The Start-up CEO
The biggest mistake
a CEO and CTO can make is to ignore each other
Frans M. Coetzee
Note: This is Part 3 in Frans M. Coetzee’s series “Here
Be Dragons: Managing a Tech Start-up,” which discusses the
pitfalls and glories of starting up your own tech company
frequently misconceive the roles of the chief executive officer (CEO)
and the chief technology officer (CTO) in a small organization and
how these two work together.
The CEO is supposedly
the evangelist and chief strategist, whose vision is professionally
executed by a dedicated team attending to the details. In practice,
the CEO is truly the executive without portfolio. All intractable problems
in the company—no matter where they originate—end up on
the CEO’s desk. As the CEO dispatches one problem, two new problems
arise. (The mythical, multiheaded Hydra is the icon of the start-up
CEO.) If you wish to be a CEO, be prepared to deal constantly with
problems others cannot solve and to put up a fight to gain the time
to do non-crisis–related work.
The CTO job is seen
as the choice development position, one that lets you cherry-pick the
technical problems and largely avoid business turmoil. So most CTOs
suffer a rude awakening when they realize that the interesting problems
are solved by others, while they rush along at breakneck speed dealing
with constant distractions and nontechnical issues. In fact, the major
job of the CTO is not hands-on development or technical problem solving.
It is dealing with business people trying to talk to technical people
and forcing a coherent vision of the product into the heads of the
technical staff. Most of the CTO’s time is spent bridging the
tech-business divide, then verifying that these groups respond appropriately.
(The mythical doorman Janus, whose two faces were turned to watch both
the under- and the over-world, is the icon of start-up CTOs).
For both the start-up
CEO and the CTO, being the boss means taking out the garbage. Unlike
your counterpart in a large corporation, you are the one who ultimately
has to deliver the product to the customer or face immediate failure.
As a result, on top of your own particular assignments, you will find
yourself doing whatever else is needed to plug the gaps.
If you want to assume
either the CEO or the CTO role, apply careful introspection and make
sure you have the skills and desire to perform the necessary duties.
Now that the stage
is set, let’s take a more detailed look at the two principal
actors of the start-up.
CEO has to be someone who can manage multiple threads, impose order,
and make hard
decisions. There are many managers out there, but good CEOs are scarce.
Frequently, managerial candidates are drawn from the large set of upwardly
mobile MBAs who are birthed and fed in large companies that have sheltered
them from ever making a decision with a consequence. In big corporations,
vaguely overseeing a series of go-nowhere projects—or even having
a series of understandable failures that relieve senior managers from
making hard decisions—is often considered to be much the same
as a record of moderate successes. That being the case, some managers
in big companies have excellent corporate careers despite the fact
that their actual performance is lackluster. Only a few of these managers
can be start-up CEOs, notwithstanding their glowing résumés.
Before hiring a
CEO from such a background, find out the true scope of the person’s
accomplishments and, in particular, what hard decisions he or she has
had to make. Find out whether the person knows how to really work hard
and how to push products along that last yard into the marketplace.
Talk to people who have worked with the person. If everyone says they
liked the person, good. However, if his or her popularity came at the
cost of never having told off staff or pushed them hard, consider other
candidates. A start-up cannot afford a weak CEO unwilling to share
the load and maximize resources.
The CEO should be
someone who is willing to shoulder the burden of delivering a tangible
product. In fact, if most members of management only organize, but
never actually deliver anything concrete, even something as a simple
as a completed report or letter, the company is doomed. I have often
heard highly paid executives rationalize that, given their pay scale,
spending time actually working on any task personally is a waste of
money. Executives who only delegate invariably become detached from
the real problems in the company, set disastrously high or low expectations,
and lose the respect of their staff.
The best start-up
CEO is someone who inherently recognizes the concept of quality. Such
a person understands the tradeoffs in the business, especially between
the long and the short term, and understands why money and time might
sometimes have to be invested in a product even if there is no obvious
immediate financial motivation.
