August 11, 2016

Do You Need to Own the Source Code to Your App?

Do you need to own your app's source code? Here's the unexpected risk associated with owning the source code, and how you can lower the risk for your startup.
Grant Glas
grant@app-press.com

As co-founder and CEO of App Press, Grant created his first app in App Press, and has since built 300 more with over 1M+ downloads.

Do you need to own the source code for your app's minimum viable product, also known as your MVP? 

When you're running a start up, or turning an app idea into a business, you should focus on making the smartest investment at the lowest risk to validate your idea. 

Owning the source code can give you more control in the long run, but it can also be an expensive proposition that introduces a lot of unnecessary risk. 

How do you de-risk your business plan? This mantra of 'de-risk' goes against the idea of owning your source code. Your risk factors can be boiled down into three things: Skill, Time & Money.

  1. Do you have the skill to write and maintain your app's source code yourself?
  2. Do you have the time to write the code yourself or to search for the developer you can hire to write the code?
  3. Do you have the money to hire a developer to write and maintain the source code?

If you're a non-technical founder, think about the source code dilemma this way:

  1. Do you want to own the source code?
  2. Can you write the code yourself?
  3. Can you hire a developer?
  4. Do you have 2 - 3 months to find and interview candidates for the developer position?
  5. Once you find a developer, can you afford to pay a $85K - $125K salary?
  6. If you can't afford the developer's salary, are you willing to give them 5%-50% of your company?

HOWEVER, in my experience, folks typically answer 'maybe' or 'no' to questions 4, 5 and 6. 

If you're not technical enough to write and manage the source code yourself, or have someone on staff that you trust, owning the source code can expose you to a lot of risk. 

Risk involved with finding a developer 

Trust me: finding good people is hard in today's market. If you find an experienced developer after the interview process, be prepared to pay him/her in cash and equity (that's IF you find a developer). 

 At App Press, it took us over 12 months to hire two developers.  Good developers are in high demand. So get ready for an uphill battle trying to find one, and convince them to join your team. 

Risk involved with hiring a developer 

Paying one team member $85K-$125K and hoping they are able to build exactly what you envisioned, exactly the way it allows your business/app to scale is a big risk. 

Guess what happens if your developer writes lousy code? The source code you paid for isn't worth a dime. If you end up with badly written code that's impossible to maintain, extend, or test, you'll need a complete re-write. 

Bad source code can send you right back to square one, and kill your app, or even your business. 

Risk involved with giving a developer ownership 

If you give your developer an ownership stake in your company, you now have a partner with a say in your business. This could either be great, or a future problem as your business grows or stalls. When you build an app with a development shop, or a tool like App Press, you don't own the source code. 

However, you de-risk your plan. Here's how.

  • Lower costs (typically you'll save 10% - 50% on the development cost. For example, instead of paying a developer a salary of $85K salary, you may instead pay $40K in development costs)
  • You keep 100% of your company
  • You save several months of effort trying to find a developer to hire
  • You get your app to market faster
  • You get a qualified and experienced mobile development partner that will build a quality app
  • You can always request and discuss ownership of the source code and opt to pay a little more to own it

It boils down to building your MVP as quickly and cost effectively as possible. Many times that means using a third party vendor or tool (or both) where you don't own the source code - which can actually be a good thing. Less risk translates into more flexibility.

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