Why 99% Of New Apps Developed By Outsourcers Fail

“Dave” (not his real name) sat across from me at a cafe in Kiev, nearly falling out of his chair with excitement. He was a very fit, middle-aged London banker who had an idea for an iOS app and had hired an outsourcing firm in Kiev.

$150,000 into his yet-to-be-launched app, he kept saying “I’m certain.”

It doesn’t occur to many first-time product founders that the outsourcer’s entire business model is to code to spec, get paid the second half of the deposit (before releasing the code to the client) and move on to the next client as quickly as possible.

Or that code is only 40% of what makes a project successful.

The truth is, outsourcing is a grueling business with 10% to 20% margins at best, and that doesn’t account for all the dead time your engineers are not working, the constant churn as engineers leave you for better-paying positions, nevermind the sales and marketing costs.

If outsourcers could build successful products, they wouldn’t be outsourcers. That’s why 99% (likely more) of new apps developed by outsourcers fail.

Dave became upset when, instead of joining in his excitement, I told him “Dave, you’re a great guy but if I could short startups, you’d be first.”

I know, I really got to work on my bluntness.

However, a few months later Dave sent me a Facebook message with the all too common, “John, I should’ve listened to you… hey can you meet up for coffee?”

Call it luck or psychotic determination, but both of my startups have had profitable exits and nearly all of my clients who I’ve been a growth advisor to have had: an IPO, a Series A investment, or been acquired.

When I think of why luck has been on my side, my belief is that it has to do with one core habit I’ve developed with my colleagues over two decades of building, advising and investing in new software projects that I call the CMP model:

Every successful project is a product of consistent mini-pivots based on a relentless collection of data. This is antithetical to the very essence of the outsourcer model.

Too often I hear younger founders say something like, “We failed because of _______ but we learned a lot!”

I don’t believe failure is anything to celebrate, and my belief is that many project failures could have been averted through a concept I call “Consistent Mini-Pivoting (CMP).

When I think of my first company Five9 (where we competed against startups who had collectively raised over $200 Million dollars) I’m reminded of one thing – the art & science of the CMP model.

At Five9 we were the David versus the Goliath, so we had to come up with a 10x better product with a 3x better marketing strategy.

And once we were able to do that 10x improvement over competing products, we were able to run ad campaigns on search and social media that read, “This Call Center App Reduces Long Distance Bills 70%.” That was our 3x better marketing campaign, and the combination of the two was potent.

Based on this 10x product + 3x marketing combination we grew from $0 to $10 Million in annual recurring revenues within 24 months. Quite frankly, it felt easy. It was fun (while our competitors used words like “grinding,” to describe their lives).

It was a classic example of winning against bigger competitors by having an engaging growth marketing campaign that leveraged a 10x better idea with a 3x better marketing tactic. A result that was made two orders of magnitude more probable through the CMP model.

The CMP model allows product-experienced managers to lead moderately skilled teams to achieve impressive results.

It just happens that this is the exact opposite of how outsourcers become profitable.

So my two technical partners and I set up a dev shop in Ukraine so that we could partner with outsourcers for their low-cost labor, but manage the teams directly ourselves for our clients.

We treat your new project or outstaffed developer office like it’s our own startup.

I was also the growth marketing consultant to Odesk (now Upwork) and on average the Ukrainian, Belarusian and Russian engineers were slightly but noticeably faster.

There are no guarantees with any project, but I believe the CMP model gives a project multiples more chances of success, and in this gambler’s game – it’s all about playing the odds by reaching for the best hand.

Contact us at JetBridge if you have a project in mind and I’ll tell you how we used CMP at our second startup DoctorBase to compete against a company that raised 30x more money. And won.

A 10x Improvement Over Link Shorteners

Link shorteners are used by marketers and social media mavens to make long URLs shorter and to track the source of visitors. OK, we all know that.

But did you know that sophisticated email and social media marketers not just shorten links, but turn their links into retargeting gateways? Meaning anyone who clicks the links will automatically start to see the link owners ads on Facebook, Google, etc.

Great, right? So why isn’t everyone doing this?

