August 11th, 2008

Here’s the Deadliest Catch: Hiring an Agency to Build Your Startup


startup_catch_agencies.jpg

You just launched your new startup. You’re caught up in the excitement and energy of it all and happy to see your baby in the world… Here’s the catch, the deadliest: You can’t change or adapt your site because you hired an agency to build it.

Please know that I’m not picking on Agencies here… I’m picking on the entrepreneurs that hire agencies to build their startups. We have some of the best agencies in the world here, but you should NOT hire them to build your startup. (I mean no offense to any agencies that are reading this, but for startups to work with you they risk the future success of their business.)

Agencies Build Great Websites

Startups are not just websites. With a website for a small business you can get away with building it out and then other than keeping the content fresh and minor tweaks here and there, not mess with it much for a year or so. With a startup, you’re going to change, modify or add something major within the first few days, sometimes even hours of your site’s life. In some cases between the original site map and spec phase and the actual launch of the site, you’ll change something major.

No Ability to Change or Adapt

With any agency built site you’ll be able to update most of the content, maybe even add some sub content pages in your CMS area… But the startup world is extremely fast and chaotic. In order to survive a startup needs to be constantly evaluating their service, the market and the latest industry trends. When you exist in a market where a company can pop up overnight and completely shake things up, you need to be ready to adapt.

It is important to keep in mind that you can’t possibly create an exact plan for the first 18 or even 6 months of your startup. 50% of what you do will simply be wrong. You need the flexibility to constantly be testing out ideas, trying new things and you need the financial freedom to do a lot of the wrong stuff. If you’re paying an agency to be wrong 50% of the time, you’ll run out of money very quickly.

Agencies Are Not Cheap

I’ve worked in the agency world and I know that there are a lot of overhead costs to keep a small company afloat… I also know that you get what you pay for and getting great work from an agency means having to spend some money. But for the same price a startup would pay an agency to build their site, they can hire a solid designer and a talented programmer for an entire year. With your own developer you can test out ideas and be ready to respond quickly to problems and opportunities.

Lack of Speed Kills

Bids, Quotes, Objective Summaries, Wireframes, Etc. Speed kills when driving drunk. but it is what keeps your startup alive. The web world has the attention span of a goldfish and to stay on top of their rapidly shifting focus, you need to stay tuned in to what your users need / want.

Internet Startup Red FlagsNone of the Founders Can Actually Develop the Website.

It should be a huge red flag for the founders and their early investors when none of the founders can develop the site. This isn’t to say that a startup without any developer founders can’t succeed, but it will take a bigger financial investment and be a bit slower to get it off the ground.

When you don’t hire an agency, you have to know what you’re doing… you don’t have to know how to program your site… but you should know why you built it in PHP rather than ASP, why a certain framework is best for you or why you should custom build, etc. It is hugely important that somebody on the early team can build the site… or you immediately hire on a developer. If you simply can’t learn enough about what you’re trying to start to manage some technical contractors than find a partner who understands the technical part… If you just can’t learn it, then don’t start your site.

A Real World Scenario

Fantasy Land: You love sushi. You live on the stuff… You can rattle off all kinds of different rolls and fish delicacies… so you want to start a fishing company. You know how it generally works. Get a boat, hire a good crew, find some good fishing spots and viola! you’re rolling in the tuna.

Reality Land: You know nothing about how the fishing business actually works. You aren’t fluent in the terms… “Your sharemen are saying your prime berth is no good, so you’re talking to a banker about any naked mans that can point you in the right direction.” What kind of boat is right for what kind of fishing… long-lining, crabbing, etc.? How do you evaluate the skills of a good captain & crew? What is the appropriate equipment you need to buy to be effective? How do you know when you’re spending too much on something or not spending enough?

A Cure for Agencyitis

So what if you’re one of the entrepreneurs who has already hired an agency… or are a non-technical founder not sure how to go about learning what you need to learn to hire the right developer?

I didn’t want this to just be a harsh critique and not offer solutions, but the answer to the above question is a long answer and this post has already exceeded most people’s internet attention span. So I’m going to write a part 2 of this post with a hopefully helpful and in depth answer. Look for it here, or the coming soon www.InternetAstronauts.com – A Bootstrap Startup Blog

The Darius’ Advocate

The points above are from my experiences, but I’d love to hear your thoughts… even if you completely disagree. An agency perspective could be useful too.

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And now on a lighter note… and sticking with the fishing theme:

6 Ways Bering Sea Fisherman are Like Startup Entrepreneurs

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They Risk Big

Alaskan king crab fishing reported over 300 fatalities per 100,000 in 2005. While startup entrepreneurs rarely directly risk their lives like the bering sea fisherman, they risk their financial security, personal relationships and often put huge burdens on their loved ones.

