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Starting a High Tech Business: You Need a CTO
I’m starting a new business called Kynetx. As I go through some of the things I do, I’m planning to blog them. The whole series will be here. This is the sixth installment. You may find my efforts instructive. Or you may know a better way——if so, please let me know!
People frequently get confused about the differences between CIOs and CTOs and even a lot of techworld business people I know can’t really articulate what a CTO does. In many companies, the CTO is the most technical person on the founding team. That might or might not work out depending on that person’s capabilities.
I was at breakfast this morning with a friend who has been CTO at several high-tech startups and we got to talking about what things a world class should know how to do and what role he or she ought to play. Here’s what we came up with. There’s probably more:
- Product - The CTO is the chief product officer. I’m at odds with many who believe that product management is a marketing function. There’s a difference between product marketing and product management. I think the CTO has to, first and foremost, see him or herself as the person in charge of the company’s product strategy.
- Architecture - The CTO is responsible for overall product architecture and for the primary architecture choices. Good architectural choices are crucial to future sustainability, current and future costs, and whether or not you’ll even get funding.
- Finance and Accounting - A good CTO has to know how accounting practice affects products and the way the company can or can’t recognize revenue. More importantly, a CTO needs to understand cash flow and how to model free cash flow for products. You can rely on others to build the models, but you have to understand them and tweak them.
- Legal - Almost all businesses have legal requirements that affect their products. How much, obviously, depends on what industry you’re in. If you’re in banking or health, the legal requirements are onerous. If you’re building a photo sharing site, not as much. But even there, there are privacy implications, anti-pornography laws, copyright issues, and so on that you have to understand to build a product that can be sold without incurring undue liability. I learned early on that the general counsel was my friend.
- Standards - In today’s world, standards are important because almost no product will operate independently of everything else. More than just knowing the standards, however, being involved in the standards process can give a company a leg up.
- Nomenclature - CTO’s build language about their product. Using the right nomenclature and helping others figure out how to talk about your product builds common understanding.
When you think about this, what most of these have in common is that they build context within which others work. Good CTOs provide their company with context so that discussions about customers, products, and even finance happen with a common understanding of what the company is about and what it does. In that sense, a CTO is the heart of a high-tech business. That’s why it’s not unusual to see people with the twin titles Chairman and CTO in high-tech companies.
Many CEOs don’t understand what they want a CTO for. They just know there’s a bunch of technology stuff they don’t understand. A good CTO educates the CEO about the technology and a good CEO will want to understand. Many CEOs think of the CTO as a VP of Development. Sometimes that works, sometimes it doesn’t. A world class CTO might not be a world class programmer, although they often are. Here’s why:
A CTO needs the respect of the technology organization to get the job done. They have to trust that the CTO is providing good leadership. Right or wrong, in the geek culture, that often comes down to a good old fashioned “alpha geek” shoot out and more often than not that means code. The CTO has to be the alpha geek.
I’ve run across people—not techies—who say “I just had this good idea for a Web business. All I need is a programmer. Do you know any good Web programmers?” What they don’t get is that they probably need a lot more than a programmer. They need a CTO. Without a CTO, you don’t have a high-tech business—you have a low-tech business with a Web site.
What else does a good CTO have to know and do? What mistakes have you seen CTOs make? I’d love to know what you think.
Posted by windley on December 18, 2007 12:59 PM
So true, I'm tired of so called CTO's that can't hold their weight with the techies they manage. Nothing is worse as an employee than taking orders from somebody you cannot respect, and as a techie if the boss is mandating what you see as bad decisions, it can ruin a product/line/company.
If you are a CTO of a tech company, you truly must engage your techs, you need to be able to be seen as a peer, and as you mention, and Alpha at that. Without that respect, there will be no direction.
None of the startups I've worked for had a C.T.O., though they all needed one. So my comments about what a C.T.O. should be good at actually reflect an established business (Expedia).
To a huge degree, this one applies to all high level officer positions, but it most definitely should not be neglected in a C.T.O. He/she must be really good at the politics. By that, I mean primarily negotiation and decision-making. I watched several C.T.O.s founder because they were too technical. They couldn't negotiate their way out of a wet paper bag.
Also related, a C.T.O. often is the head of project management, at least in practice. If he/she cannot get solid project planning in place (coinciding with the product planning) it will kill the company just as much as bad architecture decisions.
With the caveat that there are many variations on the CTO theme, I think you've captured the essence very well indeed. In fact, I'd be inclined to lose the "high tech" and "start-up" qualifiers. Even for well-established, non-tech companies, your description of the CTO role fits well, especially given that in many ways, all companies are going to become "high tech" in the next 10 years, and, for many of these companies, the switch from Enterprise 1.0 to Enterprise 2.0 (Next Generation Enterprise) will have many of the qualities of a start-up!
Great write-up Phil. Thanks again for sharing with us your journey.
I have no experience with CTOs so take this with a grain of salt.
The image that popped into my mind reading this was one of the market innovator. The one person that can keep the structure of the architecture in focus while conscious of business and technical constraints. Often a person that delegates that focus upon others to work on in teams. Werner Vogels CTO of Amazon did a great talk recently on video at InfoQ that exemplified this for me. Discussing the structure of their architecture over time and keeping in mind the overarching ethos and business growth goals Jeff Bezos the CEO had put in place.
A better title would be: The Juggler. :) Someone that possesses knowledge, skill and spatial awareness that can create a working vision for people to want to imitate.
I was founder and CTO of my first startup (sold it in April). CTO and CIO are two completely different roles. The CIO is the head of IS/IT and is in a support role. The CTO has responsibility for the core technology of whatever the company is selling and is much more central. We IT types tend to forget that there is far more to technology. At Intel, the CTO (it used to be Pat Gelsinger, they stripped him of the title a few years ago) should be a specialist in microelectronics or fabrication technology, not a software guy.
It doesn't help that CIOs (or the magazines that cater to them) have been trying to break into the boardroom for several years and have been muddying the waters by assuming the title of CTO rather than the less prestigious "CIO" redolent of IS and subordinate to the CFO.
The CTO also needs to be simultaneously very technical and business oriented. Some companies have the position of "Chief Scientist" for situations where the most technically skilled employee is not business savvy enough. The typical CTO will also spend half his or her time interacting with customers or partners.
The role of the CTO varies depending on the structure of the management team and complementarity with other founders or executives. The ideal situation is the one you describe, but there are some very successful tech companies where the CTO function is quite far down the pecking order and limited in responsibilities, storage vendor EMC comes to mind (the CTO reports to a sales and marketing person there).
The other distinction is between CTO and VP of Engineering. The latter's job is more concerned with managing teams, schedules and project deliverables. Often but not always the VP of Engineering reports to the CTO.
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