• Know what every tech blogger likes to write about and approach them with stuff they care about. Robert is infatuated with Google Glass right now, so even if you have the shittiest Google Glass app (his own words) he would be interested, but if you have the most amazing WinXP app he will probably not.
• Get tons of traction and people will write about you (a given). Get everyone in your batch to say you're the "hot" company of the lot.
• Get intros from insiders and trusted people in the blogger's network. If Dave McClure gives a personal guarantee about your startup, Robert will likely write about it.
• Build something in a hot market. Everybody loves mobile and mobile is the future. Nobody cares about desktop. So build mobile - you'll get more love from bloggers.

This looks an awful lot like advice for fund raising. Robert has put himself and other prominent bloggers / tech blogs on the same level as investors as far as getting their attention is concerned. Is this a reasonable positioning for tech media?

IMHO, no.

We're way past the times when a TC article could catapult your startup into the public eye, and even then it was more illusion than substance. Today, there is no dominant media outlet that can guarantee significant exposure by itself, or even combined. Too much noise and low attention span leads to articles that send a few hundreds, maybe thousands of visitors as opposed to the server-crashing articles from TC of yore. Those are at best one time spikes and at worst a one-time blimps on your traffic map.

Now, I'm not saying that tech media is useless and doesn't require time investment, far from it - prominent publications and authors writing about you gives you some social proof, can get you some early adopters and is useful for SEO considering the pagerank of those sites.  The days of a big TC launch are over though, and bloggers should be working with startups and trying to find the next big thing before everyone knows about it - and not just following the herd and have them go through hoops and filters just for a chance to pitch their concept. (I could say the same about investors - the best investors are leaders and not followers. And they add much more value than bloggers, it's not comparable at any level)

Would I try to reach out to bloggers when we close our seed round? of course. Would I spend days compiling lists and work my network to get intros in the same manner as we do for fund raising? no way. We'd love to get media attention, but we don't rely on it. We'd like to work with tech bloggers, but we won't have someone full-time doing mostly that (like we do with fund raising now). I feel like tech bloggers should be of the same mindset - looking for interesting startups that are doing new things, and not another social / mobile / local app that can be phrased as x for y and solves another first-world "problem". Just because it's easier to grok for the general public (and the blogger), doesn't make it more news worthy than startups who tackle "hard", unsexy problems.

Just my 2cents. You can troll me in the comments.

The asymmetric Twitter following model really supports this behavior - for a long time I used Twitter almost exclusively as a content curation service. While my Google Reader account was getting out of hand with the guilt inducing +1000 unread items, with Twitter I never felt pressured to chase "Inbox zero" on my read count. I might miss some good content, but in most cases if it's interesting enough it will float up again and I'll catch it anyway.

With the deprecation announcement of Google Reader, many new RSS subscription services popped up / gained popularity, and I wonder whether they're catering to an inferior content publication approach. If you look at the Google Trends chart Andrew Chen put in a recent post, the downwards trajectory correlates well to the launch of Twitter (Mar. 2006).

My 2 main sources now for new + interesting content are Twitter and HackerNews. HackerNews pushes to the top the really popular items (so it's basically my actual "news" source), while with Twitter I can personalize my stream to suite my interests and preferences by managing the people I follow. I get introduced to new content via RTs and mentions, so my content stream is always expanding.

While I think RSS failed mostly on marketing and usage penetration for the average user, I also think it had problems scaling as your subscription inventory grew. I (and probably most people) don't have time to read everything interesting that crosses our way, and in that sense Twitter has become the content subscription service I actually needed.

Monday, Day 1 (stardate 47111.1)

Kickoff meeting for the #6 batch. Most of the partners and staff were in attendance to introduce themselves and how they can help us. Dave then goes on to heckle some of the founders (and one unlucky non-founder team member) about their metrics . The message is loud and clear - know your shit at all times. What are your important metrics and why should someone else care. The rest of the day was spent getting comfortable in the office and not doing anything of major importance.

Tuesday, Day 2

Starts with a talk by Paul Singh and Christine Tsai titled "Raising Advisory Rounds and How 500 Will Help You W/ Fundraising". Paul is currently working on his own startup, Dashboard.io, a product which the 500s network uses extensively for the program. His talk covers a set of tactics to raising Angel funding using AngelList and the 500startups brand, and how to sell your startup depending on what stage it's at (slides here).

Some quotes:

"Don't be [just] credible, be notable." The 500startups brand and your metrics give you validation which is a requirement but not enough to stand above the crowd. Try and differentiate your company from the rest by telling a compelling story and use credibility just to back it up.

"Be conscious. Successful fundraising is a series of approximations and iterations." Be conscious of what you are saying and how you are saying it [to investors]. Don't be weird - build a relationship and rapport and adjust your pitch to your audience. Follow up and get feedback. Iterate on your pitch until you find what works. As a side note, Paul apparently used to be a car salesman. Dude knows his shit.

"You can either raise money on vision or traction, but you can only use the vision card once." I previously wrote about our experience with raising with vision vs. numbers. As Paul says, both are valid strategies - but you can only use the vision card once [on the same investor]. Not sure if that's a major problem though, as there are quite a few investors in the valley. Your millage may vary.

