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Do You Need Freelancers or Co-founders for Technology Startups?

Imagine that you’ve got an idea for a promising digital startup. What’s the best way to bring your idea to life? Should you find a co-founder to help build your product and share in some of the entrepreneurial risk? Or, should you hire freelance employees to build your digital products?

If you are starting a tech-heavy business, and you are not tech-savvy yourself, then you will quickly realize that you have three options:

1. Bring on a tech person as a co-founder and share the equity of your business with them.

2. Hire one or more freelancers on an hourly or fixed-fee basis.

3. Find a co-founder and also hire freelancers.

Clearly, you will need technical resources to make your dream a reality.  Before you can decide what to do, you will need to answer these questions to identify the skills you need to get your product built:

  • Are you technically savvy enough to handle overall development of your startup?

  • Does your product require a UI/UX designer?

  • How many software developers would be needed to get your product developed in the timeframe that you want?

  • What type of software development skills do you need, e.g., mobile, web, cloud?

Once you have the answers to those questions, you’ll be in a better position to decide on the components of your team. If there are skills that you can perform yourself, you can save the expense of having someone else do it.

Now that you have prepared a list of needed skill sets, you can focus on the relative merits of co-founders and freelancers:

What a Technical Co-founder Can Offer

A technical co-founder will be just as invested in the success of your business as you are, because their incentives are aligned with yours. You’ll find them to be just as keen to get things moving as you are.

Here are some important things to consider:

  • Before you bring on a technical co-founder, ensure that they are adept in one or more of the technical skills that you need to build your product. In addition to extensive programming knowledge, they should be used to taking the lead.

  • When you bring on a co-founder, you’re not just buying a service, you’re adding depth to your team and expanding the vision of your business.

  • You will need to be prepared to negotiate the equity share they will receive. Obviously, the terms will depend on you, your circumstances, and the business opportunity at hand.

  • Your tech co-founder should be able to blend business and technology knowledge effortlessly, keeping in mind both ends of the spectrum.

  • With a co-founder, you won’t have to worry about how many hours they are clocking when your product becomes more complicated than you first envisioned.

  • A tech co-founder is a lot more valuable to you if you don’t have much programming experience, as they will need less direction than a freelancer, who would expect you to have at least a basic grasp of the task you’re requiring them to perform.

  • While you’ll still be working closely with your tech co-founder, you’ll feel less like a micromanager and more like a CEO.

  • When you hire a tech co-founder, make sure that they have dedicated time to build your product. If your tech co-founder is slow because he or she is distracted by other projects or concerns, your project may suffer severely.

What Freelancers Can Offer

You can hire multiple freelancers to fulfill all of your project’s skill requirements, precisely when they are needed. For example, you can hire a mobile developer to work on your mobile app, a designer to handle the UI/UX, and a web developer to fulfill your web/server needs.

Here are some other key considerations involved in using freelancers to build your digital product:

  • Freelancers will require lot of time and effort from you, providing direction and helping to coordinate efforts.

  • It is not easy to find a freelancer who fits into your skills and budget requirement. You will need to do thorough evaluations of candidates in order to find the right fit.

  • The biggest plus with freelancers is that you do not have to sacrifice a share of your business, as you do with a co-founder. You will, however, have to pay a freelancer to get the job done.  That means you’ll have cash-flow issues to solve.

  • You don’t have to pay a freelancer on a salary basis. Their compensation can be based on milestones achieved, or on a time-and-material basis.

  • You can change freelancers relatively easily, compared to a co-founder, if you don’t find them to be a right fit.

  • Freelance developers are generally more scalpel than sword; great for specific solutions but not your best bet for overall development.

  • In addition to the fact that you are not paying constant salaries for times of low workload, another cost-advantage of working with freelancers is that you don’t have to pay benefits or provide office space and equipment for them.

So, Which Is Best for You?

Hopefully, the preceding information has helped you understand what you need to get your technology startup in business.  If your best choice is still unclear in your specific case, perhaps one of these concluding considerations will help:

  • If you do not have the technical knowledge or time to drive the development of your product, you will need a technical co-founder who can advise you on technology, and also manage the development effort.

  • In many of the most successful startups, the founder focuses on the business side and a co-founder focuses on technology.

  • If you need multiple skills to build your product, e.g., design, mobile developer, web developer, server developers, etc., you will definitely need freelancers even if you have a technical co-founder. One co-founder cannot realistically provide all of those skills.

  • Many successful startups have a technical co-founder with multiple freelancers, which the co-founder manages.

  • Sometimes, an especially-effective freelancer can be elevated to co-founder. Just be careful that you don’t bring on too many co-founders, which can dramatically reduce equity share-value in your business while becoming a management headache all of its own.