Thursday, August 15, 2019

Fractional CTO

Since the early 1990s, I’ve been a part of 50+ startup companies in various roles, and have informally advised 100s of other startups.  Through these experiences, I’ve become increasingly convinced that early to mid-stage companies need to stop being locked into full-time executive hires (especially CTOs) and in most cases use fractional hires and/or advisors.

Almost all software-enabled startups do not require a full-time CTO, and their CEO should be using a fractional CTO and/or technical advisors.

I get at least one email each week from startup CEOs who are looking for a CTO. Well, let me be more specific – startup CEOs have varied specific situations, but the two most common are:
  • I’m just beginning, and I need to find a CTO to build my MVP and to help me get investment.
  • I hired (or partnered with) a CTO to build my early versions, and I need help because the technology is a mess.
Take a look at these two common situations. What do you notice? They are the before and after picture for a lot of startup CEOs who didn’t have the right people involved. The CEO who starts out looking to hire a CTO to build their MVP often turns into the startup CEO with a technology mess. Why is that?

A full-time CTO in an early-stage company?

To start to answer this, let me take you back to one of my early experiences.  I was an early hire at a couple of software startups in a senior software role.  While my title implied executive, the reality was that there was some early strategy work but then I was quickly spending all my time being a team lead and coding.  I was really good at both leading developers and coding, but my passion was the strategy. Within a month of being hired, my time was roughly 10% strategy and 90% development. 

What do I mean when I say strategy? It’s answering the following kinds of questions:
  • What should we build to get the biggest bang for the buck?
  • How much will it cost to build what we need to build?  How can I control costs, but effectively get stuff developed?
  • How can we phase development to balance cost, features, risk, etc?
  • Given likely market changes, how will we design and build so that the systems can respond to marketplace changes?
  • What technologies will we use?  What existing systems will we leverage, what programming languages, software development methodologies, web application frameworks, revision control systems, etc.?
  • Other integrations?  Security?  Scalability? 
  • Who will build it?  An in-house team?  Or will we outsource?
There are many more of these questions that you can find in Startup CTO or Developer.  

These strategy questions are critical to ask if you want to find good answers.  When I first started each of those roles, I needed to spend time upfront getting the right answers to strategic questions.  But once you start to get those answers, the bulk of the time (and money) needs to be spent on getting things built. 

In talking with a lot of fellow CTOs, they’ve had the same experience in early-stage companies.  Simply put, early-stage companies don’t have a full-time CTO role. Instead, they have need for getting good answers to these strategic questions, and then they need a team lead and hands-on coder, and perhaps some number of other resources.

Before and After Mess

So let me go back to the before and after picture for the startup CEOs:
  • Before: I’m just beginning, and I need to find a CTO to build my MVP and to help me get investment.
  • After: I hired a CTO to build my early versions, and I need help because the technology is a mess.
The startup CEO who doesn’t get help from someone like me, and is going around saying they need to “find a CTO,” is looking to find an individual who is going to do strategy work (hence the CTO title) but is also going to be the team lead/developer.  The reality is that the CEO will be unlikely to get any CTO who has good strategy skills who will also be willing to sign up to be the team lead/developer. Instead, they are highly likely to find someone who is mainly focused on development, and they will be given a title (CTO) that implies strategy knowledge and skills that they don’t have.  What happens?
Look at the “After” picture.  Even if you are lucky and are able to find a developer who has good team lead and development skills, because of the lack of strategy, very likely what will be built is the wrong product, technology, and team.  You are left with a “technology mess,” and will start to hear a lot about technical debt and refactoring. New technical people will talk about re-architecting or even rebuilding.

Where did these CEOs go wrong?  They asked the wrong question at the very start.  And it’s not at all obvious, because you ARE looking to find a CTO.  It’s just not a full-time CTO – it’s a Fractional CTO and maybe a technical advisor or two.

How Does the Fractional CTO role work?

Let me go back to my personal journey.  So it’s the midst of the dot-com boom (later to be known as the “dot-com bubble”).  I’ve been in a CTO role at a couple early stage companies that turned out to really be a team lead/developer role.  I’m meeting lots of startup founders who have some funding and really “need to find a CTO.” So, in 1997, I decided to shift gears and agreed to be a fractional CTO for 3 startup founders.  I would do the strategy work - ask and find answers to the key questions. Then I would get the right team, technology and process in place. Basically, I am agreeing to be the CTO of all 3 of these startups, but at the same time.  

Of course, to be more accurate, the work I did was staggered out.  The biggest chunk of work as a fractional CTO is at the start, and then it settles down.  Even with them staggered, there were some fun challenges for each. One company was an event photography business that was transitioning to delivering services online; another was an art archive software becoming a internet-enabled SaaS company.  These presented some interesting strategic challenges, especially back in those days.

In each case, it worked well to be a fractional CTO.  I would make sure we were building the right product and define the technology strategy.  I would figure out and help find the in-house/outsourced teams. Then I’d work with them to make sure we were building the software well, and work with the rest of the business to iterate and adjust.  Really, it’s what you would want from a CTO. But rather than a full-time CTO, I was doing this on a part-time basis.

When does the fractional CTO role end?  It varies based on the company. With eHarmony, I was the fractional CTO from concept through to when they raised $110M - a period of four years.  It didn’t make sense for eHarmony to have a full-time, in-house CTO during that period of time. Once they raised $110M, then it made sense for them to have a full-time CTO and in-house development team.  Until then, they needed to prove key metrics and keep burn low.

