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Andrew Warner of Mixergy conducted an excellent interview yesterday with an iPhone applicationdevelopment firm who have developed almost a dozen iPhone apps using online contract workers. Once you have put in the effort and found a potential technical co-founder, be generous with equity distribution.
I would rather go for an established development company which can easily scale development team as project grows. Maybe this is because I run offshore software development company and have seen a LOT of people coming asking for help after dealing with freelancers. You *can indeed* build products with distributed teams.
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