"The best investors always understand that founders' time is more important than investors." Take meetings at a neutral place or your own offices if possible - not at the investor's offices [unless he's some serious big-shot that you *have* to meet]. Be conscious of your time management (Meet over coffee instead of lunch - Mark writes about the investor POV here, but it applies both ways).

Watch the slides for more - it's a great talk.

Christine then gave a follow-on talk about how to specifically use 500startups to help with the fundraising process (slides here). Main takeaways -

• Don't expect 500s to close your round for you. It's on you to make it happen. Hustle!
• A couple of great use-cases of previous batch companies using the 500s network to strong effect. Relationships are key.
• Raise from day 1. Try and close half of your round or more by demo day (don't expect to just magically get to demo day and get funded on the spot). Always be CLOSING.

This talk gave us some very immediate action items. We started compiling our (mainly Angel) investor list the same day (=night). We started planning our meeting flow for the coming weeks. We set specific funding goals for the duration of the program. Adam, my co-founder, will be focused 100% on that front and I'll have to pick up the ball on all of his other responsibilities. It's a challenge we have to overcome to get ahead in the game.

A welcome party and networking event for the batch members closed the day (I did not attend).

Wednesday, day 3

Day 3 kicked off with a 1-on-1 meeting with Dave McClure. In contrast to his explosive, nerd-rage on-stage persona, Dave is actually super-nice in person, and a pretty funny guy. Also possible we caught him at a good time - we heard from some of our batch mates that later in the week he became more visibly tired and less engaged. Lesson learned, guys - be first in line. We had a good, productive talk about where we're at and what our immediate goals are. He gave us some nice leads on relevant investors in the network and other bullet points to track. Also, turns out the 500S peeps didn't know we hailed from Israel when we applied. Who'd thunk it.

Right after we had a meeting with Sean Black, a network mentor, about building our sales team. I used to think you could find most hands-on advice online nowadays, but nothing beats talking to someone with real-world experience. We got some nice takeaways and actionable data to get the process going. Unfortunately, it was hard to get into a good flow initially, since this meeting was done over skype (and we both had some connection issues at the beginning to exacerbate the problem). Mental note - in person meetings are always better, at least for the 1st meeting. Hard to explain difficult concept over phone or skype (for both sides).

Next up was our metrics meeting - a meeting with a panel of 500s partners and mentors to discuss our key metrics and how we intend on improving it. This is the kind of feedback that is extremely hard to get without being in a program like this. It seemed like we had most of our shit in place (we like to track everything), but it was another good talk and as usual there's room for improvement.

We had another mentor meeting in the afternoon, this time with Michael Levinson, a VP of strategy at oDesk - a service which shares a lot of our audience. We talked about some bizdev opportunities in that space and he gave us a lot of stuff to think about. Bizdev is one of the hardest things to do in a small startup without significant leverage.

During the day I could barely get any work done on the product anymore - I was handling sales (building our sales team), design (working on our redesign with our remote designer), starting to recruit a community manager while setting up appointments with network mentors. I'm a developer, by the way. The grind was on, need to get used to it.

The day ended with a fireside chat with Dave which I did not attend for various reasons. I heard it was quite engaging, with Dave talking about his personal history and how he made it to where he is today.

Thursday, Day 4

The first day of the week we had nothing scheduled for the morning. We actually managed to get some work done before our first meeting.

In the afternoon, we met with Shai Goldman, a partner in 500s that is usually located in NYC. We had a decent talk, but Shai is a tough read, so hard to tell what his impressions really were. Apparently he will be visiting Israel next month to connect with local investors, so we might have something more concrete to talk to him about next time. (Though personally I'm not fond of raising from Israeli investors - my co-founder wants to explore that option).

For our next meeting we decided it was time to split up - it's just not sustainable taking every meeting together. We need to be more conscious with how we use our time. Adam went to meet Yvette Bohanan, a previous Sr. manager at Amazon and a payments manager at a host of huge companies. Adam told me he had a great, dynamic talk with her - perhaps meeting 1-on-1 is better for building rapport with mentors. We will continue with this approach going forward, whenever possible.

While Adam was meeting Yvette, I met with Mike Greenfield, who previously worked on fraud detection on Paypal. Fraud detection is a subject close to our hearts, and keeps us up at night even though we prevent 99% of it. We talked about ti how identify potential frauds based on on-site behavior, and also a bit about growth hacking which is something Mike was doing at 500s last year.

Friday, Day 5

We are getting used to the flow of meetings and actually manage to get some product work in between (meetings are highly disruptive for doing development. No helping that).

After lunch we met with Brian Heifferon, who is advising on go-to-market strategy, sales and marketing. This was definitely one of our most productive meetings yet, as we talked close to an hour about every aspect of setting up a sales process, and even getting to specific details, such as going over our cold-email template and offering improvements. I feel much better prepared to tackle the task of setting up a sales process now. The value of the 500s program really shines here by giving us shortcuts over learning things the hard way, by getting hands-on advice from someone who's been in our shoes and came up on top.

