Starting a High Tech Business: You Need a CTO


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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.