A Chief Technology Officer (CTO) leads the technology or engineering department in a company and is responsible for developing processes and uses technology to build better products.
Hiring a CTO at the right stage in your startup growth plan can benefit your business tremendously. A CTO will set the technical direction for your product development, create and execute a strategic plan, identify the exact resources needed to put the plan into action, and oversee the entire process from start to finish.
The reality of growing and leading a startup is brutal - 90% of startups fail, but surely there’s a path you can follow not to find yourself in this large margin. To be in the successful 10%, startups must rely on strategic planning for their growth and development, a big reason why a great CTO is essential.
The Role of a CTO in a Startup
The role of a startup CTO is not the same as a CTO at a big, well-established company. Of course, the main scope of responsibilities stays the same (both are in charge of the technological development of the company). Still, the role of a startup CTO is more associated with rapid growth rather than big-picture and long term planning. Larger companies have the resources to take more time to make decisions. Startups demand a different approach, where the survival of the company rests on their ability to adapt and roll out new ideas quickly.
A good CTO combines both project-management and technical skills. Even though they often-times take a backseat in terms of writing code, a CTO should have a thorough understanding of the development process to lead a software development team. A CTO's responsibilities can be quite diverse, let's focus on six main aspects they should continuously be working.
It's hard to imagine a startup CTO that doesn't work well with people. CTO's are responsible for hiring and managing teams of developers and helping them complete projects effectively, or at least delegate that task to the proper person under them. The foundation of a successful startup is the quality of the people on a team, which means that it's essential for a CTO to be involved in the hiring process. They should understand what particular skills and capabilities the development team needs and how to identify these in potential hires. With the right talent in place, a startup can build a great MVP, attract investors, and create a product that delights end-users.
A CTO provides their team with the technology stack they need to build their product and guide the overall technical vision. Understanding the technical requirements of a project is what's important here; a good CTO who understands the problem they are trying to solve. They also oversee the company's hardware and server infrastructure and manage which the internal technologies are adopted and deprecated.
A startup operating effectively requires it to be like a well-oiled-machine. A CTO contributes heavily to this by shaping how the technical sides of a project and managed, striving for a well-defined process that is proven to bring results. Whether it’s Scrum, Agile, or whatever software development methodology a CTO wants to deploy, how a product is developed is one of the most important things they can shape to ensure development runs smoothly. A CTO who has a firm grasp on operations is what's required to ensure the business can run smoothly.
A CTO needs to be constantly tracking performance in order to maintain the productivity of their team. In a startup environment, the CTO should be a person that can work closely with developers, understanding where they are finding success, and where they need work. In a lean team found in a startup, it’s essential to understand where positive results are coming from, and how to sustain them long-term.
It’s also important for a technical leader to improve the product by listening to ideas from the developers they oversee, advocating for innovative ideas and finding paths to their implementation. Rewarding their team for exceptional performance, and contributing to the development of products is a large part of a CTO’s job, they should go out of their way to make sure good work is recognized.
Creating technical vision
Though the products overarching vision should be a culmination of the entire founding team, the CTO needs to develop a technical strategy for a startup that will make the vision a reality. This includes clear goals, obstacles, as well as risk-analysis. This technical strategy needs to align with the startup’s overall business objectives. In order to craft a strong vision, a CTO needs to have profound technical skills and a thorough understanding of business. Creating, and channeling this vision into something real is required to lead the technical side of a startup.
Representing the Company
A CTO provides a face and personality to represent the technical endeavors of a company. In a tech-startups that is promoting new and innovative ideas, it’s pretty much mandatory to have a qualified CTO to inspire trust in the product that they are building. Funding opportunities often come from individuals and organizations like angel investors, Venture Capital firms, or accelerators. It comes as no surprise that these sources of capital are viewing a company with a lot of scrutiny for its leadership team, especially the technical vision from the CTO. Representing the startup extends to engaging in speaking opportunities, conferences, as well as written publications in order to showcase the company and its work. Properly representing a startup as CTO is a well-rounded process, requiring fairly active involvement across most public aspects of the company.
Challenges of a startup CTO
As we’ve seen here, the CTO’s role in a startup is has many sides to it, each coming with its own set of challenges. As displayed in the responsibilities, the role requires a well-rounded knowledge of technology and business, while always remaining innovative. Let’s take a look at some of the specific complex challenges that a CTO would face, especially in a startup environment.
Finding and retaining top talent
An ongoing struggle in a startup is often acquiring the talent needed to build the companies vision. This is especially true for hiring software engineers. A hurdle that a CTO must overcome is the difficulty of sourcing these types of talented individuals, training them, and getting them up-to-speed on the startups projects. Sometimes where a startup is geographically based is a limiting factor in where staff can be hired from, a lot of startup leadership has increasingly began to hire remote to find a way around this. Though hiring remote comes with a unique set of challenges, it also allows for flexibility with how a team can be scaled. Check out our guide on hiring developers remotely for more on this.
