Technical Co-Founder or CTO: Which Should You Hire?
Is your business looking to build a web app and needs someone with development expertise to hop on board? Are you beginning your own startup and looking for a tech expert to help you build the app you have in mind?
If you're finding yourself in either of these situations, you're likely faced with the question of whether you should pair up with a technical co-founder or hire a CTO.
While both of these positions have relatively similar day-to-day duties, particularly at the beginning, they differ in their investment in the idea, their stake in the company, and more.
So, which one is right for you? Let's look at what you need to know about technical co-founders and CTOs and examine some alternative options.
What Is a Technical Co-Founder?
A technical co-founder is someone that is there from the very start of a project. This is often somebody you already know– someone just as invested in the idea of the app or project as you are. In the same way you spend your free time thinking about all of the different aspects of how to turn your idea into a reality, your minds are churning away considering all of the different avenues and potentials of the app.
Maybe this is a person you went to college with or worked with closely in the past. This is a person that you have a relationship with that goes way back, where you already have a deep understanding of what it will mean to work with them and how trustworthy they are. You don't expect to be surprised by what the actual experience of working with them on a day-to-day basis will be like.
Since a technical co-founder is someone that has put time, energy, and effort into the project since day one (or one of the days shortly thereafter,) they typically get a large portion of the company. This doesn't necessarily need to be a 50-50 split, but a division that feels fair to both parties is essential to avoid numerous problems down the road.
Essentially, a technical co-founder is simply one of the co-founders of a company that has expertise in building software and the technological aspects of the company. While you might be more of a visionary and a marketing guru, your technical co-founder is the whiz kid that is able to piece the nuts and bolts together.
Are you searching for a SaaS developer that is passionate and talented? This article goes over eight ways you can spot a high-quality SaaS developer to join your project.
What Is a CTO?
While chief technology (or technical) officer might sound very similar to the title of technical co-founder, they actually have a number of notable and important differences.
One of the primary differences is when a CTO joins the company. While a technical co-founder has been there since you started scratching the initial idea out on paper, a CTO is someone you search for once you already have a fully formed idea in hand. At this point, you know what you want to do and are simply looking for someone that has the necessary skills to make it happen.
While they don't hop aboard as early as a technical co-founder, a CTO is generally one of the first employees you hire, if not the very first.
Since the CTO is someone you are hiring rather than a co-founder, they will usually have a much smaller stake in the company. Though they often have a good-sized option grant, they usually aren't anywhere near equal owners in the business as you are.
A CTO is usually given a salary of some kind, but this might be below market rates because of their stake in the company. They also aren't necessarily a person that you already have a long-standing relationship with, and they usually aren't on the board in the way a technical co-founder would be.
On the other hand, there are some very strong similarities between the two roles when you actually look at their day-to-day responsibilities.
CTOs and technical co-founders help provide strategic thinking, are responsible for hiring and managing a growing team, are responsible for building the product, and are highly invested in the company's success.
If you're building a web app for your company, deciding whether to pair up with a technical co-founder or hire a CTO is only one of the many decisions you'll have to make about how to create a sleek and functional digital product out of your idea. Check out these articles to learn about whether you need both a front-end developer and a UI developer, the best online coding interview tools to use in screening, and how many developers you need to build a web app.
Understanding the Difference Between Startup CTOs and CTOs at Larger Companies
CTO is a job title that is held at tiny startups and enormous corporations, and it's worth understanding that these are pretty different jobs in practice.
For example, a large company CTO is an executive dealing with budgets, people, and policies. They aren't banging away at the keyboard, writing code until the wee hours of the morning.
In startups, though, CTOs are often responsible for a large chunk of the technical duties at the company, just like a technical co-founder in a new, small company. At the same time, you definitely don't need to hire a CTO simply because you are looking for someone to code an app for you. As we'll discuss later on in the article, there are other ways to produce a digital product without hiring a salaried employee or giving away a huge chunk of your equity.
Do I Need a Technical Co-Founder or a CTO?
The answer to this question depends on a number of different factors specific to your startup.
The first question you'll want to ask has to do with what stage you are at in idea development. Did you just come up with this idea yesterday on your daily run, or have you developed a concept that you're simply ready to press on?
