Guide: Do you really need a CTO or Tech Co-founder and what the roles actually mean in a startup?

cto

 

Appsjunction.net -  your favourite networking, #crowdfunding & freelancers platform, brings to you this helpful - "Do you really need a CTO or Tech Co-founder and what the roles actually mean in a startup?" guide!   This and more experts insights like this is often shared with audience at popular Appsjunction meetup in LondonAppsjunction.net is a networking platform which brings together iOS Developers, Android Developers, Win Phone developers to find each other and build apps for each other and startups. Soon to be launched a market place for buy & sell of App Code.

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Very often we are asked by people, how to find a CTO or Tech Co-founder in London and UK?  We have listed following facts and research which we have identified can help you find the right help in London.

Idea guy asking for funding and co-founder

http://dilbert.com/strip/2015-09-11

Following is our analytical take on the subject when someone says you need a Tech Co-founder.

The MYTH that one Engineer or iOS developer or Andorid Developer (possible co-founder) is all your need today and in future to launch your app startup in a serious way is totally not true. Following diagram shows what are typical components of an App and that for medum to high tech need startups - you would need  a team of people to build it right from scratch so it can scale up in future. If you are not technical yourself then you would need someone to handle technical aspects of your tech startup project and handle its development by the dev teams and that person ideally should be (Please read the article till end and don't forget to bookmark/share as we keep updating it) a Tech Project Manager OR Tech Business Analyst but definitely not a developer for reasons explained below.

Typical App And Server Architecture

The first question to ask yourself is how much technical you think you are and how much tech your actually startup needs. For the sake of discussion we will classify tech startups in 3 categories with examples -

  1. less tech - Examples 1) a nanny or plumber booking platform with a call centre - 2) a readymade meal (pre defined menu) ordering and fulfillment business, 3) a property investment and rental management sort of business, 4) AirBnB type of property listings to book 4) daily deals platform - all these can be sorted by readymade wordpress templates + plugins (Typical outsourcing cost for Ver 1.0 between $500 - $1500) as the business is actually more backend - you would need cust support and content admin manpower to manage the listing & booking of people/services, manage refunds etc.  In this case the business actually just needs a simple to make website & app for regional/local services/products. A non-tech entrepreneur doesn't necessarily need a tech co-founder in this case if he/she has the time to deal with 1-2 geeks and get the MVP built. Once the MVP is successful, an advisory CTO/ tech PM can be hired on salary + some equity model for ongoing support/upgrade of the product/service.
  2. medium techExamples 1)  event booking platform, 2) marketplace to buy/sell of products or services, 3) paid online learnig tutorials (vdeos etc), 4) Job portals, 5) crowd funding websites 6) ebay/amazon type eShops selling 1 or more products 7) dating websites and apps - these business are 50% backend operations and 50% tech - moreover the tech here should be implemented in a way from day one so that it can scale up to global level one day. A non-tech entrepreneur would need a tech co-founder (local or outsourced) in this case.
  3. high tech -  Examples 1) transferwise type FX transfer service 2) twitter/facebook/whatsapp type platforms, 3) fintech startups dealing with trading platforms, 4) blockchain and bitcoin exchanges and wallet websites/apps  5)  VR games 6) NFC/iBeacons/POS/Wallet linked products/services. A non-tech entrepreneur would need a CTO level tech co-founder (local) and tech teams (local or outsourced) in this case. 

If your startup falls in category 1 above then its better to learn a little bit about wordpress and wordpress based eShops etc on your own rather than looking for a tech co-founder to build it for you in return for 20% (forever in your startup) which you could have outsourced to a local/remote developer to build & set it up for you. 

Why sharing equity with a Tech Co-founder for something seriously simple to build ( 1-2 months) is such a bad idea.