They Love What You Do

If you’ve watched the deadliest catch than you would know that Bering Sea fisherman love what they do. They hear a calling to the sea and she beats the hell out of them every season… but they come back every year because they love being fishermen. Many of them have been generations fishermen and they pass down their love of the sea to their kids.

People Think They’re Nuts

It’s hard to watch the show and not think these guys are all missing a couple key connectors in their brain. The weather is as hostile as it gets, the work is back breaking hard and you stink like fish for weeks… oh yeah, and you’ll likely get sea sick enough to know what you look like from the inside out. To the outside person, it just doesn’t make any sense. Why give up the security of a comfortable career and balanced home life in order to work ridiculous hours and risk so much? Because they love it.

They Are Nuts

Let’s face it… you do have to be a little nutty to suffer as much as they do. But crazy ideas are often the most successful. It takes that stretch of the imagination and sanity to come up with something that doesn’t yet exist.

They Smell Bad

Startup entrepreneurs definitely don’t smell as bad as a fisherman, but chaotic working hours often throw a wrench in any plans you have to do basic things like grooming, working out… and sometimes even eating and drinking non-caffienated fluids.

They Need to Be a Bit Lucky

Fishermen have Charts, Maps, Expert Team Members… and if they drop their pots where the crab aren’t it could spell disaster for the season. They also can’t prepare for the random rogue waves that have been known to steal fishermen from the decks of the boat. A startup entrepreneur can have a solid launch plan, the right team and at the end of the day… a little bit of luck could be the difference between your rockets igniting or exploding on the launch pad.

They Make Good Money

The last one doesn’t count… because if you can’t handle the previous 6, then it doesn’t matter how much money you could make it just wouldn’t be worth it. Being a startup entrepreneur like being a Bering Sea fisherman is not about the money. It is about doing what you love and doing something new, exciting and hard as hell.

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[Editor: Thanks, once again, to Darius for sharing his ideas and opinions on the startup scene. I always look forward to hearing his insights and first-hand accounts from the trenches. For more from Darius...]

Darius A Monsef IV, Internet AstronautDarius is an Internet Astronaut and the creator and editor of COLOURlovers.com. You can find him on Twitter, Facebook and LinkedIn.

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19 Responses to “Here’s the Deadliest Catch: Hiring an Agency to Build Your Startup”

  1. Don Ball says:

    Great post. I’ve been on the agency end of this scenario, and fact is, the agency simply can’t keep up! And that’s no reflection on the agency — as a business, an agency isn’t built to work in that kind of rapid development environment. In the situations I’ve been involved in, what usually happened is that the relationship dissolved and the startup went fishing for more nimble resources.

  2. Wyatt Werner says:

    Fantastic post; dead-on insight. You can hire a great dev agency to build a fantastic site, but once your credit cards max out (and they WILL max out) your site is dead in the water. Not only can you not afford to update the site, but the site build has sucked up all the resources you need to solve other business problems. Partner with a good dev early on, an pay in equity if you can.

  3. David Frey says:

    I couldn’t agree with you more. Like Don, I’ve been on the agency end and watched a fun and exciting new idea slowly decay into a strained and painful relationship that eventually fell apart. Speaking from the agency’s point-of-view, we really tried to cater to the startup model, I worked many 16 hour days, but in the end we just couldn’t keep pace with the site’s needs post launch. Tragic and heart breaking, but a valuable lesson learned.

  4. Toby Lucich says:

    Great guest post. I agree that ideas take time to be fully birthed, and having the talent at the ready to make this happen is invaluable.

    As a business guy, I’m inclined to read what you’ve described as the “start up” needs as being true of both the tool or service (beyond a simple web page), but also as critical to the business of running a new business.

    The same degree of flexibilty necessary for the tool to evolve is critical of the founding team as well, as it seeks to agree expectations and direction, and take on roles beyond the desktop (such as money guy, decision maker, advisor, executor of the vision).

    I would add to the “Red Flags” section that, in addition to launching a tech start-up without a founding developer a risk, equally risky is not engaging someone to help manage the business of planning and addressing the business needs. As soon as discussions extend beyond the immediate founders, others (investors, employees, customers, vendors) should be seeking adequate assurance that this evolving effort will in fact materialize as a real business.

    Best,
    tl

  5. Greg says:

    I am the non technical owner of a software agency and found this article to be very true and really was my main motivator for the direction of my company. I find these things to be very true with a lot of agency’s but found a huge gap that helped us to land our first big contract. A lot of great idea’s never reach fruition because non technical entrepreneurs don’t know what they don’t know. Aside from just a yes that can be done, we also want to present b,c, and did you know you could d also?

