Being an entrepreneur is tough.
Anyone that’s tried to start a company or has one will tell you it’s not easy. You don’t know if your idea will make it and you’re not sure when you’ll be getting your next pay day—or if a pay day will even come at all. After you pay everyone else, will there even be anything left for you?
Combine the reality of those concerns with a mortgage, family, and kids. You’ll then wonder if it’s even worth it.
When I first launched Majestic Media, I wanted to be profitable from the get-go. I know, you’re probably thinking: crazy, cocky, stupid.
But I didn’t want to be constantly worrying about financing, loans or diluting my shares by raising funding to stay afloat. I simply wanted organic growth that was profitable.
Our first projects involved building on new technologies: mobile and Facebook apps. At the time, there were only a handful of us in Canada that could do this kind of work.
Finding the right talent in Canada wasn’t difficult. That’s right, it was easy to find. Talent was plentiful. There were extremely intelligent and capable developers. But the price tag that came along with their talents made me wonder how I would even stay in business.
When I first put up a few job postings for a senior developer position, the salary expectations for almost every applicant was $75,000 and up. Some of which were fresh grads with no significant experience.
At the time of launch, I wasn’t even making that much, so I could I justify paying someone more than I was making myself as a business owner? It was a hard pill to swallow.
I kept banging my head against the wall, doing calculations on profit margins, ability to grow and scale with those kinds of salaries. The end result of my calculations were very slim margins, a low salary for myself and the need to receive financing to keep the company afloat while I collected receivables from clients. Not fun stuff, nor encouraging.
I took a gamble: I tried a different approach. I decided not to hire anyone in Canada and instead look for developers abroad.
My country of choice was Argentina. I spoke Spanish, they were in the same time zone as us, had large population with a great education system, and a talent pool that was a great fit for what I needed.
The gamble paid off. What I found was shocking. For the price of one senior developer in Canada, I could easily hire four (or more) equally talented developers in Argentina. I interviewed a lot of developers until I found the right ones that I could trust, had passion for their work and also spoke English.
My first hires were two engineers, one of which is our current CTO. I didn’t choose guys that were second best to those here in Canada, I selected the cream of the crop.
It was at that point I realized that talent wasn’t just in Canada. It was everywhere. I changed my hiring strategy forever.
As the company grew more and more, I started hiring more engineers and even opened up a development office in Argentina. But why stop at Argentina? What about Europe? If I could have guys there, I’d then be able to have a global team that could work 16 hours in a single day without working any overtime.
It was a brilliant plan, and one that became very lucrative for us: we’re now able to execute tight timeline projects faster than anyone in Canada, without working overtime or breaking a sweat. Like I said, the gamble paid off.
Today, our team is comprised of over 30 engineers, designers, UX, project managers, and creative technologists, in four different continents. In fact, most of them work from home, myself included. I haven’t been to our Bay Street office in over a year. I sometimes forget what it looks like. I don’t need an office to get work done, nor do I need my guys in the same office as me to see that work is getting done.
I took a different approach to most startups. I decided not to hire any engineers in Canada. That doesn’t mean I don’t hire talented staff. In fact, we’re the company that recruits engineers from companies like IBM and other tech firms. The difference is, the recruitment doesn’t happen in Canada, it happens globally.
It’s not outsourcing. By definition, outsourcing is obtaining the goods and/or services from an outside supplier in place of an internal resource. That’s not what we do.
What we have in place is a global company that’s very well-orchestrated. It’s not large by any means, but we have well-defined processes and systems in place that most large companies don’t. We’re lean, smart, agile, and build cutting edge platforms.
By hiring globally, I was able to stretch a dollar much further, expand organically, and not have to worry about financing or issuing options (in lieu of fair market salaries like what most startups do). I was able to hire engineers abroad, pay them above their market rates, keep them happy, maintain high margins and maintain ownership. It was a win-win strategy.
To further illustrate my point in the context of a start-up, let me present this scenario:
Your start-up raises $500,000 in funding. With that funding, you’re going to hire:
- 4 engineers
- 1 sales director
- 1 UX/UI expert
- 1 support staff
The burn rate with that staff you hired will probably cause your $500,000 to run out in one year, unless you receive further financing or are able to start generating some profits to offset costs.
On the flip side of that coin, with that $500,000, I could easily hire:
- 8 engineers
- 4 sales directors
- 1 UI/UX expert
- 1 support staff
With the same amount of funding, I could double the staff while quadrupling sales efforts, and still have that seed money to last for more than a year and a half. Under which scenario do you think the company would have a higher likelihood of succeeding? Your approach or mine? That’s the choice I was faced with. That’s why I haven’t hired a single developer in Canada.
Am I crazy? Maybe. But my crazy idea has allowed us to become the largest builder of Facebook apps in Canada. We’re now a Facebook Preferred Marketing Developer. We consistently build mobile and social applications cheaper, faster and with better quality than the competition.
I’m not preaching that everyone should hire engineers overseas. For some companies, I’ll admit, it just doesn’t make sense. But for startups, it’s not a crazy idea to consider. It can increase your chances for success.
Some will argue that by hiring local, I could take advantage of SRED and other government tax credits. Believe me, I’ve considered that. The credits don’t come near the cost savings I see by having a global team. Plus, what happens if the government decides to reduce or remove those credits? I know a lot of our competitors and colleagues in the industry rely heavily on them to turn a slight profit. It must scary being that reliant on credits that may or may not be granted to you. It’s not something I’m prepared to do, so I continue with my global aspirations.
I hope my insights help at least one of you.