CTO as a Service: A Fractional CTO or VP of Engineering for your business
As a founder of a SaaS company, you’ve probably noticed that your job changes a lot as the company grows. The days of your technical cofounder coding that side project in the garage are long gone.
Now, you find yourself managing multiple people, battling operational struggles, and sometimes even hoping your tech team would be making progress faster. You care about your product, and you want everyone around you to do the same. It’s your baby!
Hence, letting an external person make technical and strategic decisions may sound like a daunting and, perhaps even, unimaginable task. However, sometimes a second opinion is exactly what your baby product needs.
Most information you'll read about CTO as a Service (CaaS) will say having an external leader guiding your tech team is cheaper. We believe this is not always the case, but we strongly believe there are other reasons why your company can benefit from a Fractional CTO.
Think about another set of eyes on rusty processes, help with communicating strong messages, extra experience backed up by staff engineers, or cost savings through pausing work when there is less to do.
We've been teaming up with many startups over the past few years, both on the engineering and technical leadership side. Here are the benefits and pitfalls of having an external CTO service help your tech team, what to look out for, and if your company would benefit from this. We’ll cover:
- What is CTO as a Service?
- What will external CTOs help your company with?
- What should be the role of the CTO?
- Vendor management
- Risk management & due diligence
- Potential pitfalls when working with external or fractional CTOs
- Do you need to make use of external CTO services?
What is CTO as a Service?
CTO as a Service, or CaaS, offers startups the expertise of a Chief Technology Officer without the need for a full-time executive. An experienced CTO will work part-time for your startup.
In the world of SaaS startups, "CTO as a Service" emerges as a strategic asset to your technical team. Sometimes having them join your management or decision-making team makes sense as well. CaaS helps emerging startups leverage the wisdom and guidance of a seasoned technology professional while mitigating financial and organizational burdens.
But again, it's not only about the money. We see more value in the form of trusted advisors, deeply knowledgeable experts, and expanding your technological landscape.
CTOs can decipher intricate algorithms and translate abstract concepts into concrete technical strategies. They will help you build your technical team as well as make difficult technology decisions. Startups benefit from aligning tech ideas with business objectives, ensuring a harmonious fusion of vision and execution.
Beyond the technical expertise, CTOs architect the technological foundation, emphasizing scalability, resilience, and security. Being a CTO means having one job, but taking on many roles. They fortify systems and processes against threats, safeguarding the integrity of the digital infrastructure.
It's really that simple. CTO as a Service will help your tech team with the most important struggles they face and pave the way for future growth.
What will external CTOs help your company with
The CTO is like Mary Poppins of the tech world, armed with a bottomless bag of technical expertise and strategic insight. They have to save the day with just the right mix of wisdom and a touch of magic. And what exactly is the job of a CTO now?
Technical strategy and roadmaps
Think of the fractional CTO as your startup's GPS, helping you navigate the risky roads of technology. They'll plot the course for your engineering team, avoiding potholes and detours along the way. One of the main reasons our clients ask for our help is because they are stuck with their roadmap.
CTOs will also look at the existing backlog and will make some decisions and prioritization there. Have you heard of Living Documents, Idea Incubators, and Clean backlogs, for example?
Team building and leadership
CTOs will bring the team together, creating a symphony of clear communication and collaboration. CTO as a Service can attract top tech talent with their charming ideas and vision. They will ensure the tech team's culture is on point, allowing for team members to feel appreciated, challenged, and heard.
Technical architecture and scalability
The CTO also needs to be able to transform into an architectural wizard, setting up an infrastructure that can withstand the weight of your growing user base. They envision a sturdy foundation that can withstand the powers of a digital tsunami.
Many startups build infrastructure that is too large for the current volume of users. Engineers spend time building out kubernetes cluster configurations instead of focusing on solving the problems of users. A CTO will help mitigate these distractions (and costs).
Product development and innovation
Need another metaphor? Glad you asked: a (fractional) CTO is the master chef in your startup's technological kitchen. Especially in the Research and MVP stage, the foundation that leads to product-market fit is created by the CTO.
For small teams, the CTO helps founders shape their ideas so that engineers can build the right product. For larger teams, however, a CTO helps the product team understand what tradeoffs can occur so that the team can deliver on their promises.
They will implement agile methodologies and project management frameworks while setting up cross- team collaboration to drive product innovation. Eventually, their work boils down to reducing time to market. Gordon Ramsey would be proud.
Technical due diligence and risk management
As an experienced fortune teller, the external CTO can predict potential risks and ensure your startup is prepared for any bumps in the road. Startups that reach seed or growth stage will be challenged with preparing for due diligence to land upcoming investments.
During the many audits we perform with startups, we've noticed that more and more investors (and Venture Capital firms) are not only looking at the team but also greatly value the quality of code, scalable infrastructure setup, and application robustness before making an investment decision.
A CTO can act like a tech whisperer, bridging the communication gap between developers and investors.
What should be the role of the CTO?
From the early days of a scrappy developer crafting a minimum viable product (MVP) to the sophisticated challenges of scaling teams and meeting investor expectations, the role of the Chief Technology Officer is constantly evolving alongside the business.
From Idea to MVP
In the nascent stages of a SaaS startup, the focus lies on transforming an idea into a tangible product. This demands the expertise of a versatile developer, a true wizard capable of bringing concepts to life.
However, this early stage doesn't call for a CTO just yet. Instead, what you need is a senior full-stack developer — a jack of all trades who can work on a tight budget and deliver results swiftly. The ability to manage people or handle a department's budget isn't crucial at this point. What matters most is building a solid foundation for your startup to take off. And quickly.
