Should You Outsource Technical Expertise when Building your Business?

TermSheet is a cloud-based platform exclusively built for the real estate industry that marries your workflow with your data. Our two product suites, Productivity and Intelligence, provide your team with all the tools and information they need to execute deals faster and more efficiently.

TermSheet makes it easy for real estate teams to analyze, visualize, and act on any data by automatically synthesizing information once trapped in spreadsheets, PDFs, and folders.

TermSheet’s powerful productivity tools help real estate teams execute deals more efficiently through seamless collaboration, streamlined workflows, and a centralized database.

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Should You Outsource Technical Expertise When Building Your Business? | Roger Smith & Zain Jaffer

We're here with Roger Smith, the CEO of TermSheet. TermSheet is helping real estate professionals get the most out of their data set. Roger, how are things going at TermSheet? Let's talk a bit about your story.

Thanks a lot, Zain. Thanks for the intro. I’m happy to be here and reconnect with you. It's been a while. In TermSheet, things are going well for us. We officially launched the company in a beta phase in January of 2020. It's a funny story. Sahil, my Cofounder and I went to Siri Tech in October 2019 in New York. We had a preliminary product.

The company started within a real estate private equity firm. The benefit of that is that's where we both cut our teeth on understanding commercial real estate, how deal teams operate and work, what they do, what they don't do and how they can become more efficient. That's where the idea for TermSheet came from.

At the October 2019 Siri Tech conference, he and I were in New York, scrambling around and trying to talk to as many people as possible to vet and validate the idea. That's what you used to do with a startup. It was there that we formulated at least what we thought was the initial groundwork for our platform.

2020 came about and we launched the early beta. We got an early client through Lincoln Property Company, an office out of Chicago. They're a big industrial investor. The value there was they were willing to work with us to allow us to understand, beyond the experience we had in that private equity firm, how other groups would use a platform like ours.

They were the first major beta customer that you can build your MVP around. You didn't go for a smaller pilot. You went for one of the big guns.

I'll touch on this later because I want to talk to you about this but it was a major of contacts we had and some relationships we had with that particular group out of Chicago, which is forward-thinking in searching for a solution to their problem. It was a combination of our relationships and hitting the right people and the right group that allowed us to get them on board and their willingness to give us feedback.

From a technical perspective, it's very hard for someone else to tell you what to do and lay it out because the devil is in the details.

What we realize is that this idea of one size fits all, at that time, was focused on what we call productivity like acquisitions teams, managing their pipeline, tasks and productivity. That one size fits all wasn't correct. It might work for a particular size investor with a particular thesis. That blew away so we’re like, “We've got to change how we do this. There's no way this is going to scale.”

We rewrote the platform to be what it is now, which is this flexible platform that's based around building your workflows and managing your data no matter what kinds of data you look at. It’s like building your data deal and data platform. That experience helped us. We then leapfrog to where we are and where we want to go, which is the data, the oil that's in the ground that everyone thinks that they want but they don't know what to do with.

A bit about your story too. You're a Technical Founder, which is rare in real estate. Sometimes I see a lot of sales-driven founders that lack the technical side as a VC. It's quite scary when you're doing due diligence and realize, “A lot of this code has been outsourced to a vendor or contractor.” Especially as you're taking the role of CEO, how do you balance your time? Did you start by writing the code yourself? Did you use your technical skills to oversee the development of the platform?

You're 100% right. We look at that as our superpower. What we found, especially in the prop-tech space, is that the idea of having a strong technical team in-house combined with real estate experience is pretty rare. I'm not talking about surface level but deeply understanding how one invests in real estate and the pain points that are around that. That's been our distinct advantage.

When we talk to customers, from a technical perspective, it's not like, “Let me go talk to my team and we'll get back to you in six months.” It's like, “Once we get off this call, we will make this change.” It will then be rolled out within the next hour or so. We built our platform ourselves. I wrote all of the code to get us to this point. We've made some more hires extending the team. We didn't want to build on top of another platform.

