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Startup diary: The best (and the worst) of times to start tech firm

Finding good people for your journey can be almost impossible. Stock image

We live in wonderful times. A technology startup has never been easier to launch. The online tools have never been more powerful, and the knowledge has never been more accessible. You literally cannot watch or listen to all the great videos and podcasts given by successful entrepreneurs themselves.

And yet it is also the most difficult time to do a technology startup. It is almost impossible to find good people to join you on your journey. The number one complaint that I hear as a startup adviser is: where can I find a CTO (Chief Technology Officer)? This critical hire is the only way you can realistically sustain product-market fit and continue to grow.

As an aside, yes, you can outsource the development of your MVP (Minimum Viable Product - I used to run a consultancy that would build one for you). But that is step one on a journey of a thousand miles. The essence of successful technology startup execution is the ability to keep iterating your product offering closer and closer to escape velocity. That's the only way you get to be the next Facebook.

It's no good getting market insights from your MVP if you can't build the features to take advantage of them. Outsourcing is easily five times as expensive as an in-house time. And you should be more worried about the lack of team and culture-building than the mere cost. Even the most fastidious outsourced development team will not stand with you at Thermopylae. They will very much all be walking home with their shields, not on them.

You need a CTO to create a high-performance software delivery team in-house. This is a winning strategy that applies no matter what your market or industry. The CTO skill set is tricky to get right. It is the ability to design and implement sophisticated cloud-based systems. It is the ability to pick the right technology platforms that are not only cost-effective and scalable, but are also sufficiently popular with developers that hiring is not impossible. It is the people skills to lead the technology team, take part in the sales process, and operate as a business executive. Despite the absurdity of expecting to find anybody at any price that can do all this, it is absolutely essential.

Without a high-functioning CTO, you won't make it. Solving this non-trivial problem is … non-trivial, as we (current and former) CTOs like to say. It's coming up as such a big challenge in the startup scene that I will spill some considerable amount of ink on the subject, and return to this vexing question more than once in future articles. For now let's focus on the problem of defining suitable candidates in the first place. What do they look like?

The ideal candidate is a CTO that has just helped to shut down a failed startup. Ideally they were a founder too. This person has seen it all, knows how to clean toilets, and has a fresh and endless supply of mistakes to avoid. The trouble is they are either burnt-out, completely broke, or both. Your offer of a small share in the company for a below-market salary is unlikely to be appealing.

And yet, the entrepreneurial CTO does exist, and is willing to have another go. Look for startup failure - it is the surest path to success. Those who have failed know the score. It is not for nothing that generals throughout history have coveted their veteran soldiers and given them many privileges.

If you find such a CTO, they are worth any price. All you may have are shares in your company. It is time to share them. Generously. The legendary Vinod Khosla, CEO and founder of Sun Microsystems, and now a tier one Silicon Valley venture capitalist, is known for 'equalising' the share allocations of startups before he'll invest. It makes sense for everybody to have a meaningful stake. A warning: you never can tell, so make sure you can get your shares back if things go wrong. The legal arrangement to do this is known as 'vesting'.

You likely won't find a candidate CTO at all. Most of them are doing their own startups. That leaves you with three options. First, hire an experienced software manager away from a big company. Second, hire a senior developer who has the potential to grow into the CTO role. Third, let the fire burn.

The first option is one I would advise against. It nearly always goes wrong. The problem is that while your candidate has all the technical skills (and hopefully people skills), they are not used to the vagaries of startup life. They are used to support structures. They genuinely do not realise that they will be cleaning toilets.

Occasionally this illusion is quickly broken, the person has a latent entrepreneurial streak, and you're at the races. Mostly it does not work, and your key hire just goes back to their easily restored corporate job. You, like Alexander the Great, may have burnt your boats and have no way home, but they can float away with a LinkedIn message to their old boss.

The second option, a senior developer, is probably your best bet. It is only viable if you have developed your network of technical contacts sufficiently to have exposure to the right people. You, as CEO, still need to make the call on the personality and drive question. You need to be very honest and very clear with your CTO-in-waiting. Do not hire them as CTO, hire them as a senior developer. Express your hope that they will grow into the role, but explain that you may well hire someone over them.

Then give them enough space to grow, and accept that as they grow, they will make a mess, and lose you sales, and waste your time and money. That's an investment you're going to have to make. The third option is to do nothing right now, because you have no other good options.

You need to start networking with developers immediately. The best way to do this is at technology meetups - another subject I need to cover! This is the graft, and the hard yards, and it is unavoidable.

If the thought of networking fills you with dread, remember that developers are mostly introverts and we're not much good at it either. The bar is pretty low.

Finally, if you are a technical founder, then you already have a CTO - it's you!

Sounds like a dream come true, right? Not so fast. Your ability to spend time coding will be severely compromised by your duty to build and promote the company. You are a founder and you have other responsibilities, even as CTO (that just means you're on the sales team now).

The most time you'll ever spend coding is when you build the MVP. After that, you code in Powerpoint. The term 'recreational coding' will begin to make actual sense. You need to find a strong senior developer just as urgently once the MVP is done - all you get is a one or two quarter head start.

  • Newsletter update: 192 subscribers, and a 26pc open rate. I've brought in an outside expert to help, and we're accelerating. The goal is 500 by December 31.

Richard Rodger is the founder of Metsitaba. He is a former co-founder of Nearform, a technology consultancy firm based in Waterford

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