CTO vs Tech Partner: What does your startup business need to succeed?

When you’re running a startup business, every day is different. Moving at speed, with multiple tasks to manage, there are always new decisions to make. And, with no proven path to follow, each business has to navigate this journey with its own products, people, and priorities in mind.

However, there is a rite of passage that most startups will share regardless of their market or mission - the need to build a digital product. Whether it’s a website, mobile application, or data analytics tool, having the right technology is vital to securing success in today’s digital world. For this reason, many founders look to recruit a Chief Technology Officer (CTO). But is this the right move for everyone?

In this article, we’ll explore what a CTO can offer, the challenges and opportunities you may face when hiring one, and when appointing a tech team could be more beneficial for your business.

What is a CTO?

A Chief Technology Officer (CTO) is a senior executive who oversees the technology strategy and technological development of your company. As a member of your C-suite, they are pivotal in leveraging technology to drive the company forward and maintain a competitive edge in the market.

What are the responsibilities of a CTO?

The CTO role involves a wide range of responsibilities, which can vary depending on the size and nature of the organization. These could include:

• Technology vision and strategy: The CTO sets the company's technology vision and strategy, ensuring it aligns with business goals. This includes identifying technology trends and making decisions about the adoption of new technologies.
• Innovation and R&D: They often lead innovation efforts, exploring new technological possibilities and spearheading research and development initiatives.
• Product development: In many organizations, especially tech companies, the CTO oversees the development and maintenance of products, ensuring they meet customer needs and are built efficiently.
• IT Infrastructure: The CTO may be responsible for the overall IT infrastructure, including the network, data storage, and cybersecurity, to ensure the company’s systems are secure and efficient.
• Team leadership: CTOs lead technical teams, including engineers, developers, and other tech professionals, fostering a culture of innovation and collaboration.
• Stakeholder communication: The CTO communicates with other executives, stakeholders, and sometimes customers, explaining technical concepts in understandable terms and aligning technological initiatives with business objectives.
• Budget and resource management: Managing the budget for the technology department and allocating resources efficiently can also be a key part of the CTO's role.

What does a CTO do?

The focus of your CTO will evolve as you progress through the various stages of launching your technology product (for instance software, website, or a generative AI-powered platform).

• The Seed phase: before the product launch. At this stage, speed is critical. You may be working on your minimum viable product (MVP), which is a version of your technology that allows you to launch as soon as possible with just enough features to attract early adopters. The CTO should be heavily involved in this development, as it’s a key stage in ensuring it solves the needs of your users.

• Pre-seed phase: once the product has been launched. Following the launch of your technology product, the CTO should gather, interpret, and utilize feedback from users. From here, they will work to continuously improve the product to ensure it becomes Product-Market Fit (PMF). PMF is a scenario where customers are buying, using, and sharing your product in volumes that sustain its growth and profitability.

• Series-A: PMF achieved. Once PMF is achieved, the CTO’s focus will shift towards making ongoing technical decisions that can significantly impact your business operations.

What should I look for in a strong CTO?

There are several qualities you may wish to look for in a CTO, including:

• High technical capability: Ideally, your CTO will have a ‘T-shaped’ skill set. This means they have broad technical knowledge and capabilities alongside extended expertise in a specific, relevant field.
• Skills beyond coding: While coding is incredibly valuable, ideally your CTO should be able to build products and deliver insights beyond these technical expertise.
• Good business understanding: A strong business mindset will ensure your CTO can integrate technology within your business strategy. Domain knowledge is also important for software engineering, ensuring they understand the environment in which your target system operates.
• Technical decision-making: A CTO should be able to make technical decisions while considering scalability, cost-effectiveness, and other factors. For instance, can they predict how easy it will be to recruit developers for your technology product?
• Strong product management skills: CTOs need strong product management skills to effectively align technology development with business goals, ensuring that technical innovations meet market needs and drive the company's strategic objectives.

What challenges might I face when hiring a CTO?

Hiring a CTO with the capabilities listed earlier is incredibly difficult! Professionals with this skill set are rare and it can take a lot of time, effort, and cost to find the right person. For this reason, a CTO is not always the best option for startup companies, especially if you’re short on time or operating with stretched resources or budget.

What alternatives are there to a CTO?