The day ended with most of the batch going out together for drinks near the offices. It was a great opportunity to finally get to know some of the batch mates in person. Props to Kevin from Geekatoo for organizing this, we had a blast.

Week 1 in the books

I think I managed to convey the intensity of the program so far. And we haven't even started raising! we're super excited to see where we'll be in 4 weeks, 2 months and at demo day. The opportunities are there. It's money time.

P.S - We're hiring:

• If you are a developer with some marketing / networking skills - we need a marketing / community manager for developers.
• If you have experience marketing and selling software, we are looking for a marketing manager.
• Marketing interns are also welcome.
• Pay will be competitive though not tops, you'll get to work with us in the 500s offices if you're nearby and we do accept remotes. You will be our first full-time employee, so major stock options will be on the table.
• Check out our AngelList profile for more details and create a profile if you don't have one yet. We are looking at all the people who marked as "interested" in talking to us. Or send me an intro letter directly to eran[at]our startup domain (you can do both) - make sure to tell me why you think you are relevant - a CV dump is not a good idea.

"x10 developers" are, in fact, proficient developers, who are experienced with their stack and problem domain. Once you get to this point, you can still find room to optimize - some people are inherently more focused or talented and you can always gain more experience, but the difference between developers who are proficient at what they do will never be a x10 multiplier - it will be closer to a variation of 30-40% in productivity. In some extreme cases (super experienced, focused, and naturally gifted), you might even reach x2 times productivity over a baseline proficient developer (I've seen it in action).

On the other hand, you have developers who are simply not proficient. They either have no aptitude for programming at all, or are so inexperienced that progress is very slow as they are learning everything as they go. Those are the "1/10 developers" and they make proficient developers (i.e, professionals) seem like x10 developers.

1/10 developers in the wild

Several months ago, I was involved in a venture where I was brought in to replace the previous CTO. They were just in the middle of a transition from a homebrewed framework into a popular open-source one, which I was intimately familiar with. Left behind was a developer who was highly recommended by the CEO (through word of mouth from the previous CTO). He was studying for a Ph.D in computer science at the time.

That developer was spearheading the framework transition for the previous 6 weeks prior to my arrival. Going over what he had accomplished for those 6 weeks, it appeared that he hadn't done much at all. It looked to me like the results of 2 hours of work, tops. Though I already had my doubts, I gave him the benefit of the doubt - maybe it was his lack of experience with this framework, or lack of attention / mentoring from the guy I was replacing. I would try and bring him up to speed and see if he can catch up.

I started assigning small tasks and providing guidance to see if he can up his productivity to reasonable levels. He was getting stuck frequently, and I had to literally spell out solutions for him and walk him through it. After a couple of weeks or so of this, it became apparent that I was spending (way) more time assisting him than he was saving us with the code he was writing. The code he was writing was decent, working code - he was just writing it very, very slowly.

We finally let him go after 3 weeks, during which the amount of actual code he wrote would've taken me 1 hour, tops. He seemed like a smart person and he did understand the basic principles of programming, but getting real-world features implemented was not something he could do, at this point. In the end, the feature he was working on for 3 weeks was removed and replaced with something else - the rewrite took me about 30 minutes (for a more expansive feature).

Not everybody can be a professional developer

I cannot blame inexperience alone for this - I have previously tutored junior developers at our  previous firm into self sufficient, productive developers within a couple of months (with steady progress in between). You can tell when someone "gets" it and when someone doesn't. People who don't are the "1/10 developers", that some put as the bar of performance for everyone else.

Next time you want to add a productive member to your team, you don't need to hunt for that mythical "x10 developer" - you just need to find someone who can develop a small feature using your environment and stack in reasonable time, while writing code that makes sense.

(On behalf of all the quotes I spread throughout this post, I apologize)

Addendum

Reading through the comments, it seems there's some confusion about what my intention with this post was. I never meant to bring down or ridicule anyone - the developer I mentioned was a very smart and amiable person, just not a good fit for doing software development. My intention was to point out the meaningless of the "x10 developer" term, and I parodied it with the equivalent term "1/10 developer" (hence the quotes around those terms throughout the post).

My point is this - not all people representing themselves as programmers can actually write useful code. People know this phenomenon as the fizzbuzz test, but some people who can still get by this test and make their way to dev teams, will never be proficient developers. This creates the illusion that people who are proficient at what they do are "x10 developers". That was what I was trying to convey with this post.

Others said that those "x10 developers" are developers who solve problems that have x10 effect on project progress (they advance the project one month ahead in schedule with a small addition, for example). My question is this - wouldn't all proficient developers (with the relevant experience) put in front of those problems - produce the same results? (in a time span that is in the 30-40% variation range)

As someone who recently moved to the U.S (from Israel), I'd definitely put some of the blame for the cost disparity on the medical insurance system in the U.S. To explain why, I'll relate from my own experience -

A few months after I moved to the states, and before my travel insurance expired, I set up my health insurance with the Blue Shield of California. After much deliberation, I settled on a PPO plan costing 200$ a month. It might sound on the low side to you, but consider that up until now I was paying 71NIS (~19.5 US$) a month for the highest level of coverage (you can see the actual costs on this Google translated page of the "Gold" plan at the Maccabi Health insurance provider). In Israel, all citizens are covered by law, and most medical needs are subsidized through the a health tax (which is collected by the social security office).