My background previous to TermSheet was always in traditional enterprise SaaS companies, whether that was CRM. I started my company prior to being acquired by this private equity shop, which was in the crowdfunding space. We pivoted to a white-label platform. My point is I understand how to build enterprise-grade software, deploy it at scale and then combine that with Sahil and my real estate understanding experience. We can talk to customers because we know their problems but then we have this advantage that we can implement it. I'm a real estate investor myself so it's cool to be able to build a product that you use yourself. I can experience a problem like, “I wish it could do this,” because that's also what I want.

I've done due diligence calls with startups we're going to invest in and one thing that wins the deal for real estate customers is, “This startup was fast. They took our feedback and made changes. Unlike another vendor we used, who we ripped out, didn't have good technology. It was legacy software. They took years to make any changes. We don't feel like we're getting paid attention.”

This is a tried and true formula when you're running a startup. If you have the ability to talk to a customer and take their feedback as soon as you're off the call, you're working on some type of change and you’ll win that customer over. Especially when you've got a big customer that you're going after, you have to do that. On the other side, in other portfolio companies that I'm involved with, often when they're technical founders, the challenge is if we're building this great technology, we need a good sales guy or girl.

That seems to be the case. It's either you're a strong sales founder and you need a good technical founder or hire some engineers or your technical team and you need more sales. It's good when you have that. If any of our readers here are thinking of starting a company, do you think they should look for a cofounder or do you think you can outsource the tech or hire a salesperson? What's your view? There's no true formula but, surely, you have an opinion.

Especially in the early days, you can't outsource anything. That's my belief. You would feel the same way.

It's such hard advice to hear if you've got the idea and you can't find the cofounder but, at the same time, you don't have the money to hire an engineer. You're certainly not going to be able to do anything even if you spend the weekend coding or using a no-code platform. It's interesting because it's hard advice. What can someone do with that?

The no-code platforms are great. I look at the technical side of a business when you have that skillset as a blessing and a curse. The blessing is you can do the stuff you want to do. The curse is you can do the stuff maybe you shouldn't do. Instead of building a test MVP where I collect a form or test if someone clicks a button, I will build the product. Sometimes that's not the right thing to do. You should do the easy thing to test it.

This is true in my last company. This is true in this company. My belief early on is that you have to live and breathe the problem. From a technical perspective, it's hard for someone else to tell you what to do and lay it out because the devil is in the details. From a technical perspective, it's important. From a sales perspective, early on, especially in real estate, you have people that do this all day long.

When they're talking to people who don't understand some of the minor details of real estate investing, that shows through. As you grow, it’s fine. My belief early on is you do need to do it in-house. You've seen companies in this space that build on top of other platforms. That's great to get something going. Eventually, it breaks down either because you're subjected to whatever the platform it puts on you, restrictions they put on you or your ability to get out of that.

The idea of starting something, especially when you're a non-technical person, can seem kind of daunting.

It all comes down to what the core competency of the team is but also what type of company you're trying to build. You're a data-heavy infrastructure player. There's no way you can outsource that. You have to be the platform. If you're a co-working platform or a company that's got hardware sensors, that skillset is going to be different. In most cases, hardware and sensors do tend to be outsourced to manufacturers.

If your core competency is you need to create a marketplace, a lot of real estate companies have this marketplace dynamic where you could have investors, real estate developers or contractors and consumers. You’ve got to hustle and build out that competence. It doesn't necessarily mean the technology side.

On the technology side, the UX part is the most important. It’s something the founders should play with. You could do a course on the weekend. I've done it myself. You could take courses on Udemy or Coursera and use UX prototyping tools. There's Figma, Adobe XD, Marvel, Envision and many different platforms you can use where you can put a clickable prototype together and show it to the customer. The customer won't be able to tell what's going on.

In some ways, when you're going to build an MVP, maybe do the UX. It's not too difficult to do it. You could learn it on a weekend or a few weekends. Put that together and then show that to the customer. To make that work, that's why you need some back-end technology. First, there's no point in taking feedback from a call, outsourcing it, building something and showing it to the customer. The customer says, “That doesn't look and feel right.”