  1. A typical scenario we see at tech meetups that many people's ideas fall in category 1 above. Instead of getting a paid developer to build their low-tech solution pretty cheap they end up giving the label of a Tech Cofounder to a developer in return for 20% equity who sets up the low tech solution for them.  This leads to all sorts of complications & devaluation later. 
  2. Suppose a freelancer could have built your wordpress website or a simple listing, booking and paying app for $/£1000-1500. But you instead got a tech co-founder (developer) on board who built it for free or very low cost for you in return for 20%-40% equity. To an angel investor that would mean that 20% equity in your company was worth $1000 so the whole company is not worth more than $5000 at seed stage (pre-revenue stage).
  3. Once the website/app is setup, since your business was more of fulfillment from backend, your product/website won't see rapid features and functionality changes and even if it does release new features they would be fairly simple tech enhancements. e.g. lets assume it was a readymade meal ordering website/app where people order their meal from pre-set 7-10 menus per day/week. Once built, this website/app can last like this for 1-2 years. Your tech cofounder will not have much to do for 1-2 yrs. A co-founder is for life of startup not for a one time 2 month service. (please read complete article below to get a better understanding.

 

Three questions you must ask a possible Tech Co-founder:

  1. What is their primary interest in your startup? what is their current focus (engagements & commitments) in life?  what is their track record in your domain or startup's business domain?
  2. What exactly they can and will contribute? write it down to avoid bad & sad outcomes later and to avoid arguments.
  3. Are they for long term with you or just one hit and will be distracted by other shiny new ideas later?  Will they sign an ideally 3 yrs (atleast 1 yr) of commitment contract on whatever their time & effort commitment is towards your startup? Note: It normally takes 3 years to reach the level of success where angels and founding team can think of an Exit from the company.
  4. Note:  it is very difficult to find someone credible enough who can satisfy the 3rd criteria as well.  Tech city london is full of stories where not meeting requirement 3 above killed a startup in long run in its 2nd/3rd year or even later part of 1st year. Many entrepreneurs going for their first startup are Naive and are heading for failed startups hence try to find a co-founder who already has valuable experience of failed or successful startups.  Angel.co and cofounderdating.com are two very helpful platforms in this context.

 

Understanding the different roles in a startup will save you from a probable disaster and bad conflicts later on:

