I recently had a conversation with the founders of a 17-person startup. They had just received double-digit millions (USD) of venture funding and were looking to scale their engineering organization.
While GlobalLogic can certainly help them scale more rapidly on-shore in their current California location, the cost advantage they will see from this is not as great as scaling a portion of their engineering team in Eastern Europe, India or South America. Scaling 100% on-shore, in the very competitive and expensive California labor market, severely limits how fast they can move and capture the market opportunity ahead of them.
While they saw the benefits, they were concerned about the distraction and headache of building and managing a team in a remote geography. This is a legitimate concern. While GlobalLogic and companies like us are true experts in distributed software development and can greatly ease the pain of working with global engineering staff, there is no question that it introduces a new set of challenges. Travel, for example.
I’ve done multiple startups; overall I have worked in seven pre-public companies to date. I completely understand the need to pick your battles and fight the right one at the right time. The key question I put to their founder and CTO was: When is the right time to eliminate the risk of being able to scale engineering with high-quality resources on-demand? I don’t pretend to know the answer for them — in a startup everything seems urgent — but I think that is what he needs to decide.
A key benefit to working with a company like GlobalLogic from a CTO / VP Engineering perspective is that it can essentially eliminate the risk of staffing and delivery. In my previous startups, it was always a challenge to get the right team, set up the right process and tools, and then deliver. I never failed in this, thank goodness, but it was an ongoing and somewhat repetitive challenge, a bit like Groundhog Day.
Working with a company like GlobalLogic, the struggle of staffing and delivery largely goes away. Instead, you can focus on building the right product for the market. I have very much come to agree with the saying that goes: “building the right product is more important to success than building the product right.” It bugs me as a quality-focused person, but I’ve seen time-and-time again that quality alone is not enough to win.
I’ve been fortunate in that three of the seven pre-public companies I’ve worked at have become successful. If you’re not in the software industry, that may not sound like a lot. However for software startups, a 43% hit rate is considered very good. There are various figures, but it’s generally accepted that only 1 in 10 or 20 (that is, 5% to 10%) of venture-funded startups ever even make back their invested capital.
I’m sure it sounds arrogant, but I can assure you that within the sphere of my influence at the time, every one of the products I’ve been involved with have been “built right.” So why did almost 60% of those companies still fail in the market?
In my view — and I say this as “one of the guys in the back room making the product happen” — it’s because as a management team we put TOO MUCH focus on development, and NOT ENOUGH on building the right product. In other words, the mechanics of development consumed too much of the company’s energies.
Don’t get me wrong— development is hard work, and someone needs to invest the skill, care, attention and energy to do it well. What I’ve come to believe is that this energy, skill, care and attention should largely come from specialized companies like GlobalLogic, rather than from the startup’s founding team. Founders should, in my view, focus with laser-like precision on their customers and on their market— including guiding and directing the development effort technically and feature-wise. They should not take on the distraction of re-inventing the wheel on the mechanics of software delivery any longer than they have to, unless “DIY” presents some compelling advantage to them. And it rarely does.
I meant what I said when I told the startup CTO and other founder that it may or may not be the right time to start working with a company like GlobalLogic. But if it’s not now, I think it should be very soon — or their risk of being another company with a great idea that misses the market gets a lot higher than it needs to be.