Why Startups Should Delay Hiring A CTO

by Lauren Schneidewind on March 21, 2016

So you have an idea? Awesome! The next step would be to get a fully invested technical partner, right? Not necessarily. This can be one of the biggest missteps a startup can make because it drains the bank…prematurely. Once a startup has been established and has positive cash flow or significant funding, then and only then is it time to consider a full-time CTO. However, before a business is at that point, another approach that is actually easier on the cash flow would be to hire a CTO consultant or Fractional CTO, someone that is not on the payroll full time. During the early stages of a startup, there are several benefits to not having a full-time CTO on the books.

One of the biggest concerns a startup has to deal with is cash flow, so why would you want to commit to spending money on a full-time salary before full-time work has been established? It just doesn’t make business sense. If you instead hired a consultant or someone part-time, you have the flexibility to ramp up or down as needed. And trust me, flexibility is a major player in early startup success. On the other side of the coin, it is hard to argue with a full-time CTO that is willing to work for free, which looking at the numbers can’t hurt, right? Having someone work for free can actually be worse than not having anyone at all. Let’s think about it for a minute, who would be willing to work for free? I can assure you, not many seasoned professionals are willing to take on a project full-time for no money that isn’t their own idea. (I know I’m not, not matter how awesome the idea is, sorry, it’s nothing personal, but time is valuable). Free has its appeals, but as we have all heard before there is no such thing as a free lunch. If someone is willing to work on your idea for free, then they probably don’t have much else going on and this might be considered a giant red flag. As the saying goes, you get what you pay for.

Another benefit of considering a Fractional CTO is they can act as an advisor too. I mean isn’t that one of the main reasons you are looking to hire this position anyway? By hiring a consultant, you can find someone with a proven track record of success. You are stacking the deck with A players, without having to pay their six + figure salaries. You can use them as needed. With this approach, the hourly rate will be higher than with a full-time CTO, but you will end up paying much less in the long run. A Fractional CTO also has connections, and connections can make or break you in the startup world.

What about wanting a full-time CTO since that means they are committed to the project? Well, being committed doesn’t lead to business success, sure it can help, but a veteran Fractional CTO can also have this level of commitment. However with the latter, they can both be committed to the vision; having someone with a stable career backbone can allow them to see things clearly compared to someone depending on the startup for their next paycheck.

All in All, it is better to think twice about hiring a full-time CTO right off that bat. It might make better business sense to utilize a seasoned professional until the time is right to bring someone onboard full-time.

What do you think about hiring consultants rather than full-time employees? I would love to start a conversation!

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