  • What is a CEO? - CEO of a startup can be just an idea guy with or without money, can be a marketing guy or ideally can be a guy well experienced in his field of startup . Its a position every idea owner founder smart-or-not-smart, rich or not rich, experienced or not experienced can claim and people around him can live with it.  When the startup becomes sucessful, this founder may realise that like Google or other professionally run company, a CEO is a job which requires specific skills and then at that stage founder + VCs/Investors often vote to hire a CEO material guy to run the show and grow the company.
  • What is a CTO? - Unlike CEO, this position can't be obtained just by being the programmer part of the 2 man startup team. A CTO tag has to be earned as it will need years of programming & system architecture experience to become one otherwise this CTO will never be respected by a fellow programmer and this CTO's decisions won't be right. It becomes a joke very soon when a programmer level person (often an iOS developer) starts as a CTO but when a startup is successful and big scalable infrastructre like cloud servers, cache servers, redundancy servers, APIs, firewalls, DMZ web services, SaaS web services, scalable system architecture, database architecture etc is needed, then this so called CTO doesn't have much say or inputs and becomes a tag-along "not much use" person for the company for no fault of his own.  If you need a CTO as co-founder then make sure you will need him for long run and he will be value enough for the long run.
  • What is Tech Co-founder? -  Depending on the technical need of a startup's product/service, this guy can be skilled anywhere between an iOS Developer, Sr. Developer, Full Stack Developer, Tech Lead, Solution Architect, System Architect, CTO.  This guy usually knows all the technical features, limitations, possibilities and technical roadmap of the product.  A technically zero (or less tech knowledge than a hands-on developer) version of this role is a new breed of polished PPT presenters (and good orators) known as Product Owners/Managers who can take care of your product's future features and business model if you yoruself are not smart enough/CEO material. These guys these days often handle a product's tech development using the help of Tech Project Managers/ Project Coordinators/ Tech Leads or tech BAs. However more or less they are a facilitator/project manager sort of person between a CEO and tech teams but not exactly a tech co-founder or CTO (noway). They are an extra cost to a startup in early stages as a startup can live without a product manager but not without a tech lead/tech co-founder or tech teams programming the first version of CEO's product.
  • Advisory CTO -  people won't be jobless and hanging around meetups. Usually they are beyond the pockets of an early stage not yet funded startup unless you get lucky in convincing one with your idea plus your own solid professional background in your startup's domain. Exceptions are always there as in if you are a successful serial entrepreneur and start with good cash situation from day 1 then you can find a dedicated CTO/Sr. Tech BA/ Tech PM kind of person to be your co-founder.
  • Developers (3-5 yrs of development career): might hang around meetups mainly for paid employee positions in established startups. It is usually very hard to find someone to work only for equity share as equity at this "idea" stage doesn't even buy bread and doesn't pay rent. They usually don't consider themselves a tech founder material and ideally would want to work under a senior tech figure. For most App Projects, It is not advisable to take them onboard as tech cofounder as you only need them for development & launch of first full featured product and then onwards for minimal ongoing support (which can/should be outsourced) thereafter. A cofounder is kind of someone for life and since Its majority tech work involved in your App/Web product launch is a one time service you need (in most not all cases), hence once the App is successful and downloads start going up in charts, to add incremental features you won't need a developer disguised as tech cofounder AS a standard developer or development team can do this one time job for you. One should aim to find a Sr. person like an advisory CTO level person as tech co-founder or a Sr Tech BA/PM who can not only get the product built by (local/outsourced) developers but also help you evolve the product as per your business needs in long run. 
  • Most common justifiable need of a tech co-founder is actually the need of a person who can speak tech with geeks, basically a tech project manager who can speak geek language and yet can talk to business oriented people like CEO and Marketing guys in their own language in a simplified & easy to understand ways without technical jargons or API parameters. This guy is usually a Business Analyst or tech project manager or project coordinator. Most startups don't realise that in the rest of the IT projects in rest of the World, every project doesn't require a CTO or tech co-founder. Most IT projects in big enterprises don't have a CTO/Tech Co-founder. e.g. Pingit was an App produced by Barclays. Like any App project in an Enterprise level organisation the structure will be like this:  Non-tech Sr. Business Stake Holders ( equivalent of a Startup's non-tech founder/investors)  explain the business requirements to a Business Analyst/Project Manager/ Project Coordinator who then writes detailed tech requirements (specs & wireframes) and explains the features to Tech PM/Tech Lead/Tech Teams and tests the output when it is delivered to make sure it matches the expectation of business stakeholder(s). Product roadmap/feature list is usually dictated by Sr Business stakeholder.  Hence if an IT role qualifies most for the tech cofounder role, then its the Tech BA/PM role who understands your poduct/service requirements correctly first and then gets your business requirements implemented correctly by tech teams (inhouse or offshore, doesn't matter) in a professional way by documenting spec, wireframes, ROI, MOSCOW priorities and complexity levels. S/he regularly sits with the non-tech Sr. stakeholders (You the CEO-Founder) and translates their high level business requirements to technical requirements specs for tech teams to implement and test. You will have an ongoing need for this role person as a cofounder and hence this role qualifies 100 times more than a developer trying to fit into a co-founder role.
  • A product owner/manager: role is a non-tech extension of a BA (business analyst) role. To make it simple to understand,  a BA can be a product owner but a product owner can't be a BA simply because a Product Owner is not technical enough to make right technical decisions or describe a requirement in technical ways/specs to a development team. In Agile methodology, a BA converts a business/ux/functional requirement into user stories and writes acceptance criteria for them. Aceptance criteria is a modern version of test use cases and its description is fairly technical e.g. a password reset url should be valid for only 2 hours and request for new one should expire the last one + failed attempts at reset url should be logged and more than 5 repeated attempts in 5 minutes should bock the attempting user (by IP or cookie) for next 2 hrs. A product owner or product manager can't write all that hence they are not the perfect translator or bridge between the business stakeholders/CEO and tech teams. A product owner will always need a BA to fill the need of a tech founder kind of person. A product guy should never be mistook as a tech cofounder even if they hard sell themselves these days to you as your ideal co-founder, they are just good in talking business progress and presentations (PPTs) of product roadmap to the  audience and most people in this field are from marketing, PR and advertising kind of background.
  • World is full of startups in their 2nd/3rd year where a CEO/founder is still coming to the office everyday to achieve breakeven or profitable state and seed stage Tech Co-founder goes on long vacation of many months because the website/service is running just fine by support of tech support staff and no new significant features need to be added. e.g. a p2p lending platform (and a corwdfunding platform) the author knew about, needed just a wordpress based site (readymade templates available for that) for users to login and donate money to the fundpool.  90% of the remaining work like due diligence, background checks, legal approvals etc was all background manual (Ops) work. These startups could have paid a developer $1000 to max $5000 directly to come up with a really nice and polished looking website to do the simple job but instead they ended up giving away 15-25% of their equity to their tech cofounder who in-turn further spent similar amount of company's money to get the stuff built by developers. 