At this point I thought I was set - since I'm used to insurance that "just works". However, that was not the case when I actually needed medical care.

A couple of months later, I developed a minor condition in my ear - swelling and build up of fluids - a common affliction for those who train in grappling (I train BJJ - if you never heard of it, it's kind of similar to Judo / Wrestling). If not treated within a few days, this swelling can become permanent, leaving your ear permanently deformed (a condition called "califlower ear"). This was not the first time I had this condition, and in Israel I treated it with the help of a physician without any problems, so I figured I'd do the same now (time to finally use that 200$ a month insurance!).

So I go to my insurance's website, and find an ear doctor (an otolaryngologist - try saying that 3 times fast) in my area, set up an appointment and go to have the procedure done. On the day of the appointment, I arrive on time, hand out my insurance card and then I'm led to a small doctor's office. An interesting footnote about the operation they run here - one doctor is responsible for 4 (or 6?) closed offices, visiting one at a time and then assistants such as nurses and so forth take care of his instructions while he visits the next room. Pretty efficient for the medical center.

Anyway, after 10 minutes wait, the doctor comes to see me, we exchange pleasantries, he takes a look at the ear and says he can perform the operation right now, which is what I had expected. I say great, he says the nurse will bring me a form to sign since it's an invasive procedure (a small cut to the ear). After everything is signed and he comes back from one of the other rooms, he performs the procedure, which takes him about 2 minutes + 2 minutes to suture it and wrap it up. I say "Thank you very much, see you in a week (to remove the sutures)", and leave, feeling pretty good that it went as smooth as expected. At no time did were any medical costs discussed.

Well, you can guess what happened next - 3 weeks afterwards I receive a bill from my insurance company, for the sum of 1,076$. The breakdown was as follows:

• Doctor's visit - 300$
• Procedure - 776$

To say I was surprised would be an understatement. 1,076$ for a 5 minute doctor's visit? I'll mention at this point that this procedure is so simple, that many do it at home by themselves (and from now on that includes me). I call my insurance to see WTH is going on. I go over the claim with them, and slowly it dawns on me what makes the lower tier insurance plans relatively "cheap". I was in the dreaded "deductible" for both the doctor visit and procedure - which means I need to pay it all out of pocket. In Israel, many standard medical needs (such as a doctor visit) and procedures are covered completely by  insurance - there's no copayment or deductible for either. If there's any out-of-pocket expenses for the procedure, medicine or exam, they are listed visibly and are approved beforehand by the needing party. At no time was I informed of any expenses - let alone over $1k (for some people that might not sound like a lot of money, but for me at the time it definitely was - for an unexpected expense). I had just assumed that my insurance will cover it if no one informed me about the costs and asked for my approval.

At this point I call the medical center's billing department itself, trying to understand the nature of those costs and why wasn't I informed. Here are some excerpts:

• Me - Does 300$ for a 5 minute doctor visit sound reasonable to you?
• Medical Center Billing Dept. - Those rates are within the range found in this area.
• Me - I wasn't asking about that. Does 300$ for a doctor visit sound reasonable to you? for a physician within my insurance network?
• MCBD - Sir, let me check something with my supervisor. Could you hold on for a minute?
• Me - Sure. I'll be here
• ...
• MCBD - Sir, I checked with my supervisor, and he says we can offer 30% discount on the bill. Would that be fine?
• Me (after a short deliberation) - I guess if that's the best you can do, I have no real choice. I'll take it.
• Me - I'm surprised that neither the reception of the doctor informed me of the cost of the treatment.
• MCBD - They do not have that information.
• Me - I see... so for future reference - how can I tell in advance how much would a service cost me when I visit your center?
• MCBD - *pausing, not sure what to say* You could ask for the procedure codes and then check with your insurance.
• Me - You mean you guys can't tell me in advance how much a treatment would cost?
• MCBD - Unfortunately, no.
  (Meaning I would need to ask my doctor to wait, fetch the procedure codes, call my insurance, have them cross-reference against the medical center I'm visiting, probably wait for them to call me back while they get the specific cost from that center - all in the middle of a doctor's appointment).
• Me - Ok... thank you.

What we learned here

• (Conjecture) Medical providers will over inflate bills to insured patients assuming insurance will cover. When it doesn't, they are mandated to give a "discount" to appease angry customers.
• Since they are typically being overbilled, insurance companies will raise their rates so even the lowest packages are 10 times the cost of a top-tier insurance package in other counties.
• Medical providers and insurance will make it very difficult to know medical costs in advance. Providers will obfuscate their prices through procedure codes, and insurance companies develop complex insurance packages with a ton of fine print for actual coverage, copayments and out of pocket costs.

If you already lived in the U.S for a couple of years, you probably knew this already. For anyone arriving from other countries, this can be quite a shock.

