3 Ways to Improve the Phoenix Tech Startup Scene: A Developer’s Point of View

Phoenix is becoming better known as a popular destination for tech companies, with some of the latest being Zenefits and Weebly, but what about its startups?

Is there enough tech talent with an entrepreneurial mindset to make the desert a tech startup birthplace, rather than just a popular destination for existing companies?

The Service Mindset

Being an entrepreneur is tough. I get it. I continue to struggle with the ups and downs and financial implications. Yes, I take side work when necessary to help pay the bills and get paid for my time. What I don’t do, however, is expect immediate payment for all of my work.

It’s an old principle: your time on a project should yield some sort of payment. Makes sense as long as you’re thinking long term enough. If you start a venture, dedicate time and energy to it, and see it through some level of success, you will receive back from it at least what you put in. This whole philosophy proves to be an issue to those that don’t see short-term gain for their effort spent on a start-up.

Unfortunately, I’ve witnessed far too many developers slack on or entirely leave projects that didn’t yield an immediate reward. This leaves the founders hanging, often with partially-built code and sometimes out some cash that they paid to complement any equity.

I once worked with a developer that would have vested equity (up to 5%) if he had reached certain milestones. At the beginning of each week, we agreed upon the sprint tasks that would be completed and he always fell short without even the most basic of excuses. He just wasn’t working on anything.

After a few months of this, I had to “fire” him, at which point he said (indirectly), “You can only have two: free, fast, or good”. To me, this made the issue abundantly clear — I was expecting fast and good because I was giving him equity, but, since he didn’t see the future value of that equity, he considered himself as working for free, and therefore decided he could deliver slowly.

My Solution:

Make sure any developers that are brought onto your team for mostly, if not all equity, share in your vision and see the big picture opportunity. If they don’t, they’ll get tired of “working for free” pretty quickly.

Understand that working for a startup is different than working for any other client. Get used to not seeing a pay check, but recognize that if you contribute great work at a reasonable speed, you may one day see a 10x return on your investment in time. If you’re not willing to accept this and deliver on your milestones quickly and efficiently, then don’t waste anyone’s time by getting involved.

Technical Co-founders

Plain and simple, a non-technical founder should never have to focus on technical chores, especially those that require looking at or talking about code.

A non-technical founder without a technical counterpart will waste time dealing with developers, code issues, testing releases, etc, and will consequently fail to grow the company and/or make sales. I can also almost gauarantee that a first-time non-technical founder will jump from developer to developer for a while, sometimes wasting thousands of dollars in the process.

My Solution:

Find a technical co-founder. I understand this company may be your baby and you don’t want to give away equity too early, but having a CTO invested in your vision to execute on the items you’re least experienced with will benefit your company (and mental health) in the long run.

Look for non-technical founders you can partner with. It’s a great opportunity to get into a startup at the ground level and have significant responsibility.

Investor Understanding

The last major area of improvement is investors’ understanding of the technology startup. In technology, there are different risks and rewards, different revenue models, and different skill sets in the founding team. A lack of understanding of this on the investment side means that many young Phoenix startups are not getting funding. The ones that do aren’t always given enough runway, causing them to eat through the money too fast before being able to raise a subsequent round.

My Solution:

Get investors excited about your idea. Show all revenue opportunities and how/when you will get there. Have a strong plan for what you will do with any funding and try to link it directly to future revenue. Avoid terms and plans that non-technical investors will not understand. “Development” is too ambiguous.

Start by understanding that tech companies are a different beast than some of the other types of businesses you may be used to (real estate, service-based). The revenue may be delayed, but will likely yield higher margins than what you’re used to. Also, your investment dollars may be necessary to create sales revenue.

Have additional ideas on how to improve Phoenix as a technology hub? Please contact me through kirkmorales.com or join the conversation on Twitter with #yesphx.

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