5 Growing Pains of Scale-ups in the Digital Economy
5 Growing Pains of Scale-ups in the Digital Economy

5 Growing Pains of Scale-ups in the Digital Economy

Less than 10% of companies that raise a Seed round graduate to a Series A funding round. The biggest pain behind the small success rate is the Minimum Viable Product (MVP) that companies need to demonstrate to their investors. It’s not an easy feat – especially for scale-ups that don’t have a pro team in place and work against the clock to recruit one. 

Faced with investors’ tight deadlines and huge expectations, scale-ups often resort to outsourcing product development – at which point, things tend to get painful for a lot of reasons – we’ll just review the biggest 5.

#1 Missing the big picture

When outsourcing product development, you can either hire a software company or scout for freelancers – hoping to create a high-performance team. Either way, you’re working with software developers whose main job is to code. Having the product vision is not in their JD.  So, your newly hired engineers will stick to coding the product following your specs.

You, on the other hand, don’t have the time to write detailed specifications, because you’re too busy working out the product vision and go-to-market strategy. 

Hence, the output code will most likely tick many boxes and solve specific problems, but it won’t map or integrate with the entire system behind your product. Additional components will be required, and they will count as rework – adding to the bug fixing stage that comes with the territory.

When the engineering team does not have the vision of your product, you will deal with a lot of reactivity. Inevitably, the massive rework that will follow will mess up your product roadmap and budget. 

#2 Knowledge discrepancies

Lack of alignment at the level of the technologies used in product development is another sore point. 

From the very beginning, you need to agree with your outsourcing partner on the specific technologies that will facilitate subsequent integrations and will ensure scalability. Otherwise, later down the road, you will discover that the core of your product is too restrictive and cannot accommodate further development.

Short term, the solution will be working. Long term, it won’t fit into your ecosystem. So, you will have to go way back and do a lot of expensive rework.

Your outsourced team needs to have the bigger picture – including the product’s entire technical architecture, and not limit themselves just to software execution. You need a technical team that can create software having the entire product system in mind. 

#3 Rework 

Working against tight deadlines and budgets often puts you in the position to go for lower rates – which is perfectly understandable. The downside of lower rates, however, is that it usually comes with a lack of commitment and ownership. At the end of the project, the team will most likely present you with a working solution – yet, at a later point, you will discover that the solution won’t fit the higher logic of your product. Technically, it won’t allow for further development and will entail a lot of expensive rework.

In spite of the evidence of a clearly unfair partnership, you will feel emotionally stuck to do all the rework with the same team that failed to deliver in the first place. What tricks you into walking the same path is a false sense of confidence, fueled by the reassuring fact that at least you know the team.

Most probably, you don’t want to go through unfamiliar emotions with a new team, so you continue your low-performance collaboration – even though you already have the confirmation that lower rates translate into poor quality technology.

#4 Lack of innovation

Hiring a low-cost team of engineers who lack the product vision and are just following specs leaves little-to-no room for innovation.

On the one hand, low-cost engineering teams do not come with an R & D unit – because that’s an expensive skill. On the other hand, high performance is just as expensive. Because top engineers are usually 10 to 100 times more productive than the average software developer. 

#5 Slow motion

When the team gets swamped in rework, inevitably the product’s time-to-market gets derailed. 

Things might get done fast in the early days/weeks of the project, and the solution might be working. However, without a versatile technical backbone and scalable design, every time you’re adding a new component or feature, there will be time-consuming fixing and patching.

Hence, you will not have a reliable foundation to accommodate those new components or features. Because no low-cost software team can afford to create the technology boilerplates, those predefined technology architectures, and structures that your product needs. 

Check-in next week for our next piece on ways scale-ups can overcome growth pains. Or sign up to QUALITANCE Digest to make sure you get relevant content straight to your inbox – once a month.