    Instead of being a “software development” company we wanted to be a startup development company. My background before this company was in technical recruiting and before that, door to door copier sales. I am honestly blown away by what people can do with technology. We are trying different ways to do pricing where the startup has flexibility. The project we are working on now has evolved into something a lot better than what was originally contracted for and we’ve encouraged that (of course you’ll say, yeah its just more hours for us.) Well not necessarily we are looking at new ways to price things out so the client can continue to feel like we are their own development team.

    I’m leaving out a lot of factors and points that I would like to say but don’t really have the time right now. I would love to continue conversations like this. I may be a bit naive as a new business owner but aren’t we all. Thanks for the great post.

    Greg Smith
    xgineer solutions

  6. I think this analogy only holds if you are working with a traditional agency, and also one who only builds web sites, not web applications.

    An agency that works in a agile fashion in constant communication with a startup to build an extensible app can be of great value. You get experts building your core business functionality, and training you to extend it yourself in the future. You can move faster than you would spending the time to hire good people upfront.

  7. Matt Youell says:

    I find myself simultaneously agreeing and disagreeing with you.

    I have my own axe to grind with way many agencies work, mainly when it comes to cost vs. real value delivered. But I’ve got to say that hiring a developer too early can kill your startup velocity if you make a bad hire. That is a very real risk whether your founders are technical or not. There plenty of small shops, freelancers, etc. out there (disclaimer: I am one) who can move fast and won’t break the bank. Startups often don’t end up in the exact business they started out in. Better to shake out the business model and start making money or get VC’d before you start bringing people in-house.

  8. Some good points here, but I’ve seen lots of startups make the mistake of thinking they *need* to build their own product development team, when in fact the right outside team would be much better for their business.

    I agree — a traditional “agency” that builds marketing sites isn’t the right team. But there are a growing number of firms (like ours) that have ready-to-go teams that have years of experience working together using agile methods to get great results with clients. These teams would be almost impossible for a startup to build quickly, so getting a quality product to market quickly can’t happen if they try to go it alone.

    We believe in small, nimble teams, but it’s not uncommon for us to have 8-10 different people (with different skill-sets) work with a startup over the course of a project. They’re used when their specific expertise is needed, so the full-time effective team is 1/2 that or less. While the hourly cost is certainly higher than that of a full-time hire, if you work with a firm that doesn’t lock you into monthly rates, you can gain valuable efficiencies. Throw in that some firms (like ours) are willing to take some compensation in equity, and you can stretch your cash even further (in addition to tightening the client-vendor relationship).

    Your biggest risk, I agree, is being stuck with a product you can’t support as the business evolves. We deal with this by baking into our process a training / transition phase where we help a startup bring in a developer (or full team) and ramping them up on our work. They do this at a time that’s right for the business — which also helps them bring on the right person for the job. We then remain available to help with follow-on work when needed, but the client isn’t forced to keep working with us. In this sense, working with an outside firm increases flexibility.

    We’ve been doing this for almost 10 years, and clients like Squidoo show how it can work. At the end of the day, talent and experience are a big part of what makes a startup work, and both are hard to come by. They can work on your behalf as part of an “agency” relationship — it just has to be the right one.

  9. I appreciate all the conversation and would love to hear more… even if you think I’m much more wrong than right.

    @Toby
    “I would add to the “Red Flags” section that, in addition to launching a tech start-up without a founding developer a risk, equally risky is not engaging someone to help manage the business of planning and addressing the business needs.”
    In my opinion a great team has a developer and an evangelist / business guy. I can’t remember who posted the article right now, but it was a great write up of the different roles each play… the basic idea is that the develop has a critical eye on the startup and spends his time picking it apart in order to improve it… wheras the evangelist is managing the business side of things, selling the idea to others and being optimistic about where it is going. Sometimes 1 person can do both roles, but it is very hard.

    @Clinton
    “I think this analogy only holds if you are working with a traditional agency, and also one who only builds web sites, not web applications.”

    I would agree with your there. If your startup is based around a single application, then you could work with a great agency. Your application could be knocked out and then your time would be mostly focused on building the community around the application and making notes about what things to add, update & improve in your application update releases. You would still need to be agile though in nurturing your community and get either a developer or the agency working almost immediately on the future releases.

    @Matt
    “But I’ve got to say that hiring a developer too early can kill your startup velocity if you make a bad hire.”

