Jason Goldberg is a serial entrepreneur, who founded and headed Jobster, and who is now on to his next startup, social|median, a social news website. In a long article on his blog, he talks about what lessons he learnt from his first startup, and what he is doing differently in social|median as a result. The whole article is very interesting, and I would say, a must read for budding entrepreneurs (Update: unfortunate, the website seems to be gone, and the original article is no longer available). However, most interesting to me is the fact that, although Jason is based in New York, his entire development team is in Pune, with True Sparrow Systems.

He talks about why he decided that development of social|median:

• Second […] we decided to build on a tight budget. Now, don’t get me wrong, I’m not talking cheap as in 1 guy in a dorm room. I’m talking low budget as in constraining the company to <$40k/month of burn in the first 4 months and then only taking it beyond that to about $60k/month once we had shown some early initial traction. The notion here was that spending our cash is the same as spending our equity. The more we spend early on, the less the company will be worth in the long run.
• Maintaining a burn like that forced us to think outside the box when it came to staffing the company. To put a $40k/month burn in perspective, that would get you about 3 employees at most fully loaded with office space in New York (if you’re lucky). I remember interviewing a total rock star CTO-type in January in NYC and walking away thinking there went all my initial funding and that’s just for 1 guy. Instead, we have run the company out of my apartment in New York and from our development center in Pune, India. I’m the only U.S. based socialmedian employee (besides our awesome intern Scott who joined us for the summer from Syracuse and who has been a god-send). The rest of our team is based in Pune, India. We started with 6 fulltime socialmedian employees in Pune and have since grown the socialmedian development team to 11 fulltime employees in Pune.

Finding the right company to outsource to is another interesting story.

Jason first found out about True Sparrow Systems when he saw a facebook application they had developed. He felt that the application had been designed very well, by someone who had not just done a quick and dirty job to jump on the latest bandwagon (social networking! yay!), but instead someone who had spent time thinking about the application and its users. Based on this he decided to go with True Sparrow Systems.

However, this is not your usual outsourcing relationship. Jason has set-up things rather differently from most other companies:

A few notes about working with an offshore team. If you’re gonna do it, do it right. What I mean by that is that I’ve seen it done wrong so many times it’s sickening. Folks in the U.S. all too often have this mistaken belief that there are these inexpensive coders outside the U.S. who are just on call and ready to write code based on specs. That’s a recipe for disaster. In order for software to be developed well, it takes a team that is adept at planning and strategizing and problem solving together. It takes a team that feels like a team and who is passionate about the product they are creating. It takes a team who truly feels like they are building their product not someone else’s.

So, we decided to set up things differently at socialmedian. First, our decision to go offshore was certainly based on costs, but it was equally based on abilities and mutual respect. I had worked with the future socialmedian team in Pune before socialmedian on other projects and only chose to work with them on socialmedian because I was impressed with their thought process as much as their work product. We chose to work with them because they know how to solve problems and how to figure out how to respond to customer/user needs. And, they passed the most important test of all, an earnest early interest in the problem we are trying to solve at socialmedian and fantastic ideas on how to tackle the problem.

Second, I personally committed to travel to Pune, India nearly monthly for the first year of socialmedian (I’ve been there 6 times thus far in 2008 and am headed back in a couple of weeks). The logic here was that if the team was there, I, as the lead product manager, should be there too. As per our hunch, we learned early on that in-person time was critical for planning. As such, we have evolved into this regular cadence wherein for 1 week out of every month we plan together in person, and then for 3 weeks we are more tactical as our interactions are over skype. Sure, all that travel is tough (ask my spouse who hates me for it), but it has proven to be very effective for us at socialmedian.

Third, we have made our Indian team shareholders in socialmedian, so we are one company building one product. It’s an offshore situation, not an outsourcing relationship.

Of course, this model is not for everyone, but it has worked well for us thus far. Mostly because we have an awesome team joined together working on socialmedian and we’ve created an environment where it’s all about our users and the product, and the fact that we are thousands of miles away from each other is just a fact of life, not a problem. If I had to start over today I’d choose the same team 10 out of 10 times to work with.

A lot of this is enabled by the tools:

In case you were wondering, here’s the process and tools/services we use at socialmedian to mange our New York – India operations. As noted, I travel to Pune for at least 1 work-week out of every 5 work -weeks. We ship code 3x per week within 3-4 week development milestones. We use TRAC (open source bug tracking tool) to manage bugs and feature requests. We use basecamp to share files. We talk on Skype when I’m not in Pune pretty much 6x per week from 8am Eastern Time to around 11am.

Read the whole article for a whole lot of other (non-Pune related) advice. It is long, but worth the trouble, especially if you dream of having your own startup.(Sorry, the article is gone, but here is a copy from the Wayback Machine (thanks Pragnesh))

Related articles by Zemanta

• Why I chose Pune for my startup
• Jobster CEO Jason Goldberg Steps Down
• Socialmedian unveils improved social news site
• Talk by Jason Goldberg, Founder+CEO of social|median
• Inviting articles on Entrepreneurship for CSI Pune’s September Seminar
• Call My Lawyer … in India