Hiring the wrong contractor can completely throw off a project, especially if you are a smaller agency. I used to hear all sorts of horror stories of potential clients who had found a contract on their own, shelled out thousands of $$$ and were left with an app that didn't work.
Even as a technical founder myself, I also made some poor hiring decisions when it came to contractors.
With this post, I hope that you can avoid some of the mistakes we made.
Hopefully this can save you from losing weeks on a project:)
Contractors versus Employees
A small book could be written about this subject. I’d rather talk about tactical advice rather than legal specifcities. Here is a link to a helpful resource from Nerd Wallet that has a lot of info re when to use contracts vs employees.
How to hire contractors 👔
To summarize in one line, use verified marketplaces (I’ve linked a few below). Pay the premium to use a service that has done 90% of the vetting for you.
Please don’t post a job on Upwork, Angellist, etc and manually go through the applicants.
We’ve seen companies, startups, and friends get burned by contractors they got in touch with from a job posting they made.
Your job isn’t to be good at searching, vetting and interviewing contractors. Outsource 90% of the work so you can focus on determining if the contractor is a good fit, rather than testing for aptitude.
Where to hire contractors 🌎
A few marketplaces we used over the years
- Cloud Devs - Top notch latin american developer talent. Our best contractors came from here
- Lemon.io - Eastern European developers mostly
- Toptal - General engineering talent. Never used personally, but have heard good things
- Upwork - Has a little bit of everything. Requires you to to more work, and be more vigilant, but still has good talent. Don’t let the the really low hourly rates draw you in. Pay a premium for even mid-level talent. The low end it too risky.
Mistakes to keep in mind when working with contractors ❌
You need to be sure you treat them like a contractor or you could find yourself in annoying legal situations. This is unlikely when you are at a small scale, but it is better to be safe than sorry.
For example in NYC, if your subcontractors don’t have their own insurance, you will be required to provide it for them, even though they aren’t employees. I know, sounds like a headache. Just good to check in on this with your lawyers, accountants, Google, ChatGPT etc.
Don’t expect them to act like employees
I’ve spoken with agency folks in the past who would complain that a contractor doesn’t seem to care about the company or project. But what do you expect?
You’ve hired them as a contractor, not an employee. You haven’t given them much financial insurance. Why would they care about the outcome of a project as much as you do, or your employees?
Be reasonable, think about it from their prospective.
Managing contractors 📇
If you're paying by the project, make sure to withhold some portion of payment for the final milestone.
You don’t want to end up in the situation in which a project is dragging out and the contractor doesn’t have an incentive to finish the project promptly. If you pay on a straight houlry basis you may run into this issue. Happened to us.
You can still pay on an hourly basis for the majority of the project. But once you get to the 90% mark you could withhold the final paycheck until the project is completed.
Turn off the keystroke watches and screen monitoring.
Some marketplaces will provide services that will occasionally screenshot the contractors monitor, or track their app usage in their browser.
For high function roles like developers, we would always turn this off right away.
It starts the relationship off on the wrong foot. It defaults the relationship to “I don’t trust you”. I think it is better to start with trust, and let them lose it, rather than the other way around.
They will feel better this way.
If you are worried about their productivity, there are many other ways to accomplish this goal that aren’t as obtrusive.
Contractors, summarized 📝
Contractors can be a huge help. Since there is less of a tax burden they can be much more affordable then hiring someone full time. There are hidden costs, such as less motivation in the outcome or trajectory of the company, but you got to take the good with the bad.
Use services that already have vetted contractors. DON'T do this on your own. This isn’t your job, you’ll make mistakes.