CTO search · Founder equity

Chief Technology Officer/Architect - Does it take salary and equity?

Allison Rosenberg, Ph.D.

May 13th, 2015

I recently lost a wizardly CTO/architect when, after hours of Skype over the period of a month, he laid it on the line and shared that I would need to cover the full costs of developing the app and offer equity. Ultimately, I understand his position (he's in high demand; has family obligations; etc.), but I was really deflated. I have just consulted with another, very successful software entrepreneur, and he affirms I'll need to pay a reasonable salary and offer equity IF I want to attract a first class architect and incentivize him or her to stay with me. I'd appreciate the advice and experience of others in the software startup space. I'm especially interested in hearing from successful entrepreneurs who have faced and overcome the challenges of securing the technical expertise necessary to hit a home run. Thanks in advance, all.


Willem Muller

May 13th, 2015

Hi Allison I'm a tech guy with about 15 years experience in various capacities. Is the idea validated? From an engineers point of view, I don't want to feel like I'm doing all the work to validate someone else's idea. It really helps if you can get past the idea phase before approaching engineers. Some thoughts... * Try hack together something yourself using wordpress + plugins that demonstrates the concept * Run an adwords validation test on the above * Can you get pre-orders from the adwords customers on a crowdsourcing platform? Perhaps your product isn't suited for adwords - but then you should try meet your potential customers in person. I'd say doing this improves your chances with the engineer 2x - 3x vs asking the engineer to build something that you'll take to the customer.

William Gleim Co-Founder, Technical Lead at Coinalytics

May 13th, 2015

Yes.

Aleksandra Czajka Freelance Senior Software Engineer, Developer, Web Developer, Programmer - Full Stack

May 17th, 2015

Wow, such jaded opinion, Ming. Not sure why you have gotten so much bad experience. Hiring a developer is just like hiring anyone else with expertise that you don't have. There's many of us that have high integrity by nature. But there are some bad apples, just like there are bad apples in any industry.

As for the fact that if they like your project they'll do it for free, I don't see how you rationalize that. I would never do a project for free because 1. I value my time greatly and am a business woman, not just a senior, full-stack software engineer, and 2. I don't believe that YOU believe in your project if you're not willing to stake money on it. It's WAY too easy to say that you will get someone to do it for you for free. What do you want, Mother Teresa or a really great developer that values herself? I value myself and my time tremendously because I know what it takes to build an app, and no, it's not straight forward as you would make it sound like. There's a tremendous amount of skill that goes into it and that deserves respect. And that deserves compensation. 

David Schwartz Multi-Platform (Desktop+Mobile) Rapid Prototyping + Dev, Tool Dev

May 13th, 2015

If you're a non-techie person with an idea that needs a techie to implement it, the three choices most people consider are:

1) learn to program and do it yourself;
2) learn to herd cats as a Software Project Manager and outsource it;
3) find a skilled software person and convince them to work for free, investing 1000+ hours of their time and resources in something where they're given some stock with a minority of control (if any)

Items (1) and (2) will chew up 6-12 months of your time and prevent you from doing much else during that time.

Item (3) is a long-shot at best. See below as to why.

I'm approached constantly by people saying, "Hey, I've got this great idea, and I need a programmer; if you'll build it for me I'll give you half [of something]". Yeah, right. After a few of those projects and getting half of nothing, I've stopped even listening.

For the third option, you'll find two types of people:

1) programmers who'll ONLY work for money; they have families and obligations, and they're just not going to take a flying leap on some crazy hair-brained idea with someone they don't know. Honestly, most startups that have strong techie co-founders are composed of a team of people who have been friends or colleagues for a long time. They didn't stumble into the programmer at the last minute while trolling for coders on eLance.

2) programmers who are very creative and have enough ideas of their own to work on for the rest of their life; these folks will need you to convince them of one thing: why to work for you for free for little if any control vs. working on one of their own ideas for free and keep 100% control.

And if you ask us, OUR IDEAS ARE BETTER THAN YOURS ANYWAY!

If you want us to work for you, straight equity usually won't cut it. A salary will make the most difference, as well as equity where we can benefit based on the value we're creating for you.

Here's your best bet for free techies: programmers who are unemployed and have money in the bank; who are older and semi-retired; or have sufficiently low overhead (ie., they live with their parents) so their financial needs are minimal. (There are lots of unemployed programmers in America today, but most of us aren't making enough to pay our bills. So $5k/mo + equity can make a big difference.)

Aleksandra Czajka Freelance Senior Software Engineer, Developer, Web Developer, Programmer - Full Stack

May 19th, 2015

Ming, once again, you seem very jaded. I would ask that you do not talk down about the people that you need for your projects. It is not the right way to do business.

Programmers are very talented people. Development is way more of an art than you seem to understand. People who don't know how to program will not understand the challenges we face and overcome every day. We hussel and slave away over code, coming up with the best, most efficient solutions to hard computations, programmatic, and even specific language-related problems every day. Just to get absolutely no understanding of what we had to go through and what a mountain of problems we just solved in order to implement YOUR project. And, on top of that mountain of ungratitude, we get people like you thinking that we're just coding monkeys and programming will not be necessary in the near future. Wow, you have no understanding of what you're saying.

So, please, respect the profession, even if for nothing else but good business practice.

Aleksandra Czajka Freelance Senior Software Engineer, Developer, Web Developer, Programmer - Full Stack

May 17th, 2015

Adding on the opinions of why good programmers would be unemployed....