Because it’s a pain in the ass, that’s why. And this is the very exact problem we’ve solved for with Fingrprint.io.

I mean, check out the video on how to set up a retargeting link using a popular link retargeting tool. The tutorial video alone is 9 minutes long! And it will takes tens of minutes (or longer) to set up each retargeting pixel and connect it to an ad on Facebook or Google, set up the tracking URL, create a custom audience, wait for the trigger threshhold, etc etc.

Simply, retargeting links never took off with mainstream marketers because it’s arduous and prone to errors.

We made Fingrprint to make creating retargeting links 10x easier, faster and more powerful.

Our tutorial is 30 seconds. And unlike traditional link shorteners or retargeting link tools:

  1. Fingrprint’s retargeting links can also be videos, docs and images! So prospects reading your PDF or watching your explainer video on Youtube will get retargeted.
  2. The entire act of creating a shortened link and connecting it to a retargeting campaign is now seconds (with other tools it can take tens of minutes or longer per link, and even then there are a lot of steps a user can mess up). Fingrprint is grandma-proof 🙂

Check out Fingrprint – you can create your first Fingrprint link in seconds, for free.

  • Turn content in outbound emails into retargeting opportunities by replacing normal links and videos with fingrprints.
  • Retarget prospects on 3rd party content you send them (with GDPR compliance).
  • Give it to your social media agency and have them turn normal content they post on your behalf into Fingrprint retargeting links (it’s simple enough for the intern to learn in seconds).

How To Retarget Prospects On Third Party Content

While retargeting visitors who come to our website is common practice, we marketers leave a lot of revenue on the table by not retargeting the recipients of our email sequences or by not retargeting our social media followers.

Links in emails or social media that lead to credible third-party content generally have high click-thru rates, but since marketers can’t cookie prospects on third-party sites, retargeting prospects this way was previously impossible.

So we created a free tool called Fingrprint, which makes retargeting your prospects on third-party content ridiculously simple.

In fact, the entire tutorial video here takes 30 seconds:

How does it work?

Fingrprint is an auto-magical link shortener that makes sophisticated retargeting 10x simpler than before.

Before posting links to third-party content in emails or social media posts, you can easily convert them into special shortened URLs using Fingrprint. Now prospects clicking this fingrprint shortened URL get automatically retargeted with the specific ad you connected to that fingrprint URL.

Let’s compare what prospects would see if you posted a link to a Forbes article as normal (not a fingrprint URL). Notice the distracting ads that are now commonplace on all publisher sites:

salesforce retargeting

But compare that to what a prospect sees when they click a fingrprint shortened URL (notice that in addition to being cookied in a GDPR-compliant manner, the prospect has distracting ads stripped away and can conveniently engage with your team should they have any questions):

best facebook retargeting tool gdpr

Why should we care?

Let’s compare this hypothetical content conversion funnel which yields a 0.05% conversion rate from delivered email to SQL (average for B2B):

best b2b retargeting app software tool

Compare that to a content funnel that shows retargeted ads to prospects which yields double the number of SQLs with the same volume of delivered emails (results we have seen across the two B2B SaaS companies we ran):

content retargeting

And if we can 2x the conversions we get from content marketing, anyone can 2x their conversions from content marketing. And now it’s both free and 10x easier to do than before.

Start using Fingrprint for free.

I Fought One Of America’s Most Powerful Law Firms, And Won.

In 2009, I started a digital health company. One of the first people I hired was a sales rep who I’ll nickname “Bruiser.” 

Our company’s big idea was to get doctors to message with patients by rewarding them not with money (those attempts by earlier startups had mostly failed) but with verified reviews instead.

Whenever we encountered problems Bruiser would declare, “I’m an immigrant from the toughest part of the world — this is nothing.” His confidence gave the rest of us confidence. 

But the more successful our SaaS company became, the more difficult he became. At each growth milestone, he wanted to renegotiate his position with clauses like “anti-dilution guarantees.”

Meanwhile, the business was gaining traction and soon hit $1 million in annual recurring revenues. Before we could celebrate, Bruiser called. He wanted to renegotiate.

I let him go on the spot. “Let’s chat on Monday and figure out your exit package,” I said.

