Startup tactics: How and when to hire technical talent

As a serial entrepreneur, MIT Sloan’s Paul Cheek knows what it takes to lead a successful startup. But as a software engineer, he also knows that founders can be eager — sometimes overeager — to hire coders and engineers and get right to work.

“I have unfortunately started with this tactic … only to build a product searching for a business model instead of a business that offers a product,” writes Cheek in his new book, “Disciplined Entrepreneurship Startup Tactics.”

In the following excerpt, Cheek, executive director of the Martin Trust Center for MIT Entrepreneurship, offers several points for startup founders to consider when transitioning from product design to development — and when sourcing the early engineers who will help make that transition.

“Day 0 engineering does not necessarily mean writing code or soldering circuit boards,” Cheek writes. “Instead, remember that you are building your minimum viable business product” and will have to hire, contract, or be the talent you need to get that product built.

This excerpt has been edited and condensed for clarity and length.

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Early approaches to technical talent
The engineering and creation of your product is one role you should be familiar with so that you can, at minimum, communicate with more technical individuals if you are not one. There are a few approaches you can take to equipping your venture with the technical capabilities necessary to bring your product to market.

DIY
The first approach is doing it yourself. If you are technical — or wish to learn the needed skills — you can invest in building the first version of the product on your own. But even if you possess the right technical chops, the hours and days you spend developing your product yourself will take away from the time and energy you could spend building the business. While it can increase your iteration clock speed as you test and incorporate functionality, your bandwidth will be limited. If you are not technical, learning enough to bring your product to life will likely increase time to market, which may also be prohibitive.

Finding your CTO
You might consider hiring a technical resource such as a chief technology officer (CTO) or technical co-founder earlier. Bringing technical skills onto your team can be incredibly helpful, but it can also take a lot of time to recruit quality candidates. Also consider the financial trade-off, given that technical resources are expensive. Hiring a CTO will likely increase your burn rate, and their overall compensation package may cut into your ownership of the business more significantly than you’d prefer.

Outsourcing
When building the product yourself or finding a CTO are not possible, you can also consider outsourcing. This might be to a freelancer, a contractor, or a development shop that builds products for other companies. With this approach, you have a set project or engagement timeline and do not have to hire individual full-time resources yourself. In most cases, equity doesn’t factor in, and compensation is exclusively in cash due to the limited time span of the engagement.

Weighing the options
Remember that as your business grows, the decision to hire technical resources compared to outsourcing is not an either-or decision. In all likelihood, you will at some point complement in-house technical resources with freelancers, contractors, and/or outside dev shops. In the short term, keep these things in mind:

1. You should have technical competencies on your team to round out the team’s skills.
2. A full-time technical resource adds value to the team and to the business’s value.
3. Freelancers, contractors, and dev shops do not have long-term commitments to the business, so significant technical debt (the future cost of not fixing engineering problems now) is possible.
4. Routine maintenance becomes difficult without institutional knowledge, which is often lost when an engagement with a freelancer, contractor, or dev shop ends.

In almost every case, hiring in-house, full-time, long-term technical talent for your team will best prepare your venture for success, but you may need to look to external resources to continue gaining momentum or get traction while you find the right people to bring aboard.

Also remember that your business and product will continue rapidly changing in these early years. As you learn from interactions with end users and customers, you will have to disseminate that information to your team, which is much faster and more seamless with full-time, long-term team members.

Excerpted from “Disciplined Entrepreneurship Startup Tactics,” by Paul Cheek. © 2024 Paul Cheek. Reprinted by permission of Wiley. All rights reserved.