The sheer number of decisions and tradeoffs a founder needs to make to build the right tech team is maddening. You need to source and manage the right talent without shortening your runway too much. But when your product or service is tech heavy, you often can’t afford to gradually build up a technical team.
It’s in these moments that you need to appreciate your options and weigh the risks of building your own team vs bringing on a tech partner. Below, we’ll break down how to understand what a tech partner is and appreciate its benefits so you can make the best decision for your business.
What is a tech partner?
This is when you hire a full team of developers or other technical professionals to supplement or simply be your tech team. While larger and more established firms can bring on tech partners for domain-specific knowledge, they are particularly useful for startups that need efficient and proven teams which can hit the ground running.
But how can early-stage startups afford to hire a tech partner and access such an experienced team? That’s where effective partnership design comes in. The exact nature of the partnership between you and a tech partner can vary tremendously. Often, instead of a basic payment scheme, a partnership can use risk-sharing or IP transference to defer some of those costs while keeping both sides of the partnership aligned on the same goals
A tech partner can also be gradually replaced with an in-house team as the company develops or it can remain as-is. The ability to build a partnership on a well-designed and predictable agreement is a key benefit to relying on a tech partner instead of hiring ad-hoc.
But just as important to understanding a tech partner is understanding what they aren’t.
Technology partner vs Consulting partner
The main difference here is simply that a technology partner is there to do the work, not to simply consult. But the differences go much deeper. Tech partners are usually more integral to a company relative to consultants. Often, the aim is to have them function as if they were any other company employees, sharing the company culture, and even sharing risk as a startup grows.
In other words, working with a technology partner is a way to avoid the classic “not my problem” issue firms run into with consultants. A tech partner simply has more of a vested interest in your success owing to the way they’re integrated into your firm and the structure of your partnership agreement. The relationship is also more likely to be a lasting one because you have the ability to craft a partnership agreement which encourages a long and fruitful partnership.
Finally, startup consultants are more often focused on the business side of things rather than the underlying technology. They may have some experience in building or running tech teams, but they’re unlikely to be capable of getting you the raw development talent you need.
Ironically, hiring a tech partner means that founders and other senior managers at a startup can spend more time on the kinds of business challenges that they might otherwise hire a consulting partner for. It’s a bit of a “do you really need another energy drink or do you need better sleep?” kind of situation. Founders always need to be careful about using quick fixes like bringing in a consultant rather than addressing deeper problems with long-term solutions.
The benefits of a technology partner for startups
We’ve already alluded to some of the advantages startups have in choosing a technology partner, but here are 8 easy ways to think about it from a founder’s perspective
1. Gets you dedicated experts from day one
Domain experts are expensive. A cohesive and experienced team of domain experts is even more expensive, not to mention the time needed to build such a team. But in the early days of a startup, you need to find that perfect balance between extending your runway by saving money on salaries and getting the talent you need to create world-changing products or services.
By hiring a tech partner, you can get access to a seasoned and talented development team with the domain knowledge you need far faster than it would take you to hire individually.
2. Gives access to a mature team with deep knowledge of architecture, processes, and tools for product development
When you’re watching your runway and keeping your investors up-to-date on your latest progress, you can’t afford to wait for your team’s skills to mature. But finding, hiring, and paying the caliber of talent you need is also a major hurdle. A technology partner gives you options to access the talent you need within an experienced and effective team.
Just as importantly, if you choose to gradually build an in-house team, your tech partner can help share that critical domain knowledge over time. So instead of sending your new hires to some training course of waiting for them to get certified, they can learn the best way: by doing the work with seasoned professionals.
3. Allows founders to gradually build an in-house team
Most founders do want to eventually transition from a tech partner to an internal team. This is where the ability to develop a custom partnership agreement becomes so critical. Often, in our experience, a tech partner can allow a startup to hit the ground running and handle the heavy lifting early on. Then, over time, the startup can gradually replace tech team members with in-house hires.
The flexibility of this process means founders can hire at their own pace or when the time is right instead of settling for whoever they can get when investors are breathing down their necks. We generally approach this by having regular meetings to discuss your status and capacity needs over the next 3 months. Then, once you’ve obtained some traction, we begin planning for 6 months into the future and so on.
Doing this gradually also allows startups to ensure their in-house team grows with an effective culture. As mentioned above, there are also huge benefits in terms of sharing vital domain knowledge and work habits as your internal hires work with the external development team.
4. Creates a predictable development budget to help you better define investment requirements
Hiring means negotiating and that means it’s hard to predict how payroll is going to affect your runway. The need to hire someone new or the possibility of an existing hire leaving at the wrong time all create potential ticking timebombs. Considering how much time founders need to spend ensuring their development timeline matches their funding realities, the predictability of a tech partner can massively simplify the process.
By bringing on a tech team via a predictable and well-structured partnership agreement from day 1, founders end up with fewer tough decisions to weigh them down. That translates into better focus and less stress ahead of each investor meeting. After all, quantifying the effects of stress and decision fatigue may be hard, but there’s no denying the heavy toll they take on founders.
5. Reduces recruiting and people management hassles
It’s no secret that founders need to wear too many hats. Being an HR master capable of hiring a world-beating team is one of the toughest. By taking the need to hire an entire tech team of individuals and translating it into the need to simply hire a single technology partner, many founders can dramatically cut the amount of HR work they need to do.
The flip side to this is those founders also dramatically reduce the amount of time needed to build an effective culture within their tech team. After all, a single primadonna developer can throw a wrench into a well-oiled team you’ve spent months or years building. Mitigating the risks that come with bringing new tech hires together, particularly in the early stages when there are so many other pressures, just makes sense.
6. Simplifies communication
Finding the right technical hires is hard enough, but getting them all in the same place is even tougher. Remote work is increasingly standard, but it presents all kinds of communication challenges. Hiring a full team who already works together and has established communication practices makes it simpler for you and your core team to work with that tech team to get things done.
Of course the partnership agreement can always specify how that communication will work, over what channels, etc. This gives founders the option to rely on the existing communication culture and style of the tech team or to integrate them into a new culture they’re building from scratch.
7. Allows founders to focus primarily on building their business
A lot of what we’ve described so far boils down to enabling funders to take some work off their plate. This makes them more effective in everything else they do, whether that’s raising the next round, hiring non-tech team members, product development, or simply honing their vision (though let’s be real, it’s probably all of those). The role of founder is, to be frank, a bit insane and so any way to make that role more manageable is a vital ingredient for a startup’s success.
8. Gives flexibility in scaling or downsizing teams
Letting team members go when you need to reduce spending is brutal. After spending so much time finding the right talent, you hate to have to let them go because you’re concerned about your runway. On the other hand, seeing an opportunity which requires you to quickly scale up your tech team can be equally nerve-racking. Fortunately, working with a tech partner makes both scenarios far simpler.
If you need to downsize, it’s relatively simple for a tech partner to take a team member and relocate them to another project. Instead of letting someone go despite their doing a good job, you can keep focused knowing they’ll still have a job tomorrow. That same principle applies for reallocating team members to a growing team. Working with a tech partner with plenty of talent working on various projects means that you always have a ready pool to expand your own team when needed.
Whether you need to scale or downsize, tech partners ease the financial and psychological burdens which can so easily wear a founder down. Your investors will appreciate the flexibility as well.
Find the perfect tech partner for you
Every successful partnership between a startup and a tech partner is custom built to fit the startup’s needs. If the advantages we’ve laid out sound like they would help your startup succeed, get in touch with us to learn how we can learn more about your situation and how we can help.