EDIT: I've been getting DMs asking the name of the company and that I can post it, so it is a company called Systango.Seventeen thousand Euros and hundreds of hours wasted on it, I've realized that the number one way to run out of money and almost be forced to close down your startup is outsourcing.Some context. I am the co-founder of a job search website that is exclusively for a country in Europe (currently only on the web). I have some technical background, but I mostly focus on business development rather than actual development and programming because quite frankly, I'm not good at it. We have two in-house developers who work on the core web app (we use React).In the August of last year, in the middle of the pandemic, we thought it was a good time to start the development of a mobile app. We are bootstrapped, so we decided to save some costs and go with outsourcing. We 'heard' good things about outsourcing and saving money, so we thought it would be good.We posted on Upwork, contacted 'offshoring' partners who would connect us with vendors, etc. Note that we were naive and this was our first time outsourcing, so we didn't have a lot of information apart from Googling.I dropped my email address at a lot of these websites so that the vendors could contact me. This is where my stupid mistakes started:Stupid mistake one: picking a vendor from the spam folder. I don't usually check my spam folder, but I casually clicked on it. I had a few days old email from an Indian company, let's call it 'XYZ' (I am really not sure if we could name and shame here. Let me know if we could, I'll be open to name them). My spam filters caught it, possibly because they dropped a rate card there. I clicked on it, and decided to visit their website. Their website looked good, I'll give them that. It was well-developed, in proper English (I read that usually outsourcing companies stuff keywords with bad English), had its HQ in London, and office in central India (we found out later that they did not, in fact, have any office outside India) and had customers like Disney and Grindr (learned later that they did not)! They made a good first impression.I showed it to my partner and we shared the same thoughts. We decided to at least take a call with them. I emailed them back, and they replied in just under an hour that they would be happy to jump on a call and discuss.We got on a call the next day directly with their CEO. I thought it was odd because I expected a sales manager to be on the call, but I remember thinking at the time that it was a nice touch. The CEO was well-spoken, but she didn't sound super 'techy' to me. She was a decent salesperson, but dodged every question I had related to their technology. This is where I committed:Stupid mistake two: NOT asking more questions. I just wanted to understand the costs ASAP. So I did not dig deep into their previous projects and technology stack. The CEO was in general sounding like they would do 'everything' we would throw at her. I asked her the costs and she quoted me half the hourly rates I would pay to hire similar devs in my country.My partner and I thought that this was it. We were clearly not thinking straight, and were only thinking about saving the money. We asked them to send a proposal over to us with how much it would take to build the app. They sent us a proposal of EUR 8,000, which - given the features of the app, was pretty cheap. We decided to pick them.Stupid mistake three: Paying a lot of advance. We asked them to kickstart formalities. They asked for half the project costs in advance. We asked them to lower it but they were kind of insistent saying that they had bad experiences in the past, asking half upfront is why they have low costs, etc. We decided not to discuss more and agreed.They sent over a ten-page contract with conditions. We skimmed over it. There was one area where that kind of implied that they would ask for 'time and material engagement for third party APIs' and we agreed to it. We thought it may take only a few hours to do that, and we were prepared to pay for it. We wired the advance money to their account in India.Stupid mistake four: Not discussing the 'third-party API integration' The 'development' of the application started. If you're non-technical, 'third-party API integration' basically meant that they would be charging us whenever there will be a requirement of integrating something like, say, a payment gateway like Paypal. Again, we were fine charging for that.We set up a recurring meeting (scrum) every day to discuss the progress with the developers. This is where ‘signs' of something shady going on started:The developer that they assigned to us NEVER turned on their webcams in any of the meetings. When asked to, they gave some excuses like it was not connecting, etc.The voices of the developers kept changing. I even recorded a voice one day, and played it to the 'other' guy the next day. He said he had a cold.They just said yes to everything. Like, I know this is a weird point to raise, but they kept saying 'yes' to whatever features we asked for.The delivery time was 10 weeks. They settled on a UI for the first couple of weeks (I thought the designs looked good), and then started on actual development. There was no way to see the progress of the application directly, so we thought that we would be directly getting the app.Their response time was like a day or so, not only on email - even on Slack.There were more signs but this would keep getting longer. After 10 weeks, we received an APK from the developers over email. I started that APK, a screen opened and boom: it crashed immediately. I emailed multiple times to the devs and their 'managers', but no response on that day. Got response from them that they were 'looking into it' the next day. After two days they sent another test APK. This worked but the UI was NOWHERE close to what they showed us initially. Like, absolutely nowhere close. Right after delivering the email, they sent over another invoice for the other half, plus additional 3 Thousand Euros for 'third party integrations'. We argued with them and they kept saying that this was what we decided on, etc. More enhancements would cost more. Keep in mind that we were already EUR 4000 in.So, because of sunk cost fallacy, we paid them the amount of money (at this point, we paid them like EUR 11K), and they showed us how they could improve the app more. We decided to continue on 'Time and Material' engagement and the meter kept running.I’ll fast forward here: the later version of the app was crappier. It didn't work, looked horrible, and had hilariously bad UX.YES at this point we decided to take legal options. But unfortunately, our counsel advised us against it.In the end, we were left with -17000 Euros, hundreds of hours lost, and NO mobile app.TL;DR: Guys, don't outsource your app to scam companies. It is better to pay more and build it in-house. see hubwealthy.com/wealthy
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