Once talent has been obtained, retaining it is the next thing to worry about. There’s an endless sea of opportunities within the startup ecosystem, it truly is a sellers market for developers. There are numerous ways to retain your startup talent, oftentimes it's as simple as having an interesting product that truly makes them passionate about their work. Balancing an enjoyable work environment with sufficient benefits is key here.
Truly innovative ideas are the fuel of any successful startup. When it comes to “make-or-break” in a newly formed company, it often boils down to whether something new is being brought to the table. A startup can’t afford to think in three or five-year cycles as their limited resources don’t allow them that privilege. Ideas need to come quick for a tech-startup to survive, this is often a challenge for CTO’s that is overlooked. Ideas need to be tested and validated to ensure they are innovative, a great CTO has to be able to produce innovative ideas and be ready to pivot them whenever required.
The process of managing your company's innovation is easier said than done, it truly comes down to creating a culture company-wide that promotes innovation from everybody involved. For a CTO to be an effective leader in a startup, they need to actively promote their team to bring forward new ideas to make the product they are building more groundbreaking. Spearheading innovative ideas while encouraging your entire team to bring forward new ideas is key here, a CTO needs to balance these in order to build a startup that gets people excited.
Project management can be one of the hardest parts of developing software. There are many philosophies for exact methods for overseeing development, but there is one thing that can consistently derail a project: feature creep. This is when a development team continues to add more to their planned feature list until the project becomes impossible to actualize in reality. When crafting and executing innovative ideas, it’s difficult to balance a realistic product or service with an idealistic vision of one.
A good CTOs knows how to effectively manage expectations, translating this into how the projects are managed. By focusing on what can be achieved in a timely manner, and prioritizing features that will have the most impact, a CTO can successfully balance the development plan with what matters most for the company. An experienced startup CTO will be especially effective at doing all of the above in a way that utilizes an efficient amount of resources, and executing plans in a timely manner.
What qualities does the CTO of a startup have?
So how can a CTO make sure their skills are used properly for the startup environment? As mentioned before, the role can be dramatically different in a startup due to the lack of resources. With this in mind, let’s go over a few things to look for in a CTO for a startup.
Always keeping the customer in mind
When developing a product or service, it’s vital to have a solid understanding of who the final user is. A lot of startup co-founders end up building something for themselves, lacking a key-understanding of who the end-user is going to be. A CTO at a tech-startup must have the ability to identify clearly who they are building for and plan the project around that. Never losing sight of this is mandatory for a company to create something that people actually want to use. The faster a CTO at a startup can understand exactly what problem they are trying to solve, and who they are trying to solve it for, the faster they can craft a customer-centric product or experience.
A startup could be described as an intimate experience for those involved. In the early days teams are small and often confined to working physically close with each other. Being able to work closely with small-teams like this and oversee their work, all while making them feel involved with the early-stage development of the company is important here. Having a CTO that has the ability to manage people effectively while teams scale up is a very beneficial for a tech startup. This extends to hiring, setting goals, and in some cases firing staff. Being a good manager is essentially the culmination of everything written in this article, but managing a team requires a leader who can connect with their team, identifying their strengths and weaknesses, and applying them to the overarching vision of the company to make it a reality. A company is nothing without the people behind it, a CTO for a startup should recognize this and allow it to guide how they communicate and collaborate with their staff.
Prior experience in startups
While this point is not entirely obligatory, it’s definitely preferable for a CTO at a startup to have previous experience of working in a startup environment. The practices and culture found in a startup are quite different from larger companies - they are more disruptive, fast-paced, requires working with limited resources without sacrificing the quality of work. It can be a difficult adjustment for the professional who hasn’t experienced it before. Understanding, and being able to navigate the startup world is definitely a quality to look for in a CTO at a startup. From being able to contribute to securing funding for a venture, to leveraging their network to grow the company, it definitely pays off to have somebody familiar with the startup scene.
But what can a CTO at a startup expect to get paid? With all the responsibilities mentioned above, CTOs earn on the average salary of $130,000-$195,000 per year in well-established corporations, depending of course on their skill set, experience, and performance results. The salaries also vary depending on the sector in which the company is operating and the financial situation of the company itself. The average pay range for a startup CTO however varies quite a bit. Due to the limited resources that startups usually have, a CTO for one usually gets paid around $70,000 per year, plus equity. The amount of equity CTOs get vary considerably, though it’s rare that a CTO isn’t a founder so the amount they receive is often in the double digits.