The traditional software development model asks startups to pay for progress they hope will eventually become a business.
Unfortunately, that arrangement is starting to look less comfortable for founders.
Case in point, only 57.3% of startups survived past their first five years, according to U.S. Bureau of Labor Statistics data.
The statistic is a sobering reminder that getting software built is hardly the same thing as getting a company off the ground.
For years, most of that uncertainty has belonged to the client.
Founders pay for the hours, design, development, and project management, then discover whether the resulting product can attract users and generate revenue.
But a different agency model is beginning to emerge, one in which development firms attach part of their engagement to measurable business outcomes.
Designli's TractionLab is a prime example of this.
View this post on Instagram
Rather than stopping at shipping a product, the program ties its commercial structure to early traction.
Founders receive a 14-day refundable trial, fixed 90-day pricing, and a commitment that if the product does not get a real user by Day 30, the following month is free.
According to Designli CEO Keith Shields, this model shifts the goal from launching a product to actually building a business.
"That distinction matters because distribution has become considerably harder to figure out," he says.
"A product can be technically sound and still disappear into the crowd if its founders have not figured out how customers will discover, evaluate, and adopt it."
Confident Agencies Lead With Outcome-Backed Engagements
Outcome-backed engagements change the commercial relationship between a founder and a development agency.
That's because the agency has a reason to care about whether their deliverables move the business toward a meaningful milestone.
That is a significant shift for startups, especially since development spending can consume a substantial portion of limited capital.
And that's before there's even any evidence that customers will actually pay for the product.
In the case of TractionLab, Designli puts more of that risk back on itself by tying part of the engagement to whether the product reaches early traction milestones.
After that initial launch, the focus shifts from getting a product into users' hands to proving there is a business behind it.
The goal is to generate the first dollar of real revenue by Day 90, with Designli supporting go-to-market activities alongside continued product development.
That structure matters because distribution has become a much harder problem over the past year.
As such, finding the right audience, reaching potential customers, and converting early interest into revenue need to be considered from the beginning rather than after development is finished.
View this post on Instagram
What Outcome-Backed Engagements Change for Founders
For founders, the TractionLab model creates several potential advantages:
1. Founders get stronger alignment
When part of the agency's compensation or commitment depends on reaching a defined milestone, the agency has a commercial reason to pay attention to what happens after the code is shipped.
That can encourage closer attention to questions such as:
- Is the product solving a problem customers will actually pay to solve?
- Are the right users being reached?
- What is preventing early adopters from converting?
- Which go-to-market activities are producing meaningful traction?
For a startup, those questions can matter considerably more than whether another feature made it into the release.
2. Founders get a clearer signal of agency confidence
An agency can promise that it has the expertise to build a successful product. Putting something behind that claim makes the promise more meaningful.
An outcome-backed engagement effectively asks the agency to demonstrate confidence through its own exposure to the result.
But keep in mind that this doesn't eliminate startup risk.
Market conditions, pricing, competition, founder decisions, and customer demand remain outside any development firm's control.
However, sharing some of the risk can provide founders with a stronger basis for evaluating how seriously an agency stands behind its approach.
3. Both sides work toward the same milestone
The traditional relationship can create two definitions of success.
The agency succeeds when it delivers the agreed scope. The founder succeeds when customers use the product and the business begins generating revenue.
But outcome-backed engagements bring those definitions closer together.
Instead of asking whether the agency completed its work, both sides can focus on whether the product is moving toward the milestone that justified the investment in the first place.
For an early-stage company, that can make the relationship feel less like hiring a vendor and more like bringing in a partner with something at stake.
BuckHub puts the outcome-based model to the test
BuckHub provides a practical example of how an outcome-backed development engagement can extend beyond building and launching software.
The ranch and livestock management app approached Designli with the goal of shaping their profile, identifying the right audiences and channels, and generating web and app users.
Over the course of TractionLab, the teams maintained frequent communication through platforms, including Basecamp and Google Meet, to work toward weekly milestones and understand BuckHub's business.
The approach produced measurable progress.
BuckHub was able to increase the number of users on its app during the engagement, and said the work accomplished during the first 60 days exceeded their expectations.
Build Toward a Shared Definition of Success
Software delivery remains necessary, but it's only one stage in turning an idea into a business.
A product that launches without a distribution strategy can end up as an expensive piece of software that nobody knows exists.
That makes distribution a vital consideration from the beginning rather than something to address after development is finished.
TractionLab reflects that approach by extending the engagement beyond launch and into the work of finding real customers and generating initial revenue.
"We define success by setting goals and working toward them through continuous integration with hypothesis-driven development as a main framework," Shields says.
"That means the product is not developed in isolation and then handed off to the founder to figure out what happens next. The work continues to evolve around what we learn from users, the market, and the traction the business is actually generating."
