Table of Content

1. Case Introduction and Recommended Decision ................................................................. 1

2. Decision Options ................................................................................................................. 2
2.1 Hiring programmers from a local firm ........................................................................ 2
2.2 Odesk ........................................................................................................................... 2
2.3 Dashfire........................................................................................................................ 3
2.4 Chief Technology Officer ............................................................................................ 3
3. Decision Criteria ................................................................................................................. 4
3.1 Costs ............................................................................................................................ 4
3.2 Equity........................................................................................................................... 4
3.3 Time Constraint ........................................................................................................... 4
3.4 Protection of Intellectual Property ............................................................................... 5
3.5 Quality ......................................................................................................................... 6
3.6 Short- or Long-term ..................................................................................................... 6
3. Criteria Interdependency ..................................................................................................... 8
4. Proof of Recommended Option including Shortcomings ............................................... 8
5. Action plan .......................................................................................................................... 9
6. Concluding Remarks ......................................................................................................... 10
I. References ......................................................................................................................... 11
II. Appendix ....................................................................................................................... 12

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1. Case Introduction and Recommended Decision

Brent Grinna grew up in a small town and was the first one in his family to go to university.
Studying International Relations at Brown University enabled him to build a large network and
start a career in the financial sector in Chicago. As he was new to Chicago, he entered the Brown
University Alumni club to make friends and eventually became the vice president. In this
position, he was responsible for fundraising. The task was to collect donations from alumni,
from whom, however, important data was lacking. Information was captured in an unstructured
excel sheet, with outdated data. For instance, alumni were still listed with their parents’
addresses.

Therefore, Brent wanted to develop an app to enable networking and fundraising among school
alumni. His vision was to carry the network in his pocket. Within the app, several features
should be implemented, such as a donation function to donate to Brown University, a location-
based student directory, or aggregated news from different sources. For example, information
from the alumni magazine, from traditional news, or social network profiles. A LinkedIn profile
could indicate if someone got promoted or moved due to a new job.

Dashfire, a software development company run by a friend of Brent that helps entrepreneurs at
an early stage of their business, developed a mock-up for an app interface (See Appendix A).
The app was named Evertrue. This mock-up was used to present the idea to the board of Brown
University which was interested in the project. Brent was given two months to develop a
working app that would be funded with at least $10,000. However, Brent did not have the
technical knowledge needed to develop such an app. Thus, the challenge is to find a technology
development option that meets his expectations while keeping in mind that he has only two
months and limited capital.

In the following paragraphs, I will list the options that Brent has and then evaluate these based
on the decision criteria. The decision criteria are the time needed to develop Evertrue, the
associated costs, whether he wants to outsource the job or not and the amount of equity Brent
has to give up. In addition, the decision is made by looking at intellectual property protection,
the quality of the final product, and whether the options provide a short- or long-term solution.

In this report, I will argue that Brent should continue to work with Dashfire, to develop the
product and a strategy. Subsequently, I will outline why a transition from Dashfire to working
with a CTO would be beneficial.

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2. Decision Options

2.1 Hiring programmers from a local firm

One option Brent has is to hire programmers from a local company and insource the
development process. This would have the advantage that he could meet the local programmers
in person to see if they are competent, reliable, and trustworthy. On-side programmers also
enable the possibility to discuss the roadmap of the product and meet spontaneously. As the
demand for mobile applications has increased, the hourly rates for programmers have also
increased up to about $150 per hour.

For example, he could hire local programmers from Raizlabs. This is a company based in
Boston, with clients such as Macy's and MIT. Costs are $40,000 to $100,000 or more to develop
an app with them. Their mission is to support companies at any business stage that lack
capability, such as knowledge, or resources. Raizlabs does not only develop the product itself
but wants to provide a whole concept for their customer.

