CTO for Startups: Do Startups Need a CTO?

According to the Wall Street Journal technology columnist Christopher Mims, “every company is now a tech company.” With software and IT impacting the world around us, your startup’s technology resources are some of its most valuable assets.

Many organizations create a designated position to oversee all these resources: the chief technology officer (CTO). But do startups truly need a CTO, or is the job of CTO for startups a largely unnecessary one?

What does a CTO do in a startup?

If you’re wondering whether your company needs a CTO, the first question to ask is: what does a CTO startup do, actually?

CTOs wear many hats, and the CTO’s role will be different at each organization. Briefly, the main responsibility of the CTO is managing the company’s IT ecosystem and technical architecture from end to end. This includes using tech to full advantage so that the business develops efficient and effective processes and workflows.

In particular, CTO responsibilities may include:

• Selecting the right technology stack to turn concepts into reality
• Recruiting and hiring software engineers and technical managers
• Developing the company’s long-term technology strategy and vision
• High-level engineering team management and performance tracking
• Representing the company’s technical side (e.g. at conferences and investor meetings)

Of course, in order to fulfill this job description, CTOs need in-depth technical skills. Yet this doesn’t imply that CTOs are writing code on a day-to-day basis. Once you have a development team in place, the task of building software, apps, or websites is usually delegated to developers themselves.

It’s also true that the CTO’s role tends to evolve as the business grows, though. In a startup’s early days, the technical co-founder may be the only person with a tech background. This person would then act as the de facto CTO.

However, things generally change as the startup’s minimum viable product (MVP) is built, and as the company recruits more technical employees. This enables the CTO to transition from a hands-on, practical role to one that’s more advisory and managerial. When this occurs, another role (such as vice president of engineering) may take charge of the company’s technical operations.

How important is a CTO in a startup?

For startups, the difference between a great CTO and a poor one can be a make-or-break issue. Excellent CTOs can bring a startup to a multimillion-dollar valuation; bad CTOs can drive the business into the ground before its first round of seed funding.

CTOs in an early-stage startup often earn this position by default as the only team member with technical skills. The CTO can thus lay the foundation for the entire company’s technology posture. This includes the engineering team members and team culture, the choice of tech stack, and more.

There’s a significant difference between a startup CTO and the CTO at a more mature business (e.g. a Fortune 500 company). A large organization may have multiple levels of tech managers and executives between the CTO and software development teams. As such, CTOs at major companies spend more time running the business’ administrative side. With other technical employees to pick up the slack, larger companies can function with the CTO position vacant for an extended period of time.

Startup CTOs, however, are often expected to get their hands dirty by directly contributing to the company’s MVP. Without the CTO, or at least someone with the right tech skills, many startups would have no way to build or expand their core products and services. A startup CTO acts as the company’s go-to person for any major technical questions, which makes this person’s presence (or absence) especially crucial.

Does a tech company need a CTO?

If technology is the lifeblood of your business, then having a CTO to manage that technology is essential. Running a tech company without a CTO is like running a marketing agency without a chief marketing officer, or a bank without a CFO.

Rather than hire a CTO, some tech startups look to other options. The alternatives to hiring a CTO include building an in-house developer team or even outsourcing development to an external firm.

For a growing tech company, however, both of these choices can only be temporary. Developers need solid management and oversight to operate at peak efficiency, which is exactly one of the CTO’s responsibilities. Although senior programmers can help mentor junior members of the team, asking them to assume some of the CTO’s duties will inevitably overtax them and cause delays in product development.

Meanwhile, external development partners can help execute a short-term technical project to completion, but rarely provide assistance with long-term strategic planning. They aren’t meant to replace the higher-level activities of CTOs, who can leverage their extensive knowledge and experience. CTOs are responsible for defining and carrying out a business vision, making smarter business decisions, and identifying critical risks and opportunities — all things that outsourcing can’t get you.

When should a startup hire a CTO?

Startup founders not only need to recruit the right team members, but also bring them on board at the right time. So when should early-stage startups hire a CTO?

If you’re already looking to hire a CTO for your startup, your instincts are probably correct. As soon as your startup starts feeling growing pains, or you need to make major technical decisions, hiring a CTO is in order. A CTO’s guidance can help you choose between competing technologies, find workarounds for limited IT budgets, optimize your development workflows, and much more.

The good news is that there are multiple places to look when hiring a CTO. You can source candidates from your connections in the startup community, or internally promote one of your star developers. Running an external search will take longer, and candidates will need to be vetted for the right expertise and culture fit, but your potential talent pool will be much deeper.