Cost opaqueness makes competition and informed choices very difficult - if you can't easily tell how to minimize your costs, you are left with trial and error. It appears most states in the U.S do not require hospitals and medical providers to list their prices. See here how your state ranks in this respect (California gets a D).

The NY Times article I referenced in the beginning also mentions how Americans use health care less frequently than other countries - considering the volatility of costs, I think that's hardly a surprise. I have been very cautious in using health care ever since that incident (even though I upgraded my insurance). I can also understand why so many people are uninsured here - I heard about so many cases from friends here on how their insurance didn't help them when they needed it, and then having to spend thousands out of pocket - no wonder you wouldn't want to add the insurance cost itself to it. The only reason to have insurance here in the U.S is to avoid going bankrupt if you do need something more than a simple treatment (like an operation).

The medical services and insurance cycle of raising and obfuscating prices to squeeze more out of people who need medical attention, is terrible. In my opinion, medical care is one of the core things that a 1st world country should make available to anyone, for cheap, by subsidizing it and enforcing transparency and price normalization for common needs (In Israel, we have a uniform benefits package that is provided for free for anyone with insurance - which includes every citizen). The prospects of this happening in the U.S do not look good, and it's a shame.

Coming across a heated discussion a couple of days ago on Hackernews over an article titled "30 pounds in 30 days", took me back to the time we were educating clients on the cost of software development. I would like to offer my perspective on outsourcing, cultural difference and the overall cost of outsourcing software product development.

(For the short summary, skip to the TL;DR below)

It takes more than an engineer to build software

If you are a first-time entrepreneur and likely someone with little experience with software development, the chances of you successfully directing the development of a product on your own, are slim.

If I told you the same regarding building an apartment complex or a prototype car, that might have seemed obvious. You would not start such a project without an expert translating your vision into the project requirements (such as an architect or an industrial car designer). In software development, too often vision holders hand off a "vision document", i.e. "The Specifications", to a developer and expect him to translate it to the finished product they have in their mind.

Most software developers or graphic designers are simply not fit for that role - they do not have the experience, skills or vested interest in transforming your vision to an actual product. They know how to write code or design user interfaces, not understand what are the user-flows that achieve the vision you had intended. Not to say those people don't exist - because they do, just saying that most aren't and it's wrong to expect that in advance.

Most outsourced project fail for one main reason (and by outsourced I mean everything developed outside of your internal team) - having no interest holder with the ability to translate the original vision into reality. Fact is that conveying general and abstract ideas in words is difficult, and most people don't do a very good job at it.

The Correlation Between Cost And Quality

There's a catch-all phrase that says "You get what you pay for", and it has merit. Logically, it makes sense - the better a product or service is, the more you would be willing pay for it, right?

Reality is more complicated than that. Brand, culture and competition can affect price just as much as quality. This is true in software development as well - a quote from an Indian developer in Delhi that is 1/10 of one from an American firm in NYC, doesn't imply anything about difference in quality. The Indian developer is competing against the pricing range of his peers in Delhi, and the NYC firm is doing the same in NYC while also taking brand into account (not to mention company overhead). Pricing services such as software development reflects the cost of living as much as anything.

The truth of the matter is that high cost development projects can fail just as much as cheaply outsourced ones, with the failure often not even related to the actual developers. Under-specified product specifications and ideas and business models that were not fully hashed out, bad communication skills and budgeting / cash flow problems - just to name a few.

So Where Do I Find Good Developers?

If I had a dollar for every time I heard this line... well, I'd have a few, that's for sure. As the CTO of Binpress (A marketplace for source-code), I've done code reviews for thousands of developers, from all over the world. And the conclusion I came with is that you can find talented developers everywhere. You can also find terrible developers everywhere. There is no preference to any specific geographical location as far as the quality of code goes. The distribution is, more or less - 70% terrible code, 20% decent / useable code, 10% good to great code.

Think North American developers are the bomb? well, they write plenty of shitty code too. Think Indian developers are worker bees who post incessantly on message boards for quick solutions? well, they can write top-of-the-line code too.

So how do you find good developers? the simple truth is that if you don't know how to assess the quality of code yourself, you just can't tell if you're talking to a good or terrible developer. He might be a good talker, but all of his projects are copy-pasted from some online tutorial. He might be an introvert with communication problems but damn, he can really crank out polished software in no time.

Trust

My personal opinion is that it's first about trust - if you know someone you trust who can vet out developers for you, that's your best bet. If not, you need to find a developer (/company) that you feel you can trust to turn your vision into reality. If you do not have the experience or skills to write up the requirements of the product, you need someone on the other side that can do it for you (the so-called "product guy").

In addition, you need to bring cultural differences into account. In many countries, the same response means difference things, and people react and communicate differently. In India, for example, people have a tendency to try to please - so they will say "Yes, no problem" to your requests, while in reality they might not know how to get it done or it might prolong the project significantly beyond the original scope and budget. In Israel, for example (where I hail from), people are very direct, much more so than most Americans. This might seem like a negative if you don't handle unfiltered feedback well, but on the other hand, you can be sure to receive the developer's honest opinion in most cases (on the downside, it does create more friction than necessary, most often than not).

