often calls for competitive compensation packages.
Forget trying to hire people, are you sure your idea is worth cracking the code?
When talking to my aspiring entrepreneur friends, many times, I find that there is an over-enthusiasm on implementation. In fact, if the founders are software developers, they might be in a greater hurry to have the how-to-implement talk instead of the why-do-we-even-start talk.
Friend A: I want to build a platform that does X. It has Y, Z features. Do you code, or do you know anyone who does?
Friend B: We want to build a software that does X. It has Y, Z features. We want to make sure the architecture is scalable in order to support future expansion. Gonna get another guy to come in and take care of the front-end bit.
Hold on a sec. What is the problem that is being solved again? Don’t quite get who is experiencing this problem. Is it really painful? If this product is built, will they use it? Will they pay for it?
When you are working on an idea, you probably have an assumption or two to answer the above questions. Before bringing in new people whose expectations you have to manage, and doubts you have to answer, why not make sure the assumptions are on the right track?
Many times, validating these assumptions does not require building a full-blown software. There is a component of desk research, a lot of talking to users, showing them drawings, sketches, videos, any form of mockups that illustrates the idea without actually coding anything. In some cases, you can run some online ads or launch a simple landing page (via Wix) just to see how many people click to see more, a totally doable way to gauge the interest level.
Imagine getting a bad response after running these tests. Pivot to something new. Scrap the idea. No harm done. For a more detailed explanation of this concept, check out “The Lean Startup” by Eric Ries.
Ready to start development but still not quite ready to have a few developers on your payroll?
Okay, some of you who reach this section feel like you exhausted all of your resourcefulness to validate the assumptions. It is time to slowly build up on what you have, and let users give feedback on “the real thing”.
If you are still on the way to get enough seed funding or to look for your fellow “zealots”, perhaps, a short-term solution is to outsource some of the development work to a software development company.
There are usually less strings attached. The engagement can be project-based; requirements are defined upfront, and timeline is fixed. There is also an option to hire dedicated manpower in a fixed period.
For example, you can pay a software development company to provide you with 1 front-end developer and 1 back-end developer who will work with you full-time for 3 months. It is up to you whether you want to scale your manpower need up or down.
There are, however, caveats to this approach, which will be stories for another day.
Eventually, a software product business still needs an in-house development team
An in-house team provides a much faster and consistent response to market and product requirements. Fast-forward to when the business is growing, an in-house team helps establish a structure, a process, and an organisational know-how that lay the foundation for stability and scalability.
At the beginning, the emphasis should be on the value proposition of the product. And there you have it: why you should not hire an in-house development team when starting a software business.