He agreed saying, “I love you but you’re too difficult to work with.”

I remember thinking, “Well that was cordial! I thought he was going to break something.”

On Monday I got a letter from his attorney demanding $750,000.

We didn’t have the money, or an attorney. The closest thing I had was a friend who had just started his own law practice. It was so new I had designed their logo a few months back.

On Monday I gathered my team with my friend the attorney and explained the situation. “I’m worried,” I admitted. “But he’s muscling us and I don’t want to settle. What do you guys think?”

“No. I can’t settle,” said my Operations Manager without hesitation. The others nodded.  We were officially embroiled in my first lawsuit.

We responded letting Bruiser’s lawyer know we were fighting.

And then something unexpected happened. Bruiser’s attorney dropped out of the case. But why?

Using the power of positive thinking, I told my team that Bruiser was likely getting a cheaper lawyer.

A week later we got a letter from Cotchett Pitr McCarthy. They were Bruiser’s new attorneys. Known as “CPM,” they had successfully sued companies like Eastman Kodak and Citigroup. Their founder Joe Cotchett was described by a popular legal website as “The Bully of Bullies” with the subtitle “Why does Joe win so often?” 

So much for positive thinking.

CPM introduced us to their firm by sending in a wheelbarrow of documents four feet tall containing every email, contract or anything thing else that could produced from a commercial laser printer. 

“Total intimidation tactic, so CPM,” marveled my attorney. 

We had an open floor plan and we stared speechless with looks on our faces like the primates in the movie 2001, where the obelisk suddenly appears and confuses the monkeys.

I broke the silence by getting up slowly from my fake Herman Miller chair and announcing, “We’re going to win. I promise you.”

I’m not sure anyone believed me, but I packed my laptop and went home early. I didn’t want anyone to see me looking stressed. Later that night I brought half of that pile home (my attorney graciously took the other half).

It was time to ping my network. My friend Jay was the former in-house counsel for Twitter. A Harvard educated attorney Jay knew technology and the law, he was brilliant.

“John,” he said, “if you were in a knife fight, with CPM Bruiser just brought a gun. You sure you don’t want to settle?”

But I had told my team too much about standing our ground to settle now. If I settled I would lose all credibility.

We continued on as if I was running two operations – my company and this lawsuit. Evenings after work I sifted through documents until I passed out drinking a glass or two of scotch. Maybe three. 

Also, I picked up smoking.

My life kept going on like this until my phone rang at 3:00am one morning.

“Get up!” My attorney was shouting like he just discovered who killed JFK. “What year did you incorporate?”

“2009, I think,” I was still groggy. “What time is it again?”

“And when did you buy the .com domain name for your company?” he asked. “Look at the sales contract that Bruiser signed with a customer. What year did you buy the .com name?!”

To me, it looked like a regular sales contract.

“You incorporated in 2009 but bought the domain name in 2010,” said my attorney. “So why does this sales contract from 2009 say the agreement is with the .com name you bought in 2010?”

“Because he forged these sales contracts,” I said, flabbergasted.

There were other sales contracts with the same error. But why would he do this?

“Because Bruiser plans to show that he was instrumental in the success of the company,” my attorney said.

I immediately called my Operations Manager. “Get up!” I shouted when he picked up the phone.

About a week later we demanded an early deposition of Bruiser from CPM. One of the lead attorneys at CPM asked if we really wanted to do this, saying it was unusual to call such an early deposition. But we called their hand and at the deposition, we presented Bruiser and his attorney with the evidence.

Another week passed and we got a call from CPM. They wanted to settle.

“It’s a fraction of the original demand amount,” my attorney reported.

I balked. “I’ll pay to cover their clerical costs for printing that pile of crap they sent to our office, but that’s it.”

I don’t know a large law firm’s internal cost structure, but I’m guessing Bruiser and CPM walked away with about that and not much else. 

It was also a lesson for me about surrounding yourself with the right people from day one. When I told my managers we were being sued that Monday morning, even though I could see the fear on their faces, not a single one of them sold out their sense of morality for practicality.

And when that inevitable time comes, maybe you shouldn’t either.