In the world of startups, you don’t have to have a tech background to launch a tech company. Charlotte’s entrepreneurial ecosystem is filled with real-world examples to back that up.
But if technology is core to what your company does, there will come a time when you have to add strong tech talent to your team, in the form of a CTO or a technical co-founder. The problem is, that process isn’t as easy as posting a job opening online.
At RMCSoft, we’ve been studying how local startups are responding to this challenge, surveying the community about their tech needs and analyzing where there are gaps in the process. At our most recent TechTalk event, presented by Advent Coworking, we brought together three local startup experts to break down all the factors startups need to consider as they approach the hunt for tech talent.
Joining the discussion were:
- Greg Brown, administrator, Charlotte Angel Fund
- Brian Formato, founder and principal, LeaderSurf and Groove Management
- Peter Prakash, ISS director, Coca-Cola Bottling Co. Consolidated
The conversation kicked off with the first question startup founders need to understand…
What is a CTO?
Peter Prakash, of Coca-Cola, took the lead on this question.
“The CTO — chief technology officer — is somebody who is going to come in and build out the technology platform for your business starting from scratch all the way to up what your business road map is,” Prakash explained.
Although the bulk of his career has been spent in corporate technology departments, he is preparing to join a renewable energy startup as CTO in the next month. And he understands it’s a distinct role — more advanced than a product manager or specialist yet not as all-encompassing as the job of CIO, or chief information officer, he explained. A CTO sets the technical vision and strategy of a company, which also requires a solid understanding of business strategy, particularly if technology is core to what the startup does.
“The CTO has to understand the business and get familiar with the business roadmap. Then they can advise me and say, ‘We need to do A, B, C, D, in this order,’” Prakash explained.
Do you need a CTO?
Once you understand what a CTO or technical co-founder brings to the table, then you need to ask yourself if your startup needs one, Prakash added.
“Is technology a core service of your organization? Or is technology just an enabler? That is a key differentiator,” Prakash said. “If it’s core, you need to have a CTO earlier on in the business cycle. But if it’s just an enabler, you can use some standard tools in the early stages.”
As your company scales, it may make sense to design custom platforms, at which point it may make more sense to bring on a CTO, he explained. It’s also a matter of your startup’s viability. For instance, the startup Prakash is about to join is three years old and is only just now bringing in a CTO.
“They shouldn’t have hired me two and a half years back because they were trying to determine if the concept made sense. Instead, they used mostly SaaS solutions that are available in the industry until they could onboard a few customers and see that this is a viable concept and that we can scale this,” he said. “Now we need a proper technology organization for our business. That’s where someone like me can come in and set up those platforms.”
It also becomes more important as your startup goes in search of funding, said Greg Brown of Charlotte Angel Fund.
“As investors, we want to have some idea of who is setting the technological vision for a company,” Brown said. “You’re not going to receive any material amount of funding without some clarity as to who is going to be in that role.”
How do you pay for it?
Chances are, your startup won’t be able to pay market rate for a CTO or technical co-founder. But that shouldn’t dissuade you from hiring one, if your company needs it.
Brown said it may just be a matter of rethinking traditional compensation packages and going heavy on equity.
“You’re going to pay for this dearly through your equity, and you should want to do that. You want this person ingrained and wedded to this business. Don’t ask them to take 40 percent of their market wage and 3 percent of the company,” Brown said.
For the right person, a strong equity position will still make for a compelling opportunity.
How do you find a CTO?
Prakash recommends finding an advisor to start the process — someone who understands the differences between all the technological roles and can help you determine what your business needs, and what it doesn’t. That person doesn’t necessarily have to be in the startup world; they just need a solid understanding of technology and the ability to offer sound guidance.
In terms of skill set, you of course need to look at the person’s technological abilities. But finding the right person is more complex than that, said Brian Formato of LeaderSurf.
“The technology side you can measure far more easily than the fit, the will power, whether they map to your core values,” Formato said. “Ethically, are you on the same page? Do you have the same level of tolerance? It’s like a marriage.”
For Brown, one core element is whether or not the person has worked in a startup before, as the entrepreneurial environment differs wildly from that of corporate America. It’s also got to be a rational life choice for the potential candidate to work for a startup: Can they afford to take a pay cut? Work insane hours? Wear all the hats?
“It’s not a rational choice for everybody. It may be emotionally appealing, but sometimes it’s not the right thing from a life point of view. And eventually those pressures are going to force them to leave that startup,” Brown said.
Fractional resources can be a viable option, too. But Brown cautioned that you should figure out whether those resources are in the market intentionally or if they’re doing it because they’re in between jobs and they’re hoping to land a new one. You don’t want to find a phenomenal fractional resource only to have that person leave you hanging when they get a full-time job offer.
“If someone’s in this and they’re really good, they’re going to get a job offer. So you could risk losing someone who’s really good, and that could really suck,” Brown said.
In the end, the best way to kickstart the process of finding the right tech talent for your startup is to network, Brown said. Talk to people about where your business is at and what you think you need, and use your connections to find a solid candidate.
And once you find a potential candidate, take your time to see if they’re the right fit for you and your business, he added.
“To be comfortable with your decisions, try to construct projects to work on together. It’s typically not until you’ve actually worked together on something that you get a sense of one another’s work styles and work rhythms, and that what you view as a good level of customer service and performance is congruent with yours,” Brown said.
After all, filling the most critical roles in your company are among the most important decisions you can make in the life of your company.