So I wanted to do a video to explain a dichotomy that I’ve posted about before.
Namely that the technology decisions that you make in your technology business, don’t fckuing matter. As a non-technology person, if you are given a choice between a few different options, it’s extremely difficult to make a BAD decision.
This did not used to be the case – go back far enough and ABSOLUTELY, making the wrong technical decisions at an early stage in your business would sink your battleship before it had even got out of the harbour. Today, in 2023, that’s not the case.
So in your new technology business, do you need a CTO or a technical co-founder to make decisions about technology? At least, do you want one from the start.
One of the reasons why it’s worth delaying making that hire is that if you are pre-revenue or even pre-investment, bringing in another person just to look after the technology is really expensive as you may have to give away equity to secure that person. In fact, that can not just end up “really expensive”, that can be “fantastically expensive” if they don’t work out and you’ve already made a commitment to them. So timing is a factor here – and bringing that person in later when you have revenue and can fund them through cashflow rather than through equity may be a very smart decision.
But you will ULTIMATELY need a technical leader within your business. So how do I explain that, given that I’ve said that technical decisions are not important?
A friend of mine has this phrase to describe what an expert does, which is that basically: “an expert puts in 30 years of work so that they know where to hit the pipe”, i.e. if you in your business have a pipe, and there’s something wrong with the pipe and you want to move to the place where there is no longer something wrong with the pipe, you can have an expert come into the business, know where to hit the pipe, hit the pipe, fix the problem in five minutes, and present you for an invoice for £1,000 because you’re paying for 30 years of learning, as opposed to five seconds of swinging a spanner/wrench.
This approach presupposes that that the best thing that you can spend £1,000 on in your business right at that moment is for an expert to walk through the door with a spanner/wrench and smack the pipe in the right place.
Most modern businesses are much more adept at getting a good enough solutions without needing to rely on deep expertise. A big part of this is that in our modern era, there is so much information and deep-knowledge given away from free, e.g. through YouTube videos.
Having some normal non-expert people already in the business, looking up pipe fixing methods online and variously kicking, shouting, or sacrificing chickens over the pipe might get you a good enough solution, and allow you to keep the £1,000 in your pocket.
Another way to look at expertise is that it is about “judgement”. Judgement in turn means that ability to look at a situation or scenario, look at the pieces on the board, work out where the ideal end result is, and then instantly/intuitively know what to do in order to get to that ideal result.
If you think about someone just starting out in their career, their boss will create a little “sandbox” in which they can learn how to make judgements about to do their job. They will be given a small remit and a small amount of responsibility, and use that small area to get better at and prove they have capability in making judgements that are beneficial to the business. As they get better at making those judgements, the sandbox gets bigger and the items in it get more complicated and they get trusted to make more complicated (and riskier) judgements.
The better their judgement gets, the more they get promoted, and they get given more responsibility.
Eventually, that person ends up with an ultimately large sandbox where they either end up on the board with remit over the whole of sales, or operations, or finance, and/or even larger sandbox where they are the CEO with full executive control, and/or even even larger sandboxes where they end up advising other businesses as a non-exec or chair, or similar.
The principle of a C-level executive is that they are “chiefly” responsible for the area within their purview. Or, to loop this all together, they’re supposed to have the best judgement when it comes to matters that fall within their purview.
A junior marketing person for example, might put together a campaign to sell your B2B SaaS platform – because their judgement and expertise means they can be trusted to do that; but when it comes to the actual marketing strategy, that ends up falling to the CMO who has earned their stripes and can be trusted to have judgement with a broader remit.
The question then comes – how readily does the business need access to this senior level of judgement and high level of experience, especially because it is likely the business cannot afford to employ a full board.
Go back 100 years and it was possible to win a Nobel Prize with a notepad, a pen, a quiet Sunday afternoon and a bottle of laudanum. These days, winning a Nobel Prize requires huge interconnected multidisciplinary teams and thousand of man years of effort. That is because over time, all the Nobel Prize-style problems that can be solved by one person have been solved, and now we’re into the much more difficult problems.
