How to Slow Your Burn Rate in Development

November 8, 2017

3:50 pm

When you are looking for differentiators in the market and a team that can help you build your product with the highest quality while maximizing your resources, that list gets much shorter.

It happens when early-stage startups begin to take on funding. Once investors are involved the accountability factor goes up and now founders have to answer to their new partner(s). When the money clears the bank, the pressure is on to perform, get one’s product into the hands of customers, obtaining traction and data points to justify the raise. When time is of the essence founders begin to consider whether they should expand their development team in-house or look to build a virtual team.

One point of view would argue that an in-house team will provide more proximity to team members and instant flow of communication. However, with a limited amount of funds, founders need to consider all the expenses involved, plus their burn rate. As a result, more companies are considering virtual teams to build out their products. This mindset isn’t uncommon as large corporations use development teams around the world-why can’t startups.

hire developers

A founder may wonder: Then what about control, communication flow, and quality with an offshore team? I talked with Sherwyn Soff and Riccardo Soff, cofounders of Enqos, a Seattle-based engineering and digital design firm that created an R&D center offshore to build its own startups, to ask their advice on the shift of early-stage startups using virtual teams and how best to put a team together.

Sherwyn was part of the engineering team that built the initial version of Microsoft AdCenter, Ad Center Desktop, and Microsoft AdExchange, these products now generate over 2 billion in revenue. Riccardo has over 10 years of experience in the sales and operations of internet domain name, marketing and IT industry and was part of the founding team of Runway2Street.com, subwoofer.com and incensesticks.com

When asked about how startups can best save their money in development, Sherwyn said,

“An offshore team is cheaper to operate and has a lower burn rate. You can put more resources into a development team versus the cost of one resource in the states.”

In a telecommuting study by Global Workplace Analytics, “Fortune 1000 companies around the globe are entirely revamping their space around the fact that employees are already mobile.”

For startups, building a virtual team could become the new norm in order to gain the talent they need to build their product.

“Keep in mind, every top technology company has a large research and development center offshore in countries like India and China, so it behooves [founders] to look at offshore as a serious option that gives [them] access to top talent, build [their] product faster and save a lot of money,” Sherwyn said.

Read: How to Be a Productive Startup With a Remote Development Team

When founders hire an offshore company, it’s important to discuss intellectual property and ensure that it’s clear who owns the code and has access to the secret sauce.

“We have contracts and legal language in place that will help secure IP and Trademark rights on products that are being built,” Riccardo said. “Though the virtual teams are based overseas, the contract/agreement with a startup is with a company based in the United States and hence bound by local laws.”

How do you know what kind of offshore shop to go with? Riccardo said to do your research and look at the owners/founders of the company. Begin to consider if the founders really understand what you’re going through and the needs of an early-stage startup.

“We have been a startup and our solution was used to build our first startup with limited funds.” Riccardo said. “We believe we were made by startups for startups, which is very different from using a typical consulting or outsourcing firm that doesn’t know how a founder thinks and acts.”

Read more about building out your product on TechCo

This article was written in partnership with Enqos, a technology company building solutions that unlock the potential of entrepreneurs.

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Tishin is a technology journalist and correspondent. She has written for TechCrunch, Demand Studios and Fitness, and has regular network segments on local Phoenix affiliate stations. She holds a Master's degree in Clinical and Sport psychology, and has covered many areas of technology ranging from 3D printing and game development to neurotech and funding for over 15 years.

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