Tech Co-Founder vs. CTO - What’s The Difference, And How To Know If Your Startup Needs One
October 7, 2021
You have it, an idea that will streamline processes, save money, improve customer experience, and bring high ROI. Your market analysis and business plan are complete, the proof of concept validates initial assumptions, and you have perfected your investor pitch.
The next step is to start building your solution, right? You have found talented freelance developers to create an app for your product or service, and you're ready to hire your dream team.
Before you do that, consider if your startup needs a technical co-founder or chief technology officer (CTO). If you don’t have technical expertise to bring to the table, this step is critical to the long term success of your startup.
But wait you say, what about the enormous startup successes led by non-technical founders such as:
- Pinterest: Ben Silbermann, Paul Sciarra, and Evan Sharp
- Pandora: Tim Westergren
- Airbnb: Brian Chesky, Nathan Blecharczyk, and Joe Gebbia
- Getaround: Jessica Scorpio
- Groove HQ: Alex Turnbull
- NerdWallet: Tim Chen
- Groupon: Andrew Mason
- 23andMe: Anne Wojcicki and Linda Avey
Founders gaining huge success, having never written a line of code, are the new Cinderella stories. These triumphs seem even more possible when you realize that there are so many development tools that enable non-coders to create an app or digital product without technical skills. However, the reality is that coding is not hard, but creating meticulously agile software that advances business goals and provides a simple customer experience is very hard.
While the founding team members of Pinterest all had tech exposure, the team recognized that lackluster app performance was holding back a great idea. Ben Silbermann shared at SXSW in 2012 that after poor early product performance, the group invested their own money to outsource a build with a software development firm. The app that struggled to reach 200 users in late 2009 is estimated to have over 400 million active users today.
Alex Turnbull, CEO at Groove, shared how he worked with a startup tech partner to create a beta app for his product to help get him traction. Turnbull described the process. "The weeks were flying by, and my search for a technical co-founder was going nowhere. I decided to begin a search for a development firm to build the first iteration of Groove. I told myself that, four months from now, I could have a living, breathing product in the market that would let me collect user feedback, get validation, and push this business forward. Or, I could still potentially be sitting here with nothing. Four months after we got started, I had a working app that we released into the market. We were able to collect feedback, test the product, learn about our users, and improve."
Startup success stories are put into perspective when you consider that, according to Get2Growth, there were 1.5 million startups globally in 2014, and only 3,173 accelerated. Of that 3,173, Forbes estimated that only 45.5% will hit the five-year mark.
What factors give a startup staying power? Bill Gross, tech incubator, Idealab, founder, conducted a study of over 100 startups. He found that two critical factors accounted for over 60% of the successful startups:
Timing - Startups with great ideas and substantial funding that could not get Time to Market (TTM) right, frequently failed. If the product does not get to market quickly, the game is lost.
Team/Execution - Data from First Round indicates the importance of having the right technical team in enterprise startups – showing a full 230% better performance than their non-technical colleagues. While timing is the number one factor in startup success, the right technical lead will eliminate waste, streamline processes, and accelerate product development timing.
Entrepreneur added that when Tech Co-Founders or Chief Technology Officers (CTOs) join the team, entrepreneurs can then focus on other key business areas, such as refining products/services and business development. It is also important to note that investors will rarely commit funding to a startup with no in-house technical talent.
When Tech Co-Founders or Chief Technology Officers (CTOs) join [startups], entrepreneurs can then focus on other key business areas, such as refining products/services and business development.
What is in a Name? Tech Co-Founder vs. CTO
In many ways, the day to day responsibilities of a technical co-founder and a CTO, especially early in the startup lifecycle, are almost identical. Both need a deep understanding of and commitment to the business and are responsible for guiding technical processes to achieve short and long-term organizational goals.
While the early stage responsibilities of both roles may be similar, there are clear distinctions.
A technical co-founder, as the title indicates, is a founding team member with specialized expertise who has an owner-level responsibility for setting the overall technical vision, innovation, and direction of the business. They are often someone that the founder already knows and has worked with in the past. They receive equity in exchange for their significant commitment of time and effort. Because of the potential longevity of the co-founder relationship, individuals choose individuals not just based on vision and technical ability but also personality and culture "fit."
If you have not already done so, it is a good idea to work on a project with them before committing to becoming partners for the next five years or more. Spend time upfront working on a small digital project such as a website landing page or the wireframes of your application or online product. The best way to understand how you work with someone is to work with them.
If both parties decide that they want to move forward with the project, then they each should have a significant stake in its success, and their stake should be relative to their contribution. Frank Demmler developed a formula that has come to be known as the Founder's Pie Calculator. It helps quantify the various elements that should go into the process of dividing equity.
Chief Technology Officer (CTO)
The CTO is a full-time skilled technologist who directs the technology side of the startup. Often, they are the first employee hired and eventually manage any developers that you bring onto your team. Beyond being excellent technologists, they must share the founders' vision for the organization and understand that at the intersection of relevant, agile software solutions and business goals lies market growth.
Gartner outlines four typical CTO personas, but in an early-stage startup, the CTO's focus is being the Business Enabler.
