How can choosing the wrong partners hurt a startup's success?

There can be damages from reputation perspective, there has to be a great deal of trust with the partner that you decide to work with, they have to be aligned on the vision and mission of the organization too. There are several factors that are important and worth considering and discovering when agreeing to work with certain partners. 

We are not a startup that could have been bootstrapped, so we got funding. We knew that because we were going up against established organizations, such as the comparison websites, we needed to have a sleek, professional look. We couldn’t afford to appear like a scrappy startup because we needed to build a high level of trust. As a result, we went with very established technological partners for development. The company we partnered with is over a decade old and has a great reputation in Brisbane, or so we thought. We found out a lot about them through that partnership that we didn't know before. And in hindsight, I had a lot of misgivings but I couldn't voice them because their CEO and our CEO were rugby buddies. When you know someone personally, oftentimes your level of scrutiny is a bit lower. 

In terms of engineering, they were topnotch; there was no problem with them technologically. But we found out that they’d made a contract with us when they were insolvent, which they shouldn’t have done. And we also weren't told that there was a silent partner, who turned out to not have our best interests at heart. We thought we were dealing with one company and we agreed to pay a premium because they promised us that everybody on the team would be on shore, including all the engineers. And some of them were on shore, but key parts of our development were being done overseas and that was never disclosed to us. We don't have a problem with offshoring but we paid them more money because we thought we were getting Australian developers, which cost more. But they were actually doubling their percentage. 

It was a huge markup and we weren’t getting the internal development resources we thought we were. They had farmed out our project to three companies and issued all the contractors their own emails to create the illusion that everybody was working for the same company. That is not necessarily unusual, but some disclosure would've been nice. A lot of the problems we ended up having with the development project were because of this offshoring and the fact that these people were literally working against each other when their interests became misaligned.