Don't Co-Found With a CTO

Socrates once walked around to the craftspeople, poets, and politicians in Athens and asked them about their expertise. Because his subjects were all skilled in their particular area, they assumed they knew everything.

Let's assume you're a founder without a technology background. You think "I have a great idea for an app". You talk to your circles about it and they confirm. You do some preliminary research and it confirms your first hypotheses about the problem, need, and market opportunity. You're sure the only thing between you and the lucrative benefits you imagine is the ability to create the technology. You set out to find a tech person to build your idea.

Developers are not rare. Over the next half-century, computer science jobs could become as popular as plumbing jobs. Supply is high; that's good news for a founder who wants a job done fast and cheap. You probably don't realize supply is high. It's okay - technology is new to you.

Be aware - if you do not educate yourself about software development, engineering, languages, needs, before you set out - you're taking a huge risk. If you're not technical, put in some effort to learn about software engineering. Literally, go to a local university's computer science department and hang in one of their student hangouts. Ask questions, and yes, try to use HTML and CSS, just to learn it. You'll increase your sphere of empathy doing so.

You first search within the people you know. If you have a friend or relative who wants to do the job, just know, something's likely going to go wrong. If it doesn't, you're in a rare position. In the rare case, friends and family may end up being your best partner possible. However, the majority must realize how much your present friend or family relationship must bend, strain, and change to form a business together. You're injecting the chance at major money and, unfortunately, competitive greed between you. It's a different relationship, and possibly, one you don't want. 

Friends and family aside, the majority of non-technical founders assume they can only find tech help somewhere out in the randomness of the high supply environment. And even though they're aware they can pay a firm to do the job well, they either can't or don't want to - they want speed, cost, and to be on Shark Tank in a month.

Going "random", such as craigslist, Fiverr, Upwork, strangers, friends of friends, computer science students, and general freelancers - essentially anyone you have to meet for the first time in a coffee shop - is a near-guaranteed disaster. Quality technology talent is always either: 1. Employed 2. Working on their own important projects 3. On a beach somewhere. Random technology talent is almost always: 1. Inexpensive 2. Promises fast 3. Lazy 4. Probably a liar 5. Probably not a great fit, 6. And they fall into the Socratic example of thinking they know everything.

Say in your desire to be "lean" and to "move fast and break things" you had your coffee meeting and a random charmed you. You've been charmed because at this point your idea's development you are too insecure to make a quality decision. You swoon when someone says anything positive and reaffirming about what you're trying to do. In your mind, approval, and anyone's approval validates you, your idea, your vision, and the imagined, eventual payout. Not only, you likely had to sell the random developer on the idea with an ROI pitch - and after you sell them on the pitch, they not only have validated you by demonstrating an interest in your idea, they have validated you as a business person by buying into your pitch. You're a sucker and a dreamer, in fact, you're only a dreamer because you're a sucker. Oddly, what we've learned is in the beginning, you're better served with skeptics than believers. Skeptics challenge you, and a nascent company needs challenging. After all, in some corner of your mind, you don't even buy into it.  

At this point, please stop yourself from working with the random. Please. You're about to waste huge amounts of time and money. The person you've met for coffee is not a genius. They will not be the person to save your business. But, you probably still don't believe what we're saying.

Let's break down what we've experienced to be the true problem with software developers as co-founders where they immediately grab the pretentious title of CTO. In some cases, where the technology is innovative, proprietary, and a true feat of science, obviously, the CTO is an essential part of the company. It's likely the CTO is the first founder anyway and their creativity is the only way the idea can be real. In the case of the founder whose idea is not an uncopiable piece of game-changing technology, where the technology precedes the technologist in importance, the technologist is interchangeable. Tech people tell you - salespeople are interchangeable. They're wrong. Sales and entrepreneurial skills are far more essential to a start up's success than a software developer's skills. 

But, you're still caught up in your idea and so as they start to lay out the jargon to you, they sound brilliant and your vision sounds more real than ever. You hear them speaking about their experience, who they know at Google, front end, back end, UI/UX, whatever, and it's a perfect fit. 

