Some time ago I came across this article on Harvard Business School’s Working Knowledge blog about when founding CEOs need to go. It’s from 2005, but it is still just as relevant now. The main takeaway is that you need differently skilled people at the helm in different stages of your company and that this transition is not always easy. They talk about founding CEOs, but this is also true for CTOs, whether they are founders or not.
In the HBS article, they discuss two situations in which a CEO needs replacement, specifically in an early stage of a smaller company. The obvious scenario is when the founder-CEO is not performing well and the targets aren’t met. But paradoxically, it may also be necessary to replace the founder-CEO if the company is doing exceptionally well. In that case, the CEO has been very successful in the stage the company used to be in, but with such dramatic growth, quick change is needed and that requires a different type of CEO.
… the fact remains that the challenges a CTO faces change enormously throughout the life of a company.
This same reasoning can also be applied to CTOs in a digital product company. Whenever bugs pile up, the development team is in chaos or features are constantly almost ready, the CTO is probably not performing well. That is an obvious scenario, but what does the other scenario look like, one where the company is hugely successful?
At first, you need someone who can get something built quickly. That first product should prove the concept, scale a bit to cater the first clients, largely ignoring concerns like stability, security, and scaling. Now imagine your product works: you get traction in the market, people notice you and clients arrive even faster than imagined. Your original CTO has been very successful, but at this point you need someone who can get your product stable, working at scale, and with the security needed in this day and age of ever more refined hacking methods. And you need this person fast. If that same person still ticks all the boxes, you are very lucky.
This example is, of course, a bit extreme, but the fact remains that the challenges a CTO faces change enormously throughout the life of a company. So which skills do you need at each point? And do you even need a full-time, in-house CTO?
At the start, you need a developer, a hacker, someone who knows how to make something that proves your concept and who is skilled enough to make it work for the small user base you will hopefully build up soon. And preferably all of this on a small budget and quickly. This is not a CTO, this is a full-stack developer. They must have a broad skill set, but managing people or a department’s budget, or setting out a technical vision is not needed yet.
At the start, you need a developer, a hacker, someone who knows how to make something that proves your concept and who is skilled enough to make it work
If you’re very lucky, this person is you or your co-founder, but realistically you will have a hard time finding someone who is a good hacker and is willing to work for free, which we all know is what co-founding comes down to. Finding someone that is all this and is ready for the next stage, if and when it comes, is several orders of magnitude harder again. So whatever your situation, calling your most talented developer a CTO may very well backfire as soon as your company grows.
All that is not to say that there’s no need for strategic thinking. How do you solve this? A good option is to start off with advisors to fill this gap. You could hire an external CTO or find an investor with the right experience, but ideally, you find advisors that have had their own successful start-up that has grown beyond where you’re at now.
Fast forward some time. You’ve built your MVP. Congratulations, this is not a small task. You’ve added features to your product and people to your team to keep things going. Suddenly there’s success; people are talking about your product and even signing up. You need to scale the product, the infrastructure and the team, all at the same time as dealing with the non-technical challenges this brings.
Now your company needs its first full-time CTO. You need someone with a vision on how to do things and the skills to make it happen. A CTO at this point still needs to mainly look inward and know how to code, know the structure of the application and infrastructure, but the focus is shifting towards managing a team, establishing a culture and processes to be able to grow quickly. Growing also means hiring but also making sure that every hire is an effective team member as soon as possible.
A CTO at this point still needs to mainly look inward and know how to code, … but the focus is shifting towards managing a team
With growth come scaling issues. This means your code, however young it may be, will become legacy code, unfit for its current task. A CTO at this point should know how to manage this and know what relevant technology can be used to improve the code base. Managing changes in so many areas is not an easy thing to do.
At this point, you will typically be looking for an extra round of capital. Potential investors will be looking at the team. Your CTO is one of the key people they will evaluate when deciding to invest or not.
What are your options? If you have a CTO already, get advisors, mentors or training. You could even temporarily hire an external CTO ad interim to oversee the rapid changes while training your CTO. Don’t take it lightly; don’t assume anyone can just handle this situation.
You’ve managed to grow quickly and not end up in the graveyard. Your product is maturing and has multiple parts, available on multiple platforms. For each of those, there’s a dedicated, multidisciplinary team, with a great number of different function titles that used to be just tasks. Product owners, product managers, engineering managers, technical support, operations, user research, user experience design, and more. This is no longer the tight-knit band of developers working to take over the world. People come and go, hiring is a constant process, people management takes a lot of time now. Scaling issues on a regional scale, security, legislation, a company vision, all of these become important whenever a technical or product decision needs to be made and after a few rounds of investment, the CTO now has clear budget and performance goals to meet, set by a board of directors they regularly meet.
Your ideal CTO now is a visionary, understanding the technical side and the product, specifically within the sector of the company.
This is clearly not the same set of skills as before. A lot more weight is given to people management, process and structure, but still, the technical side of things can not be left to the teams alone. Again a giant leap is needed. If this change comes along slowly, your CTO has the time to adapt, learn new skills, but slow growth is usually seen as bad by investors.
Your ideal CTO now is a visionary, understanding the technical side and the product, specifically within the sector of the company. But they are also communicators, with a well developed professional network and the ability to manage upwards, the expectations of the board, and downwards as a manager of managers.
At this point, it is important to not lose touch with the developers, designers, tech support staff, and other technical teams. You’re not a multinational corporation (and even there it helps to keep in touch, but that’s a different subject). Things still move rapidly and changes can be made quickly.
The examples above are only that, examples. There are as many journeys as there are companies. What I do hope is that these examples illustrate how a CTO’s skills need to adapt over a short time. Look at the difference between the hacker leading a small group in the beginning and the almost-corporate CTO managing multiple teams — this transformation can happen in just a few very busy years.
So before hiring your first CTO, consider what role this person will fill. What skills do they need and for how long? Will they be able to help you in the next phase too? The required skill set rapidly changes in a quickly changing company. Success or failure, you may need a different CTO.