As an example, consider
Google: the company’s cofounders pursued a plan of extensive
optimization of the quality and speed of the search results. And they
did this at a time when the bean counters and marketers had eviscerated
most technical progress at the other search-engine companies in order
to squeeze a few more pennies from the technology. For Google, the
pursuit of optimization led to technical depth overall and eventually
to large competitive barriers. Even small details that showed the pride
of the company—such as changing the logo daily—eventually
translated into major brand differentiators.
The CTO serves as
the fusion point person and is required to give structure and form
to wispy ideas collected from both the business side and the technical
side. The business side expects concrete outputs that can be used in
business planning, such as understandable functionality, risk assessments,
and realistic time lines. The technical staff expects concrete specifications
that can be transformed into products. It is up to the CTO to align
technical reality with marketing dreams and financial commitments.
The CTO should be
someone who is comfortable spending a significant fraction of time
apart not working on gritty technical issues. So what does a CTO spend
time on? First, there’s the business side. Business people often
will not take care of the business side, so the CTO almost invariably
has to step in. It may be useful to think of the business side as an
input/output pipe; it never produces deliverables, it only transforms
them. The CTO will have to feed the pipe. Thus the CTO will be sidetracked
into financial, legal, customer service, human resources, and sales
and marketing efforts—and even into doing favors, such as reviewing
unrelated investments in other companies for your venture capitalists.
I and other CTOs
I know have found that the CTO is often expected to be the ultimate
provider of answers to questions on why your product is better than
the competition’s. Market research is a major part of the CTO’s
province. In most start-ups, the CTO is expected to perform this research
during those hours previously wasted sleeping. Some words of warning:
always check your writing before sending out a report; your words will
end up verbatim in marketing materials as “technical jargon.”
The second major
thing the CTO will spend time on is ensuring that the technical staff
actually works toward developing a product that fits the business needs
of the company. I once found near-disastrous mismatches between the
code of two developers that showed they had harbored unrecognized,
fundamental disagreements about the direction of the company’s
product—and had done so for months. This happened despite freely
distributed written strategic and functional plans, frequent meetings,
and a shared office. The only solution to this kind of confusion is
for the CTO to spend substantial time with each technical staff member,
and to ceaselessly reiterate and enforce his or her vision of the final
The best start-up
CTOs I have seen have a gift for putting together a strong, consistent
story that intertwines the product technology with the business plan.
A wise executive once said that his wisdom came when he realized that
his entry-level programmer, coding late at night on the core product,
was making decisions as critical to determining the ultimate capabilities
and market of his product as his best strategic plans. A good CTO’s
story is the thread that guides everyone—from entry-level programmer
on up—to develop the envisioned product, even when explicit specifications
Given little more
than some ideas and a blank piece of paper, true CTOs have the ability
to “see” a new product in all its technical detail. When
you meet one of the great ones, it can be humbling: primed with a few
suggestions, they will describe solutions as complete and detailed
as if they were simply reading from a book. This ability is rare. Some
otherwise excellent technical people crack when their livelihood finally
depends on distilling a complete product from nothing. That said, I
have not seen either of the core CTO gifts in anyone who was not also
highly technically proficient in some area.
A note if you are
considering being a CTO: realism is the last CTO requirement. In a
start-up, most young CTOs for reasons of cost and pride include themselves
in their engineering and development head count, taking on complete
engineering tasks critical to product development. This overload can
be fatal to long-term coherence as team members and other divisions
drift while you are holed up in your cubicle trying to meet your personal
deadlines. As CTO, your primary technical task should be to retain
control over the core technical direction and to do planning and specification.
Especially in the
early stages, the grand vision is probably only in your head. If this
vision is not expressed in the core design and base implementation,
it never will be, and you will pay dearly as long as the company exists.
I strongly advocate for the CTO’s participation in actively working
on the product, but be aware of and manage your true priority. And
never jeopardize the whole by continually doing someone else’s
work as well as your own—fire the cretin and get real help.
