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Considering a web development firm - embrace or proceed with caution?

I found a potential web development firm to build out an MVP for the startup I'm building, CloudConservatory.com. However, there are a couple aspects of the deal that have raised questions and perhaps a yellow flag of concern.

I'd love to get thoughts and guidance.

This firm has just set up shop here in Boston, with a newly assembled team. I like the lead project manager and trust his input. As his 2 developers have extensive experience.

So I sat down with the team and described the idea for my platform that is going to integrate live streaming video (using the OpenTok api), archiving of those video streams, user accounts & profiles, and scheduling & payment capabilities. In the end, the team loved the concept and the prospect of building it out.

The concern, though, is that they put together a quote for only $15k. My expectation was something closer to 3-6x that range. Also, they expressed that it should only take 6-8 weeks. Again, expectation tells me that 3-4 months is more realistic.

When I asked the lead project manager the motivation behind the pricing, he mentioned:

  • the firm is new & untested and needs to build up a portfolio
  • they know I'm in a lean startup that has a limited budget
  • his team needs something to get there feet wet and not sit around twiddling their thumbs
  • obviously for the next client they would charge more than $15k

Is this an opportunity I should embrace? Or what do I need to look out for or keep in mind? I'm not a developer myself, but do have a couple local friends who are willing to look over code and general architecture.

Cheers in advance, Trevor

57 Replies

Chayim Kirshen
3
1
Chayim Kirshen Entrepreneur
DevOps Focused Software Professional
Trevor, I'm all for getting second (and third) quotes in order to size the reality of the situation. Making a choice from a sample size of one is terrifying, and not something I'm comfortable doing. Although they're not in Toronto, I would recommend the folks at Rangle.IO (disclosure: I know the founder, but don't work with them in any way). cheers, --c
Ray Dollete
0
0
Ray Dollete Entrepreneur
Tech Lead at PHENOMENON
I would tread carefully; I've seen this scenario before which has led to some sub-par delivery. Obviously there are exceptions to the rule as well. Do you have a technical product manager on your side to ensure that everyone's expectations are getting properly communicated?

Dave Hecker
5
0
Dave Hecker Entrepreneur
Co-Founder at SourceSeek | Founder/CTO at Sagewing
If they really are lowballing the project in order to get traction as a new company, that can work really well. But, underestimating the project is a sign of an inexperienced team. Good developers don't make good estimators all the time, so this can really get tricky. If you want to take a chance on them, my advice would to help them succeed by: - breaking the project into distinct, simple phases - have them bid on each one individually - encourage them to really consider the estimation (if they are losing money, your project will suffer) Then hold on to that budget, with the expectation that they'll need more payment. It can work out fine, but a gross underestimation is a major red flag.
Daniel Morris
1
0
Daniel Morris Entrepreneur
CTO at eScribers, LLC
If you're happy to:
1. use a "new & untested" firm in order for them to build their portfolio
2. let them get their feet wet on your project, rather than twiddling their thumbs
then I'd take the bargain price, but still expect the time to extend past the quoted 8 weeks.

Are you working with them on this, or do they just go away for 8 weeks (or more) and then present the final product? If I were you, I'd expect to see their work progress during the development.

Hope that helps.

Milenko Beslic
2
0
Milenko Beslic Entrepreneur • Advisor
Co-Founder at Beam, CTO/Co-Founder at Pingup
Trevor, you always get what you pay for. They could be amazing developers, but they will also learn on your project, which means making mistakes (time or quality). As Ray said, having a technical product manager on your team will help you a lot.
Robert Clegg
1
0
Robert Clegg Entrepreneur • Advisor
Game Based Learning Expert
1. They should submit a dev plan outlining milestones for the project including deliverables. Your friends should be able to tell you if that's realistic. That dev plan should include the rationale for the architecture which you friends should be able to evaluate as well.

2. Consider long term stability and support. Will these guys be there to support what they build? Will they be there to build other features as you go? Will they use your extra budget to keep building or jump on to other paying clients with bigger rates? Should you be structuring a longer term deal for the whole budget to incentivise them?

3. Hey, it's only 6-8 weeks. Offer them double the money if they hit it (no money down). Or some bonus variation thereof. Explain your concerns but give them the bonus option. That puts the onus on them to deliver. But make sure the milestones, deliverables, performance, and any other criteria are agreed to in the contract.

Happy to discuss more directly if you'd like,
Robert
Luis De Avila
2
0
Luis De Avila Entrepreneur
Owner/Fullstack Architect at IdeaNerd LLC
The devil is in the details. Make sure you get a detailed list of deliverables. For example, will they just be writing code to meet the requirements or be creating unit tests and integration tests? Will they setup a server(s), Will they setup a code repository, automation scripts, etc. Of course all this adds costs to the project. They may not be including them in the estimate.

Dave has a great suggestion... breakup the project into phases and make sure the contract allows you to exit if you are unsatisfied.

Also, seems like they were honest about the reasons for the low quote. That's a good sign.
Dave Hecker
1
0
Dave Hecker Entrepreneur
Co-Founder at SourceSeek | Founder/CTO at Sagewing
Actually helping clients to manage vendors is something I do a lot, so let me know if you want a hand with this.
Karl Laughton
2
0
Karl Laughton Entrepreneur • Advisor
VP of Finance at Insightly
Hi Trevor,

I'm leveraging a firm here in San Francisco who was recommended to me by the folks at Carbon5 for mvp builds. I was quoted 50k on a delivery schedule of 5 weeks (they have a proven track record and strong team for agile based projects). Furthermore, I'll be hands on throughout the project. Hope this helps level set.

I'd say give them a shot and have your friends review deliverables as they hit milestones on the back end. You should be recruiting a technical team in parallel. At a minimum they can give you something to raise with, and you can scrap it after you've raised to build scale and foundation on establishing product market fit for the next round.

Hope this helps,

Karl
Joel Magalnick
2
0
Joel Magalnick Entrepreneur
Storyteller. Innovator. Leader.
I'd also have them keep the code posted on GitHub, weekly at the very least, so you and/or your tech buddies can check progress and make sure nothing's running off the rails before they get too deep into the development. Plus you will always have access to the code.
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