My first job out of Cornell, after getting a Masters in Physics on computer simulations in physics after a double major in Computer Science and Applied Engineering Physics, was working for Intel as a Software Engineer in their chip-making fab to automate the chip-making process. I left Intel. I left because 1. I don't like the idea of a salary and 2. i don't like the idea of busting my butt for someone else's company. I have been on my own and working for myself for 6 years now. Getting paid for every hour I work. Setting my own "salary" with my own standards. It's the most natural way for me to live. 

I get recruiters contacting me all day. Bombarded with the salary positions. But I am firm on what I want. I want to work for myself. Work from wherever I want. And always have the freedom to choose my project and when I work on them. Why would I EVER give that up?

Hopefully this perspective helped you guys and teaches you a different perspective on developers. If it doesn't and you're just unwilling to trust, you shouldn't be in business. Good business requires a lot of trust. Guided, knowledgeable trust, but still trust. I would never start a business relationship with someone that started out by insulting me with lack of trust.

Do your research. Hire well. And compensate your talent. 

Rob G

May 13th, 2015

plenty of threads on this already, but the short answer is, yes, it takes money (salary and likely some equity too).  It's not impossible to get the job done on equity alone, but if you want a more predictable result then plan to pay in the form of cash and equity.  It's a supply and demand issue.  Your story has to be overwhelmingly compelling to satisfy the risk/reward curve of the type of technical help you want.  But like most projects you have 3 variables you can adjust: time, money, scope.  consider the tradeoffs of modifying each of these until you find a blend that works.  Plenty of $$ is no guarantee you will end up with the right person so hedge your bets accordingly.  If you haven't built even an MVP yet, let alone a rev 1 product then i would question whether you really need a "CTO/architect".   If you are willing and able to roll up your sleeves and do most of the upfront design, business logic and architecture work yourself and if you can manage a development project then your options increase dramatically AND you will learn a LOT about what you really need to build AND reduce costly pivots.  At the opposite end of the spectrum (from hiring a CTO/architect) is you developing detailed specs and managing a small team of offshore developers.  This has it's own challenges and tradeoffs. As the CEO of a technology company you will be much better off getting your hands dirty up to your elbows (or perhaps eyeballs) in the details anyway so better to get dirty sooner rather than later.   The $$ burn rate will be lower, but time and scope will need to be adjusted. 

Aleksandra Czajka Freelance Senior Software Engineer, Developer, Web Developer, Programmer - Full Stack

May 13th, 2015

Allison,

I run into these questions every day being a freelance Senior Software Engineer. I get 20 start-ups a day asking me to join for equity, which, 99.9 out of 100 times will mean that I'm doing the work for free. Why do they do this? Is it because it's the best thing for the business to hire someone for free? Is it because it tests the technical person's character and makes sure they're the right person for the job? No. They do this because they don't have the money. Is it the right thing to do for the business? Absolutely not. 

The best thing for the success of the business is to make sure you have the right team. Will you need to pay them, very possibly so. Is it scary because you will have to invest some money? Oh yeah. But, if you're not willing to do this, to me, as a person that would join your company on trust, it tells me that you don't believe in your concept. It tells me that you want to get into your business bearing as little risk as possible. And, if that's the case, why would I take a huge risk, devote my development time, which I can get paid top dollar for, just to put my faith in someone that doesn't believe in their own concept. Because, if they did, they would pay the top dollar for me.

Tell me this, have you yourself ever considered working on someone else's project, giving your expert advice, to someone you met a month ago, for entirely free?

I truly wish you luck on your project and hope any of my thinking is useful.

Best,
Aleks

Janine Davis President & Co-Founder Fetch Recruiting & Fetch Advisors

May 15th, 2015

In my experience placing CTOs in Silicon Beach startups, yes, it takes equity and cash (quite a lot of both - typical is 200-300k in base/bonus plus 1-5%).   It’s certainly possibly to try to attract a technical co-founder using some of the sites out there which do that matchmaking, so you might be able to find another wizard for equity, but it’s frankly one of those stars-aligned, blue moon kind of miracles.   Some of my clients have successfully brought in a talented Software Engineer who has created their MVP and architected/built the site/app.  But that can lead to a few long term, and potentially bring-you-to-your-knees issues: 1) the site will not scale; 2) the engineer used whatever language they are most comfortable with, not necessarily the best technology stack for what you are creating; 3) good luck getting funding without a real CTO in that square on your org chart.  

 

I generally recommend that my seed or pre-seed clients engage a CTO-for-hire. These are seasoned CTOs who have experience making (and breaking) scalable sites. Being an ex-technologist myself, I know that the best way how to learn how to do it right is by doing it wrong and then fixing it. That only comes with time and experience.   These CTOs have learned the hard way (but the right way), and can help you to avoid pitfalls that a Software Engineer simply has not had the time or opportunity to deal with yet.  

 

In Silicon Beach, I know several CTOs-for-hire, and simply refer them out. They are all willing to have a conversation, which if nothing else, can be validating to your approach.   If you have opted to get a Software Engineer to build the MVP/site, the CTO-for-hire can also be invaluable in validating the architecture to ensure it will scale (and that the right technology for the task at hand has been used).  If you decide to engage them, they are compensated in various ways - some are open to equity, some are hourly. In addition, some have their own Engineering resources on deck, and can build the MVP/site for you. Not saying it’s cheap, but it may still be the optimal way to go pre-funding. In addition, many let you use their name on your org chart, which helps you get funding.

Tom Maiaroto Full Stack Consultant

May 13th, 2015

Yes you will. However, you can get sound advice for free (or on a tight budget) quite often. I often help many people with free advice or paid consulting and simply help them find developers for the execution part. That way things fit in their budget. Pretty much always in my experience, no matter what their budget is.

The problem is equity has been too freely thrown around to the point that it's almost worthless these days. It'll depend on the stage and size of the company of course. Every situation is different of course.