What should the
CEO expect from the CTO, and vice versa?
The CEO is responsible
for delivering resources to the CTO, but the CEO should also tailor
the company’s commitments so that the CTO can deliver the products
with the given resources. The CTO, in turn, is responsible for delivering
products to the CEO that support the business plan, reliably and according
to the planned schedule. The CEO and CTO should jointly balance short-
and long-term considerations. The worst position for a start-up company
to be in is when the CTO misses one delivery after another while the
CEO frantically flails around inventing ad hoc products and assuming
absurd customer commitments in hopes of landing a whale of a sale.
Here, then, is the
lesson for any potential CEO: the biggest mistake a CEO can make is
to work independently of, or ignore, the CTO. That mistake can hurt
any company, but it’s fatal to a tech start-up. A CEO with a
sales and marketing background, who is typically less interested in
how the product is built, will be tempted to downplay and shortchange
functionality that is not visible to the customer.
A good CEO, however,
understands and accepts that the company cannot grow faster than the
underlying technology of the product. A CEO should never place a company
in a position that requires the CTO to produce miracles to save the
company. Though this may be tempting if the CTO has a history of doing
so, miracle production is not sustainable over the long run.
the corollary for any potential CTO: the biggest mistake a CTO can
make is to work independently of, or ignore, the CEO. Especially if
you are a cofounder, with control of the board, it will be a temptation
to obey a hired CEO’s orders only selectively. Good companies
simply do not function that way. A good CEO will and should exercise
full executive power. At a minimum, the CEO will select the people
who work with you and directly or indirectly determine the flow of
deliverables, commitments, and corresponding authority. Poor decisions
on the latter will become your responsibility, whether you deign to
answer the CEO’s phone calls or not.
A further note to
the potential CTO: in most companies, the technical staff do not control
the company. The CEO will be your boss. Unfortunately, especially in
Western companies, there is still a degree of condescension by the
MBAs to the technical side, and “techies” are considered
to be interchangeable. If you’re the CTO of a company in which
the CEO and board fundamentally do not respect technical staff or cannot
differentiate between an application programmer and an HTML developer,
get out. Your staff will hold you responsible for not garnering them
respect and giving them a voice, and you will find that you will never
truly gain their trust. At the worst possible time, you will be forced
to replace functioning staff with inferior staff willing to work on
As a CTO, you should
also be able to depend on some understanding by the CEO of the technology
and its strengths and limitations. The CTO cannot write down or explain
every item or contingency. In tech companies, there is the well-known
concept of “mechanic’s feel,” an innate understanding
of the technologies of a business that cannot be acquired or communicated
by meetings, reports, or plans. If a CEO does not have sufficient technical “feel” to
know when projects are going well—despite scary issues—or
when projects are going badly—despite great reports and lovely
PowerPoint slides—then the company will not work.
Likewise, the CEO
should expect the CTO to be able to go on a sales call, to reproduce
the basic outlines of the financial or marketing plans, and to respect
the customers. For the CTO who ignores basic business issues, a rapid
graceful exit to a technical lead position (such as heading up a special
projects team) is strongly advised.
Finally, if you’re
considering a CTO job at a start-up, make sure that the other managers
are brighter than you. If not, walk away. The hard reality of the start-up
marketplace is that only 5 percent of companies succeed. Take an especially
good look at your potential CEO: is he or she able to measure up to
be the top one in 20? And don’t be swayed by an apparently great
product. What the company produces is irrelevant if the CEO is not
worth his or her salt. Why not be a light bulb surrounded by stars?
You will get all the benefits and none of the heartburn.
About the Author
Frans M. Coetzee
received a Ph.D. in electrical engineering in 1995 from Carnegie Mellon
University in Pittsburgh. In 2000, after stints as a researcher at
Siemens and NEC, he cofounded Certus International SA, a security software
company, which was later acquired by GenuOne Inc. He served as CTO
for both companies through August 2003 and is currently a key advisor
and board member of GenuOne, which makes supply chain security products.