Eliminating the risk of outsourcing

If you’ve been running a lean start-up, shoestringing operations until you can show market traction with your minimum viable product (MVP), on the day that you secure your first major injection of cash, you can celebrate the end of one set of problems… and then start losing sleep over a whole new collection that comes riding in on the coattails of that first big windfall. When you suddenly need to start responding to your investors’ immediate demands for scaling and innovation, you quickly realize what a challenge it is to find the right people to add to your development team.

Such was the case for the founders of a data and analytics start-up operating in the financial services sector. These guys didn’t just think they were the smartest guys in the room; they were the real deal. The founders, seasoned professionals from the financial consulting world, had amassed a great deal of relevant experience: One was a former CFO of a $100M company; two had worked as developers; and all had formed deep industry relationships over time.

They had a good grasp on the back end requirements for the analytics platform they were developing, but they needed help with the user interface, so they had tapped m3hive to develop wireframes. (Some of our deepest engagements start with just such a targeted role at the outset. Our partnerships can stem from a narrowly defined set of initial deliverables, and then, once we demonstrate the value and structure we bring through our MVP Development Framework, the client expands our role.) With this client, once we delivered the initial wireframes, they asked us to stay on through delivery of a high-fidelity prototype.

Once the founders demonstrated they had a product that people would pay for, the company was ready to pivot towards full-scale product development. Their story was a little different than most start-ups, in that they had the luxury of being able to self-fund their first round (avoiding having to give up equity to an early investor) with an eye towards securing a major round of external funding down the road. But they approached the transition to the product-development phase no differently. When they were ready to scale up operations, it was full systems go. And here’s where things bogged down: They were trying to operate in overdrive, but the company couldn’t scale quickly enough to meet the demands of its own aggressive development schedule.

Hiring talented developers is a challenge anywhere, especially in highly competitive tech sectors like New York, San Francisco, or, in the case of this company, Boston. Far too often the recruiting/hiring/onboarding process takes too much time and too much attention away from the actual work that needs to be done for which the jobs were posted in the first place. And while you’re investing time and energy in finding good people to bring onto your team, your competitors are steadily gaining ground and making progress on new innovations of their own.

So here’s where some crucial decisions need to be made. Do you double down on your recruiting efforts by overpaying a few search firms to locate minimally acceptable candidates as quickly as possible? And then do you overpay these marginal candidates because they are available to come aboard now, knowing that a year from now most of them will have moved on? Or do you put everything you’ve worked so hard to accomplish on the line by ceding control of your product development process through outsourcing to a development shop?

Neither route is appealing, and neither was viable for our client. They knew they had to stick with the recruiting process, because building an exceptional core team is the foundation for long-term growth, stability and continuity. But they understood that there are no shortcuts to be taken with recruiting. Finding the right candidates to add to the core team is a time-intensive process and a long-term investment. And outsourcing was a non-starter for them because they also understood that outsourcing would mean giving away ownership of an aspect of their business to an outsider who had no stake in the company’s success – something they were absolutely unwilling to do. And we agreed: We never engage in an outsourcing conversation because we know outsourcing doesn’t work. Instead, we talked to them about a unique alternative we can offer in the right circumstances: Team Augmentation.

Team Augmentation allows your business to scale by tapping our staffing resources and adding them to your team. This is nothing like outsourcing, and this is not a permanent solution. We offer Team Augmentation as a finite engagement that may last as long as a few years while you recruit the right people into full-time regular positions. During that time our skilled personnel join your team, learn your culture, plug into your workflows, and deliver measurable value to your operations.

We’ve created a replicable process for team augmentation in our Team Integration Framework. We’ve explored the Team Integration Framework in detail in a previous blog post, but the foundational concept is that we create value for the business, demonstrate impact on processes, and build your trust in our resources across all levels, from leadership to management to execution teams. Team augmentation works because we share the risk with you; if you don’t see value within the first 60 days, you don’t pay.

Now, even though we had helped our client successfully navigate the MVP development phase, the COO was very wary of plugging our developers into his team’s operations as they launched into the product backlog. He was very concerned with the security of the company’s intellectual property, and we needed to explain to him that our reputation was only as solid as our track record of delivery and preservation of confidentiality. The COO tested us on every security avenue he could think of, including NDAs, setting up closed-circuit television, and requesting ISO certification statements.

Instead of fighting him, we provided as much transparency as we could. We were open about what we could and could not do to address his IP concerns. We told him that we were doing ongoing work for a major law-enforcement agency with stringent security requirements, and once we agreed to isolate from our own network the M3hive developers assigned to their team, the COO decided to give Team Augmentation a chance.

We started with one developer, working on a 2-month engagement initially. As with our earlier work for the client, once they started to see our developer understanding the culture of the business and delivering the value within those first two months, the client expanded our involvement. Over the course of the next few months, our presence on their team grew from one to three to five to seven resources.

To date the engagement has flourished for over three years. We helped them progress to the point that they successfully closed on the external funding they were seeking — $10 million on an evaluation of $100 million. We will be looking to transition out of this engagement in the not-distant future, secure in the knowledge that our Team Integration Framework helped set them up for long-term success.

Team augmentation is about helping venture-funded start-ups scale and address market opportunities without losing time. The M3hive Team Integration Framework provides the needed structure to help get growing companies to the next level. If you’re interested in exploring staffing options that will satisfy your executive leaders, your managers, and your team leads, all while building value for your growing company, give us a call. We’d like to talk.