The other common scenario is thinning down the role based on growing in-house talent or bringing in the right person who can bridge VPE and CTO needs.  Sometimes I will take on a small consulting role to help the VPE and CEO in an on-going basis, but I won’t need to spend many hours. When this can be an in-house resource, I always feel an extra bit of pride for a successful collaboration with them to reach that state.

Review and Turnaround Fractional CTO

Over the years, my Fractional CTO roles have been increasingly when organizations have an existing tech team and and some technology challenges.  The executive team sees the product is struggling with bugs or performance, the tech team isn’t producing at the needed rate, and they are missing lots of deadlines.  Basically some variation of “I feel like we should be doing better.” 

It’s generally a business executive who calls me, and they often start by saying they don’t really know the cause of the issues, but they also have lost confidence that the tech team can solve it on their own.  

This situation sometimes occurs because early in the life of a startup, the bulk of the work is development - so it’s natural to hire or outsource for development.  Often you are bringing on relatively more junior resources. And they are optimizing to get product shipped quickly. You said MVP right? It’s minimum long-term architecture in most cases.  Unfortunately, the same relatively junior resources are going to be challenged when it comes time to somehow get from a messy, fast moving initial period into a more stable state that will support customers.  These are some of the hardest challenges. The plane needs to keep flying and we need to change a wing. Quite often the current resources are a great part of the longer-term picture, but they lack some of the skills now required of them.  

One of my favorite parts of being a fractional CTO is the opportunity to work with up-and-coming talent to help them learn and adapt to the new skills required as the organization and tech transitions.  Many of us technical people grew up from individual contributor to various management positions, but just have not been given much help in growing our skills and knowledge along the way.  

So as I come into a new organization, I’m working closely with the business and team to determine what the team composition needs to be, where there are gaps, what new team members are needed.  For existing team members, I enjoy rolling up my sleeves and spending time coaching and developing. For places where we need additional talent, I define positions and collaborate on recruiting, onboarding, and retention techniques. 

Interim Fractional CTO

In this case, a CEO will call because they just got 2-week notice from their CTO or plan to let them go very soon. It seems to be coming up more often recently, and it’s a slight variation of the turnaround situation.  There’s an immediate gap created in the organization. Overall the technology team seems to be doing okay, but we don’t want to lose momentum. Maybe there’s someone who is a possible internal candidate, but who lacks some skills.  There’s a question of whether that person can fill the senior-most role. Or if there’s no one internally, a fractional CTO is a great way to bridge the gap to the new CTO. 

Of course, once you get into the specific situation, there are often more issues to figure out.  Quite often, the CTO leaving or getting let go is an indicator of other problems. So while you hope that an interim situation will mostly be maintaining the current situation, sometimes there are turnaround aspects.  At a minimum, there’s need for defining the new CTO role, helping with recruiting, and making sure the team stays focused in the interim.  

Getting Started with a Fractional CTO

As a CEO, it can be a little bit intimidating to get going with a Fractional CTO.  What does the organization actually need? Is this person qualified to do the job? How will they be working with the existing/new team?  What will it be like working with them?

Let’s go through what my initial process looks like and then come back to these questions.  Typically, I’m introduced to a CEO through a fellow-CEO (often past clients) or via investors.  We have a couple of initial conversations to assess the situation together.

If it’s a brand new product build, then the questions I have are pretty much in: Free Startup CTO Consulting Sessions. I want to know about the business, product, budget, key milestones, etc.  

If it’s not a new product build, then I’ll still want to know those things, but I’ll also ask about:
  • Key pain points for the organization
  • Key technical team leaders/members. Who will I be primarily working with? Are they aware of the concern and that you are looking for help? This is often a great first conversation.
  • Existing and planned technical team shape and composition
  • Product leadership
From this information, I’ll be able to formulate a picture of what the organization needs.  In some cases, I will talk to a CEO and realize that it’s just not very clear. In that case, I may need to have an initial meeting with a couple key players.  Even this next week I’ve got meetings to a CTO and CPO that’s exactly that kind of situation. But most of the time, I have a fairly clear picture of what it would look like for me to take on the Fractional CTO role.  If there’s a deeper initial technical review required, I’ll know that as well and likely will suggest some resources to help with that.

From there, I will write up the initial and on-going process and work effort, will size it, and then will provide an estimate.  There’s almost always more upfront cost as I get up to speed and then it thins out over time. But my philosophy is not to ever have surprises around cost, so I’m clear on it.  And as a Fractional CTO, my costs will be a fraction of the cost of a full-time CTO, freeing up budget for individual contributors who are the real engine of a technical team.

Let’s go back to the challenges that the CEO is facing as they look at potential fractional CTOs:
  • What does the organization actually need?
  • Is this person qualified to do the job?
  • How will they be working with the existing/new team?
  • What will it be like working with them?
For each of these questions, the CEO should be able to get answers through our initial conversations.  We get pretty deep in those conversations where we are actually working together to define aspects like how to communicate with key senior tech team members. Again, I may even have initial conversations with other team members.  The CEO should also ask about prior related engagements that relate to this engagement.


If you are a CEO, I hope that you have been at least convinced to explore this.  I’m always happy to talk about this and explore what might make sense for your organization.  Send an email to me (Tony Karrer):