Software Engineering is one small aspect of the vast field of Computer Science. And even within the narrower field of software, the types of specialties are vast.  Think about Biology as analogous to Software Engineering. Someone who is a biologist may specialize in ecology and an ecologist may specialize in marine ecology and in particular mating patterns of the manatee. For your job, you need a manatee specialist; what if your computer scientist specializes in whales? What if they're a physicist. All you hear is talk. You don't know what they're saying.

There is a near guarantee that even if the developer you've found is a talented and competent engineer, they are only competent and talented in a very particular area of their vast discipline. And that's where the Socratic pride enters the discussion.

Software engineers think because they know one area of engineering well that they either can quickly develop the skills to learn another or worse, they assume they don't have to learn it. And they secretly assume they're already good enough to do the job and they won't have to do too much work. Every engineer tells you some variation of "it'll be easy". Easy is not something to be excited about - it's a sign of their pride and their lack of engagement with the difficult problems your idea is trying to solve.  Down the line, they'll blame their failure and the difficulty of the job on you.

If by the auspiciousness of your august attempt to ascertain a partner, you stumbled upon the perfect skills match to the needs of your app (which by the way, you don't know, and your possible partner doesn't know), then we are wrong about finding a technical co-founder. But we're not wrong. And we haven't even got to the worst part. The thing is, a "CTO" just seems so damn easy! After all, this person is going to work fast, they've claimed no one works faster than they do, and they're willing to work on equity, which costs you nothing. You trading equity for their services; this is the worst part.

Trading equity is alluring, especially after you've watched Shark Tank. Giving away an imaginary percentage of a business makes you feel like a real business owner. Listen! Real business owners do their absolute best to never give away equity (obviously, necessity gets in the way sometimes). Do not give a technologist any percentage of your company. Just saying "you own X percentage" gives the random technologist legal grounds to claim ownership over the company in the inevitable dissolution. Going on a "maybe we'll make your partner" basis also gives them legal ground.

If you don't heed our warning and still want to hire an unemployed developer, it must be done with a lawyer present. In fact, a lawyer must be present for any partnership agreement. Make sure your new "partner" agrees to the specific terms of your operating agreement, which you created, which you've had written by an attorney. Sink $1500 into it. It will save you so much money, time, and spiritual capital, guaranteed. And make sure in the operating agreement you have a well-written force out/buy out clause for when the partner fails you. A buy-out/force-out is necessary for any partnership agreement.

As a rule, don't do business with people who can't be sued. This sounds sort of, Trumpian, but the truth of the matter is - people or institutions with resources are generally savvier, and do better work than those without for two reasons; first, they've obtained those resources through their industry and second, they want to protect their resources.Work with people with something to lose. Working with someone with nothing to lose, gets you American Beauty.

Hopefully, at this point, we've convinced you not to co-found with a CTO. Still, if you've wisely decided not to get ripped off, you're still left with the problem of obtaining technology resources. You still want to build a tech company and you still want to do it quick and inexpensive.

There are ways to do a technology job inexpensively without sacrificing quality and hurting yourself and your company. First, get the idea that it's going to happen fast out of your head. Positive change happens slowly. Even fantastic companies took months or years to launch - and when they did, they were unsexy, infantile, and unrecognizable. Speed cannot be your priority because even when you work with quality developers - software engineering is still challenging, it still requires precision, and it's always slow.

Then, turn your disadvantages into advantages; because you're a "start-up", you have leverage in any negotiation. People assume you have very little money. That's great! That means, they can't expect a lot of money from you. Semi-unfortunately, it's true.

Finally, go and find a boutique agency. Usually, they're branded as digital marketing and development firms. They are small, often between 2 - 10 employee businesses where there are board games and a few employees plugged into desktop computers. They're staffed by passionate people, with skill, who know how to work with start-ups.

Research and network and find a boutique in your town. You're going to pay the agency a large but reasonable sum - a sum governed by MSAs and SOWs - not promises over cups of coffee. Boutiques can be sued (again, a good thing in B2B) (again, not saying this is what anybody wants to do), they have teams to answer internal questions if a developer doesn't know how to do the job, they're willing to work with startups and they don't assume much of your money. 

If you're going to build a business, you're going to have to raise money eventually. So validate your idea, raise your friends and family round, and hire a boutique. Remember. You know nothing.


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