Outsourcing for Start-ups

I see so many start-ups that simply waste money, unintentionally (I’ve invested in them). They get $100k, or maybe a couple of million, and before they know it, the money is gone! I once told a new investor in my business that I valued every cent he invested “as if it was my own”. He promptly told me “Bugger Off! this was the money that I was going to use to send my kids to college – don’t you dare treat it like your own!”

So when you’re at the CitiBank ATM getting a credit card cash advance to pay the staff salary, you’ll be debating if you really needed to spend all that money on the EMC SAN or that $1000/day “consultant” during your early start-up phase. There are times and places for big shiny EMC SANs and $3000/day consultants. Most people get this timing wrong.

The same can be said about start-ups and outsourcing. It can be a good way to extend your time to life and reduce time to market OR you could just be wasting precious time and money. The trick with outsourcing for start-ups is knowing WHAT to outsource and what to keep in house.

#1 – Own and Create Your IP/Architecture.

You cannot, should not, and must not outsource this function of your start-up! You are the owner/creator of your IP and Architecture – not a company in Hyderabad, Manila, or Ho Chi Minh City. This doesn’t mean you personally need to be an uber-tech-god/goddess yourself. However, someone in your company who has a significant piece of skin in the game should be! That person needs to be living, thinking, breathing this stuff 24/7. This is the sort of person who goes to sleep dreaming about what they are going to be working on tomorrow: “Sorry honey, not tonight – I’m thinking about distributed content delivery frameworks for mobile networks in emerging markets.” You don’t get that level of commitment when you outsource to IBM, Accenture or Avanade. (Use these guys when Sequoia Capital opens their cheque book).

#2 – Product Management (see #1)

You cannot outsource product management (especially not to a constant!). I think this is more important than #1. A good product manager is like your technology architect. Instead of understanding how TECHNICALLY it all works, your product manager understands how it works from the BUSINESS LOGIC side of things. In many cases in early-stage start-ups, you are the product manager. See #6 below about how you can outsource some low-level Product Manager functions.

#3 – Design is King

Design is important these days. Design is something that can be outsourced, but again, probably not to Hyderabad, Manila, or Ho Chi Minh. Find a local designer in Australia, UK or the US for the core design layout & style guides – Get them in, work together on this. Once the design is nailed down, the rest will follow. Change it on the fly – you should be always able to tweak and change things, even at a moment’s notice. If your developers whine that it’s too hard, takes too long to make a change, etc., screw them! Change your developers today! If it can’t be changed quickly and easily, they built it wrong (sorry guys)!. If the new design/layout doesn’t work, change it back.

#4 – QA (Gratuitous Plug Alert: QA is CloudStaff’s forte)

I do not have a good track record with software QA (Quality Assurance) teams. In my previous business, WebCentral.com, I had about 6 developers. I never had a QA team, because I always figured they/I could test the work. Plus, I used to wait for the customers to find the problems and then fix them quickly. Back then, we only needed to support a couple browser versions and screen resolution was limited and customers were more forgiving and we didn’t have twitter.

Consider what you’re supporting today: multiple browsers, different operating systems, mobile versions, varying screen resolutions. Customers have a tendency to complain loudly to a large audience even if your product is free and business logic is getting a lot more complicated.

I have since learned the virtues of good quality assurance. I am now a believer. Good QA means you deliver a better product and your developers focus on coding. The key to good QA is getting good test plans – and lots of them. Then it’s throwing people at the test plans. These people run each test on each device and on each browser, etc, and they do it again each time you make a change QA can be a “set-and-forget” function once you have good test plans written.

If your development team say, “We use automated test systems – we can do it ourselves,” that’s perfect! Tell them that you will reduce their hourly salary to $8/hour for every hour they spend playing or even thinking about this stuff. This is something that you can, you should, you must outsource.

Not one single second of your developers’ time should be spent on this.

In fact, the development team really should not manage the QA process; a QA manager or a Product Manager should do that. When developers manage QA, testing tends to skew toward what they know is working. Development should not drive QA, nor should it set the QA agenda.

As the business owner, you should expect to see a summary of the QA tests. It’s simple to read, there are nice big coloured pie charts that should show which tests Pass, which are Blocked and which ones Fail, etc. It gives you visibility of the project’s progress.

#5 – Developer Productivity

Should I outsource development? It depends of the type of development. If you’re developing some really key, special technology, like a new video codec, a real-time chat protocol, or special security application, then no, you shouldn’t outsource the key or core of that project. Determine which parts of the project could be moved to a remote team.

However, when you do outsource development, never rely on a single developer. With all remote development teams we try to achieve a productivity multiplier effect. Have one senior developer and buddy them up with two or three smart junior developers. It gives you more bang-for-your-buck. It also means knowledge is shared and in a few years, those juniors will be senior developers.

 #6 – Outsource the little stuff

Now for the fun part. Get yourself a PA. In fact, get your team a PA. However, this is NOT the kind of PA that is going to be checking with QANTAS about the vintage champagne they are serving in first class on the A380 from London to Sydney (I think it’s Louis Roederer).

This is someone who can do the little things. Get them to save you 2 to 5 minutes here and there. Start with simple and then extend:

Ann – Skype Peter. Give him the password/domain, then change it in 1 hour and update Password Safe.

Ann – Find out what pizza the developers want, order it. Use my credit card.

Ann – Sign me up for a free account on this site and put the password/username in Password Safe.

Ann – Post this XXXX to Twitter, Facebook, LinkedIn.

Ann – Research this person.

Ann – Go to this website, get all the names of the VCs in Singapore, phone them and ask reception for the name of the partner who deals in Green.

Ann – What is the cheapest flight from London to KUL?

Ann – What are the last activity on my credit cards?

