There are CTOs and there are CTOs…
If you’re not sure what a CTO is, read this
Simply put, a good CTO provides you with both business strategy and technology understanding and expertise.
In the tech startup world though, there is a real problem with understanding how much to pay a CTO.
So, let’s just assume that you have a startup with a great idea that needs technical expertise to deliver it. You’ve done some validation of the idea. The missing link is the technologist. Unfortunately none of you are really technical enough to be able to know how to deliver it.
So what do you do?
You have a number of options. You can find a company to build it for you (outsource) or you can hire people and manage them (build a team). But the issue then becomes whether or not you are getting good value.
Outsourcing has problems. Unless you have experience of managing outsourced tech teams, and delivering to a tight budget, then this is a risky thing to do. FYI If you don’t have a tight budget, then I can promise you that you’re wasting money.
Hiring a team is also problematic. What do they need to know? Who is going to manage them? Who is going to hire them? If you are using recruiters, how are you going to pay the recruitment fees? Again, this is a problem.
What is needed at the very beginning is someone who can:
Develop a technical strategy
Identify the technologies to utilise
Develop it themselves and/or build team and/or find an outsourcing company
Manage the process of developing your first version
Develop a maintenance strategy
Manage the budget
Most people when they are focussing on the CTO role at the start only focus on “can you build it?” which is a false economy.
Great CTOs are like gold dust. You should pay them what they’re worth.
The best CTOs recognise their limitations and will often limit the scope of a project because of their awareness of things like complexity of maintenance, inclusion of other developers/outsourcing companies into the development process.
If you think that a CTO is worth the same as a senior developer, then you are massively undervaluing that person’s worth. When you do that, you run the risk of disenfranchising them from the process over time.
A CTO is the most important person in the company, when you are developing your first version.
Get it right, and you have a chance to build a unicorn.
Get it wrong, and you’ll go the way of almost every other startup.