Go to the profile of Rose Yao
Rose Yao
I spent the last 11 years building products mostly at FB and Google. Also a food, travel, and fitness addict. Follow me @dozenrose or on www.roseyao.com

Startup life: contractors how and when

So the competition for engineering talent is brutal in the bay area. Startups today have to offer a dream, equity and a competitive salary. Hiring is hard and you are competing at every level. With the big companies like Facebook and Google that offer stability and are doing some really cool things like VR and AI. With the Uber, Lyft, Airbnb, Pinterest, and Slack(s) of the world that give people the dream without much risk. At a scrappy small startup, you’re competing with all those company and all the other small scrappy startups.

The best engineer for the job is going to have the skills you need now and they’re going to believe in the dream you are selling because they’re going to take the job for less money and a lot more risk. (Note on compensation: It is important to have a consistent and transparency strategy early.)

So how do you fill the gap while you’re trying to hire the best engineer for the job and stick to your budget?

Before joining the startup world, I was pretty against the idea of using contractors. How could someone working at an hourly rate be motivated to work as hard as someone who’s full time? How could a contractor do high quality work when they don’t have to maintain the code? How could they understand our libraries and have all the context? How can they fit into our culture? But the world is changing and I realize I was just spoiled with the wealth of technical talent at FB and Google.

When I joined Athos, our VP of software at that time left to be CTO at his own company and I started to help with recruiting and planning on the engineering side. I talked to my friends who started companies about how they dealt with those problems. In the last 9 months, I’ve realized that contracting smartly can really help a startup make the best use of their funding and avoid hiring the wrong people out of desperation.

So how do you contract smartly? Let’s start with the type of engineering contractors.

Offshore engineering consultancies

  • Who are they: large groups of engineers in Mexico, China, southeast Asia, eastern Europe with a sales team or lead in the US finalizing contracts.
  • Cost: $-$$ (typically $30-$70/hr)
  • Best projects: Use this option for work that’s very clearly scoped with little ambiguity. Examples: unit testing/API testing, static marketing pages.
  • Tips: Make sure you have strong ideally personal references for the engineers . Put someone in charge of managing the project and invoices. Set up regular checkins and make sure scope and hours are agreed up ahead of time.
  • Pros: costs being low is key.
  • Cons: Communication gaps, time zones, quality of work and management overhead.

Freelancers

  • Who are they: engineers who optimize for flexibility and typically get jobs via personal references or freelancer sites.
  • Cost: $$ (typically $90-$150/hr)
  • Best projects: This is actually a great option for MVP projects and filling in the “first engineer” role before you raise an A round. I know several YC startups who bootstrapped their first launch with 1–2 freelancer engineers.
  • Tips: Interview and treat them like a full time engineer for the best work. You may end up converting them later.
  • Pros: Generally native English speakers with good engineering backgrounds and low risk because you’ll know within the first week or two if it’ll work.
  • Cons: Generally they work remotely, so lots of slack and skype in your future. Also you will probably be throwing away their v1 work when you do hire a full time engineer.

Boutique consultancies

  • Who are they: small firms with 10–30 engineers generally based in the US or Canada.
  • Cost: $$$ (typically $150 — $200/hr)
  • Best projects: Best for accelerating a project with a clear deadline. You need people who know what they’re doing to get in there quickly and most likely just be part of the team. You don’t have time to wait for a new engineer.
  • Tips: This is an expensive option so make sure you have a great reference and you hire the right firm for you. Occasionally these firms will be willing to negotiate cash for equity.
  • Pros: For these firms to be successful, they have to be good. They know how to roll up their sleeves and get stuff done.
  • Cons: Mostly it’s expensive and only sustainable if you already have a profitable business.

Experts

  • Who are they: engineers who specialize in particular areas and are amazing at what they do. They’ve generally proven themselves with their work at large companies or universities.
  • Cost: $$$$ (typically $250 — $400/hr)
  • Best projects: Advising roles where they help make critical engineering decisions but are not spending time on the execution. Super specialized and most likely industry specific technology that’s critical to your product. (ex: how to interface with rockets)
  • Tips: Try really hard to learn everything you can and ideally recruit this person to join your startup if not full time then as an advisor.
  • Pros: You get the expertise you need.
  • Cons: Expensive and often you still have to make hard decisions about how to take their feedback/advise and deal with reality of where your company/product is right now.

Hope this helps. Love to hear what you think.