Ep. #1019 - Why Founders Need A CTO

Matt Watson 00:00
And we’re back for another episode of the Startup Hustle. This is your host today, Matt Watson. Excited to be joined today by Mark Adler. We’re going to talk about why startups need a CTO. And, you know, I, myself, I’ve been a CTO basically for the last 20 years. So this is going to be a fun conversation today. Mark runs a business that works as a CTO as a Service, like a fractional CTO. It is kind of a new buzzword, I believe, these days. So really excited to talk about it. These days, we have fun topics. Before we get started, I do want to remind everybody that today’s episode of Startup Hustle is powered by FullScale.io. Hiring software developers is difficult. Full Scale can help you build a software team quickly and affordably. And has the platform to help you manage that team. Visit FullScale.io to learn more. Mark, welcome to the show, man. I’m so excited about this today.

Mark Adler 00:47
And thanks for reaching out to me. I’ve been reading your comments on LinkedIn. And it’s very, very insightful thoughts from you. So I’m really looking forward to having this great conversation.

Matt Watson 01:00
Yeah, you as well. Also, I mean, I randomly found you on LinkedIn, like, two weeks ago or something. So glad we’re here to do this. Before we get started, I guess once you tell us a bit about your background. You mentioned to me you’ve been working in and around software, all this stuff, for a very long time. Love to hear a little more about your background and understand where you’re coming from.

Mark Adler 01:20
Okay, great. So I’ll give you the petting tour here. I started off in the late 1980s. As one of the first Windows developers on Wall Street, I’ve been working with Windows since it was a beta product. So I worked for companies like Goldman Sachs and some other Wall Street companies. I left there to start my own business Magma Systems and developed a few products, which actually turned out to do really well. One was like this word processor, which was one of the top-selling word processors in the shareware market. But then, I went into a whole bunch of programming tools, sold the company, in probably the late 90s, went into consulting, and did stuff with dot.com. During the dot.com boom and the dot.com crash. Then I got a big break when I joined Citigroup in the mid-2000s. I joined as an architect in the equities division, and equities are basically trading stocks. And I got promoted eventually to Chief Architect, which is kind of the de facto CTO since we really didn’t have a CTO. I reported directly to the CIO, which is kind of a story of my life. I went over, and I got recruited from Citigroup to go to Citadel when Citadel was a very big hedge fund. And they were starting an investment bank. In the wake of all the other investment banks like Merrill Lynch and Bear Stearns, and Lehman Brothers going out of business, they started a new investment bank. They got me to head development. That investment bank didn’t last too long, and they closed it down. After two years, I did a whole bunch of consulting, including running it for the British Petroleum energy trading operation. Then had the fortune to become the chief architect of MetLife, the big insurance company. And left them after a few years to join startups and basically been Chief Architect and CTO for a number of larger and some smaller companies.

Matt Watson 03:37
Into that a lot of shit. That’s what you’re saying.

Mark Adler 03:38
A lot of stuff, a lot of stuff. But the thing is that it’s actually realized that CTO and chief architects work, right. So we can kind of get into this later about fractional CTOs and bonafide. But I’ve actually been a CTO and chief architect of some pretty large companies. So what, go ahead.

Matt Watson 04:06
So I mean, how would you define what a CTO is? So Chief Technology Officer, for those who are listening? How would you define the CTO and the importance of a CTO versus just being like a director of software development?

Mark Adler 04:19
Right, so a CTO means different things in different companies and so on. For instance, on my website, I have an article to say what is what chief architects do, and you can kind of sometimes equate chief architects with CTOs, and every company has a different definition of what they do. Some company CTO likes the most senior developer on a team. That’s usually the smaller companies. But for CTO, you have to be you’re really the interface between all of the technology teams and the CIOs and the executive. Sweet, right, so CTO is it executive suite visit physician. But you’re the one who is really in charge of taking everything that the CIO and the CEO want to do and transforming it into a technological vision and plans. So there is a lot of stuff. And then, of course, there are things around there like approving large budgets for projects, vetting third-party vendors, being a visionary, etc. But it’s really the person who is setting the technological direction for the whole company. You contrast that with somebody like a VP of engineering, which I consider to be a more tactical position, making sure the cloud infrastructure is correct, making sure the builds are correct to kind of come up with the software development lifecycle, methodology, things like that. But the CTO is really that interface that is in charge of the entire technical direction for either the entire company or a certain line of business when the key there is the CTO is an executive in the company, right?

