A post came out recently from the successful investor Aleksandr Dresen. In it, he basically outlines the reasons why a startup without a tech co-founder is not fundable. Interestingly enough the points he uses to motivate his logic are based on a case strangely resembling one of the startups brought to live by Obecto’s Technical Cofounder as a Service. And while we 100% agree with Aleksandr on the premise that founders with no tech team on board are having much harder time realizing their vision (that is why we came with technical cofounder as a service in the first place) we could not but disagree on the rest of the points from Aleksandr’s post.
This motivated our CEO, Todor Kolev, to comment on the post, answering the concerns addressed by Aleks and some that founders with no tech cofounder are struggling with. Which in turn motivated our team to turn our CEO’s comment in the following blog post.
Whether your position lies with Aleks or Todor, we believe that the topic is important enough to reach more entrepreneurs so they could join the discussion.
…Here it goes.
Good post, Aleksandr! Exactly to the point 🙂 Actually while reading it, I thought you are talking about our Tech Cofounder as a Service offering at Obecto ;)…
… The article starts with a great observation – a lot of startups work with software studios because they just don’t have the skills or the network to hire a tech person. Here are some questions non-tech founders ask themselves and the Obecto’s answer of their concerns:
Founder (F:): How can I know if a developer will really do the job? Everyone says he is the best engineer on the planet! How to do a tech interview since I have no idea where to start?
Obecto (O:): We provide CTO-level expertise to startups – help with recruiting an appropriate team, scoping an MVP, consulting on the strategy, establishing a work process and guiding the tech decisions. Startups initially only cover the expenses for the developer rates. Our CTO work is not billed until the startup starts making money or finds an investor.
F: What if I join a developer, give him equity at one point and then he decides to leave and join a better-paying company? Probably he believed in the idea in the beginning and joined me because doing a startup is cool. But what happens after we dry out and there are few months without salary. Yes, our startup idea is cool but statically speaking we have just 10% chance to succeed and this outsourcing company offers my tech guy a good check. If my tech guy leaves I will have a person on my cap table that is now completely disengaged and out of the company. Can I find an investor with such a cap table?
O: We are not taking equity and we are not on the cap table. The founder can switch to other CTO or internal team at any time without any complications. In the same time, we are fully motivated to make this startup successful, the same way we were going to be motivated if we had equity in it. After all, we make a profit, only when the startup is successful.
F: What if my tech guy is not doing the job and my startup is failing mainly because of his incompetence? How can I join a better one if I already gave equity to the first?
O: We work with a special breed of developers who have already escaped the corporate world and are working remotely for tech startups as freelancers. Most of them are already dreaming of doing a startup themselves. These guys are times more motivated and experienced in the field of building a startup compared to any nine-to-five employee in any outsourcing company. If a developer decides to leave and work on another project, we can quickly find a substitute and do the knowledge transfer harmlessly, since there is a CTO who is overseeing the development from our end.
F: What happens when my startup get traction and I want to hire the developers to work for me as in-house devs?
O: Once the startup gets traction and hopefully an in-house CTO, we assist the founders in hiring their team internally. Again, the team is not from Obecto employees, but from a network of freelancers, so we have no concern. We are doing whatever needed in order to make the startup successful.
As you see all these questions can be addressed and a great new billion dollar startup can be born following the already established path of getting a brilliant idea, find a tech fellow, struggle together and become successful in few years.
The only problem is that it’s not what happens in reality and you have already noticed it. The Silicon Valley’s standard model works mainly in the Silicon Valley and for a very specific group of over enthusiastic, badly planning college dropouts. There are so many competent founders over there, who are again building digital products but they are not inventing the next hyper-efficient compression algorithm which Google wants to buy.
There are many domain experts, ex-high-profile corporate employees, and people with a child dream and some savings who, as I’ve seen from my practice, are not much worse entrepreneurs compared to the overenthusiastic, badly planning college dropouts. All these guys just want to get their dreamed product built and they don’t really feel as looking for their perfect tech soulmate before doing any progress.
This is the reality, as again, you have also noticed yourself. And now we have the choice to either kick these people out of the holy startup industry and keep the investment gates closed for them, or invent a way to give them a chance and let them build their products even though their CTO position is still not fulfilled. This is what I will call a democratization and a disruption in the way tech startups are built.
I’m personally interested in exactly this kind of disruption. My company, Obecto is working in the past almost 8 years to crack this exact problem – how to enable everyone to build his dreamed tech startup.
Making a startup is no longer reserved for the elite group of college dropouts living in 20 miles radius from Stanford. Humanity needs to innovate as never before and a lot of “ordinary” people should become entrepreneurs of some sort in order to survive the coming work automation apocalypse.
So after all these years, I believe we are on the right way on how to disrupt the process of building a tech startup and making it more democratic and accessible.
For more details, you can check the story of a startup we helped with this model. We helped them find a developer, focus the effort and build the product. Now we are assisting the founder in hiring the developer directly because this is in the interest of everyone: http://www.obecto.com/make-your-startup-fundable/
Also, we are not alone. Few other startups which are trying to crack the same problem appeared just recently. Here is a comparison between us and probably our most successful competitor with few million VC funding from the Valley: http://www.obecto.com/gigster-alternative/
After all said, I believe the agency model of doing a startup should not be dismissed so easily. The world is changing and what have worked in the past is not always the only way things will work in the future.