I’m often asked by non-technical startup founders and leaders what they should look for in a CTO. This is usually followed closely by questions like:
- How much equity is appropriate?
- What is the difference between a CTO and a VP of Engineering?
- Which one do I need?
- When is it appropriate to have both?
- How do I find the right one(s)?
It’s worth mentioning that the answer to these questions will vary depending on a few factors:
- The startup stage
- The background of the other founder(s)
- The makeup and skillsets of the existing engineering team, if applicable
What is a CTO?
First and foremost, a Chief Technology Officer should have a high level of technical aptitude. It’s in the title. Note that technical aptitude is related to - but not in fact the same as - having a good sense of product requirements or user experience. I see these confused frequently.
Aside from having been a CTO before, good indicators that a person possesses a high level of technical aptitude may include but are not at all limited to: a CS degree with a high GPA, experience as a senior engineer at a notable tech company, etc. Be sure that this - or equivalent - experience is recent, as tech moves in dog years.
How much experience should be required?
Unless you’re able to pay top dollar, then the type and experience level of the CTO you expect to land should be proportional to the traction the business has achieved and/or the prior credibility and network you’ve personally built as a founding member. The same goes for the compensation and equity required. This is a high bar. Be careful not to drink too much of your own kool-aid when deciding who you can realistically land and how much they should cost you in either equity or comp. Speaking of…
What about equity?
I’ve seen less than 0.5% equity for CTOs joining well-established startups with hefty compensation packages. For these purposes, let’s define a well-established startup as one with at least Series A funding or $5M ARR in addition to a 30+% growth rate. I often see 50% equity for cofounding roles where no funding yet exists, no salaries are being drawn, equal time is being put in by both founders, and risk is fairly equivalent. In between, there are companies that have gotten past the Seed stage but have yet to prove product/market fit or gain meaningful traction. A CTO entering such a situation is often compensated at a livable but still below-market wage, usually with between 2-5% equity. Of course, your mileage may vary.
How is an early-stage startup CTO unique?
Beyond technical aptitude, any CTO of a startup that has not hit at least the growth stage should generally bring to the table: human-centered design thinking, strong leadership and mentorship skills, solid recruiting skills and/or networks, the ability to build a great engineering culture, a long-term strategic mindset, and fantastic business acumen. If you believe you’re in a position to land a seasoned technology leader, most of this should be demonstrable based on previous successes and references. Otherwise you should look for ancillary evidence that this person is both passionate about and capable of all of the aforementioned skills but just hasn’t had the opportunity to exercise them all in practice - yet. In either case, keep in mind that you might need to bend a tad on technical aptitude to ensure you have a CTO who is balanced enough to get you through all of the needs that will arise in the early years.
What about VPs of Engineering?
You may have noticed that early-stage startup CTOs take on a lot. While they know their tech, they are also leaders, strategists, recruiters, managers, and user experience gurus. That’s because early on, everybody - even the de facto technology “specialist” - needs to wear a lot of hats. There aren’t enough resources to go around. But as startups progress and hopefully turn the corner to the growth stage, it often makes sense to think about a VP of Engineering role to complement the CTO.
Once it makes sense to divide and conquer, the split that’s often - but not always - observed is as follows: The CTO focuses on driving technical excellence through thought leadership, advising the business on broad technical strategy, and engaging in enterprise sales enablement and/or partnership efforts. Meanwhile, the VP of Engineering focuses on the day-to-day needs and processes of the engineering team, driving delivery, recruiting or partnering with specialized recruiters to continue to build the team, etc.
Where do technical leaders congregate?
If you’re later stage, you probably already know the answer to this question. In fact, seasoned technical leaders are likely introducing themselves to you. But if you’ve yet to hit the growth stage - and especially if you’ve yet to land a seed round of funding - you’re wondering where to start. In the virtual world, you can find a lot of technical leaders in communities like Hacker News, Product Hunt, and local invite-only Slack and LinkedIn groups (ask your local network which ones). In the physical world, you’re going to want to get out to startup & tech meetups, startup networking events, etc. You’ll discover these events on Meetup.com and from local Slack and LinkedIn networks. Of course, good old coffee and lunch dating go pretty far as well. Ask for names of people you should know, meet them, and repeat. It’s slow but super effective.
What do technical leaders want to see when being pitched a CTO position?
Don’t be stealthy. Don’t require NDAs just to have an initial conversation. Use a megaphone to make it clear to the community what you’re doing and why you need a CTO.
Most important, communicate why it’s an obvious choice for a CTO to join your company. Why are you and your team uniquely suited to grow this business? Why now? Why isn’t anyone else already doing it or why do you have the upper hand on them?
Treat this entire exercise as though you’re courting an investor - which means being transparent, concise, and compelling with your messaging, and fair in your negotiations.
Good luck out there!