Matt Watson 06:12
So you have a lot of companies that, if you’re a law firm, having a CTO may not make any sense. You might have a director of software development, but having a CTO may not be like a real strategic executive-level position, right? So it depends a lot on the industry, the size of the company, and all these kinds of things. But mostly, what we’re talking about are tech companies. And the CTO was like, really, really critical position. Who usually leads not just the technology, the software development, but sometimes even the product itself? Or is very, very involved in the product itself.

Mark Adler 06:49
Yes, exactly. Because you have to actually communicate with the chief product officer, right. So you have the chief product officer or the product managers that want to define the technical, what did you find the capabilities, and it’s up to you to talk to them to really map out the technical direction, whether things are feasible, and how much resources you’re going to need, how much budget you’re going to need, etc. So there’s a lot of ideas that people that the product officers will have, or the CIOs will have or the business will have. And it’s up to you to really harness all those resources and to tell people whether or not it’s feasible to choose the technology. If you don’t have the technology in-house, you have to go in and explore the different technologies, and you usually have to interface with the CTO or the CEO of potential partner companies. So yeah, you have to. You’re the one who is really, at the executive level. You’re the one who is really leading the direction for implementing all those ideas. It’s kind of not that different from me being involved with a startup where you have a founder that has lots of ideas, and why the founders and the founders need a CTO to be able to tell them if these ideas are doable and how.

Matt Watson 08:10
Yeah, so let’s talk about that. And I think that’s a common problem. You’ve got really smart people, they have industry knowledge about some specific thing, and they want to build some technology, and oh, shit about building technology. Right. And so sometimes they hire really expensive consultants, or offshore teams, or whatever. And they may sink, like, literally millions of dollars in building technology. And they don’t really know what they’re doing. But they just keep writing the checks, right? And what they’re missing is somebody like you or CTO that can help them understand. Does any of this make sense? And are we getting what we’re spending? You know, what we’re paying for?

Mark Adler 08:47
Yeah, exactly. I mean, I could tell you all sorts of horror stories about founders that I’ve met who have gone into projects and hired development companies and have come out with dismal results.

Matt Watson 09:02
So let’s hear one. I want to hear.

Mark Adler 09:06
I can give you a million of them. But here’s one like when I first started, CTO was a service. I had met a potential client who had an idea for some service that was centered around the whole voting and political domains. And she had the idea, and she hired an offshore development shop to implement her ideas. And she and the thing is she was not disciplined as far as creating a proper product requirements document for telling the developers exactly what they had to do. So after a few months, and after sinking many, many 1000s of dollars into this effort, she got back something that was totally non-functional. So she called me to see if I might be able to help her. So I said, Okay, maybe what I could do is look at your infrastructure and look at the source code and see how bad the job is. I said, Where’s your source code? And I said, What do you mean? I said, Well, you have to have it in some sort of repository, say, what is that? I said, have you done the names? Like if I say, GitHub or Bitbucket? Do those sound familiar at all? She says, No, I have no idea where this stuff is. I said, Well, can I look at your cloud infrastructure right now? Did you? Did you go and create your cloud infrastructure? No, they did it for me. I said, you have the passwords or credentials to anything that you’ve built in and said, No, I don’t. And so here’s an example. And I’ve met more than one founder who has gone down that same route. And because they’ve gotten into disputes with the development companies, they’ve never gotten their IP back. They put in 1000s of dollars to get something developed. And they can’t even get the keys to their own infrastructure or their own source code. And these are examples of non-technical founders who say I need to develop a product. Let me just throw my idea over the wall at some development company and hope that something good comes back. And what I say is that every single founder needs some kind of senior technology person at their side to represent their interests, right? It doesn’t have to always be a full-time CTO, but they need somebody on their side to make sure that the developers know what they’re doing, somebody to maybe do the architecture and set up the cloud infrastructure, somebody to help them solidify the product requirements, and all of the use cases, things like that. So there are a lot of non-technical founders who just don’t know how to do that. They’ve never heard of SDLC, the software development lifecycle. They’ve never heard of Project Management. All they do is throw an idea over the wall, chase it with some money, and hope that something good comes out. So this is why every non-technical founder should have a senior-level technical person at the side. And I say it’s a CTO because, as a CTO, you’re used to wearing multiple hats. You can run the development teams, you can do the architecture, you could do the cloud setup, you can examine the budget, you know, when somebody’s billing you eight hours for a very, very small change that that’s the code that took maybe five minutes, you can basically part of my friends and call bullshit on the development team. Right?

