A Tech Industry for Hawaii

Comment

Comment by John on April 9, 2008 at 9:53pm

I know lots of startups go the route of hiring four or five high end developers. Indeed, I've worked for some.

The thing is: do we really want to encourage that? and is that really a good business tactic?

In my experience, hiring a team of developers usually happens when you have a founder/visionary that lacks technical skills but has a big idea. First challenge I have experienced is that the big idea has a major technical/operational flaw that is not obvious to non-technical folks. You spend a lot of time and energy trying to overcome or shift around this. The second challenge is that the burn rate influences perception of the value of your product/service, namely that you expect an unrealistic amount of customers willing to pay an unrealistic price.

Today, in an increasingly "Y Combinator" world, if you pay for this large team, you not only have those challenges but now you are competing with 2 or 3 guys who can or have built a product similar to yours in 3 months for $50,000. They can underprice, outlast and more quickly adapt than the larger, more expensive team.

That being said, I think that techhui can provide a valuable economic development role by helping local developers work together on startups. Indeed, I suspect this could ultimately be more valuable than throwing lots of taxpayer money at the problem.

Comment by Daniel Leuck on April 9, 2008 at 4:55pm

I agree - its definitely much cheaper to start a software company these days if the initial programmers are all partners working for equity. On the other hand, if you need to hire a team of four or five high end developers your costs rack up pretty quickly.

I also agree that a Hawaii-based Y Combinator would be even more beneficial than tax credits. Another problem is recruiting. Putting together a team of five top notch guys in Hawaii can be challenging because we loose so much of our talent to the mainland. I think recently this has started to change, but its a slow process.

Comment by John on April 8, 2008 at 5:55pm

I don't understand why funding is seen as such a critical issue in Hawaii's tech sector.

Now, granted, my focus is in software, so perhaps funding (and local funding at that) is really the key issue for life sciences/bioetech companies like Oceanit, Hawaii Biotech, Cardax, etc.

In the last 10 years, the cost structure of starting up most software companies have fallen by an order of magnitude - cheaper hardware, SAAS, more productive programming languages/frameworks, etc. It's become a common refrain/lament in the Valley that VCs are having a tough time putting their money to work because agile software teams need less and less to get started. Ycombinator is demonstrating this in the extreme.

Perhaps, in the software community in Hawaii, we need more of that then we do tax incentives?