OK - so don't hire employees, but contract with contractors. Seems a pretty simple problem, yet few companies I talk to want to go down that route. No, contrac

OK - so don't hire employees, but contract with contractors. Seems a pretty simple problem, yet few companies I talk to want to go down that route. No, contractors are usually not a great fit for a few reasons. 1. They're expensive. A lot of can cost a 50% to 100% premium on a salaried employee. Example most good contractors I know (solid, quality devs not rockstar architects) go for about $125 an hour in the SF Bay Area. Over 48 (assume some timeoff) weeks this is about $240,000 a year. This gets worse working startup hours where you get a cost efficiency with salaried employees when people work massive amounts of overtime. Imagine the quality of engineer you can get for $200k a year. 2. When contractors are done all the knowledge of what they've done goes out of house. Both in terms of what you lose as well as any proprietary info that can now go into competitors hands. 3. Contractors don't have to work your hours. A lot of people aren't aware of the legal differences between a contractor and a full time employee because its very vague. But you can't just say "boom" you're a contractor and expect them to show up every day like a regular employee. Some do and if they don't complain its fine, but if you piss one off they can easily get you in trouble with the IRS and your state's labor code. If you expect an employee to show up every day, at your office and work 9 to 5, and work off your product backlog then they are by law a "full time" employee. You're expected to take out payroll taxes, workmans comp etc. No hire a few very competent people who can adjust. Where contractors have their place is on discrete pieces of work - doing your iPhone app, performance tuning your stack etc. These are great places to have contractors come in.