2.2 Odesk
Odesk is a platform where companies can place short-term or long-term job offers. Freelancers
can then apply for these jobs. Odesk began its business in 2005 with the goal of making the
outsourcing process easier. Every freelancer on Odesk has a profile which lets a company
contact a freelancer for their project when they see someone suitable. Otherwise, the freelancers
can apply for the open job offer on Odesk themselves. It plays an important role that freelancers
get good ratings to be more attractive to companies, as freelancers who performed well within
their first contract have a higher chance to be booked a second time by the same company
(Ghani and Stanton, 2014). Odesk provides comprehensive management, billing systems, and
the communication between company and freelancer. Additionally, Odesk monitors the
freelancers by, for example, taking random screenshots of their screens during working hours.
In return, the platform takes a 10 percent transaction fee from the hourly rate a company pays
to the freelancer, which is around $30 per hour and paid weekly for the hours worked. Launched
in 2005, oDesk has grown to become the largest online outsourcing platform in the world, with
thousands of clients, partners, and job postings. The key success factor of Odesk is to provide
a worldwide network of freelancers that are available at short notice and on a medium budget.

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2.3 Dashfire
A friend of Brent, Rick Desai, founded his company Dashfire in 2009 with Nicholas J. Begich
as the Chief Technology Officer (CTO). In comparison to Odesk, Dashfire has not been
operating for a very long time yet. Dashfire's goal is to equip entrepreneurs with the right
strategy and a strong product for their business idea from day one. They function as an investor
at the seed stage which carries the risk that the invested model turns out weak on the one hand
but on the other hand has the opportunity to be part of a successful business from an early stage
on. While the business is in the US, the developers are based in Maidura, India. The connection
to India goes back to the founder Rick who was inspired by the innovative nature of Indians
when he worked for an NGO there. The business model is different from Odesk in terms of that
Dashfire hires no freelancers but rather has a few permanent programmers and selected clients.
In December 2009, Dashfire had 20 employees. Thus, fluctuations across the workforce are not
as high as at Odesk and programmers only serve one client at a time. The key success factor of
Dashfire is to accompany a start-up or entrepreneur at the first steps of the business by not only
setting up an application and website but also developing a company strategy. With a strong
team and a dedicated way of working, Dashfire claims to stand out from Odesk and similar
business models. Dashfire charges a rather low rate of $10 per hour but takes 10 percent equity
in return within the first 12 months.

2.4 Chief Technology Officer

Another option would be to team up with a CTO, who could function as a co-founder with
technical skills. The benefit of a CTO would be to form a substantial basis right from the start
and develop a long-term strategy. The co-founder has a monthly wage of around $10 815
(Crunchbase, 2021) and is given about 20-50 percent equity.

For Brent, Arjun V. Ohri would be a possible co-founder. He knows him from a business
challenge project they conducted together at Harvard Business School. Arjun has a computer
science background and experience in product management. Since he raises funds for those in
need in India by singing in his spare time, he is already familiar with fundraising.

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3. Decision Criteria

3.1 Costs
To develop an app that would be presentable to Brown University, Brent has estimated 100
hours of high-quality programming which realistically would sum up to approximately 500
hours of programming time. When looking at the first decision criteria costs, Dashfire is the
cheapest option with $10 per hour, followed by approximately $30 per hour for a freelancer of
Odesk, and lastly $150 per hour for hiring a local programmer (see table 1). For instance, a
company like Raizlabs from which local programmers could be hired, charges $40,000 to
$100,000 or more for the development of an app. This is well above the $10,000 that Brent
might receive as an investment from Brown University. When choosing to work with a CTO,
no hourly rate is considered. The monthly salary is about $10,815 for a start-up CTO
(Crunchbase, 2021), resulting in $21,630 for the two months of development time. Based on
Table 1, it can be seen again, that Dashfire is by far the cheapest option when looking at the
costs involved.

3.2 Equity
All equity is retained by Brent when hiring either local programmers through a company like
Raizlabs or assigning the development job to a freelancer from Odesk. Dashfire would take
over 10 percent of equity while working with a CTO implies to might give away 20 to 50
percent equity (see table 1). To give away equity does not necessarily have to be bad as will
be demonstrated in the section of interdependencies across decision criteria.

