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My friend's first startup took a dive after spending $80,000 to work with a local development company. It turned out the development firm was just a front to outsource all of the work overseas and take a big cut.
Long story short, 5 months later he ended up with no app, no money, and a lawsuit that he couldn't much afford.
Has anyone else had an experience like this?
I got told to train them in the application but how far can you get in like 2 weeks with a remote team, really? They seemed very competent however, so maybe not really a horror story but the whole thing was totally unnecessary because if we had gotten reinforcements when asked for it, maybe not everyone would've resigned.
If I dont see results or competence I bail before its too late.
I think the lesson for your friend is that they need technical people with ownership in the business. If your primary use is your App, you should be your own expert.
IMO: Be a full stack developer at least once in your life. Maybe twice.
When I was a freshman in college and learning iOS, I contracted out a developer team in Bangalore to write the backend software for an app I built, so that I could focus on the front end.
I had not taken a software engineering course by that point and had little experience writing clear and concise requirements, so that when the product was done it was missing key features that were necessary for the app to function but were not explicitly detailed in the contract.
I had to renegotiate for the missing features at an additional cost of $100. Granted, it was not a lot of money, but it was more than 50% above my original budget, and as a college student, that stung. Sometimes I still wonder if I was screwed intentionally.
Not much of a horror story but I hope my tale can serve as a lesson to others who may find themselves in the place I was then: learn the tech or be very very clear about your requirements before you sign a contract.
Shortly after, I got an Email from an unknown individual who said he knew the employee and asked if I could chat. Turns out, my employee was subbing out all of his work and stopped paying his sub, who then stopped delivering. The sub proved this to me by confirming some confidential information that he shouldn't have had access to.
After revealing that he had taken part in this scheme, the sub then asked me for a job! Needless to say I told him he wasn't a good fit.
What I get from this story is your friend raised an inadequate amount of money to build a company that required a technical background that he/she didn't possess, though should have.
80k over 5 months is 16k a month, which should get you roughly one qualified engineer. Unless the project was very simple, 5 months isn't a lot of time. Maybe they didn't understand what was possible within that time-frame / budget?
There's nothing wrong with outsourcing. I'm outside of the US (though from there) and companies outsource to me -- not because I'm cheap, but because there aren't that many people who do the specialized work that I do, in any country.
On the other side of it, most work that gets done for startups is relatively simple. There are plenty of competent engineers all over the world that can do the work.
> It turned out the development firm was just a front to outsource all of the work overseas and take a big cut.
Turns out Apple outsources all of their manufacturing to China and takes a big cut. Maybe I should start buying only `Made in the USA` (or wherever you're from) computers?
I also got the libraries upgraded (they were waiting for months for a release for some support library that turned out to be unneccessary with newer releases of the main libraries.)
We then went on 2 weeks vacation. When I came back, I was surprised to hear the contract was nearly up - they had supposedly been working over our vacation. This app looked identical to the MVP we'd seen before. I was upset, but there wasn't much we could do. Also it turns out the app didn't look flashy enough for leadership. This was a major wake-up call for me - I messed up here by not critiquing the app or making clear work hours expectations - but also I discovered that demo-ing an app to a whole group leads to a lot of group-think. The criticism only comes later and then you are screwed.
When I was consulting I had a build pipeline to production up as my #1 task. Doing this kept me honest and prevented a month of "go to production" issues at the tail end of the project from surfacing but far more importantly was building trust with my clients. They could see what was happening all the time and if something was going off track we could correct it quickly.
Similarly, I was running a digital agency and the performance of one of my first employees took a nose dive. After trying everything I could think of to help him turn things around I had to let him go. Shortly after, I got an Email from an unknown individual who said he knew the employee and asked if I could chat. Turns out, my employee was subbing out all of his work and stopped paying his sub, who then stopped deli…
He didn't "take part in a scheme", he was tricked into it the same way you were. He should have been getting a real pay check and not just the cut your employee was giving him.