Given how hard CTOs are to recruit, or the commitment involved in hiring for this position, many startups will consider other options.

• Appointing a partner agency/tech team: This may just be a short-term solution until the business matures or you find the right candidate, but it can also be the beginning of a long-term partnership that proves beneficial for years to come. At Seeai, we act as a technical team for startups without a CTO. Working at the intersection of product development and AI technology, we’ve helped numerous startups and companies build scalable and secure AI products at speed.

• Hiring a freelancer/interim CTO: A freelancer or interim CTO can help bridge the gap before committing to a permanent hire. It’s worth noting that, out of the two, interim CTOs can instill more confidence in your investors and stakeholders. However, both will likely provide more flexibility and require less investment than a full-time CTO if that’s what your business needs. Again, these individuals also have very sought-after skill sets so can be hard to recruit.

What are the benefits of appointing an external technology partner?

Finding the right technology partner with CTO capabilities can benefit your company in many ways.

• Immediate access to expertise: With a team at your disposal, you can call upon a wider bank of expertise and experience than most individuals can offer.
• Speed of delivery: An established technology partner has resources, such as tools or assets, that you can access immediately. This allows you to hit the ground running and can often be more cost-effective than investing in such items yourself, especially in the early days of your business. Many agencies, like Seeai, can also be engaged quickly without having to endure the senior notice periods that can come with CTOs, providing a quicker path to progress.
• Cost-effective: Searching for, and hiring, someone with CTO capabilities can be expensive, often resulting in a full-time salary, the release of business equity, and recruitment costs. With a technical partner, you can engage the team as needed.
• Opportunity to scale: When you use an external technology partner, you can scale resources up or down based on project needs without HR complications.
• Risk mitigation: With a technology partner in place, the responsibility for the risks and successes associated with your projects are shared. There’s also an opportunity to agree on guaranteed deliverables with your agency, which can help to secure your success.
• Hiring risk management: Appointing a CTO is a big decision. If you want to give yourself time to consider this, letting your business mature before you make any choices, an external partner with CTO capabilities could be the solution for you.
• An outside perspective: Bringing in external team members can offer a fresh perspective. Not only will they have other projects to draw experience from, but they can also stand back when needed to provide new insights and questions.

What should I look for in a strong technology partner?

When looking for a company to work with, you need to make sure that your technology partner company possesses the CTO capabilities above as well as the following:

• A hands-on approach: Appoint a technical team that works as an extension of your organization, getting under the skin of your business needs and end-users. This hands-on approach ensures your partner can help provide more tailored and effective solutions.
• A focus on your end-user: Typical agencies can often fall into the trap of working to please the client (you), rather than your end-user, and this can be bad for business. For instance, they may build your product for a platform they are familiar with, or that allows them to deliver work faster for you, rather than the platform that best suits your audience or business objectives. To combat this, look for a technical partner that puts your end-user first.
• Flexibility: Launching a new technology product or service as a startup can involve many iterations. As such, your technology partner needs to be adaptable to requirements changes, market feedback, and the many phases a startup will go through.
• Knowledge: A strong technology partner can make informed technical decisions that benefit your startup and business. They’ll keep on top of industry news and will be able to call on a bank of relevant experience to provide you with the right recommendations.

CTO vs Tech team, which option is best for me?

Ultimately, a CTO is a great addition to a business. However, given the challenges involved in hiring one, it’s well worth considering alternatives, such as external teams, especially if you’re a startup business.

• A CTO could be your preferred option if:

  • Your startup is deeply technical at its core and requires dedicated leadership from the very start.
  • You already have a big team of in-house developers and you want somebody to lead the team.
  • You already have someone in mind who aligns perfectly with your vision and is open to being recruited.

• An external agency may be your preferred option if:

  • Technology is a tool that can add value to your startup, rather than its sole purpose.
  • You don’t have an in-house technical team to manage.
  • You’ve tried appointing a CTO but the search or hiring process is becoming too costly, time-consuming, or difficult.
  • You need more time to find a candidate that fits your organization.

Hopefully, the information we’ve shared in this article will help you make an informed decision on how best to progress with your technology strategy. However, if you have any outstanding questions or you’d like to hear more about Seeai and the work we do to help startups and companies build scalable and secure AI solutions, please do get in touch.