# Should I use a dev shop?

**Author:** Michael Seibel
**Type:** Video
**URL:** https://www.ycombinator.com/library/7v-should-i-use-a-dev-shop
**YouTube ID:** QAJQOXMM7ak

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Y Combinator Partner Michael Seibel on using development shops to build your startup.

## Transcript

a common question that we get at YC is is it okay to outsource the development of your initial product the challenge here is that most founders who are not technical think that they have a problem that's worth solving think they understand their customer really well but don't have the ability to build the solution and more and more the advice that these people are given is that instead of recruiting a technical

co-founder what they should do is use a dev shop to build the first version get traction on the version and then they can hire a CTO now I don't want to say this advice is incorrect because there are some companies that have been successful in doing this the problem though is that it's too easy to focus on the companies that have done this well and not hear the stories about the companies who have done this poorly many many many many times iein emails from founders who've tried

to do this path and it has failed and so I want to share a little bit about what that looks like when you're working with an outsourced dev shop oftentimes it takes longer than you might think to get the first version of the MVP out one because you might not have a lot of experience in how long it will take to build a software and to because that dev shop might be working at other projects or have other priorities and I mean to be honest the person is not as motivated as they would be if they were a founder with a lot of

equity in the product that they were building this results in you spending more money than you might expect up front so you might think it's gonna cost you fifteen twenty thirty thousand dollars for the first version and oftentimes it can cost a lot more this is something that people find extremely frustrating especially if they've raised a little bit of angel money and they're pouring all of it in the building of the initial product the next challenge here is that oftentimes in use an outsourced

dev shop it's actually harder to raise money because there are a lot of very good tech startup investors who do not want to invest in companies that are outsourcing development unless those companies are absolutely taken off and just growing ridiculously quickly which is very rare the last thing that most people understand is that a lot of this work is actually thrown away because if you do happen to hire a developer if the outsource developer built it in a way that your person you hire doesn't agree

with oftentimes the solution that they will come up with is to rebuild so this is the kind of trap of working with an outsourced development shop to build your MVP if you want to build a tech startup and by tech startup of course I mean startup that's going to generate a lot of value for a lot of people and you know be a multi-billion dollar company and that wants to raise money from the venture capital world you know that's what I'm focused on there are lots of other situations where working with dev shop is totally fine but if you're in

that narrow slice this is the problem what makes this a trap is that it often doesn't look like a trap in the beginning you often go from nothing being built before you have the dev shop to things happening once you have the dev shop so you feel like you're making all this progress and of course you're spending money and it's taking longer but you still feel like you're making progress until the first versions released you've spent that money you realize that actually the solution that you built doesn't solve the problem because it

it's rare that an MVP does and you need to start iterating and now you start having to spend even more money and more time with the dead shop and usually this is when your funds run low and you realize oh man I can't make it I'm not going to raise more money and I'm not able to do more iterations my startup is gonna die now this is what you should be thinking about I think the people who give this advice by using dev shops their hearts in the right place but they're not quite understanding is that the vast majority of good early stage

investors care more about whether you can build something than what you've built they understand that at the point that they're investing there's very little proof that you're going to be successful and the thing that they're more interested in is can you iterate through multiple versions of your product until you can find a version that solves the problem that you want to solve and unfortunately doing that what the dev job takes longer and is far more expensive than doing that with a technical co-founder so there's kind of a misunderstanding that the early stage

investor is actually looking for tons and tons of traction and actually they're looking for like tons of ability to build and iterate quickly true early stage investor not you know someone who does series a is of course series a investors want traction if you don't fall in this trap if you can recruit the technical co-founder typically what ends up happening is you have to spend far less then you'd have to spend for that dev shop you have product that's released far faster and you're much better set up to iterate the solution as

you get feedback from your customers so you get more done spending less money in less time and so a lot of times upfront people think that finding technical co-founder is too hard so they give up and they go the dev shop route what I would tell you is that so many companies fall to this trap that they should really reconsider whether or not spending that extra time recruiting a technical co-founder in and is going to be far more worth it than going with the dev shop once again I will reiterate I'm not saying this applies in every situation and there are

certainly some companies that I bought our first version the depp shop and i've gone on to be successful but in my experience that is by far the exception not the rule so if you're going with a dev shop you really should be worried about falling into this chop thank you you
