I am about to create my first tech startup, it is a simple project that could be entirely outsourced. My fear is based primarily on the future of the startup. If the project takes hold, how to deal with the transition from external to new hired engineers? How to handle this situation?
Let me tell you about my story but from the point of an outsourcing company. In short, I think it is possible to have the most of work outsourced but it's very desirable to have a person who can manage this remote team on your side (or within your business hours).
My partner and I co-founded a start-up in New Zealand with two local business people. He acted as a CTO from the beginning of start-up accelerator and MVP development. The development team is located in Russia.
After funding and a year of work they could hire a local CTO and my partner transferred all responsibilities to him. Currently this CTO works with our team remotely and we had no serious issues in terms of technical side despite of some time difference and lack of personal communication with the team. This model also allows to hire local staff gradually reducing the number of remote members.
So the bottom line is it's possible to organize it but like many people noticed here you will need a person who can manage the tech team. Also I wrote a small blog post that could help you to pay attention to some important details: http://crystalnix.com/blog/2014/04/29/how-pick-proper-it-outsourcing-vendor/