    True, but for some people… without a developer they can’t start at all. I’m going to address this more in the follow-up to this post, but just wanted to say… there is a bigger risk in hiring the wrong agency vs. hiring the wrong developer. The added cost of the agency will run out much quicker than the single developer… and if you know enough to pay attention to what the developer is doing, you can cut him off before he’s gotten too far.

    @Brian
    I honestly like the idea of where you’re coming from. I’d love to learn more about what you guys do and how you do it. With that being said, it almost sounds like you guys are a combination incubator / agency… and I think that would be a key difference between you and the standard agency that builds websites.

  10. @Brian
    I’m also interested in what agency you represent! I’ve been looking for alternatives for Hashrocket and Norbauer, whom I’ve had recommended to me from here and there.

    Does anyone else know of any more “agile development agencies” that’s co-developed successful sites?

  11. Laura F says:

    Agreed with the rest, this is a very dead-on post and I have seen this manifest itself in start-up after start-up (I work as a freelance manager/multimedia consultant). It is no longer true that you merely need an idea and an entrepreneurial spirit to get an idea off the ground — you need an idea, an entrepreneurial spirit, and a dev guy. That having been said — a few people have reacted under the assumption that the post above is knocking agencies, when really I think the point is that if you’re a startup who is primarily web-based, agency work at agency prices is totally inappropriate for that model. What I don’t understand is why this isn’t considered in terms of ROI. You’re going to get nowhere near as good a return on your investment from an agency as from a freelancer who you build a steady relationship with, or from an in-house guy you hire off Dayak or another online recruitment site. For god’s sakes there’s even linked in if you won’t even take the cut-rates from online recruiters. The point being — spend the money on your team, not on a site that you farm out and can’t modify easily.

  12. Darius: I think you are spot-on!

    I work with lots of web startups as organizer of Atlanta Web Entrepreneurs and several years ago I tried to get this one guy to be agile and roll out things little by little so he could get rolling PR. But his vision was to launch it in a big way with everything all at once so he hired a big $$$ local agency (the kind that does projects for Ga Power, Coke, Delta, Home Depot, etc.); very web 1.0.

    And 3 years later his site still doesn’t have any of those things “he had to have” at launch. I don’t know how he is doing, but from the outside world it looks like he’s gone nowhere.

  13. Ben Scofield says:

    @Darius, @Gustav: Brian is one of the founders of (and, in the interest of full disclosure, Clinton and I work for) Viget Labs.

    I’d like to reinforce one point in particular: if you don’t have a technical co-founder, it can be very tricky to hire your own internal developer or development team. Often, it’s difficult for non-technical people to judge the quality of a developer’s work, and I’ve personally seen some of the unhappy results that can result. In such a situation, it can make a great deal of sense to follow the model that Brian describe—hire an agency to get you up and running, and lean on them a bit to help you find the right person or people to keep it going once it’s no longer financially sensible to keep the agency onboard. Smart companies will realize that the best way to build a good reputation is to develop quality products, and to make it easy for clients to stand on their own.

  14. [...] rails, Startup Just today, I twittered a link to an insightful blog post, “Here’s the Deadliest Catch: Hiring an Agency to Build Your Startup”.  The title is largely self-explanatory, and I may blog my own riff on it at a later date.  Digg [...]

  15. Pete Grillo says:

    When i first read the title, I assumed the article was on (so-called) Full Service PR Agencies. Then I found out you the article was about Full Service Web Site Agencies. So now I’m really troubled, as I can’t decide if the disaster I experienced with a Full Service Web Site Agency eclipsed the disaster I experienced with a Full Service PR Agency. Perhaps you could do a series on this topic? I could see it now …”Why Full Service equates to Overpriced, Outdated and Inflexible”. I’m sure you wouldn’t lack for material. I and others might find it therapeutic (and quite humorous…).

  16. [...] is a follow up to my post from a couple weeks ago, Here’s the Deadliest Catch: Hiring an Agency to Build Your Startup where I advocated against startup entrepreneurs hiring agencies to help them build their sites. I [...]

  17. animesh says:

    well now-a-days there are specialized websites that cater to only start-ups. they take care of hiring for start-ups and that too free of cost. check out http://www.sutrajobs.com which is actually developed by the holding company SutraHR. It focusses only on start up hiring.

  18. [...] this post that I guest authored at Silicon Florist last year because I’ve spent a good amount of time recently looking at large teams working on [...]

  19. Very good blog! Do you have any tips for aspiring writers? I’m hoping to start my own blog soon but I’m a little lost on everything. Would you advise starting with a free platform like WordPress or go for a paid option? There are so many choices out there that I’m totally confused .. Any ideas? Kudos!|


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