3.3 Time Constraint

Brent was given a deadline of two months to present a finished product of the Evertrue business
idea to the Brown University board to receive the investment.

By hiring local programmers, the time constraint would not display an issue as efficient
meetings can be held right away in person to discuss what the programmers should deliver.

When looking at the time component, Odesk would deliver a fast and efficient option as
developers worldwide would be working on the project. Nevertheless, relying on freelancer’s

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reviews would carry the risk, that the delivered product has poor quality. This would in return
result in a need to review it, which is time-consuming and comes with additional costs.

Working with Dashfire is highly efficient as programmers of Dashfire are only assigned to one
customer, focussing on building the app and website for Evertrue. At the same time, Brent could
discuss the strategy with the Dashfire founder Rick. It should be considered that negotiations
on product set-up and strategy can take a considerable amount of time to ensure that Brent and
Dashfire are on the same page. This could also lead to arguments, for instance, whether to target
alumni themselves or alumni associations to collect donations. Indeed, those arguments are
important to figure out the best strategy for Evertrue to succeed long-term.

The decision to work with a CTO is time-consuming in the sense that Brent does not yet have
a viable product which makes it difficult to find someone highly qualified on the CTO job
market who is willing to commit to a business idea at such an early stage. Furthermore, the time
limit of two months reduces the attractiveness of the position as a CTO would most likely want
to discuss the product and business strategy in detail. With Arjun as CTO, Brent no longer has
to look for an external CTO. But since Arjun may have different ideas than Brent about what
Evertrue should be like, discussions about strategy and product design take up time.

3.4 Protection of Intellectual Property

Especially in the early stages of a business, it is important to protect intellectual property.

As the personal connection to local programmers could build up trust, intellectual property
could be more secured. Additionally, Brent could hold them accountable in personal meetings.

When using Odesk, it must be considered that the idea will be shared with a large network of
unknown people, which carries the risk of misusing the intellectual property.

The contract with Dashfire (See Appendix B) stipulates that the intellectual property remains
with Brent, and the control lies in his hands.

The same holds true if Brent brings the CTO on board. As the development process is insourced,
the intellectual property is secured.

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3.5 Quality
Brent can be sure that the product delivered by the professional programmers, such as those
from Raizlabs, is of high quality and does not need to be reworked. Raizlabs in particular has
already developed 100 applications for different types of companies, 50 of which were mobile
applications, which is evidence of extensive experience.

Choosing Odesk and outsourcing operations like the actual software development in such an
early stage comes with a risk, as the decision which freelancer to choose relies on reviews of
other customers. Since high quality can be a subjective characteristic, it may not correspond to
what Brent expects. This could lead to the disadvantage of having to rework the app which is
costly and time-intensive. Moreover, the competitive advantage is in danger as software
developers might not individualize the product enough and design it like what they also do for
other customers. Especially, when considering that Brent has no technical background, it might
be harder to evaluate whether the work delivered is of high quality and if not, what needs to be
changed.

One argument that speaks for Dashfire, is that they already created the mock-up successfully
with Brent (Appendix A). With Dashfire, Brent would offshore-outsource the development
process to India but insources the strategy process by having close discussions with Rick and
his team. As Dashfire just started to operate and does not have that much experience the quality
could suffer. As 10 percent equity is transferred to Dashfire a stronger sense of responsibility
among the Dashfire team results. As a result, employees are more committed to working
collaboratively, which leads to higher product quality.

The quality of a resulting product when Brent decides to work with a CTO depends heavily on
the CTO's commitment, prior experience, and expertise. As Arjun has already valuable work
experience in developing a product from an early stage on and is a professional, the expected
quality of the product is high.

3.6 Short- or Long-term

Choosing to hire local programmers would make sense especially in the short term, as the
programmers are, in comparison to the other options, expensive, and their main purpose is to
help set up the business and develop the app. Local programmers are not considered to
contribute to running the business after the pitch.

