I am leaving a large company as an IT exec to join a friend’s startup as the startup’s initial CTO. Do you have any advice for a first-time startup CTO?
I will assume you have the basics, such as up-to-date relevant technical excellence, the ability to design, manage, and create projects, a history of delivering work on time, communicating deliverables, learning to say no, and the like. I also assume you are fanatical about security, privacy, and other areas which typically fall into the engineering side of most startups. Let me therefore focus on a few common issues I see among startup CTOs.
Startups Do Not Practice Big Company Culture
If you are coming from a larger company with processes, systems, controls, resources, teams, solid budgets, expense reimbursements, benefits, and the like, you will be in for a shock. Startups are starved of resources and the trappings of established companies. You will be working hard in the trenches until the startup scales, so do not count on supervising a large team of minions. You get to do that when you are successful. You will give up a lot of perks, but your retirement plan is your stock grant.
Customers Do Not Care How Smart You Are
Technically gifted leaders often become frustrated that elegant software, technical virtuosity, clever algorithms, groundbreaking architecture, and other strokes of genius are hidden and often mean little. Admittedly, technology debt is real and repaying it often causes excruciating pain, but businesses are won and lost by early market traction, the delight of customers, and virality, not the ideal best technology. In short, customers do not care how smart you are or how cool the underlying technology is, only how you are solving their problem.
Share the Team’s Vision and Passion
If you are coming into the company after its founding, you must share same passion and vision as the founders or the clashes will tank the company. All teams must be aligned to the goals and metrics that matter most. I often have our companies align engineering incentives with growth and sales to ensure that everyone is focused on the same thing as your stock price will be based upon value creation for customers, like everyone else’s.
Read these two books. And then periodically read them again, especially in times of crisis. Then read The Startup Way and a book or two on Design Thinking (see my resources section for recommendations). Depending upon your background, you may not have been truly exposed to Lean or Growth Hacking. Lots of people have their own caricature version of what each means, but go back to basics and learn afresh.
Many technologists lecture me on their knowledge of Agile as proof of their Lean cred, spouting platitudes about MVPs and rapidly iterating, but then the day-to-day grind begins and the wheels fall off the bus: large waterfall-style design processes, obstinance about early architectural decisions, adamance about shipping perfect products, feature creep, sticking to long cycles when crises develop, dismissiveness and disdain when customers do not respond positively, and all the other hallmarks of traditional, non-innovative business engineering culture.
Startups are ever-shifting beasts, with new, sometimes daily crises and shifts in the business landscape. You need the ability to handle setbacks and to react nimbly with the information available. If you do not feast on ongoing crises, a startup life may not be for you.
If, on the other hand, you channel your inner Eric Ries and are a savant on all the virtues of rapid testing, Lean methodologies, user experience, and cross-functional innovation and growth hacking, but the other parts of the management team give you blank stares and will not learn, it is probably time to find a different startup to work for.
Leverage As Much as Possible
You need to leverage your scarce resources. Do not build your own servers when you can use AWS, outsource non-essential parts of your process which do not yet require full time talent, and use existing tools and code (with proper licenses) to create and test rapidly, even if you need to replace them later with your custom work. If you strike gold, you will eventually have a budget for all the in-house fancy things, but frugality until you can scale means life or death for a startup.
Let Go of Your Work As You Scale
In the beginning, you will often be the “coder in chief” and will make many crucial design, feature, and architectural decisions. As you grow, you will need to let go of some of those decisions. Perhaps new talent has better ways to solve those problems, or some early decisions inhibit rapid growth or no longer can scale technologically. Do not become nailed to the cross of your early engineering decisions.
Test, Test, Test
Release constantly, move fast, and test everything mercilessly. If you can resolve a decision with data, do not spend any time arguing about it. Just test it. You must create a culture of measurement, merit, and facts. Avoid feature creep. The perfect product is the enemy of market share, even if it misses many features you love. You will be in the world of continuous deployment, not large quarterly or annual releases. Also, in the early stages, focus on testing those aspects of the business which make your company fundable by investors, such as growth, engagement, activation, and virality. Engineering purity is nice, but will not mean much when you run out of funds and have to shut down the company. Like customers, VCs also do not care about technological brilliance, unless it creates a real business.
Be the Product Manager
In the beginning, you will likely fulfill the role, by yourself or in committee, as the initial product manager of the company. Be the champion and voice of the product and its users. Get out and talk to actual customers. Watch them use your product. Ask them how they solve their problems today. Do not become defensive when they do obviously (to you) stupid things with your product or miss its genius. If something is hard to use, it is on you, not the customer. Reread the previous sentence.
Be a Superstar Team Member
As the CTO, you have a core role in a startup. Investors, new talent, customers, and others will often assess the company’s ability to succeed by judging you. Learn to communicate with a range of audiences, including non-technical customers and investors. Become the universal translator of technology to the world, a rare but crucial gift in this technological world. Listen to your colleagues and understand what they need from technology to make the business work, whether it be sales, legal compliance, or closing investments.
Superstars are accountable, to their team and others. When something fails, rigorously do root cause analyses without creating a culture of scapegoating, especially since the errors may be yours. The goal is to create rapid learning, not burn the heretics. When you make a mistake, admit it, learn from it, and have a plan to prevent it from happening again.
Being a great team member also means being the best manager. Your job is to make your team successful. Listen to your team more than they listen to you. If you are always the smartest person in every conversation, you did not hire your team correctly. Do not compromise on hiring quality, mentor and train, and get out of the way to help ensure your team can succeed. Also ensure that your stars are identified and compensated appropriately. The best technical talents are often worth 30 average talents, or more. Study the management culture of Google and other successful technology companies.
Be Humble; Innovation Resides Throughout the Entire Company
I hate to write it, but many CTOs are arrogant to the point of being unbearable. The same is true of other roles also, including VCs, but be better. First, be humble, be open, and have the capacity to be surprised. Second, do not believe that your team has the monopoly on innovative ideas to drive company value. Understand the importance of all roles in the company. Too many engineers and their managers see themselves as the virtuous value creating gods among the benighted and interchangeable mortals of the other departments. Companies need stars everywhere to succeed. Further, innovation, growth hacking, Design Thinking, and fundamental business decisions work best when teams are cross-functional and work together toward a common goal. When I run patent programs, for example, I always include people from many parts of the company. The best ideas often come from the structured chaos that results. Please watch the course on IP Strategy for examples.
Take Care of Your Economics
Make sure you sew up your standard employment terms, including cash compensation, stock, vesting, early exercise and 83(b) filings, acceleration upon triggers, indemnification, and other terms for key executives. You need to be aligned economically as a founder, even if you are not technically a founder. If the terms here are unfamiliar to you or you do not understand what is normal, watch the lessons on founders and compensation. You should not be distracted by your own personal financial issues or job insecurity.
You are going to spend more time with your co-workers in a startup than with your spouse or partner and family. Too many people succumb to the vapid drudgery and forget to have fun. You are in the center of the greatest burst of creativity since Renaissance Florence, surrounded by some of the most incredible people alive. Remember to enjoy it and you will create memories and stories for a lifetime.