How to Build a Development Team for Startup: Tips and Solutions for Founders
Updated August 16, 2023
OK, you’ve got a thoroughly spelled-out idea, an effective business plan, and an even more convincing pitch. You’ve even passed your first round of funding. Congratulations! Now the most exciting part begins — building a team to make it all happen.
For the obvious reason of limited financing during the startup stage, your team must first achieve cost-efficiency. That is, what it produces (when measured in monetary terms) must be higher than the total expenditures for its maintenance and management. In other words, you need to carefully choose only those people who are absolute must-haves for your team.
It is easy to get somewhat confused at this stage, simply due to a constantly expanding variety of IT-related professions. If you aren’t exactly sure what makes a project manager different from a product manager (both are PMs, right?), you may find the following tips useful.
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C-level choices
Let’s start with yourself and other leadership positions. Do you need a technical co-head alongside yourself? They can also carry the title VP of Engineering, Chief Technical, or Chief Information Officer (depending on the ambition and the nature of the product/project).
Here you would need to critically self-evaluate your skills and your time load and realistically. How much tech help do you really need? Is it a part-time or full-time job, or a job for two different people?
Secondly, suppose your idea/product can be explicitly split into two or more standalone ideas/products/workflows. In that case, it is highly advisable to have at least two Product Owners (often referred to as POs). A simple example: if you are developing a dating app, it may be a good idea to have three product owners — for backend, for frontend and UX, and personal data security.
As a rule, each product owner has at least two project managers under them.
Defining the team: software development
The general rule here is simple: if you are a startup, you are going to need at least three people in your development team. Most likely, the maximum number of developers you’ll be able to afford won’t be around nine.
Once again, you’ll need to self-evaluate your project again. Depending on the complexity of the project, the duration of its growth stage(s), and your management style preferences (apart from actual developers), you may also need a software architect, a solution engineer, a DevOps, a business analyst, and a Scrum or Agile master. Most likely not all of them at the same time.
Software architect is responsible for the overall technical structure and the internal interface. They are also expected to provide strategic guidance to the entire team of developers. In some cases, you can just hire an architect for the first three months, if all goes well. Also, note that this position will most likely be the highest paid in your team.
Solution engineer is the person responsible for discovering major obstacles and creating original solution prototypes. Their work is somehow located between the strategic and tactical levels. Not all startups need solution engineers at the earliest stage, but you probably would need to hire one at later stages.
DevOps is responsible for troubleshooting between development and daily operations. In other words, these are the people responsible for the maintenance and stability of day-to-day operations. The DevOps’ job requires a knowledge of multiple coding languages, this position requires another extensive monetary investment.
You won’t necessarily need one if your team of developers is not yet too large and/or your product is original but quite simple under the hood. If your idea is more technically complex, then the rule “better safe than sorry” totally applies, and you certainly need to consider hiring a DevOps specialist.
Business analyst — you’re going to need one if you plan to enter brand-new markets which are unfamiliar to you. In some cases, a business analyst, marketing manager, and advertising manager can be the same person (at least for the first year).
Finally, don’t forget about testing and QAs. A widely spread urban legend is that startups do not need testers because product owners and founders test everything themselves. First, you won’t really have time for error reports. Secondly, identifying bugs is a standalone job in and of itself.
Moreover, if your list of extra features is still under development, testing will definitely be part of your team’s daily routine. In this case, opting for QA automation instead of manual testing is strongly advisable.
Calculating additional expenses
Even if your team is only made up of five people, extra costs are still unavoidable. Try to forecast as many of them as you can in advance:
- Office rent. Or alternatives — dedicated space in a coworking facility; office space shared with other startups; business incubators and startup accelerators. If you are 100% sure that your future office is a virtual one, invest in at least two or three paid Zoom licenses (40-minute limitations and the absence of recording would eventually become a real pain).
- Apart from Zoom, you will need other software tools. First of all, consult with your software architect and/or your solution engineer on a future technology stack. Secondly, do not cut down too much on management tools. Note that even advanced work planning tools (like Asana, Monday, and airTable) have free plans available. And investments in GitHub and expanded Google Drive storage will pay for themselves in no time.
- Extra perks for the team. In the IT sector, employees are rotating quicker than in any other industry. When you are a startup, employee retention can be a real challenge because more mature businesses can easily outbid you in terms of pay, medical insurance, free lunches, etc. It could be hard to compete with perks, but you can surely win by applying some creativity: mentoring opportunities, participation in meetings with investors, flexible working hours, workation opportunities, a chance to buy company stocks sooner than any investors.
In-house or outsourced?
This is probably one of the most tempting and most complicated questions any startup founder has to face.
Having a completely in-house team is a comforting idea for those with a recently created product. Today, very few startups are able to make this happen.
Outsourcing or out staffing is a good idea in the following circumstances:
- When you are still unsure how soon you would need to scale up
- Paying by the hour or by tasks completed is a better option for financial or managerial reasons
- You need people with highly specific skills for a rather short period of time
Finally, remember that you can always go with a hybrid model, keeping core development tasks and marketing strategizing in-house and outsourcing the rest.
