Harnessing Experience at a Fraction of the Cost
As a startup, one of the most important decisions you can make is ensuring you have access to experienced technical leadership. While hiring a full-time CTO can be expensive, there’s a better alternative than going it alone: the fractional CTO.
Five Years of Giving Dangerously
Who Cares if it Scales?
Across the country, in every accelerator, exec team meeting, advisor session, and board meeting, startups are asked the same question:
“But how will it scale?”
My answer: “Who cares?”
Startups: You Don’t Need a CTO (Yet)
"If you could just build the product, hire the team, and prepare an investor presentation by Monday, that'd be great...."
You finally did it: after years of building software for someone else, you took the leap and joined a startup. Now you’re building software for yourself. All the risk (and a 30% stake in the rewards) is yours. Then comes the day when your co-founders ask that fateful question: “What title do you want?”
You’ll be tempted, my friend, to reach for that brass ring, to claim the right of First Techie, to confidently say, “Why, CTO, of course!”
Hold on there, Tiger.
Do you like meetings? Because you’re going to be attending a lot of them (and even hosting a few yourself!)...
As CTO, you’re in charge of the whole thing: people, processes, and technology! And while code might be complex, at least it’s consistent: the same command will behave the same way today and tomorrow as it did yesterday.
Your best engineer today could be a hot mess tomorrow, and it’s your job to straighten them out. Forget about writing code: you’re a bio-hacker now.
Some people like this kind of thing.
“Pre-seed is the new seed.”
“We need to see traction before we can write a check. Come back when you have a product and customers.”
“We don’t do sub-500K rounds anymore. If you want less than that, talk to your friends and family.”
There’s a growing gap in the funding market, and early-stage companies are finding it more and more difficult to raise the money they need to get their products off the ground.
I’ve seen this trend in the Boulder/Denver market over the past couple of years and I’ve confirmed it with friends and peers in Boston and the Bay Area: VCs and angel investors are moving up-market, de-risking their investments by waiting until a company has already proven its viability by releasing a product and winning its first few customers.
One solution would be for investors to stop swinging for the fences with every investment.
I see a lot of benefits in this approach, as well as some complications:
- It invests idle capacity in something other than busywork.
- It creates an early relationship between entrepreneurs and service providers, which becomes more profitable as the company grows and gets funding.
- It lets non-technical founders separate “I need a cofounder” from “I need something built.”
- It builds a community around these young companies.
The challenges are:
- Securities law limits how equity is granted, sometimes in challenging ways.
- Many helpers = many names on the cap table, a negative for investors.
- Cash is always less risky than equity, so a service provider has to have a higher risk tolerance if they want to sign up to help early-stage companies.
The startup monster will eat everything you put within its reach, including your free time, your health, and your family. As leaders, it’s our job to fence it in and protect both our teams and ourselves.
When the hat gets too big
Every company, no matter how small, includes basic functions like sales/marketing, finance/accounting, HR, product development, and customer support. Leading the company means ensuring that every one of those areas runs effectively, so every leadership team has to cover a lot of ground in the early days.
The function’s criticality should dictate the seniority of the leader.
When your investors tell you to
Before your investors tell you to
Sometimes, that means leaving a seat open until you’re actually ready to fill it.