Matt Watson 13:15
And I said, absolutely bullshit, okay.

Mark Adler 13:19
And so you need somebody by your side, who was able to do that, and somebody who’s been in the CTO chair before, and has that wide variety of experience, can do that, as well.

Matt Watson 13:36
And the worst thing is you work with some sort of consulting company, contractors, whoever it is, and they do some sort of statement of work, like, oh, it’s going to cost $30,000- $50,000, or whatever it is. And then like, several months go by, and then they get something back. And it’s not what they wanted, either, right. And the problem with a lot of these people is they’re, they’re not involved in the process. Like, they’re not familiar with how to build software and agile methodologies and, and giving feedback to the team and all that kind of stuff. And it just falls apart very quickly.

Mark Adler 14:10
Right, exactly. And you do need somebody, a founder needs somebody to be able to manage that development team, oftentimes the offshore development company will have their own project manager that they’ll put on. Now sometimes it’s for free, most often they charge for it. But it’s like the fox guarding the henhouse. Yeah, as we say, right. And so, if you were a founder, and you dealt with a lot of times when you deal with a project manager from offshore companies, and you say, Well, how’s the development team doing? They’ll give you back a very, very rosy report. But you do need that person who’s at your side, representing you to say, hey, this, this task is taking three times longer than it should or this code that somebody just checked in, is really not not going to be good. Right, it’s going to fall down, it doesn’t have doesn’t have certain exception handling, logging, monitoring, things like that. Yeah. So you do need to. So if you want to get back something that can fall apart, at any time, then you know, then you don’t, you might, you might not need that CTO by your side. But you really, if you really want to get back something that’s quality work, I think that every non technical founder should have that CTO by their side, just to help them out. And it doesn’t have to be a full time CTO, you need somebody, maybe a few hours a week, two hours a week, three hours a week. And this is where the whole concept of being a fractional CTO or CTO as a service comes in.

Matt Watson 15:57
So at Full Scale, we love CTOs, of course. And I do want to remind everybody that finding experts, software developers doesn’t have to be difficult, especially when you visit FullScale.io, where you can build a software team quickly and affordably. Use the Full Scale platform to define your technical needs. And then see what developers are available to join your team visit FullScale.io to learn more. Now, what’s interesting about Full Scale, we’ve worked with over like 100 different clients over almost the last five years. And we don’t do project based work. So if somebody comes to us and says, How long is it going to take to build x, y and z, we said, we don’t know, nobody knows, nobody will literally ever know, it’s purely a guess. And we don’t even do that kind of work. Actually, we only do staff. So it’s like you have a team. And we’ll help add more developers to your team. And over the years, we have taken on some clients that are more like the ones you mentioned, they’re like, they don’t have any technical people on their team. And more often than not, those projects do not go well. And currently, we very rarely will take on one of those kinds of customers only if they have a really strong product owner that we feel comfortable working with. But we really prefer them to have somebody technical on their team, because it just, it just doesn’t go well. Like we don’t want them as a client either. Because we want them to have a positive experience. Right. And I think the challenge is another challenge that companies have. I’d love to get your feedback on potentially the person, somebody who has a CTO, they basically take a software developer, and give them the job title of CTO. And it could have been like the first developer they hired is the CTO, what kind of experiences have you had with that?

