Chief Technical Officer as a Service Concept

Chief Technical Officer (CTO) is one of the most impactful person in any IT startup. Good CEO is a win, as someone must lead and inspire the team. Bad CEO is a loss that can be recovered by finding a replacement for her and, perhaps, a slight change of strategic focus. Good CMO/Sales is a win, as someone must attract users and investors. Bad CMO/Sales is a loss that can also be compensated by replacement with little to no effect on overall project plan. Good CTO is a win, and can also be a double or triple win for reasons I will describe below. Bad CTO is a loss that cannot be recovered by a mere replacement. You will need to replace the platform on which your project is built. And that will cost you X times as much as a bad CEO, CMO, CFO or other Chiefs. At worst, it will cost you the whole project when you lose faith that it can be built and become successful at all. That’s why bringing a good CTO to the project is a hard task. Let’s look at this through the eyes of a seasoned CTO.

First of all, CTO candidate must like the idea behind your project. Here lies the major challenge. Traditionally, CTOs are very well aware of the whole industry and pragmatic when it comes to applying their skill, time and energy resources. They are harder to impress compared to other C-levels.

Secondly, CTO must like you and your team. Working with new people is often highly stressful even (or I can say especially) for top management. Only 10% employers in the first month say their new team is better than the old one.

Thirdly, CTO must accept the compensation proposal that usually consists of salary and bonus (shares, options). I think nobody will argue with me that more than a half of success in an IT startup is CTO’s work. In this case both salary and especially bonus must be sizeable for CTO. Today option rewarding scheme is very popular. CTO contracts to work with the company for 5–10 years to receive some shares. Beautiful practice, “best practice”.

Let’s inspect this in detail. What is the most impactful period of work for CTO? The first year or maybe the first two years. Why? Because CTO needs to outline a strategic plan, design the architecture, and hire the team.

After all the processes are set up and running, someone else could take control as this work is not a rocket science. But as we remember the CTO is contracted to stay in the company for 5 years to get their bonus. Why five if all the valuable job is finished in one–two? Nobody knows. How many projects could a good CTO run to earn a reward for each? 4–5? Maybe 6. Not more. How many projects will rise and become unicorns? 0.01%? To me that sounds not profitable at all.

How can you solve this challenge? To bring on a good CTO and afford to pay them well at the same time? CTO as a Service is the answer. You reach out to a CTO consultant with a good experience. He or she may not want to commit to your project for a long-term (here I mean a span of 5 years and more). There are three reasons why they wouldn’t be ready to do that: idea, team, and reward. But 1–2 years work is a fine commitment. CTO helps project owner with strategy, team hiring, plans, then launches the project, and gets bonus and salary. And after the important period leaves the team. Thereafter CTO could join another project in 1–2 years and help build more great products.

The above approach is undervalued because everyone thinks that core members of the team must stay with it until they (or the projects) are dead. Because of this we have a big problem with hiring good IT managers and architects.

Start thinking flexibly. Enjoy!

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