Communication

The second important factor to the success of a software development project, is good communication. If I were to outsource today, aside from testing the quality of code (which luckily, I can), I would mainly filter out people depending on how communication with them went.

Do they respond to Emails in a timely manner and with decent grammar? how well do they communicate their thoughts and share their opinions? if it seems I might be discriminating against non-English speakers, that's not a mistake - clear and mistake free communication is very much dependent on being able to understand each other well. Especially when talking about very technical topics and detailing complex processes and interactions.

One small advice - try not to haggle on price with a software developer. Just like you wouldn't ask your lawyer to work at lower rate than they bill other clients (or maybe you would) - everyone has the price they are willing to work for, and you should respect that. If you do manage to get the price lowered, don't expect that not to have trickling effect into the project as the developer might try to cut corners to even out the lost income.

TL;DR

So to sum things up:

• Outsourcing can definitely work and be cost effective if you know what you are doing or know someone who can help.
• If you don't have complete faith in yourself on being able to translate the vision that's inside your head into words that can be easily understood by complete strangers, you should find someone who can.
• Good developers are everywhere - just make sure you understand their culture before making assumptions.
• Communication is key - setting expectations correctly before and during the start of a project, manufacturing easily understood requirements / specifications and related resources (mockups, screens, etc), and making sure everyone is on the same page.

Good luck to everyone setting out to build their product ideas! you are already one step ahead of 99% of the population.

Join the discussion on Hackernews

Most often the process stops at that point as I realize that -

• The product is not as simple as it seems on the surface,
• There are reasons it is built the way it is, which were not immediately apparent,
• There is already strong competition in that space

I went through a similar progression when I came up with the idea for my startup, Binpress. I had just finished yet another client project rather quickly, thanks for the most part to the mature code-base I've been building for several projects up to that point. I was thinking to myself - instead of continuing to provide custom development for one project at a time, wouldn't it be more efficient to just license the code stack I've been using as reusable components?

That was the initial idea, anyway. From there it grew to an idea of building a marketplace for developers to do the same, with the major competition at the time being codecanyon. The reason I felt codecanyon were "doing it wrong", is that they focused on low-end, low-cost components mainly for designers and beginning developers, without any kind of quality control. They did seem to be making significant revenue (I scraped all their sales data and I can say with confidence it is significant).

Understand first, build later

Alright, so why am I bringing this up now, and how does it relate to the title of the post?

The research process I went through when I decided to build Binpress took close to a month. I used codecanyon for a while as a publisher and sought out additional similar services. I talked with freelance developers and codecanyon sellers, gathering as much insight as I could. The goal was to understand why codecanyon was built the way it is, and if my take on it is valid.

Not everyone shares the same process - I just read a blog post on a new service called Gitiosk, which is termed "Building a Binpress challenger in 48 hours". In it, the team explains why they think it is better than Binpress -

• It is not a marketplace
• They don't do any marketing for you
• No review process or quality control
• You basically sell your code yourself

Basically, they looked at all the main value points of  Binpress and decided they are expendable. As someone noted in a HN thread on the blog post, the value offered by such services is everything but the actual sale. There is marketing and reach, which is difficult for everyone and developers especially suck at it, there is licensing which is difficult and confusing and you better have some legal authority, there are conversion and trust issues with prospective clients, if your code component costs something significant (we have components on Binpress that sell up to 1500$), or even if it costs at all - don't underestimate the barrier of getting someone to hand over his credit-card details online.

We solved all of those problems (through a long, iterative process), and despite the opinion of the commentator on HN, we did take off - since the value of quality, ready-to-use code is not zero as he suggests (a surprising viewpoint). Gitiosk looked at the same market and decided to solve a very different problem. In my opinion, as someone with close to 2 years of experience with this market, they solved the wrong problems - and it's probably only because they didn't understand it enough.

On the bright side, it did take only 48 hours for a team of 4, so no major time loss there. Time will tell if their approach is better than ours (though I feel we already made our point, with many developers making a living from being Binpress publishers).

But if I were Twitter, I'd go about it a different way - why put hard limits when you can just add tax instead? charge a small amount for every API request over the limit (or sell bulk packages) - suddenly you have a major revenue stream, and API developers still get a chance to scale using your API.

Soft cap vs. Hard cap

If you're into sports, this is somewhat similar to the difference between the salary cap system implemented in the NFL vs. the one implemented in the NBA. The NFL has a hard cap, which means teams have to stay under a specific total number for player salaries at all times. The NBA on the other hand, has a soft cap, which allows teams to exceed the cap number by paying increasingly larger tax for every dollar spent over the cap.

Both of those cap system exist as an attempt to create competitive parity in those leagues, by preventing teams from bigger markets outspending teams from smaller markets. Each has its own merits in the context of sports competitiveness, but in Twitter's case there is no reason for a hard cap at all. What does Twitter gain by putting a hard limit on API usage?