First Growth: (pre-) Seed to Series A
When your MVP has taken flight, and your startup is gaining traction, it's time to solidify processes, expand your team, and manage the non-technical challenges that come your way. This is when the role of a dedicated CTO becomes indispensable.
At this stage, your CTO should possess a clear vision of how to propel your company forward. They must be skilled technically, in coding and infrastructure design, and understand how to lead and manage a team.
Establishing a robust culture, implementing efficient processes, and ensuring the seamless integration of new team members become crucial tasks for the CTO. As your startup continues to grow, each hire must contribute to the team's effectiveness and align with your vision.
To Multiple Teams: Series A+ and Beyond
You've successfully navigated the treacherous waters of early growth, avoiding the startup graveyard. Your product is maturing, and its various components span multiple platforms.
Enter the era of multiple teams, each specialized in their respective domains. From product owners to engineering managers, from technical support to user experience design, your CTO now faces a complex web of functions and responsibilities.
External CTO services might be just what you need when you are dealing with more struggles than you had imagined. As you know, it takes a village to raise a child, so you might even need additional help from fractional Engineering Managers and VPs of Engineering.
Gone are the days of the tight-knit band of developers who set out to conquer the world. The rapid expansion of your startup means constantly hiring new talent, managing people effectively, and addressing scaling issues on a regional scale.
The CTO becomes the bridge between technical decisions and overarching strategic considerations. The challenges now encompass regional scaling, security, legislation, and aligning the company's vision with technical and product choices.
With increased investment rounds, the CTO shoulders the responsibility of meeting clear budget and performance goals set by the board of directors. If your current CTO isn’t up to it, it’s natural that they look for a mentor to help them. Who better than another CTO?
We’ve seen plenty of SaaS businesses grapple with selecting the right technology vendors. If you're a non-technical entrepreneur or a startup looking to hire a software development company, it's like venturing into uncharted waters.
How do you gauge the competence of an agency that speaks a language you barely understand? How do you make sure they are trustworthy and ready for the job? How will you know who’s going to deliver quality within your budget?
This is where the value of a CTO-as-a-Service becomes crystal clear. An interim CTO is a seasoned tech professional who lends their expertise to your business, guiding your decision-making processes, particularly when selecting an agency or vendor to work with.
A fractional CTO can manage:
- Negotiating with (part-time) designers, researchers, and other vendor contracts and relationships
- Monitoring vendor performance and ensuring service level agreements are met
- Selecting and grooming capable agencies to work with
- Evaluating, interviewing, and selecting technology vendors and partners
- Staying up to date with industry trends and emerging technologies
Your CTO will ensure your technology partner is delivering on their promises. It’s as simple as that.
You also need a watchdog, someone foreseeing and mitigating myriad risks that come with building software. An interim CTO will implement strategies such as phased deliveries or milestone-based payments, reducing your business risk. They will create your business recovery plan, manage a risk register, and analyze GDPR compliance.
A fractional CTO can help with:
- Identifying potential risks, security vulnerabilities, and compliance issues
- Mitigating technical risks and ensuring data privacy and security
- Establishing disaster recovery and business continuity plans
- Identifying potential risks such as project overruns, software bugs, or integration issues
- Detect data privacy and security issues, considering GDPR and stringent data protection regulations
Potential pitfalls when working with external or fractional CTOs
Working with external parties is like embarking on a thrilling roller coaster ride — exciting but with a few loops to navigate. There are a couple things to take into consideration, since bringing in outside profiles needs to be done carefully.
The Culture Connection
Finding a CaaS provider whose values and work style harmonize with your startup's ethos is essential. A misalignment in your team values and method of working could result in a communication Bermuda Triangle, decision-making gridlock, or a team collaboration breakdown.
Search for the right profiles and make sure you have a good feeling that is not just based on gut but backed by objective criteria.
When we start working with new clients, we always tell them our ambition is to become redundant. We want them to stand on their own feet as soon as possible. Does your new partner feel the same way?
The Integration Tango
Onboarding an external CTO requires a carefully choreographed dance of integration and knowledge transfer, especially if you are short on time. Make sure there are plenty of open communication channels and your team already has a collaborative approach to ensure smooth transitions and effective teamwork.
Your team should be on board and understand why this new person is joining. The incoming CTO will need to know how to gain trust from the start.
While fractional CTOs bring immediate benefits, the future holds surprises. Eventually, your startup may demand a full-time, in-house CTO for sustained growth and success.
It's like transforming a butterfly back into a caterpillar, but fear not! Plan ahead, ensure a graceful transition, and transfer knowledge and responsibilities in the right way. A proper CTO will embrace this type of work from their first day, knowing they will abdicate the throne, sooner or later.
Do you need an external CTO?
The journey of a CTO in a SaaS startup is fascinating, marked by adaptability, continuous learning, and the ability to anticipate and address the organization's evolving needs. Starting as a developer, crafting an MVP, to a strategic leader, navigating multiple teams and investor expectations, the CTO's role transforms at every step of the journey.
Embracing this evolution, harnessing new skills, and staying ahead of the curve are the hallmarks of a successful CTO. So if you're a SaaS startup founder, choose your CTO wisely, for they will be instrumental in shaping the destiny of your venture.
It's hard to believe the person that took on the role in the first days will have the skill set needed for what’s coming next. At one point in time, you will probably benefit from an external CTO, even if it's just for coaching and mentoring your existing CTO. Good luck with raising your baby.