CTO vs Freelancer vs Offshore Agency: Who to hire?
You've got a tech startup idea but you need someone to build it for you. Should you recruit a CTO and give them some combination of equity and cash? Should you pay a freelancer to build it for you? Or should you farm out the development work to a cheap offshore agency?
The answer is: it depends.
In this article I'm going to give you an overview of these options, weighing up their respective pros and cons to help you decide on the right path to choose.
Chief Technology Officer (CTO)
A CTO is usually a permanent position as a cofounder of your business, someone who you will spend many hours with and is going to be key in the success of your product. As such, they'll need to be just as passionate about your product as you are and you'll need to get on with them. They will need to have experience in building something similar to what you're trying to build, or at least have a good idea of how they will utilise technology to achieve your dream. They will need to have good management skills to be able to manage future tech employees that join the company. If you're a non-tech founder then they're going to need to have good communication skills to be able to explain why they're doing what they're doing. A good CTO is pretty hard to come by so you might need to hire a consultant to help you find the right one if you have no previous experience in hiring tech people. If you can get a friend to recommend a good CTO to you then that's even better.
Since they're doing all the heavy lifting in the early stages of the product, you'll need to either agree an equity-only deal, an equity-cash split, or a cash only deal. Depending on how much money you have, the most likely outcome is that it will be an equity-cash split. A CTO is very unlikely to join your company for free on the off chance that your idea is the one, and cash-only is going to be very expensive.
The right CTO can turn your idea into the reality you've dreamt of.
Having someone develop in-house for some equity means they'll take greater care with your product as they have a vested interest.
Having someone responsible for the tech side means you can concentrate on doing what you do best.
Time consuming and difficult to find a good CTO
You may have to part with a lot of equity/cash
Freelancers are a good alternative to CTOs, if you're not looking for someone to be your business partner. There's a few reasons you might want to choose a freelancer over a CTO:
If you're looking for someone to build your minimum-viable-product (MVP) so you can prove its concept.
If you think your product is going to be the next big thing and you don't want to give away lots of equity.
If your idea is fairly simple and won't require a big team or specialist knowledge to build it.
You already have something built but need an extra feature/some bug fixes that are beyond the scope of your current developers.
Freelancers should have relevant experience and will most likely want to be paid in cash.
They'll get the job done and you won't lose any stake in your business
Good freelancers aren't as hard to find as good CTOs
They can be expensive if you aren't offering any equity.
An offshore agency is definitely the cheapest way to build your product. However, the saying "you get what you pay for" is usually correct in this instance. If you need an MVP to be built at low cost just to prove a concept, but you're prepared for the possibility of lots of bugs or unreadable code, then an offshore agency is for you.
You may have communication problems with the team
What they build might not work well
The codebase is likely to be unreadable for future developers
As you can see, each option has its own merits and it's ultimately up to you to decide which is the best one for your set of circumstances. Hopefully this overview has made the choice a little clearer. Let me know your thoughts in the comments below!