Is it smart to use remote programmers/web designers for my first startup social networking site?

I have worked in several startups where some of the code has been outsourced. You always face the principal agent problem, that the company you hire has different interests than you: http://en.wikipedia.org/wiki/Principal%E2%80%93agent_problem.

The costs for managing the coders in the foreign country are higher compared to the local ones. Whereas the local ones will likely be significantly more expensive.

I can suggest do to outsourcing like this:

1. Let them build a functional prototype, minimum functionality.
2. If you see that the market accepts the prototype, hire coders, throw away the old code. Build everything from scratch.

Update

Just as an update - I started working for several companies as a freelancer myself. I made the experience, that being paid on an hourly basis reduces the interest of writing bad code. If you agree on a fixed price with programmers, chances are high that they will attempt to minimize their work. The hourly rate is better in that case.

Depends on how familiar you are with leading remote development teams (or development teams in general). If you haven't done this before, the ability to do face to face allows for quick verification of points that you may not have articulated properly ("do as I meant, not as I said") and allow for more flexibility.

If you have a good rapport with the remote team / have worked on projects before / already launched a project with them, the local need is diminished since most times people understand each other.

There's never a right or a wrong way.

We all have different needs and situations. In the end it comes down to 'people'. You don't get great (or lousy) service from a location. You get it from 'people'. And when the chemistry works and you have confidence in the people you work with, it won't matter where in the world they are located.

I had a heart attack a few years ago, and had to start a remote business as a freelance inbound marketer, because I just couldn't travel any more. I work with all my clients remotely. Video conferencing is just as good for looking into the eyes, and having a group conversation with people around the world, but it costs virtually nothing and its instant.

My advice ~ and I am biased of course ~ would be to resist the temptation to buy local from average talent, just to get avoid taking a risk on finding and working with a specialist remotely.

Talent and specialization always works out best in the end.

I interned in a startup last year which had its development team based out of another city. The founder and the marketing guys were in a different city. We used video conferencing and remote terminals to review the work and discuss new ideas.

In our case, the founder knew a few people on the dev team from before, so trust issues were minimal.

In case you do go with a remote team, here are a few pointers:

• Keep a dedicated Team Meeting hour where all relevant people can meetup online / via phone and discuss new ideas / progress on old ones. Ideally keep meetings regularly or your team will start feeling disconnected due to the geographical distance.
• Keep an account (private one) on Github / some other version control system. Otherwise its Version Hell!
• Best case scenario is to at least have one person on the Development team from your city. Despite all the interconnectedness, there is nothing like physically meeting and explaining your concepts to your team. Next best case - Invite your Dev team at least once a year (depending on cost feasibility). We took this approach. Since everyone was from the same country, transport charges were not much of an issue. We met every quarter (and had fun!)

Hope this helps!

If I have the choice, in a startup environment, I'll always pick local company over a remote one and I'd always pick an in-house team over a local company.

In startups, especially web based technology startups, the length of the feedback loop is vital. The shorter the better. The further away you are from the team the longer and more complex the feedback loop. The bigger the chance of there being communication problems that waste time and money building the wrong thing.

There's a lot of evidence that distributed teams add considerable overhead to product development (see http://pinboard.in/u:adrianh/t:colocation for some pointers to research). The overhead is much more likely to harm a startup than it is an established organisation since there is far less slack.

I believe there are a few pros of engaging remote, foreign development teams for startups:

1. You are able to attract very skilled people if and when you need them
2. You don't have any routines in how you manage your software development, so you can focus on building the right habits for managing the remote team straight from the start
3. You can beat the competition because you produce at much lower costs, which also makes it more interesting for investors
4. You are much more flexible in removing or adding team members than with a local team

Of course if you have never managed a remote team, it will take some time to learn, but the same holds true when you work with new people locally. In the end you have a group of human beings that needs to learn how to work together. With people abroad, complexity is added because of different cultures, languages and distance.

I write many practical tips and tricks on my blog about this topic: http://www.bridge-outsourcing.com