The same can be said of technology decisions. All of the hard problems have been solved. It’s even slightly worse than that because actually all of the hard problems got solved about 10 years ago. If you’re building a software product today, most of the moving parts used are at least 10 years old – many of them nearly 20 years old, and some of them are 30 years old.
(This ignores the whole “AI” thing, but even then we don’t have proper dependable tools that can be used to introduce AI capability into your solutions – but I particularly don’t want to end up down that rabbit whole.)
This happens in every industry. The balance sheet, still a staple of every accounting function everywhere, first appears in this historical record in the 17th century. No CFO has needed to better that concept since, i.e. that problem has been solved.
What this does to judgement as a concept in building products is fairly profound.
The old way of thinking about why a technology business needed a CTO or a technical co-founder FROM DAY ONE comes from the problem that EXCELLENT judgement used to be needed from Day One because all of the baseline problems had not been solved. Now you don’t NEED excellent judgement from Day One, providing you don’t do anything stupid because all of the baseline problems have been solved. You now only need a CTO to solve the HARD problems.
Let’s break down another definition – just what is a “technology business”. I have a very simple definition for this – it’s a business where the primary manner in which value is delivered to the customer is digital in nature.
Ostensibly, this means that the business has to make an investment in their digital products, as digital products are used to deliver value. All digital products are software at their core, therefore all technology businesses have to BUILD software. The CTOs job, then, is to build software because if software it not build, the business cannot deliver value.
When a non-technology founder or founders want to start a technology business, in every case they have to commission someone to build their first digital products – their first software – for them. Nearly always this means outsourcing the work to a software agency.
What happens when you do this is that you are buying expertise from an external supplier. That external supplier – to loop this back – “knows where to hit the pipe”. That supplier will look at where you are, look at where you want to get to, and form a judgement as to the best way to get you to where you want to get to. They will normally crystalise this judgement in the form of a price proposal.
The problem with outsourcing – any type of outsourcing – is that you as an organisation don’t ever get better at making judgements in whatever area you are outsourcing. If you outsource software development, you do not get MEANINGFULLY better at building software, although you will get better at knowing how to outsource.
This is where we get the principle of not outsourcing things that we want to get better at.
And a lot of people outsource their sales and marketing – which I flat out do not understand because all businesses need to get continuously better at accessing their market, but let’s not get me off-topic.
As a technology business – as a business who’s PRIMARY WAY you deliver value to your customer is through the software that you produce, YOU absolute need to get better at “knowing where to hit the pipe”. You need to develop Jedi level pipe-sensing and hitting skills, on-tap, 24/7 within your business.
This is where the dichotomy comes from. You can rely on someone external making technical judgements for you at an early stage, but you can’t rely on someone external making technical judgements for you as the business matures.
Why this is – is because judgement is CONTINUOUS and IMPROVING. The way a CTO is perceived is quite strange, because usually businesses DO hire C-level people to lead to continuous improvement. A CMO doesn’t come on board, build a marketing strategy in Week 1, and then do nothing for the next two years. A COO also is continually observing the needs and capability of the business and making incremental improvements. Same with a CFO.
Any business will hire a C-level anything expressly because it wants to IMPROVE. No one hires a C “Whatever” Officer and give them the remit of – this is fine, just keep it the same.
“You need to get BETTER at producing software over time”. Or to put it another time “YOU need to get better at producing software over time”, and it is a bad move to make another organisation – one that you have no control over, and one that you’re beholden to keep paying – chiefly responsible for that. It needs to be brought in house.
And that’s why you ultimately do need a CTO. It’s not about the Day 1 decisions, because today Day 1 decisions are not important. But as an organisation that exists to provide value via its digital products, you will need one a CTO because you need to build up the “technical leadership” needed to keep the business moving in the direction that it needs to move in.