 

How to launch a startup without a tech cofounder and without giving away significant percentage of your equity to someone who fulfils just one time need of a product launch?  There are two recommended ways:

  1. either you hire a team of devs (local if you can pay significantly more or outsourced) represented or managed by a tech PM/BA Or
  2. if you think that you have grasped enough about the simple tech solution you need (many times its just a wordpress site and some plugins/api integrations which does the job)  to launch your product (web/app) then just handle the geeks directly and get it made by geeks/developers (local if you can pay significantly more or outsourced). Note: Most good & recommended mobile & web development outsourcing services providers like PhoenixInfomedia provide a Tech PM/Project Coordinator as well to help you with technical stuff if you yourself are not that technical.  

 

Note: It is true that investors won't invest in a one-man-show company. But it is not true that, this one man always has to be a tech co-founder. Author thinks that  angel ecosystem should use the help of Technical Advisory level people to evaluate the technical needs (low, medium.high) of a startup to judge whether it needs a tech-founder or not as in many cases an outsourcing provider can do the job of tech co-founder very well. It is high time the eco-system must realise that in this modern age of too much information & promotion to get the customer's eye balls and attention, the need of a CMO in a startup is more paramount. CMO (Chief Marketing Officer) is the key person for a startup's success - someone who knows online marketing, SEO, ASO, Analytics, growth hacking and monetisation and its need in a startup is probably 1000 times more serious and valid than the need of a tech cofounder who may not be needed everyday in office just a few months after post golive. It is far easier to outsource a tech PM or Developer role but it is very hard to find strong CMO level people and you would need them locally even if they outsource the mundane tasks of regular social media updates and SEOs to teams offshore. You would need someone to dig into analyics and data and could find out the best avenue to spend your dollars/pounds for fast growth. A smart CEO and CMO combination is a far bigger guarantee for the success of a startup than just CEO and tech co-founder.

Note: If you have already done good online marketing and growth hacking yourself, to take your startup to a stage where its fairly successful and you have a good traction, at that stage you don't need a tech founder anyway. You are past that stage and instead you should aim for hiring a CTO on some salary + 1-2% equity deal. Now you need a CTO material person to scale it up and put his 10-20 years of solid experience into the efforts of taking your product global. More informed opinions about this particular scenario here. https://www.quora.com/My-startup-is-growing-to-28K-users-and-I-did-all-of-that-with-outsourcing-agencies-and-still-I-cant-find-a-tech-co-founder-What-should-I-do-next

Note: PhoenixGMN.com can be your tech co-founder depending on the technology needs of your startup

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