3 Questions That Determine If You're Ready for a CTO
Not every company needs a CTO in its formative years.
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As the founder of a low-code development platform that startups use to build web and mobile applications, a common question I get from my clients is "When should I hire a CTO?"
My answer to this question isn't the same for everyone. The response depends on whether a company has technical or non-technical founders, if they've developed an MVP or roadmap and other factors.
Before I give any guidance, I first ask a few questions about their current situation:
What level of funding do they currently have in place, and what are their funding plans over the next 24 months?
Do they currently have someone in a tech leadership role, and what's the composition of their current team?
How are product requirements being gathered and prioritized today? Does the CTO need to lead this as well?
Do they have or plan to have an in-house or outsourced team?
How much of a true engineering challenge is their product?
The answers to these questions help determine if a CTO is required or even attainable. For instance, if the company has insufficient capital, a small addressable market (less than a $1 billion) and limited upside, it will be extremely difficult to hire a CTO unless he or she becomes a full technical co-founder with a very significant equity stake.
Where can a CTO make a difference?
There are many reasons to hire a CTO, but chief among them are:
When your company's technical needs are significant - While many CTOs can assist with the tasks at hand, their real impact is implementing processes, tools and a team to get the work done in a rapid, efficient and scalable manner. This is true whether the engineering team is in-house, outsourced or a combination of the two.
When experienced, decisive leadership is required - A CTO does more than just provide direction to the IT team. They can also steer the direction of a company at large, as they're used to working at the intersection of business and technology.
When a large-scale technology upgrade is required - If productivity is being impeded by outdated technology, a savvy CTO can help identify and transition your team to the appropriate tech stack.
When an important constituency requires a CTO - As a company achieves scale and success, it's not uncommon for its initial tech team to struggle when trying to evolve to the next level. Boards and investors often notice and comment upon this problem. Resolving this frequently requires adding an experienced tech leader who has a proven track record of growth. You'll find this move also satisfies prospective clients who may require a competent CTO as part of their purchasing decision.
Before you begin the recruitment process, you're going to want to have a clear understanding of the problems you're trying to solve, and a pretty good idea of what you'll be asking someone to do. If you don't know what you're trying to achieve — or how to vet the right candidate — you might end up hiring someone who looks great on paper, but is a poor fit in reality.
Is a CTO needed at this moment?
A common misconception is that a CTO is an experienced developer who can roll up their sleeves. While some may fit this expectation, it's a rather narrow view of who a CTO is and what they can do.
Founders should avoid assigning bloated titles to individuals who don't have the experience or skills needed to move a company forward. A big mistake is when people assume that a good coder is a good leader. Frankly, a lot of great coders aren't great managers.
Another key point: Just because someone has a senior developer or architect title, that doesn't mean they're ready to be a CTO. While technical know-how is part of what a CTO offers, what you're really getting with a CTO is expertise gained over time and executive leadership skills.
According to research by Agil8, CTOs typically have 24 years of work experience. They will have served in eight positions across four companies, spending no more than five years, but no less than one year in each role. This experience makes CTOs visionaries who often set long-term goals and think outside of the box.
This is important because I've seen many startups begin the search for a CTO because they merely needed someone to triage technical issues. If this is the burning need, a VP of Engineering is the better hire. In most organization structures, the engineering VP ensures things run smoothly, deadlines are met and the team is working efficiently.
If a company is pre-Series A, a VP of Engineering will likely serve it well. All that's really needed is someone who can occasionally jump in, help the dev team understand what needs to be built and educate the founders on what's required to get to the next phase. Once an A or B round has been raised, however, that's when a company will need someone who's less concerned with day-to-day operations and is more focused on the big picture.
What are the characteristics of a great CTO?
When interviewing someone, I'd suggest you determine how well-versed they are in being a strategic enabler of the business and a technical partner to a company's leadership team. Confirm they understand the processes of a successful IT business, and how to effectively and efficiently run critical IT business processes.
Ask if they can present a company's technical vision and execution plan to outsiders, including institutional investors, board members, clients and industry analysts. Inquire how up-to-date they are with tech trends. Verify they possess strong business communication skills and assess if they can hire, fire and manage employees without micromanaging.
In addition to technical expertise and business acumen, you'll also want to see how candidates stack up in these areas:
- Vision - Your CTO needs to be able to come up with unique solutions to any business problem. Being able to innovate on demand is critical. Ask candidates for examples of how they've resolved issues as a result of their unconventional thinking.
- Technical partnership - A CTO becomes a true technical partner to the CEO and the company's leadership team. They can be a trusted advisor and reliable resource to deliver on the company's technical needs.
- Creativity - This goes hand-in-hand with vision. A CTO who's open-minded and flexible will have greater success determining how new ideas and technology can be applied. Finding a CTO that sees opportunities that others can't will serve your company well.
- Hustle - Restlessness is a good personality trait in a CTO. You'll want someone who isn't satisfied with the status quo. During your interviews, try to get an idea of how candidates have moved companies forward.
The role of a CTO is future-focused. It's their job to think about where the product is heading and where it needs to be in five to ten years. Think of it in these simple terms: A VP of Engineering is kind of like your MVP (short-term thinking) while a CTO is more like a roadmap (long-term thinking).
Not every early-stage startup needs a CTO at the start, nor could it secure one even if it tried, given the disequilibrium between supply and demand for these individuals. What's important is to execute on a solid product vision and drive early traction, then bring on the appropriate person at the right time to help take the company to the next level.