A Win-Win Scenario

Twitter's focus on monetizing through ad sales already created a small rift in their user base. People concerned with becoming the product and not the client in an ad-driven ecosystem, have started a new initiative for a subscription based Twitter clone. Personally, I do not believe such a model is the right direction as the network effects of Twitter are what make it valuable - and you can't have the same effects with a paid service (because of the barrier to entry).

But if Twitter found API taxing a more profitable channel than ads, suddenly it has motivation to allow federated usage of its data and can focus again on delivering the best signal-to-noise ratio in social media (as it has in the past). Now it's the data (and access to it) and not the users that is the product. Developers should be satisfied knowing that they can scale beyond arbitrary, fixed limits (even if it means they have to pay), and at the same time it addresses the issues disgruntled users have with the service. (By the way, consider this story as a precaution for Twitter advertising)

Perhaps (even likely) there is more to it than I'm aware of, but it seems to me that it's the most obvious way for Twitter to monetize going forward.

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have we learned nothing from Apple? "F**k developers" is not just a valid strategy, it's the only sensible strategy.

— Jeff Atwood (@codinghorror) August 28, 2012

Yes, most of the large tech companies today are taking a hardline approach when dealing with developers who use their platform, treating them with entitlement as they hand down "our-way-or-the-highway" rules and regulations that leave little recourse when things go wrong.

From Apple's notorious appstore approval process, to Microsoft abandoning core technologies they've been selling developers on for years, to Google's insistence of providing no direct contact points for developers - the sign on the wall is clear: developers are just another cog in the machine, replaceable and interchangeable and without any provisions once things go wrong.

And yet, developers are the lifeblood of those companies, and are the main reason they became big in the first place. Without developers building apps for the iPhone or software for windows, or extending the Twitter platform in a myriad of ways - would Apple, Twitter and Microsoft be where they are today? the answer is an emphatic no.

Google is in a somewhat different position, as their main revenue channel (adsense) is not being supported (directly) by developers using their API, but as they spread to new markets (mobile, for example) they will become more and more reliant on a developer community fueling their effort.

BigCorps hold all the power

The reason this situation can exist at all, lies in the balance of power between tech companies and the developers who build for it. As individuals, developers have very little effect on the ecosystem as a whole. They have practically zero leverage when things go wrong, as Bigcorp cares about scale and numbers and not individual slip ups that do not affect the big picture.

While developers create a ton of value, they are a collection of separate individual entities who alone cannot influence a much larger system. I hereby suggest a new approach that has been used to great effect by members of older professions: organizing a union.

Union: Strength in numbers

A labor union is an organization of workers who have banded together to achieve common goals such as protecting the integrity of its trade, achieving higher pay, increasing the number of employees an employer hires, and better working conditions.

Most established professions have labor unions in developed countries. Unions prevent large entities (companies, governments) from dominating a one-sided relationship with individual (or small) entities, dictating terms and abusing their position.

While developers have no leverage as individuals, as a collection the balance of power reverses. Lets go over an hypothetical example:

Apple declines an app from its appstore, citing a technicality which is enforced inconsistently and without much detail on how to fix it. A developer who has spent 6 months working on it and personal funds to design and market it, appeals to the developer union for help. In response, the union instructs its members to suspend all in-app purchases for a day. For each infraction, Apple loses millions of dollars on IAP commissions.

Now, it's suddenly viable for Apple to hire more (and better) reviewers and to actually provide meaningful feedback in appstore reviews - maybe even start an active dialog before declining a submission outright. This requires more resources from Apple, but if the alternative is millions lost per infraction, they are forced to accommodate the people who enable their ecosystem.

(Naturally, for this to work, union members have to comply and act as a single entity. Lets assume they do for the purpose of this post)

One can only dream

This post is more hypothetical than practical - I don't really see a software developer union happening, unless something changes radically. We are inherently a spoiled bunch, with our profession being more in demand than ever before and it's hard for us to imagine our favorite tech company disowning us while we are living comfortably in their ecosystem.

I would like to see some community leaders ban together and try to apply some leverage against the offending tech companies once in a while. Here's to hoping that the 21st century Jimmy Hoffa Cesar Chavez will be a developer.

Feedback and iterations are great and will improve your product to no ends. However, this is bad advice if you intend to raise outside funding (VC in particular). Let me explain by relating to my personal experience:

Me and my co-founder Adam launched Binpress in the beginning of 2011. We are experienced product guys, so we had no problems launching a polished product without funding. Building web products is what we've been doing for a long time. Our thinking was that building and launching a product, getting some users and some revenue will put us in a better position when we would like to raise capital.

(For a quick summary, you can skip to the TL;DR at the end)

VCs (and most angels) don't want lifestyle businesses

When we started a funding round about a year ago, we quickly hit a wall. We had users and sales figures, but they weren't amazing. While we had strong conversion numbers, this was not Twitter or Instagram growth graphs. Every investor who showed interest asked the same thing - "How big is the market?" "Can this be a {insert figure here in billions} $ business?"

Getting a good estimate on the size of our market is difficult. We want to say that our target audience is the entire software industry - but getting a real estimate of how much you can capture is hard. We estimated the size of the market at around $15 billion, based on metrics we found online and a guestimate of how much of it is addressable.

