The rise of the devless startup has been around for a while, echoes of “we can outsource it and save $n” are always bandied around at pitches, meetings or the casual coffee with other founders.

Here’s my stark warning: no in house dev team, your startup will die far quicker than the rest.  If you are a founder who can code full systems, front and back end, apps and API’s then you are in a very strong position.

The Changing Landscape

The last couple of years has seen a sharp increase of new startups. According to the Kauffman Startup Index report the figure stands currently at 310 new entrepreneurs per 100,000 population. That doesn’t sound like a lot but that equates to 500,000 new treps each month.  If only I knew that the churn rate was.

What hasn’t changed much is the workflow in some areas of idea creation to funding. It’s still the same trodden path with the same numbers, “VC’s play the 1 in 10”, one gold star while the other nine either break even. Perhaps that number needs addressing a little more realistically, 1 in 100 for example?

And when there’s a huge amount of money being pumped in to ideas that aren’t going to turn into much, then expect the correction to happen. Stock markets are emotionally driven, see a dip and lots will follow, including investment money.

You need an edge, you need an advantage and you need to ruthlessly (but legally) exploit it for profit.

No in house dev team, no chance….

With the number of startups in existence it’s been a great time to be a software developer with 3+ years experience. You could hop from place to place and take a decent salary, notice I didn’t say anything about stock options. Guess what, probably worthless unless you were first hire or tech co founder.

If you don’t have an in house developer team, or even one lead developer, then make that your priority to find one. You need not care where they are in the world or if they are remote, just find a good one and pay them. Contractors are fine but only once you have dev number one in place.

Over the last couple of days I’ve been watching news reports in to various fields of commerce and service. We can measure sentiment, extract topics and tags from vast troves of data. Startups with no in house development team cannot react in the short time frames that are now expected.

Imagine the scenario, a news report starts doing the rounds at 8:30am with a graph showing a huge decline in an area your startup is working on. There’s an edge staring you in the face. If you email/phone your outsourced development company you’ve already lost to a competitor (and if you don’t think you have a competitor there’s another reality check to do), “we’ll be able to do that on Friday for you”.

What you need is: the war room, how do you exploit this need?, find a solution, do it, have the press release done by 11am to everyone you know via every channel you can find. If you can’t do that then there’s a good chance you’re missing 90% of the opportunities passing you by, even worse the competition will be exploiting them against you.

You basically need to be a mix of Pablo Escobar and Bobby Axelrod, but legal.

Monitor every piece of data in your field.

Monitor everything you can get your hands on, every social channel, news feed, RSS feed, basically anything. Automate it, pick out specific phrases, use sentiment analysis to see what the audience and markets are thinking.

While the huge talk up on Big Data and the opportunities (well most of them vanished in 2012) still goes on, it’s the narrow viewed data that you really need. The ones that are going to give you the alpha, the one piece of data that gives you the edge over the competition. It’s the deep dive of what you know to pull out that one pearl that will turn it around, when you find it you still need the developer team to implement as quick as they can. Not as quick as a third party can, they will never share your concerns, fire or need.