The kind of products that make companies
Entrepreneur turned Investor, Founder of K9 Ventures, Team & Starting Up Expert
If technology is the core of your company, then outsourcing is the kiss of death.
If technology is just an enabler for another service, then outsourcing is okay.
There are a lot of things that people like to use, but they are not willing to pay for.
Lesson: Founder Framework with Manu Kumar
Step #5 Core Tech: The kind of products that make companies
If you're building a company where technology is your product, you’re building a technical product, then outsourcing is the kiss of death. If you're building something where technology is simply an enabler for something else, then you might be able to outsource. If you're building a core technology company, if you're outsourcing or contracting, or even working with remote people, that's a non-starter for me.
Different people have different ways of looking at that. That's my view of the world. There are definitely folks who believe that if you can have part of your engineering team sitting in Ukraine, Estonia, India, Argentina, that can actually be a huge positive because it's really hard to hire in the Valley. Finding engineers in the Valley is almost impossible at this point.
So people look at it like, "Okay, if you can't hire people here, then, yes, you have to use them elsewhere.” For the stage of companies that I'm working with where it's literally two people and an idea or one person and an idea, trying to do anything that relies on outsourcing is generally not a good recipe.
How will people experience your product? What's their mental state when they look at your product or when they're thinking about buying your product? What are the factors that actually influence that decision? Are they willing to pay for your product?
There's lots of stuff that is getting built these days that people love to use, but they are not willing to pay for. Then those companies end up getting shut down because they don't actually find a business model. I was, at one point, joking about writing a blog post that I was going to title "Killing Innovation One Acqui-Hire at a Time", because most of these companies end up getting hired by some bigger company and they kill their own product in the process.
It might have actually been a good product, but had they thought about who was going to pay for the product and what the revenue model was going to be, they could have built a business model out of it. Sometimes there's just not effort going into thinking about what that business model is going to be.