Last week I talked with a startup that had struck a deal with a tech company, for a percentage of the startup the tech company would build their product.
When I asked how their product process was, the founders of the startup looked like at me like a big question mark. "But the tech company is building our product." It turned out that the founders didn't have a clue about the process from idea to product, didn't have anybody in their founder team with any experience building products. A third-party tech company controlled all product knowledge, access to source code, production environment, and no process was in place to solve the costumer's core problems with technology.
As a startup, you need to own your product. You need to build it as a team. You can't just give the task of making a product to someone with only a remote connection to your company. You need to jump into the trench and figure out what solves your customer's problems together; this should be the sole mission of everyone working on your startup.
If you don't own and control the entire product, you are building a skyscraper on a foundation of jello shots.
"But I don't know anybody that can code, design and build products?!" Well, then you need to start networking or learn to code and design yourself.
It seems easy right now to hire an external company, they already have the team and the skills, but what do you do if they change focus, get a better-paying client or goes bankrupt? Poof, your product is now gone from the face of the earth, all the data, all the code is gone, nobody to call, nobody to fix it, your customers are calling complaining - what do you do?