Mark Adler 17:36
So I do give up. So first of all, let me just say that one of the things that I aim for with my clients is that after several months of being a fractional CTO, I do encourage my clients to hire a full time CTO. And it could be one of those full time developers that they promote to the CTO title, but it’s up but I would be available to do mentoring and coaching to that person to kind of give them the benefits of my experience. So I think that I think that you, you really need to be very, very careful when taking a developer and giving them that CTO that CTO title. It’s, and I’ve seen examples, where I will go into a client, and they will have a couple of developers and they’ll say, okay, this person is the CTO, but that that person is really just a developer and will not know about all the things to look for in a certain project. So for instance, you might be a great no JS developer. But if you don’t know how to scale out a system so that it can handle many 1000s of concurrent requests, you don’t really know how to do a lot of the DevOps stuff. So you know, with the, and plus, you don’t know how to do some of the non technical stuff that you need, like analyzing budgets, coming up with projections, being the senior technological face when your founders meet with venture capitalists or private equity companies to get funding, right. So there’s a big difference in having a senior developer or promoting a senior developer to be the CTO and actually having somebody for who’s who’s who’s had 30 years of experience doing this. I’m not sure if that answers your question.

Matt Watson 19:55
Well, you know, you mentioned being a Chief Architect before. So, how do you describe a Chief Architect versus a CTO?

Mark Adler 20:05
Okay, so the chief architect, and again, it depends on the kinds of companies you’re with. So in a lot of the companies I’ve been with, as chief architect, I reported directly to the C, CIO, the Chief Information Officer. So I have been the de facto, see the de facto CTO, but what I would say, the main difference between a chief Enterprise Architect and a CTO is that the chief Enterprise Architect is responsible for setting a lot of the standards in the company. So sometimes the architect will actually do the solution architecture, but a lot of it is for setting standards, we also do other jobs, like, like, look for end of life software, etc. But a lot of times, depending on the company, the chief architect position will overlap a lot with the CTO position.

Matt Watson 21:13
Well, and that’s the reason I ask and I do a quick Google search here. It says one thing to consider is Chief Architect is not necessarily a C level position, either it’s a head of arc, head of Enterprise Architecture type role, which is that a fair statement? Or you think Google’s off on this one?

Mark Adler 21:29
No, no, no, that that is that that is? And also, you know, you could have chief architects at the enterprise level at the entire company level, and you have chief architects that are domain specific or line of business architects, right. So you know, so Yes, Chief Chief Architect, is usually not the executive level. And in fact, a company could have multiple chief architects, it all depends on how the entire architecture organization is scheduled, but it is an interesting story. So I’ll give you, I’ll give you some interesting and interesting story here from from some of the companies I’ve worked with, is some of the companies have this chief architect, somebody who might sit in a remote office, who, who kind of looks over the entire business, but you have the line of business architects who know about how that particular line of business is supposed to be run. And there’s often a lot of tension or conflicts between the line of business chief architect, and the enterprise Chief Architect, because the enterprise Chief Architect usually does not know each line of business and what each line of business needs. So. So usually, in these kinds of situations, the line of business chief architect has precedence over the enterprise Chief Architect. Right, well, so go ahead.

Matt Watson 23:10
So let me get back to where we’re talking about earlier. So I think one of the struggles you have with these young startups is they take a really smart person and or smart developer on the team. They’re like, Oh, you’re our new co founders, CTO, or whatever. But they really don’t have the background and experience as a CTO, right? They’re just really good coders, really developers, maybe really good software architects. And I think part of my point was going back to this, maybe they are the chief architect, but they’re not really the Chief Technology Officer. And I think in a lot of companies, what I’ve seen is like the CTO can be like, they could be like, the most gifted, smartest software developer there is they, they’re really good. But they’re terrible at managing people and processes, right? So it’s like they hire a VP of engineering, or somebody who really runs the organization. And the CTO is kind of the mad scientist in the lab. Right? And have you seen that a few times?

