1. Faster Time to Market
Most projects, at least the ones worth doing, have a significant weighting on time over cost. Getting an idea to market, faster, almost always beats getting it there slowly. By using an established agency with experts in their fields, your ramp up time is minimal. Both the time to evaluate as well as the speed of ramp up is faster for the agency route over the new hire.
Evaluating an agency typically involves a simple conversation to validate a known reputation and/or checking a few references. Most of our clients make their decision within the first phone conversation and we are delivering some of the first prototypes within days to a couple of weeks. From there, we iterate.
2. Lowered Risk
One of the biggest risks a newly funded startup will take is hiring their first engineer. Even if the founder or co-founders are engineers themselves, they might be in a better position to evaluate raw talent, but unless they are hiring someone they have worked with before, it's impossilbe to know things like personality, work ethic, ability to surmount difficult challenges, how they will respond to stress, etc.
We are firm believers that every startup should have full-time in-house engineers, eventually. However, since this risk is large, why not mitigate it by hiring a known entity with a public reputation and easily verified client references? In addition, when an agency works like we do with simple hourly billable for blocks of hours, your up front costs are minimal and as you need them, giving you the flexibility to stop and start as you need to. Try doing that with a salaried employee.
3. Heterogenous View Points
One aspect, that might just be the most valuable about hiring an agency is the diversity of view points it brings to the table. Developers and project leads at an agency are constantly exposed to different industries, settings, businesses, personality types, problems to solve, and more. This creates an incredibly robust sense of seeing abstractions quicker. This experience is a tremendous benefit to you and the capital you are investing to build your business. It allows us to apply tremendous speed in to solving problems and building solutions. This is true for both pure code authoring as it is for knowing what works on the web and helping provide input back into your product development decisions.
4. Focus on Product
There is only so much one person can do. Even in the case of multiple co-founders, there is still a ton of hats to wear. The most important of these are non-technical. Things like customer discovery/development, developing relationships with channel partners, developing strong content marketing, and the list goes on. Writing code is a tiny fraction of what needs to be done to build a successful startup. However, it can be the most time consuming, especially if you have to manage the development project as well.
You and your founding team should really be focused on what you can do better than anyone else and outsource the rest, at least while you are small and don't have large sums of revenue.
Our typical engagements entail a small team on our side of 1-3 individuals with a project lead. The project lead will communicate status, review progress and backlog, and get feedback on the work that has been deployed to demo servers, at least once a week, sometimes it can be more frequent than that but overall, the founder is spending no more than 1-3 hours a week communicating with the project lead, the rest of their week can be dedicated to all the non-technical things that must be taken care of. This is extremely freeing for a founder/co-founder.
5. Better On-Boarding Experience
Often times during engagments with startups that haven't hired their first engineer yet, there comes a point in time when the customer discovery has been nailed, the site is in a position to generate revenue, and the first engineer might be hired. Since we are engaged and familiar with the project and at this point the founders, we can assist in evaluations of candidates and/or help on-board them.
We have even worked along side new hires and incorporated them into our process so that the hand off is smooth. If the developer is a junior level hire, the hand off period often serves as some on the job training as they ramp up. This investment in a junior hire is far more efficient than reading a book or being left alone to wander about the code base.