"The business enabler ensures that the technology is operating as intended and evolving in lockstep with the business. This CTO persona includes CTOs who are in charge of operational technology and lead a team of product engineers."
Cash strapped early-stage startups may offer CTOs equity options as part of their compensation; however, their ownership position is not equal to that of the co-founders. They also typically do not hold board seats and may or may not have worked with the founders in the past.
Day-to-Day Responsibilities of Your Tech Lead
While there is no typical day in the life of a Tech Co-Founder/Chief Technology Officer, especially in early-stage startups, responsibilities do usually include the following:
- Design and build software
- Primary goal - develop a minimum viable product (MVP)
- Choose technology stack
- Design and configure infrastructure
- Select development toolkit
- Design and implement database design
- Improve and optimize application architecture
- Ensure application scalability
- Ensure infrastructure scalability
- Quality assurance
- IP Security
- Explore new technologies to implement
- Developing the startup's strategic use of resources
- Ensuring efficient use of technologies
- Evaluating and implementing new systems and infrastructure
- Eventually, attract and mentoring talented developers
Important Technical Lead Qualities
While it is evident that the hands-on-skills of the tech co-founder/CTO are critical to advancing the goals of your business, other vital traits will help ensure a successful relationship.
- Experience with successful builds in your startup domain
- Strong leadership skills
- Collaborative nature
- Team first mentality
- Ability to pivot – nimble
- Long term vision
- Strategic mindset
- Team management experience
- Stays up-to-date with tech trends
- Project management expertise
- Business savvy
How to Find a Tech Co-Founder/CTO
How you find each version of the technical lead is varied as their commitment to and relationship with the startup will be different.
Where to Find a Tech Co-Founder
Ideally, you should know that you work well together, share interests, and have complementary skills with your tech co-founder. This compatibility, versatility, and ability to multitask are critical when spending large amounts of time together and attempting to scale quickly.
There are two main ways to meet your technical co-founder:
Tech Meetups - As a rule, being in the same geographical area makes it easier to build a relationship with people and get to know them quickly. When looking for potential technical leads in meetups situations, remember, all of the same standard relationship-building rules apply: learn about them first, do not jump into the pitch immediately, make it about them, not you, make it a win-win.
Online Communities/Platforms - Reddit, Discordapp, Angel.co, and Indie Hackers have huge development developer communities with connections to potential co-founders/ partners and investors.
Ways to Find a CTO
Finding the right CTO is critical. But as this person will be an employee, it is a more traditional search path.
Here are the steps to follow when hiring your startup CTO:
Define role requirements - create a job description
- Skill mapping – what are the must-haves and the nice-to-haves
- Hard and soft skills
- Skill mapping – what are the must-haves and the nice-to-haves
Identify elimination factors
- Create benefits list
- Networking – Referrals of candidates from your network
- Social Channels
- Linkedin, Twitter
- Job boards – Indeed, Dice, Better Team
- Tech Meetups
Once a candidate is identified – make a competitive offer
When To Engage Your Tech Co-Founder/Chief Technology Officer
Regardless of the title, it is essential to engage your technical lead as early as possible. This key individual is invaluable in setting the technical direction of your startup. Ideally, they have specific expertise in your domain and have built similar projects to scale. Besides the hands-on expertise, they guide technology solutions that will serve your product vision today and ensure it can scale in the future.
Ideally, [a technical co-founder or CTO has] specific expertise in your domain and have built similar projects to scale. Besides the hands-on expertise, they guide technology solutions that will serve your product vision today and ensure it can scale in the future.
Challenges of Hiring Your Tech Co-Founder/Chief Technology Officer
While the right in-house expertise will help guide your startup towards the realization of your vision and the creation of an elegant, agile solution, know that finding the right leader can be a daunting task and is getting steadily more difficult due to several factors.
There is massive competition for highly qualified tech talent. The companies looking for technical expertise run the gamut from tiny startups to Amazon, Google, and Microsoft. Finding the right skill set AND risk tolerance to work for a startup can be difficult.
While your new venture has an amazing vision, you probably have limited resources, and the talent you are targeting is likely making, according to salary.com, over $250,000 a year. The tight labor market has even led some firms to offer cash bounties to the right candidates.
The right person for your tech co-founder/chief technology officer role will not only be a tech guru but will have a keen business-savvy mindset. It is not unusual to find that this person is already working on a startup project of their own.
What's a Startup to Do?
Your search for a tech-co-founder is taking more time than you ever expected. You do not have a prototype or funding to hire a CTO. In the meantime, your great idea is sitting on the shelf, and the chance that someone else will come to market with a similar solution grows daily. How do you move forward with your build in the absence of a tech co-founder/CTO?
Open Door Three
Collaborating with a software development/technology partner like those that helped Pinterest and Groove gain traction is an excellent way to get your product to market, focus on innovation, and bridge the gap while you hunt for the perfect technical lead. Tech partners provide a genuine partner relationship by offering specific startup expertise, guidance on all technical matters, cost monitoring and will reduce initial staffing risks.
Tech partners provide a genuine partner relationship by offering specific startup expertise, guidance on all technical matters, cost monitoring and will reduce initial staffing risks.
Until you find the perfect technical lead to take your product to the next level, working with a partner that guides your tech processes is a great option to get you to market before the competition.