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Ask YC: Any successful start-ups which outsourced their product development?

14 points by swombat ↗ HN
My personal experience tells me that product development is the last thing that a start-up should outsource. You don't outsource your core competency, and the core competency of a start-up is product development.

In fact, I've seen some start-ups fail quite badly after outsourcing their development (and, in my opinion, that was because they did so). By contrast, every start-up that succeeded spectacularly seems to have had some serious engineering talent involved right from the start.

However, to keep an open mind, I'd be interested to know whether anyone knows of successful start-ups (i.e.: made a good profit, and are reasonably well-known in their niche) which did successfully outsource their product development. It'd be particularly interested if there are any such start-ups which actually outsourced their development to a low-cost location like China or India, and still succeeded.

Thanks for any information on that matter!

20 comments

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gaika
digg
SwellJoe
Why is this being down-voted? It's always been my understanding that Digg was originally written by contract programmers. Have I been lied to?
[deleted]
(comment deleted)
inovica
I saw that and voted you back up as it was my understanding too that it was contracted out initially
vikas5678
Well,IMO while its really unsafe to have everything developed outside, certain tasks not related to core functionality of your product, maintenance work, etc is best delegated. However, I'd rather find freelancers to outsource to, than whole companies.
alaskamiller
It works when you have the money to buy up better talent.

Zoho is the best example of this. They're based entirely on outsourced development.

bigbang
Zoho development is not outsourced, rather thier entire development team is in India's zoho office. Thier biz dev is in US. Thier hiring is very different and interesting. they hire many kids out of high school. In india, normally ppl who drop out of high school almost always do so,bcos they cant afford college education. Very rarely do ppl drop out t pursue thier passion due to society pressure of importance of education.
speby
I'm willing to bet Zoho is at a competitive disadvantage long-term because of outsourcing their development. I can see the advantages of hiring some great outsourced developers quickly up-front when the money is there but I don't see how it truly pays for itself long-term (especially when what you sell is the software product built by 100% outsourced teams).
tptacek
Since this board is populated in large part by entrepreneurial software developers, you're bound to get a biased, emotional answer to the question of whether offshored developers are cost-effective.
inovica
We originally outsourced development of one of our products to some Russian guys who had been doing work for us for a year or so. They did a great job and the software started selling - and still does now. What I did though was after paying them and after seeing what a good niche business I had... I made them (2 guys) partners - and they were over-joyed by it. They were brought into the core team and have supported and improved the product over the years. In terms of income, its not fantastic (around $100,000 per year) but its nearly all profit. Hope this helps
reinspruch
At the end of the day you have to find resources at a rate you can afford. I simply could not find local resources. Or put another way, I could not afford the going rate of the local scarce resources. So I went offshore and have not looked back. The people I am working with a good guys and I consider them to be friends.

And the good ones are not dummies. They know they going rate for development work and charge a healthy sum for their services. So it is not always about the lowest cost provider.

Long way of saying that if you have to, don't be afraid to offshore/outsource.

SwellJoe
MySpace was mostly written by contract developers, in the early days, though I guess they have staff developers now.
dshah
It's important to make the distinction between outsourced developers and remote developers.

The key is to have people that are very bright and passionately ommitted to the startup's cause.

plinkplonk
"It'd be particularly interested if there are any such start-ups which actually outsourced their development to a low-cost location like China or India, and still succeeded."

Stata Labs' s(http://www.statalabs.com/) product Bloomba (http://en.wikipedia.org/wiki/Bloomba) was developed in India. (I was part of the team for a short period). Stata Labs was acquired by Yahoo. Traces of Bloomba can be seen in Yahoo Mail v 2.0.

webwright
I believe Ryan Carson outsourced at least some of his product dev... http://carsonified.com/

He's not wildly successful (from a product POV) but I think he's making a few bucks.

johnyzee
Skype was developed in Estonia by outsourced developers.

I think it's fair to say they've been pretty successful.

jawngee
All of our development for http://massify.com was done in house, but we outsourced graphic design to an awesome shop in China, http://plusfactory.com/. Run by ex-ad agency folks from NYC.

It was great since they're 12 hours shifted from us to be able to give them a spec at 5pm and have something to look at in the morning. And their work is top notch.

sanchroust
What do you think are the ABSOLUTE in terms of the competencies on the start-up team?