Mark Adler 24:05
Oh, definitely, definitely. So again, it depends on the kind of company you’re with. But I have seen organizations where the CTO is an individual contributor. Yeah. Right. So they Yeah, they won’t really manage the teams, but they’ll be the ones who are the visionaries, who will do the explorations of doing the math. Right. It’s exactly exactly and and this is a but the thing is, sometimes this is also what the chief architect does. So this is why I say that the line sometimes between Chief Architect and CTOs can be blurred a little bit. And in fact, most companies don’t even have chief architects, right? Yeah, they have maybe individual, individual solution architects that are attached to each team and that It could also be the purview of the CTO is that the CTO also has the ability to reorganize a technological organization in the way that they see fit. So maybe the CTO does not want a chief architect in there, maybe they just want a domain architect attached to every single development team. You know, one of the things also about the CTO position that said, is that it’s an ivory tower position. I don’t know if you’ve ever heard that. But that, so I call them yellow pad architects. And I’ve written about this before. And so when I was chief architect, I was extremely technical, I would not only do the architecture, I would often love to get in and do some coding, sometimes I would code POCs proof of concepts, or sometimes I wouldn’t, I would start coding some some enterprise class system that would be in production. A yellow pad architect is what I consider certain architects to be who just kind of run around with the yellow pads, right? To say, go to each team, Hey, are you checking the boxes here? Are you making sure that you’re using software that’s been approved? Are you making sure that everything is kind of adhering to standards, but those architects often do not code, they do not do technical architecture, right, so. So I’ve met CTOs who are just basically glorified project managers. I’ve met CTOs who are amazingly technical. They’re the top top technical talent in a company. And I’ve met chief architects or CTOs, that are basically these yellow pad ivory tower people. So it does depend on on the company, it’s not like, you know, the CTO was not like being a senior developer, where the task is, hey, develop this piece of code in this language and come up with a workable thing at the end, at the end of the day, a CTO or Chief Architect, depending on what company you’re with, can encompass a huge broad range of responsibilities, some of which overlap?

Matt Watson 27:14
Well, and let’s, I think, want to talk about some more of those. He talked about a young startup, you have a founder, a really young team that needs a CTO, and I think another reason they need a CTO is all the other crap we have to deal with today that has to do with security, compliance, all these other things. It’s not just about writing code, right?

Mark Adler 27:35
Exactly. So as a CTO, so for myself, as a CTO, I know a lot about the different technical domains where I can help, like I said, I can go in and design and set up an entire cloud architecture on a couple of different platforms, I can do architectures for simple or distributed systems, I can do the security around there, I can do some of the DevOps around there, I can do monitoring and, and do. And I’m responsible for the scalability designs for the scalability and the reliability of a system. And so yes, that’s stuff that I, as a CTO as my type of CTO could do, not every CTO that you find out there, could do that not even every fractional CTO right out there could do that you have some fractional CTOs out there, who are, as I said, maybe senior project managers who will just kind of dip a couple of toes into the, into the technical realm. So I am that kind of fractional CTO that really does do all this, you know, I try to do all the stuff now if I can’t do everything, I try to find specialists who can do that. So for instance, I am not a machine learning expert, but I can call on some domain experts in machine learning who I could make part of our virtual team for a while, I can call on some security experts to do that also. Right. So it depends, or and sometimes, it depends on the type of offshore. If you’re going offshore, it depends on the type of offshore consultancy you’re going to use for writing your code, because some of these consultancies will provide you with this kind of short term talent also.

Matt Watson 29:32
So what other kind of tips do you have out there for founders that are thinking about man, I need a CTO? Should I hire somebody? Should I do fractions? Why’d it? Why should I hire them? What other kinds of tips do you have for him?

Mark Adler 29:45
Okay, so if you want a true CTO, somebody who is technical in nature, and can also help you get all your product requirements together, all that stuff at and somebody who has enough what I call gravitas to be able to meet VCs and other kinds of funding mechanisms to convince to convince them that you have senior representation, Senior Technical representation on your side, I would, I would say that you that you do need this type of person. But there is not enough of this talent to go around for a number of the founders there are out there with ideas. So for instance, I get pitched constantly by founders who want me to join them. But there’s just, you know, there’s not enough of these technical people to go around. So what a founder should say is that, you don’t need a full time CTO, they don’t need to pay a large salary to a CTO who will be with him eight hours a day, 40 hours a week, and help them in this process. You just need somebody a few hours a week, and that way, it’s affordable, but you don’t have to pay benefits. You don’t have to just pay to tie up your capital with large salaries, I would say that if you were just to consider a fractional CTO for a couple of hours a week, the help that you get would be immense. And it would be only a small part of your budget.

Matt Watson 31:35
So by the way, what are you based on? I’m curious what your opinion is, what do you think it costs to hire a full time CTO these days? What do you think of margaritas?