If this is a brand-new concept and you feel like you need technical guidance to move forward, you might consider bringing on a technical co-founder. However, depending on your personal network, you may or may not feel that you already know a good candidate.
Even if you do have a shortlist of people that seem like they could be good fits for the role of a technical co-founder, it's important to recognize just how much of a commitment this can be for someone. Your college buddy might have a bit too much on his plate to take on being the partial owner of a company, or they might not be able to see the vision that you have for the app in a way that impacts their ability to be fully invested.
There are some major potential pitfalls that you'll want to consider before bringing on a technical co-founder that you don't have a long-standing relationship with. One of the most glaring issues is that this individual will have an ownership stake in the company, and you'll want to think carefully about whether that's something you want to hand off to someone you've only recently met.
A CTO is likely the better option if the idea is well-developed and you're looking for someone to help build your app. They won't have an ownership stake in the company, but they will still have the motivation to help the startup succeed.
You'll also want to think about what skill sets are needed for your app project to come to life. Are they something that you could invest in learning, or is it necessary for you to enlist some help? How complex is your concept, and will you need to put together a larger team to make it a reality?
What Are the Alternatives to Hiring a CTO or Partnering With a Technical Co-Founder?
At the same time, it's possible that you don't need a technical co-founder or a CTO at all. The reality is that both a technical co-founder and a CTO are expensive team members to bring aboard. CTOs require a salary and likely a share of the company, while a technical co-founder who has been there from the beginning will probably want a sizable amount of the equity to make it worth their time.
Hire Freelancers
It can be hard to find the right person to play the role of CTO or technical co-founder for your business, but there are lots of freelance developers out there for hire. When you hire freelancers, it means that you don't have to give up valuable equity and also don't have to deal with the expense and burden of having full-time employees.
Of course, there are some potential risks and drawbacks to going this route. Hiring freelancers online can be a bit of a gamble, meaning you could luck out and piece together an all-star team, or you could be running into endless obstacles and issues along the way.
You can even outsource executive tasks to freelancers, which is often cheaper than hiring staff members. Slack, for example, outsourced a big chunk of its design work when it was first starting out.
The reality is, though, that many freelancers are going to be less visionary and more transactional. They can often help you build a very specific product if you are able to communicate what you are looking for, but they typically won't offer a lot of strategic insight. At the end of the day, the quality of the product will likely reflect the quality and clarity of the instructions you give.
Additional issues with hiring freelancers include communicating with people in different time zones, needing to switch developers mid-project, and projects becoming unnecessarily stalled without much recourse.
Hire an In-House Team
Another option is to build an in-house team of developers for your tech needs. If you're not looking for an executive-level tech officer to manage the people that develop your code or you're struggling to find a CTO that meets your needs and your budget, you might consider bringing on some full-time developers.
Benefits of going this route include tightening feedback loops, making communication easier, and maintaining a lean team. At the same time, there are some downsides. It can be a huge time suck to manage employees, and many expenses go along with hiring employees (insurance, equipment, salary, benefits, etc.)
It can be a huge investment to recruit and train a team of people to build your product for you. Though finding talented developers might be easier than finding affordable and skilled CTOs, you'll want to weigh out the benefits versus the costs before choosing to build an in-house team.
Hire an Experienced Software Development Company
Another option you have that avoids the expense of hiring a CTO or partnering with a co-founder is to hire an experienced software development company. This way, you don't have to worry about giving away a stake in your company or dealing with the costs of hiring a salaried employee. It also means that you can maintain full control of your idea, which can be a major benefit when you clearly understand what you're looking for in the final product.
At Planetary, we love working with startups of all sizes. Sure, we have plenty of experience working with Fortune 500 companies, but it's an absolute delight to help a small startup turn their idea into reality. As a distributed company, we are able to hire the absolute best of the best around the world.
Collectively, we have more than fifty years of experience and have completed more than one hundred projects for Fortune 500 companies, non-profits, small businesses, and startups. Our star-studded client list includes Amazon, Buzzfeed, Pepsi, American Express, and Univision– you can check out our portfolio here.
Rather than giving away half of your company to a technical co-founder or hiring a salaried CTO, why not partner with our team of designers, developers, and product experts? If you're intrigued by the proposition, drop us a line and tell us a bit about your project today.