4 Huge Startups That Outsourced Their Tech

Perhaps you’ve read Intuit’s 2010 prediction that forty percent of the American workforce will be freelancers by 2020? Whether or not you think that prediction is accurate, the gig economy is on the rise.

According to a 2014 Upwork (formerly oDesk and Elance) report, the number of American freelancers had grown to 54 million, or 34%, of the workforce. But does it work? How do you know when you outsource you won’t be left with high-priced shoddy design or bug-filled code?

At Gigster, we are all about the gig economy, and today we want to tell the stories of four startups that outsourced their development in the early stages and went on to become mega companies. Who’s to say your project won’t turn out to be a superstar like these?

Skype

In the world of startups, Skype is a respected veteran of 13 years. The road to success was a bit rocky for Skype’s founders, though. The founding duo, Swede Niklas Zennström and Dane Janus Friis, ran into legal trouble with their previous startup, Kazaa, a peer-to-peer file sharing program.

Niklas Zennström

When they realized the obstacles to peer-to-peer file sharing, namely that the music and video industry didn’t like their products being given away for free, Zennström and Friis looked for another way to harness peer-to-peer technology and another industry to disrupt. They found it in voice-calling and the telecom industry.

Together with an outsourced team in Estonia, Jaan Tallinn, Ahiti Heinla, and Priit Kasesalu, they built the Skype platform to allow users to make calls over the computer. The initial alpha version wasn’t well-received by the trial users until the users realized they could make calls for free.

And that’s when Zennström and Friis realized they had something good. Their product could disrupt an expensive industry but wouldn’t face the same legal battles that Kazaa faced.

The relationship between Zennström, Friis, and their outsourced development proved successful. Skype was released to the public in the late summer of 2003. In the first day, 10,000 new users downloaded the application. Within a few months, Skype had a million users. In 2005, Skype sold to Ebay for $2.6 billion and then to Microsoft in 2011 for $8.5 billion.

AppSumo

Noah Kagan

Take, for instance, Noah Kagan’s AppSumo. After stints with Facebook and Mint.com and after starting Gambit, around 2010 Kagan saw a hole in the market for digitally distributed goods. Music had iTunes, books had Amazon. But web apps? No such website existed for them. Enter AppSumo.

Kagan built the first version of the website himself but hired a freelance developer in Pakistan for $50 to help him build a Paypal button. There you have it: $50 and one week later, AppSumo was born. He started by selling subscriptions to Imgur, an image sharing website and image host, and then branched out to other paid web apps like Dropbox and Depositphotos.

Six years later, that $50 outsourced startup is valued at over $2 million. Kagan has one of the biggest list of email subscribers on the web–hundreds of thousands of entrepreneurs and wantrepreneurs receive AppSumo emails, and Kagan himself pulls in a six-figure salary from his startup. His current projects include SumoMe, a group of web tools to help businesses grow their website traffic.

GitHub

In the world of coders and software developers, GitHub is as popular as Facebook or Twitter. According to Alexa, it is in the top 100 websites in the world. But GitHub wasn’t always so successful.

It all started when Chris Wanstrath, PJ Hyett, and Tom Preston-Werner saw a need for a way to share private code in Git, an open source language authored by Linus Torvalds, creator of Linux. And thus GitHub was born as a way for software developers to collaborate. In the early days, the GitHub founders hired Scott Chacon, a fellow coder they met at a conference, as a Git outsourced consultant. He eventually went on to write the backend of Gist, a sharing feature on GitHub.

Today, GitHub has over 11 million users and 36 million visitors a month. It has raised $350 million in funding and is valued at $2 billion. It has taken the open source coding community by storm, putting other coding websites like Google Code out of business.

Slack

We would be remiss if we left Slack out of our top outsourced startups list. Founded in 2013 by Stewart Butterfield (co-founder of Flickr), Slack is a simple and fun messaging app for the workplace. Butterfield outsourced Slack’s development to a design agency that designed the logo, the website, and the accompanying app.

When Slack was good enough for Butterfield and his team to use themselves, they started inviting a few other users to try out the prototype. They made tweaks based on feedback, and they premiered the app to the world late summer, 2013. Eight thousand people signed up the first day, and within two weeks, the app had 15,000 people requesting an invitation to use Slack.

Today, Slack has a few million users. It is valued at $2.8 billion and has raised $340 million from Andreessen Horowitz among a plethora of other venture capitalists.

Does it always work this way?

What if Skype, AppSumo, GitHub, and Slack lacked the necessary connections to outsource their development to reliable teams?

Here at Gigster, we make it our mission to connect startups and established enterprises (check out our IBM success story!) alike with the best freelance developer talent available. The Gigster network includes engineers from Facebook and Google along with folks who’ve studied at MIT, Stanford and so on. Making sure you have the talent you need to develop your product is what we do.

Ready to hire your Gigster? No project is too big or small for us. Start your project today.