Mark Adler 31:45
Alright, so if you are, okay, so full time, full time CTO for a startup you’re talking about? And I’m not talking about any kind of equity compensation, equity based compensation, you’re looking at probably at least $250,000. Okay. Right.

Matt Watson 32:04
And most of them are probably expecting some form of equity as well.

Mark Adler 32:08
Some of them are: it depends, right? You know, cash is king. So you know, you might, so if you’re paying somebody more, maybe you can get away with less equity. And of course, it depends on the geographical location, the number of years of experience, etc. But you’re not, you’re looking at paying at least $250,000 per year.

Matt Watson 32:31
Well, as we round out this episode, I do want to remind everybody that if you need to hire software engineers, testers or leaders Full Scale can help we have the people on the platform to help you build and manage a team of experts. When you visit FullScale.io. All you need to do is answer a few questions on our platform matchup to fully vetted highly experienced senior software developers. At Full Scale, we specialize in building a long term team that works only for you to learn more when you visit Full Scale.io. Well, it sounds like to me, you know, you’re you know, this podcast is for entrepreneurs, you’re, you’ve done a lot of things, obviously, in your career, but it’s like, even even now, you’re still an entrepreneur as a fractional CTO.

Mark Adler 33:08
It gets the juices running, right? It’s, you know, it’s really an incredible thing to do. Why do I say that? You learn different domains. Since I’ve been doing CTOs a service. I’ve had clients in the EdTech space. I’ve had clients in healthcare, I’ve had clients in real estate. I’ve had clients in all sorts of wellness and financial domains. And the amount of stuff that you learn right now is incredible, you know, you just round out your knowledge for all these different domains. So for instance, one of my current clients is somebody who helps farmers in South America, but with the whole supply chain for coffee, right? So from, from farming, to roasting to distribution, whatever, and I’m learning new stuff about coffee.

Matt Watson 34:04
They largely have all the same sort of technical problems.

Mark Adler 34:08
They do. Right? They are all present. Yeah, I mean, a lot of the technical problems boiled down to matching, right, there are consumers who need something. There are producers who provide something and you match up the services, right. So you’ll find that a lot of those problems are reduced to that, but they all need to have apps developed. They all need cloud-based infrastructure. They all need code written. They all need their stuff tested and monitored and scaled and whatever. So yeah, from a technical standpoint, everybody does have those kinds of common needs.

Matt Watson 34:53
All right, well, as we round out the show here, any final other tips for founders that are listening to the show today?

Mark Adler 34:59
I would say that you just think twice about going into these ventures without somebody who’s tactical by your side because it could be that your product turns out right. But you won’t know if you are charged the proper amount of money. You won’t know if your architecture or code is scalable and resilient. And you’re just being very careful if you decide to go into writing and implementing a product by yourself by using developers. Just make sure you have somebody by your side to give you advice. It doesn’t have to be a secret. But just somebody who’s technical, who knows his stuff, just to give you advice.

Matt Watson 35:49
For the record, I would start a law firm without a lawyer or a dentist practice without a dentist on my team, either. So a software company without a founder or co-founder that has the technical background or having somebody on your team that knows what they’re doing is not a good formula for success.

Mark Adler 36:07
Exactly. But there are founders who want to go that way because they’ve never heard of a fractional CTO. They think that in order to hire somebody technical, they’re going to have to spend $250,000–$300,000 to get themselves a full-time CTO. A fractional CTO can be had for so little compared to what you have a full-time person for and compared to the level of mistakes you could make without it.

Matt Watson 36:33
Exactly. You got it. Well, once again, everybody. This was Mark Adler. His website is ctoasaservice.org. By the way, you can find him on LinkedIn, and he might be a very busy guy. You have time, Mark. Everybody needs your help.

Mark Adler 36:56
I do, you know, what I love, even if it’s just a chat. I love to talk to people. I’ve learned a lot. I love to talk to people. And if you are interested in me, the first-hour conversation is a freebie. So feel free to contact me.

Matt Watson 37:12
I’m also available for these interesting conversations. I love having them, so I don’t have the time to be a fractional CTO. But I love talking about technology and love having you on the show today. So thank you so much, Mark.

Mark Adler 37:25
Thank you for reaching out. It was a true pleasure. All right.