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The same goes for working with freelancers of Odesk as Brent only hands in his idea of the
business product and they deliver it. Odesk offers a short-term solution with no regard to a long-
term strategy.

The collaboration with Dashfire is rather a long-term solution as 10 percent equity stake in
Evertrue will be acquired by Dashfire. Dashfire accompanies the kickstart of the company with
product and strategy development and offers connections across the entrepreneur scene, soon
as they are growing. Dashfire then provides intensive support to the growing company. Dashfire
opens the connection to the young innovation and tech scene and facilitates the connection to
investors.

Choosing a CTO displays a long-term solution, as he functions as co-founder and guides the
business path.

Intellectual Short/Long
Options Costs Equity Quality
Property term

Local
$150/hour keep 100% secured secured short term
programmer

$30/hour + 10
percent
Odesk keep 100% not secured not secured short term
transaction
fee
mostly
secured
mostly
Dashfire $10/hour give 10% because long term
secured
mock-up
went well
2 months
CTO salary equals give 20-50% secured secured long term
$21 630

Table 1, Summary of Decision Criteria

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3. Criteria Interdependency
To make the final decision on which option and which business partner Brent should choose,
the interdependencies of the decision criteria must also be taken into account. The discussion
of the decision criteria has already shown that they cannot be considered independently. For all
criteria, it could already be seen that they are interrelated and therefore these relationships
influence the final decision.

For example, it could be hypothesized that IP protection increases with a higher equity stake of
the business partner. This could be the case because with a higher equity stake, the
responsibility and interest in starting a successful business increases.

In addition, the time available also has an important influence on the quality of the final product.
It can be argued that with less time, fewer hours can be spent developing a product and strategy.
Moreover, with a time limit of 2 months, there is less time to find the right business partner, as
is the case when looking for a CTO.

But also the other way round, if the cooperation with a business partner leads to a product with
poor quality, which is a risk with Odesk due to the anonymity, more time is needed for the
revision of the product.

In addition, costs and quality have a certain relationship to each other. For example, the most
experienced developers, such as those from Raizlab, speak in favor of a high-quality product,
which is also associated with the highest costs of all options. For Odesk, this interdependence
means that freelancers with higher ratings are more likely to deliver higher quality products but
also have the highest hourly rate.

Low costs do not necessarily mean poor quality either but this goes hand in hand with giving
away equity stakes for Dashfire with low hourly wages but an equity levy of 10 percent. At the
same time, the equity levy implies a more long-term relationship, while high costs imply a more
short-term relationship.

4. Proof of Recommended Option including Shortcomings

I recommend that Brent should opt for Dashfire as a business partner and subsequently advocate
him a transition, by looking for a CTO within the first year. Working with Dashfire has the
ultimate advantage that they build an app and website for Evertrue, and furthermore, develop a
strategy for Brent's business idea. As they already succeeded in building the mock-up Brent has
an idea on what to expect. Dashfire also charges the lowest hourly wage matching Brent's
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budget. Even though it could be argued that Dashfire has only small business experience as
they only had a few clients before, with one business requiring app development, the mock-up
from Dashfire already convinced Brown University at the first meeting. Moreover, as Rick is a
friend of Brent, he might feel more save to share his intellectual property with him than with
unknown business partners. From a timing point of view, the criteria have shown that Dashfire
is not the fastest option as a discussion about the strategy can take time. However, because the
Dashfire team is already familiar with Brent's business idea through the mock-up, Brent is able
to discuss the strategy with Rick at the same time Dashfire developers work the actual
implementation of Brent’s project. Therefore, the deadline will most likely be met.

Giving away equity of 10 percent needs to be considered carefully. However, since Dashfire is
seen as an investor with the aim of getting the most out of its clients, I would recommend Brent
to take this chance. By the time Dashfire has more clients, it draws attention to investors, with
whom Brent can connect to receive funding and connection. As Dashfire will have connections
across the tech and start-up scene Brent can use his talent to connect and find a CTO along the
way.