Customers are visual. They rarely tend to be more back-end focused. That's probably my advice to people who don't have it. Also, if you're outsourcing or trying to find a co-founder, at least you've got some prototypes you can show and that prototype changes everything. That gives a level of specificity. I don't recommend old-school PRDs, which is a format that is like a business plan of a product. A clickable prototype is probably one way.

The other thing I'd say is, as a Cofounder, you're thinking about your ownership in the company and what it's going to be like to work with someone or the energy you have to do. Maybe you could de-risk things by outsourcing. If I were a Founder, this is tempting. I've learned to code a little bit myself because I realized this was such a big weakness.

Maybe what you do is you outsource it, get some traction, pre-orders and revenue. You've made progress with the business so you can get a higher valuation or give less equity to a fellow cofounder. That's from the founders’ perspective. From the VC’s perspective, I like to see a well-rounded team.

One of the companies I invested in is Canopy Analytics. They have a wonderful UX designer. The Founder is a technical guy but strong with sales. They've got a CTO that's hardcore tech. It’s the perfect team. In the VC space, they call it a good hacker, technologist and salesperson. By hacker or technologist, usually, there's a designer somewhere. The designer, the engineer and the salesperson, if you have those three skillsets in your founding team or founding employees, it’s so much easier to get off the ground.

The idea of starting something, especially when you're a non-technical person, can seem daunting. A friend of mine did this. He had this idea. He paid all this money to this outsource team to go build this product. I told him time and time again, “Do not do that.” What we're talking about here is product-market fit or even validation. You have not gotten validation on whether anyone wants your product. If they do want it, will they use it?

Do some no-code platform or a mobile app like a simple React Native mobile app that someone could build on a weekend or something. It doesn't have all the features but it gives someone a sense of how they would interact with it. He made the mistake. He spent $250,000 going down his path. It ended up it wasn't right. That’s the problem. When you haven't started something or been in the space, the belief is that unless you have everything, then it won't work. That is not the way it works.

I'm with you. Stop writing business plans or being like, “You can't do it because of a technical thing or you’re going to outsource it to build the whole thing.” Scrap together a form, website, prototype mobile app or whatever that is. Get it in front of as many people as humanly possible that will talk to you. At the end of the day, talk about the concept of failing fast.

The most valuable commodity that many of us have is time. The reality is you want to reduce the time you're spending on something that will potentially be wasted time. Your goal is to fail as quickly as possible to get that idea off the board so you can move to the next one to find that one that will work. I'm with you.

I watched his video from Justin Kan, the Twitch Cofounder, when he started Atrium. I don’t know if you've seen this but he talked about how Atrium failed. It was cool. You realize, “How did Atrium fail?” He was a partner at YC. He sold Twitch. He was an advisor to all these VC companies. What happened was Twitch was selling to streamers but it was a different space than Atrium, which was this enterprise SaaS services company. He was able to raise all this money without a product solely based because his name was Justin Kan.

What happened was that he realized that building a product in an enterprise B2B space is different than what they were doing and the product does matter. He didn't get the validation necessarily. He started building something he didn't even know if anyone wanted. Ultimately, they weren't building a good product or the right product.

It goes back to the early validation. Once you've got it and you need to deliver something, that's when I do believe that you do need to have those key players in-house so that idea flow is constantly moving amongst the team. You're waking up and dreaming about this platform. At the end of the day, all the players on the team need to bring some value, whether it's a hacker coding or a salesperson talking to customers. That feedback loop is important.

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About Zain Jaffer:

Zain Jaffer is an accomplished executive, investor, and entrepreneur. He started his first company at the age of 14 and later moved to the US as an immigrant to found Vungle, after securing $25M from tech giants including Google & AOL in 2011. Vungle recently sold for $780M.

His achievements have garnered international recognition and acclaim; he is the recipient of prestigious awards such as “Forbes 30 Under 30,” “Inc. Magazine’s 35 Under 35,” and the “SF Business Times Tech & Innovation Award.” He is regularly featured in major business & tech publications such as The Wall Street Journal, VentureBeat, and TechCrunch.