However, with our current traction and sales that's a tough figure to justify. We basically needed an investor to make a serious leap of faith that we can be a huge business and not just a nice revenue stream - ie, a lifestyle business.

There's nothing like numbers to screw up a good story - Josh Kopelman

(Quote via Chris Dixon - 10 million is the new 1 million)

At the same time, we saw a close friend raise money very quickly with just an idea and a couple of mock-ups. When we compared notes, something became immediately clear - it's much easier to present a dream of a huge company / exit before you have real world numbers you need to show an investor. If you can talk the talk and paint an ideal scenario that makes sense, you will be in a much better position than a startup with middling traction figures.

At this point, having launched early without funding turned out to be a funding killer. In order to get VC attention, we would basically need to reach the point where we no longer need their money. Since we're a business oriented startup (as opposed to a social startup and other flavors), big traction for us would indicate big revenues (supposing we maintain our good conversion rates), and at that point raising funds would become a completely different game. (I called this the funding paradox in a previous post)

If you've wondered how you keep seeing startups being funded without a product or without users - this is why. If you've wondered why so many startups start in "stealth" mode, this is why. As long as you are not public, you don't need to justify any growth or traction rates as everybody knows you haven't launched yet. It's much easier to sell a "sexy" idea or a cool product to investors, and it's much harder to get traction.

It's easier to get traction with funding

Funding is not a cure-all, but it sure can help with traction for multiple reasons:

• Funding will almost surely get you coverage on the major tech sites. For many startups, their main audience is the readers of those tech sites, which is great for an early user base and initial traction. Funded startups are more likely to receive additional coverage as they reach important milestones (launch, strategic partners, etc.), especially if a prolific investor is in the picture. We did get some coverage eventually, but it took way more time than it would've had we've been funded.
• Funding allows you to hire a marketing team - and believe me when I say that marketing is a team effort. Being product guys at the core, marketing was not our strong suite when we launched a year and a half ago. We are getting better, but there is so much to do and a team (and an experienced head of marketing) would've been a huge help.
• Funding allows you to pour resources into customer acquisitions channels that are not accessible when you bootstrap. We made some experiments with paid marketing channels, but we don't have the capital to really make a strong effort in that space. We are getting some ROI positive results now, but if we had funding we could move much faster in those areas.
• Funding also allows you to hire other team members that would fill positions we sorely need - community managers, developer evangelists, business development - just to name a few. The more talented people with a defined role in your startup, the more focused you can become and work faster towards your goals.

The paradox - funding would've solved many problems that now stand between us and getting funded (theoretically at least).

The type of your startup is a big factor

So traction is harder to come by without funding, and investors want to see traction for a launched product. At this point you would probably say "but startup X got huge traction before they got funded and then everybody wanted to invest."

It might be obvious but needs stating - not all startups are made equal when it comes to organic growth. Some products have the sharing / social element ingrained and some don't. If you're building a photo-sharing app, and the main feature of it is sharing with other people - well, that's a bit a different than a service that helps you do your taxes.

While social and sharing elements can be a part of almost any startup's marketing plan, some can rely on it much more than others and become the holy grail buzzword - viral.

Most startups are not viral material, and have to work hard to get traction. Startups that get traction without funding are either the right type of product for it, or have an exceptional combination of circumstances and marketing savvy. Unfortunately for us, we qualified on neither.

We put funding on indefinite hold and just focused on the product

This is what we would've liked to do from the beginning, but the allure of funding and the benefits that come from it made us try anyway.

Now as we finally approach profitability, we can actually say formally that we don't need funding to keep going. Funding would've allowed us to move much faster, and there's always the fear of being overtaken by a competitor, but so far we've been beating (funded) competitors and we seem to be on the right path.

We preserved through persistence and belief in our product, and we can finally breath a sigh of relief. There were many times that we didn't know if we can afford to pay ourselves minimal living expenses, not to mention hiring additional team members - but we're rapidly approaching the point were #1 is a non issue and #2 is more than a pipe dream.

We no longer proactively reach out to investors. If someone falls in love with the concept and the product and wants to talk, that's great, but we no longer need it to keep going.

Some advice for people just starting up

Just a quick recap -

1. If you have an idea for a product and can talk a good game, build some mockups or a basic prototype and try to raise with that.
2. If you have a prolific team or are a prolific entrepreneur - ex Google, ex Facebook, big exit, etc., just raise on reputation (it works)
3. If you already have an actual product but haven't launched, try to raise before launching as there's no going back.
4. If you have a startup with intrinsic viral qualities and you believe you have strong marketing skills or good connections, go ahead and launch and shoot for that elusive traction.
5. If you have an "unsexy" startup or a tough audience (try selling code to software developers, for example...), try and go through 1 - 3 before launching. Unless you love a good challenge.

Now that we see the light at the end of the tunnel, it's easy to look back and say it was a good learning experience (and it was), but keeping in mind that time is fleeting, I sure wish I knew there is more to the mantra "Launch early" than meets the eye (or popular startup wisdom).