How To Effectively Use Outsourcing to Power Your Hardware Startup
In this article I discuss how to successfully use outsourcing to fill in gaps in your expertise while maintaining effective oversight.
A question I get asked a lot is “can I outsource the parts of my startup that I don’t want to do?”
Recently, a member in my Hardware Academy program, who happens to be an electrical engineer, asked if it was possible to outsource the marketing and sales functions for his startup since he doesn’t really have any interest in those areas.
He wants to focus entirely on the development and manufacturing side of his startup. Many technical founders like him are scared of sales and marketing, so they want to only focus on the technical side.
The flip side of this question comes from non-technical people, who are sometimes more comfortable with sales and marketing. They often want to outsource all the technical development of their product.
For example, someone recently was hesitant to join my program for hardware startups because he mistakenly thought we only focused on development (we also focus a lot on sales and marketing).
All of his experience was in marketing and sales, and he didn’t want anything to do with development. He wanted to outsource it to someone who could do all development work, leaving him to focus solely on the marketing and selling aspects of the business.
The simple answer for both of these scenarios is yes – you can definitely use outsourcing to fill in any gaps in your own (or your team’s) experience and knowledge.
But never use outsourcing as a way to completely avoid participating in certain parts of your startup. You are the founder and you must have oversight on all parts.
Outsourcing should be looked at as a way to fill in any gaps in your knowledge or experience, but you need to ultimately maintain control of those activities.
Outsourcing Marketing and Sales
I typically find that it’s more feasible to outsource development than it is to outsource marketing and sales.
The reason is that you connect with your customers through marketing and sales, and the customer is the most important part of the entire startup equation.
You don’t want to do anything that removes you from interacting with your customers, because that’s how you’re going to learn what your customers really want.
Gathering customer feedback is key to your eventual success. The worst mistake you can do is to hide yourself away from customers.
You may think you know what your customers need or want, and that you don’t need any input from them. So many entrepreneurs just forge ahead with making something, expecting people to buy what they made for them. But that is a recipe for failure.
From day one you need to connect with as many potential customers as possible. Interact with them, form close relationships with them, so you can get their honest feedback.
This is why marketing is the one area that I do not recommend that you outsource.
You may eventually be able to outsource some aspects of sales and marketing, but it’s the one area where a founder needs to be heavily involved and in the trenches. It’s how you get the feedback that you need to develop products that are actually going to sell.
If you just outsource sales to a marketing firm, you become one level removed from the customer, and that’s never a good situation to put yourself in. Instead, embrace the customer.
I understand that engineers, typically, are introverts. We’re most comfortable hiding behind a computer or in a lab instead of doing marketing and sales activities.
But I encourage you to learn to love marketing. I was able to do it and I’m very much a classic introverted engineer. But eventually I learned to really love marketing. To this day, I still really enjoy the marketing side of things.
Sales, I don’t find as enjoyable, but it is critical. I always want to be heavily involved in sales because that’s obviously how you generate your revenue. But, just as importantly, it’s also how you interact most directly with the customers.
Definitely, don’t try to push away marketing and sales. You’ll have a better chance of success if you can learn to embrace it.
Outsourcing Product Development
If you are developing a lot of your own product, then you’re still likely to need to outsource some parts of it to designers with specialized skills. This is typically lower risk than outsourcing the entire product development.
On the other hand, if you’re not technical, then in most cases it’s not going to be feasible for you to try to become an engineer and design your own product.
But I encourage you to learn enough about all the technical aspects to have insight into what’s going on in development. You may find helpful my article which shows you how to quickly judge the quality of a PCB design.
I always recommend that you have some level of independent oversight on the functions that you outsource.
If you are a non-technical founder, then you really need to find a technical advisor who can review and assess any work you are outsourcing.
You don’t have to be an engineer yourself, but you need to find someone with those skills who can conduct design reviews throughout the development phase of your startup.
You could also join my Hardware Academy, where you can get input from myself and other engineers. We’ll help keep you on track, make sure you are getting what you pay for from any developers, and ensure that you aren’t being ripped off.
Always focus on learning enough about every outsourced task so that you can reliably manage the work that is produced.
Then, hire a second engineer to review the work of your primary engineers. Hiring a second engineer is a great way to provide oversight.
Finally, always be sure to get a full and thorough design review before moving on to producing a prototype.
Understand What You Outsource
If you don’t have a good understanding of the functions that you’re outsourcing, it opens you up to being scammed or ripped off.
There are a lot of companies out there that prey on entrepreneurs with a dream, who don’t really have realistic expectations. They will take advantage of you if you don’t understand the entire startup process which includes the technical development of your product.
For instance, someone contacted me a couple of years ago who wanted me to take over their product design. They had previously hired a designer in Asia, and paid him thousands of dollars for what they thought was a custom developed product.
The developer sent him a few prototypes, but they soon found their exact prototype for sale on the popular Chinese suppliers website Alibaba.com. Their “custom” printed circuit board was the same one for sale on Alibaba.com.
The “designer” he hired had simply bought an existing circuit board, put a new sticker on it, and claimed that it was a custom designed board.
If this entrepreneur had a better understanding of product development, then he probably would have caught on to this scam much earlier.
That’s why it’s really important for you to have a basic understanding of all the functions you’re outsourcing.
Final Thoughts
If you’re going into this with the mindset that you only want to do the aspects that you’re comfortable with, that you enjoy, that’s really not the right way to approach a startup.
That may work well if you have a solid founder team, and you all have very discrete skill sets. If you happen to have co-founders who are dealing with all the sales and marketing, and you’re an engineer, then yes, you can just focus entirely on the engineering side.
But if you’re a solo startup, or have just a couple of founders who don’t have a full complement of skills, then you’re going to have to force yourself to be adaptable.
The key criteria for succeeding as an entrepreneur is you have to be adaptable. You have to wear many hats.
You have to do everything from development to sales, to marketing, to operations, to patents, to legal stuff, to taxes. You pretty much have to do everything. If you only want to do the things you enjoy, then chances are you won’t succeed.
If that’s the mindset you have, that’s great if you’re a hobbyist or a maker and you’re just doing this for fun. When you’re doing it for fun, you get to pick and choose what you want to do.
But if you’re doing this to build a startup, then you need to force yourself to do the aspects that you may not find enjoyable.
I recommend that you try to change your mindset and find a way to make yourself enjoy those activities, which is exactly what I was able to do with my initial aversion to marketing.
If I’m able to do it, then I definitely know that you can too. Embrace every aspect of bringing your product to market. This way you’ll have a much higher chance of ultimate success.
Other content you may like:
- The Importance of Finding Advisors for Your Hardware Startup
- Episode #16 – Questions on Outsourcing, Distribution Channels, and the Cost to Market
- 7 Strategies to Develop Your New Product
- 12 Requirements to Succeed with a Hardware Startup
- Episode #28: Marketing Lessons Learned with Fraser Vaage, Founder of Snik