Ann – Summarise our top 20 competitors’ Tweets/LinkedIn posts.

None of the above is rocket science. In fact, I can probably do every task faster than Ann, but I value my time at $700/hour. She is $8/hour. The same thing applies to my in-house developers – what is their hourly rate? Sure, they can go and spend 10 minutes screwing around on Pizzahut.com and order their own dinner – but it will take them 10 minutes. It takes 30 seconds of their time for Ann to ask them what topping they want. (I don’t trust developers with my credit card anyway; the last time I did, I got a $1,000 bill from Amazon when someone ordered a High I/O Quadruple Extra Large EC2 instance server and forgot to shut it down.)

More importantly, hiring a PA sends a message to your team. You’re telling them, “you are valuable, and your time is valuable, so here is someone who is available to help you with the ‘little stuff.’ Now get back to work!”

And it’s not as over-the-top as you would think, but you might even consider two PAs and have them cover 8AM to midnight – with a few ours overlap. When you’re working at home at 10PM, it’s great being able to throw a simple task to your PA. But it also prevents you from having a “single point of failure.” If a PA is sick or leaves, you have a backup. There is always research/data harvesting work they can be doing in the background for you.

Finally, about that champagne…

[11:46:45] Ann: Hi Lloyd, I called QANTAS, they are not sure of the vintage of the Champagne, but they told me they know that they are serving Comtes de Champagne Taittinger on that flight.  Thank you, Ann.

Hello Stella

Hello Stella,
I don’t recall us actually meeting, but thank you for your email titled “R7S light good market”.

Unfortunately, I am not in the market to buy the “replacement of halogen R7S” from Tianci lighting, but thank you for thinking of me.

However…

Tianci Lighting may be interested in a service that CloudStaff provides to Chinese companies. A CloudStaff Virtual Sales Assistant can help you sell the “replacement of halogen R7S.” into Australia, UK and US.

How?

  1. A CloudStaff Sales Assistant would find potential customers for you. Example, they could identify all hardware and lighting stores in Australia, search for the contact information and enter all the details into a CRM (database).
  2. They would then find the purchasing officer or decision maker in that company – this can usually be achieved by speaking to the receptionist. (Note always treat receptionist well – they are sometimes the most important people in the company)

  3. Then create a email/newsletter which explains what we are selling – send it and monitor the results.

  4. It does not end with the email, your Sales Assistant will phone the contact to confirm that they received the email. Ensuring that the customer received the email is important, because spam filters block more and more messages.

  5. Possibly offer a free sample of the “replacement of halogen R7S” from Tianci lighting.

  6. Again your sales staff assistant could assist with dispatch of samples and follow up.

Each Virtual Sales Assistant from CloudStaff speaks and writes excellent English, which is important if you are trying to sell into this market. Customers are more inclined to purchase from a company that understands their needs, and can clearly and quickly answer any questions they might have.

Finally, your CloudStaff Sales Assistant can maintain your relationships with your existing customers. Your Assistant can ask them if they were happy with the product they received from Tianci Lighting and if they are looking to make further purchases. Additionally, they ask if they know someone else who might be interested in “replacement of halogen R7S”. We have an adage that goes, “there is gold in the filing cabinet.” and your Virtual Sales Assistant is always doing this.

A Virtual Sales Assistant from CloudStaff will cost Tianci Lighting only US$1500 per month.

Stella, thank you for your email. Please let me know if CloudStaff can help Tianci Lighting in anyway.

Kind Regards
Lloyd Ernst
CloudStaff

Email: lloyd@cloudstaff.com
Mobile: +86 139 11199124
Web: www.Cloudstaff.com

PS: I have also written my reply in mandarin below.

Stella 您好
抱歉我不大记得是否和你见过,但谢谢你的邮件R7S light good market”
很遗憾我目前没有计划从Tianci照明购买replacement of halogen R7S”,但还是感谢你考虑我。
我有个想法。。。
不知道Tianci照明是否对加入CloudStaff面向中国公司的服务有兴趣。CloudStaff的销售助理可以帮助你在澳大利亚、英国和美国销售replacement of halogen R7S”
CloudStaff的销售助理可以替你寻找潜在的客户,他们会定位所有澳大利亚照明相关器材的销售终端,查找联系人信息并录入到客户关系数据库中。下一步,他们会找出这些公司的采购主管或者决策领导,通常很容易通过和前台沟通拿到这些信息。(对待前台一定要友善呀,有时候他们是公司里面最重要的人物)。之后就是邮件联系了,他们会宣传我们销售的产品,并持续跟踪进展。
当然不能仅停留在邮件联系,你的销售助理会和对方电话确认信息的接收情况,确保这个客户确实收到我们发的信息,你知道很多公司的产品邮件都会被过滤进垃圾箱。然后根据对方反馈,可能会有Tianci照明提供给他们提供一个免费的replacement of halogen R7S”试用品。
销售助理会负责分发这些样品,并持续跟踪。
每一个CloudStaff的销售助理都可以说/写流畅的英语,这对你关注的市场非常重要。客户会更喜欢购买一个理解他们需求的公司的产品,同时还要准确及时的回答任何客户的问题。
最后,你的CloudStaff销售助理还会继续维护你现有客户的关系,比如经常联系客户收集对方对Tianci照明产品的使用感受,是否对产品满意,是不是有进一步的采购意向等。另外,他们还会打探是否有客户知道的一些潜在购买者对你的replacement of halogen R7S”感兴趣。我们相信大多数的机会来自现有客户,这也是你的虚拟销售会一直做的事情。
我们给Tianci照明提供的销售助理的成本是US$1500每月。
Stella,再次感谢你的邮件,如果CloudStaff可以在任何地方帮助Tianci照明的话,请随时与我联系。