For the pitch at Brown University, it might be more convincing if Brent presented directly with
a strong team consisting of himself as founder and the CTO. However, I do not recommend
Brent to choose a CTO right from the start, as this requires a time-intensive search. This
pathbreaking decision of whom to work within the long term should not be made under time
pressure. Brent had his friend Arjun in mind as a business partner, however I would not
recommend choosing him as Arjun is on a steep career path towards Silicon Valley bringing a
risk of Arjun leaving Brent for a better job offer. This would lead to high administrative and
costly consequences if the CTO had to be replaced after the development process.

5. Action plan
My recommendation is that Brent should close the deal with Dashfire. Then, he should meet
with Rick and his team as soon as possible to discuss the strategy and goals of the app. Brent
should also have clarity on his app's business goals for alumni networking and fundraising.

As described earlier, there was a discussion with Rick about whether the alumni themselves or
the alumni associations were the target group for fundraising. I would target the alumni directly
because the Evertrue app has more of a personal focus as alumni have an individual profile.
Therefore, it might be easier for alumni to donate directly through their profile than through the
association. Moreover, direct donors can be expected to donate a higher amount if they are
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thanked and appreciated on a personal level. Potential donors employed by prestigious
employers such as Google, Goldman Sachs or JPMorgan are also located around the world and
may not even be members of alumni associations (Appendix C).

Subsequently, I would recommend Brent to schedule frequent meetings with Dashfire and
check the status of the app regularly to be able to intervene in time if he would not be satisfied
with any detail. This also avoids the risk of Brent having to review the product again with
Dashfire due to the poor quality of the final product, thereby exceeding the two-month time
limit. After a successful pitch to the Brown University board, I would recommend Brent to use
his network and especially his social talent. For example, he could go to conventions and fairs
looking for a suitable CTO to bring on board. This is where my transition recommendation
comes in because I believe it is important for Brent to focus on his strengths in business and
take care of the strategic direction of the app. The CTO can take care of everything technical
such as communication with the developers. In this case, the transition costs are the fact that
Brent initially gives up 10 percent of his equity to Dashfire. However, as described above, I
would accept this dilution of equity as he can benefit from the network Dashfire, as investor,
will establish. Dashfire can then refer investors so that Brent can acquire capital for his company
in several investment rounds.

6. Concluding Remarks
To decide on the right business partner for an emerging business like Evertrue, it is important
to go through the decision criteria in a structured way. In the optimal world, there is often no
perfect decision as there are risks and opportunities associated with all options. In this context,
it is important as a decision-maker to choose the option for which the opportunities and benefits
outweigh the risks. In doing so, the short-term limitations, such as the time and capital
components in Brent's case, should be considered. For the long term, the decision-maker should
also evaluate different transition options. Furthermore, decision variables can rarely be
considered independently of each other as interdependencies are present. In addition,
characteristics and soft skills of the stakeholders should not be forgotten. For example, an
important criterion in my decision was that Brent has shown a lot of networking talent in his
career so far which assured me that he would be able to get the most out of the business partner
Dashfire and find a CTO along the way who would then complement his lack of technical
background.

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I. References

Kerr William R. & Alexis Brownell (2013) "EverTrue: Mobile Technology

Development (A)." Harvard Business School Case 813-122.
Crunchbase (2021). Funding Rounds. [online] Crunchbase, h
ttps://www.crunchbase.com/organization/evertrue/company_financials, Accessed 4 November
2021
Ghani, E., Kerr, W. R., & Stanton, C. (2014). Diasporas and outsourcing: evidence from
oDesk and India. Management Science, 60(7), 1677-1697.

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II. Appendix

A. App Interface Mockup from Dashfire

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B. Dashfire Interest Purchase Agreement Template and Master Services Agreement

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C. List of Brown Potential Donors – Sample Page

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