Finding a CTO (Perm vs Fractional)
As a founder of a pre-seed or seed-funded startup, the financial side is always a worry. Hiring engineers is expensive enough, especially in London where a Senior Engineer can cost 80–90k.
Do I need a CTO?
Should you hire a CTO for your startup? Well, maybe. It really depends whether your startup idea is highly technical in nature. If you’re just building a storefront, for example, to sell dog toys online, then you’re unlikely to need a CTO. Shopify, Woocommerce etc… make it dead simple to set up and run yourself. You might, however, need a CTO when it comes to integrating with other solutions (warehousing, logistics, PIM’s) or moving to a headless commerce solution and want to evaluate the best strategy in doing so.
If you’re looking at a Series A or large funding round most VC’s will expect you to have a CTO as part of the executive team. It doesn’t have to be a permanent member of the team however, you can hire a Fractional CTO which suffices.
What do they do and how do they differ to a tech lead?
Tech leads or lead engineers will focus heavily on coding and design (maybe) as the predominant part of their role. Asking them to take on hiring, people management, product management and involving them in strategy/management meetings detracts from this and they often find it confusing, exhausting and generally struggle with the balance between these. A CTO (interim or fractional) can take on this and also act as a multiplier to your engineering team and tech lead. A CTO can also provide a set of skills that your product/engineering team might not have, including:
- They have experience as a product manager carrying out discovery/development. Building products to learn is expensive — you need to carry out user research and product prototyping quickly and efficiently;
- They are visionary in nature and able to act as a sparring partner for you within business and technology strategy alignment, organisational structure, hiring, people management etc…
- They have excellent critical analysis skills — often overlooked. This is predominantly taught in a research degree (MPhil/PhD) programme and is incredibly valuable in the early stages of a startup.
- They can hire and retain the best technical talent, motivate, educate and act as a catalyst for developing engineers.
- They can shape, guide and explain the product and technology vision to a development agency or team. This means you can avoid major, costly mistakes by taking advantage of the experience of the CTO(domain or technology-based). I’ve seen so many car crash solutions that I’ve either inherited or had to advise companies on. Sometimes, we’re talking about six/seven figure costs to remediate.
Should I promote my lead engineer?
It can be tempting to look at the shining star in your engineering team and promote them into the role, but learning to do the CTO skills is hard. Forbes suggests that a seasoned CTO spends 24 years acquiring their skills over four companies or more! It can be the difference between failure and success within a company and can often save you a lot of time and cost early on. They will have spent time as an engineer, technical lead, architect, product manager, engineering manager in a number of their previous roles.
How much does a CTO cost?
If London based, a CTO for a startup can cost you £120,000+, although you can lower this if you combine it with equity. More senior CTO’s can command up to £200,000. That’s expensive, but not as expensive as building the wrong thing, mismanaging a product/tech team, having high churn rates and a bad reputation to go along with it. Your reputation on Glassdoor counts and people do factor it into their decision making process.
A lot of founders will look at a perm CTO solution and come to the conclusion they can’t afford a full-time CTO. There’s another option however — hiring a Fractional CTO. That person works for a day a week or a few days a month, providing on-site time as well as off-site support in terms of questions and work. They can:
- Evaluate your product idea and business and work on product strategy and product management with yourself and others.
- Work with an agency or internal team to guide them on building the product idea. I’ll follow up this post with an agency horror-story post — namely around the use of bespoke frameworks, issues around IP ownership and using languages/frameworks and tech that is less than ideal. Get some help : )
- Build a hiring strategy for getting you the team you need.
- Act as a coach for your current lead engineer/head of engineering and impart knowledge/experience that way.
I have several case studies around each of these areas that I’m happy to talk about and you can always hire me as a fractional CTO/advisor to help.
