When should startups hire their first CTO?

This article originally appeared in issue 20 of IT Pro 20/20, available here. To sign up to receive each new issue in your inbox, click here

Hiring a chief technology officer (CTO) is a massive milestone in any startup’s journey. But it can also prove to be an expensive one, fraught with difficulties and challenges.

With senior and experienced tech talent increasingly scarce or expensive, and with many startup founders coming from a non-technical background, the search for a dedicated CTO is often hard to navigate. Even simply drawing up a strong shortlist can prove tricky.

Some experts suggest the right time for a CTO hire is at seed or Series A funding stage, while others say it should be done from the very start. There is also a train of thought that believes hiring a part-time or temporary one for a specific project or rollout is the right thing to do.

FanFinders, a marketing company which launched in 2012 and connects brands with parents, hired its first CTO after four years. “I knew bringing someone in-house was the solution because prior to this we had outsourced,” according to the firm’s co-founder, Alec Dobbie.

“The reality is you need that person to be immersed in the business day-to-day to really head up your IT,” he says. “When you have someone external, they might be technically sound but you’re still missing that investment in the wider business strategy and, to a certain extent, it’s impossible for them to commit at the level required.”

Dobbie adds: “As a co-founder, you’re essentially handing the keys over to this person to head up a crucial part of your business, so there needs to be trust as a priority.”

Acknowledging the fact that most startups are slightly constrained financially so can’t necessarily get the top talent right away, Dobbie recommends two possible options. The first being to hire someone with potential into a more junior role to see if they are capable of evolving into what you need over time. The second option is to sell prospective hires on the fact it is them that is in control of their career destiny and impact at your firm, according to Dobbie.

“It should be exciting for any technologist to be able to make those big, defining decisions and operate on a green field,” he explains.

Experience matched to specific needs

FanFinders’ eventual CTO hire was Paul Gwynn, who told us that it’s crucial for any new CTO to have established credentials and a proven track record for having driven similar goals.

“If a key part of delivering against strategy is hiring a CTO, then a startup needs to hire someone that has experience of going through a similar process. They should have been successful in building infrastructure to deliver against business plans and those plans could be software, hardware or elements like staffing. It’s about the complete picture,” Gwynn says.

But he warns: “In the past, I’ve seen CTOs come in and put in a number of inferior procedures where there were already solid ones just for the sake of putting down a marker, creating conflict in the process and demoralising the team.”

Leaving it too late can also be an issue. Indeed, Robin Beattie, managing director of Spinks, a specialist startup and scale-up recruiting arm of Harvey Nash Group, says that many founders end up doing this as they find it hard to let go.

“Often, founders/owners don’t feel they need a CTO because they’re technical experts themselves and know their own business inside out. They don’t have a team of 30-40 technical people and don’t have large-scale architecture - they think they can still manage everything themselves,” Beattie says.

“But it gets harder as the business begins to scale.”

A full-time CTO isn’t always the answer

A so-called fractional CTO - someone who works 2-3 days a week or even a month - is one solution suggested by Spinks, while other experts offer the idea of an interim CTO to get an understanding for what can be achieved in the early days, or to drive forward a specific project.

Talking of interim CTOs, Heather Abbott, of AKF Partners, often fills the gap for smaller organisations who are unable or unsure about hiring a dedicated CTO but need input and leadership at this level.

“Interim CTOs can help bring in external experience or validation for new approaches to key priorities and challenges. As such, an interim CTO is often brought in when a significant threat arises to help troubleshoot the problem and to make potentially difficult calls and changes to fix the issue, getting the tech team back on track to success,” she says.

“Being a temporary outsider can make it easier to objectively dive into issues and to make fair but perhaps hard decisions, particularly when it comes to sensitive areas, such as organisational and team structures.”

Abbott adds: “The temporary nature of the assignment can be effectively used to create more of a sense of urgency on key priorities. Still, it’s vital to always think carefully about any projects that would be better to be delayed until the full-time candidate is on-board.”

Before you even start the hiring process, it’s important to think about not just what you need for now or the short term, but the sort of skills and experience you’ll also require two or three years down the line, according to Abbott.

“Make a prioritised list of the most important capabilities, skills, and aptitudes of your CTO. Most importantly, as well as having the technical knowledge and know-how, can the candidate translate that tech speak into the language of business? Can they transfer the technology strategy onto a wider product and company strategy and vision?” she says.

"One of the top reasons for CTO turnover is a lack of business acumen and these kinds of competencies should be highlighted in any job description.”

Alan Baldwin, an ex-police officer, admits it was tough for his startup Practice to Progress to find its first CTO, as he felt the company was then "largely made up of less tech-savvy people."

The company, founded in 2019, helps anyone, whatever rank and role, to join the police service or reach their career goals within policing, regardless of background.

Baldwin’s brother James eventually filled his CTO role, but he advises that you should think about what your business might need from technology prior to your recruitment search.

“It’s easy to assume you know what the CTO does, but very often in a startup there are nuances to take into consideration,” he says. “Look for someone that wants to understand your business, not just the technology.”

While it’s clear that there is no one-size-fits-all approach to when or how startups should hire their first CTO, there are definitely common areas that all firms - large or small - need to be thinking about well in advance of any recruitment efforts. And, as importantly, this deep consideration about what their business needs and the best people to help turn those goals from theory into reality shouldn’t stop at a job offer.