Are Tech-Blind Leaders Jeopardizing Your Startup's Flexibility? Learn How to Navigate and Prevent Future Risks
Years years years ago, I knew a company, and they had a CTO that they hired. And the CTO, was not a technical person. No experience in software development, in architecture, in computers, in anything related to technology. And they were the CTO because they were part of the founding team, and they had a CEO and a CFO and a, you know, CRO, and this person became the CTO. And, they came from the industry that this company was starting up to go into, and so they had industry experience, and they had an experience creating the product that was necessary to produce, you know, to sell.
Speaker 1:So, like, really should have been probably titled like a like a COO instead of the CTO. And the scary thing that happened here was this person was making technical decisions that directly impacted the short term and long term. So there's the tactical and strategic outlook for this business. Now what do I mean by that? You know, this company did what almost all companies said at that point, which was spend the 1st year, year and a half with a external agency doing software development.
Speaker 1:The company the business had an idea of what it was that they needed to create in order to function and have a product in the market and what their what their disruptive product was gonna be. And the agency had to execute and create the what now we would call MVP. By the way, don't do an MVP for 18 months with a few $1,000,000 in overhead. They, and the agency would come back to the CTO, because the CTO was running the project with the agency and asked the CTO questions. Like, hey.
Speaker 1:Should we do x? Should we do y? Should we do z? We decided to do this other this is what we've decided to do here. We decided to do that.
Speaker 1:We decided to do this other thing. And this person would be like, yeah. Okay. Yeah. Sure.
Speaker 1:Okay. I don't know. Sure. Sure. Now, you know, scary thing about that was there was no because there's no technical understanding, there was no understanding of the decisions that were being made, and there was no ability to understand impact to the business long term.
Speaker 1:So fast forward a couple years, and the business needs to make a pretty significant pivot. But guess what? The business finds out that it can't pivot because its technology doesn't support any flexibility or any any alternative or any change. Now listen. You can have the best people working for you, and you can follow yourself in this problem.
Speaker 1:And without getting too specific and naming names, I'm trying to I'm trying to paint a picture here. Everything that happened to this business was avoidable in terms of understanding, like, what if we wanna make this change? Well, if you've been involved in any IT systems or technology or anything, you understand certain changes are just inevitable. And even if you're not accounting for them up front, you're kinda making plans for them in the back of your head. How do you do that, these things?
Speaker 1:And it's something that's really stood out to me for years because this becomes a really interesting thing when you when you try to hire when you hire both. I'll just I'll say specific to your IT and technology teams, your engineering teams, but it applies, of course, everywhere within the business. You know, you need a mix of people that are outsiders, that are newcomers, that have no experience, and have no background, and have no jadedness, with the industry in order to, you know, to to give you a fresh set of eyes. But you also need people that have been there. And you can hire these people, and you can bring them in house, and they can work for you.
Speaker 1:Or you can bring on and you can hire, and you can bring in advisors or consultants or or contractors or, you know, use whatever terminology you wanna use. The nice thing about having an outsider present is if they're doing this for lots of companies all at the same time, they're gonna see a big picture of what is going on in your industry, in your segment at your size in in general arcs. Right? So, you know, if if you come to me and you're a 150 employee company and you're selling to North America, you've hit product market fit, and you've decided that it is you know, your and your scale up now is happening. Right?
Speaker 1:So you're gonna go from a 150 employees to 500 to a 1000 to 2,000 employees. And you're also at the same time going to scale your sales and marketing operations, which also then mean your service delivery and customer service and customer success operations from, you know, a United States North American centric operation to probably most peep you know, most end up with, like, Western Europe because of language. You end up in Europe, and you end up in Asia, and you're gonna end up in LatAm and some some combination of that order. But, usually, it's US, then Western Europe, and Asia. Right?
Speaker 1:Well, maybe you've done this before a bunch of times, and maybe you haven't. From an IT platform, I can tell you pretty much exactly what you're gonna go through over the next 3 years of your life, how you check certain boxes today that when you need to go check another box in 18 months, you don't have to undo the first thing. And this is this is the really the pitfall that, I've experienced personally, and I've seen a bunch, and we really kind of pay out pay really close attention to. You know? You need a system today that's gonna be efficient for you because you don't you know, you nothing's guaranteed.
Speaker 1:Right? Like, you you might grow from a 150 to 1500, but you might grow to 300 or 400 and kinda hit a plateau and then figure things out. Right? So you don't wanna be deploying something at a 150 employees targeting a 1000 person enterprise or 5000 person enterprise. That's not efficient for you.
Speaker 1:You don't wanna process it. That that depends on a 5000 person enterprise. You need something that's good for, you know, really the next 12 to 18 months that can then go go forward and and give you future, you know, future protections. Now we can get into an argument about whether or not an outsider is gonna really be
Speaker 2:good for you and actually and, you know, operate with the best
Speaker 1:interest for you. And, you know, I mean, look. That's to a certain degree, you're gonna have the same problem with you hiring employees. You're gonna hire somebody full time, and then maybe are gonna have the best interest for you, and maybe they're not. You know?
Speaker 1:And and, you know, I'll I'll talk about this in the future. Something else like an idea of, you know, how do you how do you gauge this, and how do you actually suss this kind of information out? And, by the way, average tenure tenure of employee is, like, 2 years right now. So, I mean, you can you can again, specific to IT and engineering. You know, some are much shorter.
Speaker 1:Some are much longer. Oh, much longer really isn't the term that's appropriate. But, you know, vesting cliffs affect this thing. Are you still hot? Are you taking funding rounds?
Speaker 1:Are you still growing? Is it is it incentivized for people to wait till your IPO? You know, that, of course, impacts a big thing. If you're on a meteor meteoric rise, you're gonna retain employees. If you're paying people, you know, crazy all in comp, you're probably gonna keep those people and retain them pretty effectively.
Speaker 1:But if not, if you're talking about, you know, a normal business, it is very normal for you to turn over, you know, staff at about a 2 year clip. And then are you capturing and maintaining, tribal knowledge within that churn? And and that also gets really interesting when you start talking about both internal and external. Right? So if you're dealing with, if you have a critical vendor, and a critical vendor is turning people at 2 years, and you're turning your team every 2 years, and both churn teams are turning, you know, you're kinda like doing this.
Speaker 1:You know? Are you in a situation where you can maintain relationships and also, be making decisions for the future? So it is, has an interesting animal to deal with, and, it's, of course, one that we focus on. I'm not gonna promote myself too much here, but something we deal with a lot. Yeah.
Speaker 1:Anyways, you know, back to this original story. What ended up happening, of course, was two and a half years in, 3 years in, when they found out they couldn't pivot and, you know, the technology that they had and decisions that were made were all bad. They fired the CTO, and it was a your decision's your fault. You get fired. The CTO got fired.
Speaker 1:They hired a new CTO. New CTO they hired came from a very large enterprise mentality, which, of course, didn't didn't meet with the size and the nature of their business. You know? It's just you can't you can't hire somebody out of IBM and put them in a 30% startup and expect them to be successful. We we know this.
Speaker 1:So don't do that. I hired a new CTO. CTO came in and said, oh, you know, the problem that we have here is that we need to, we need to replace everything. And the CTO sold a vision, to the CEO and to the board that they were going to take all the technology, and they were going to rewrite all the technology, and they were gonna do a rip and replace. And that CTO lasted about 18 months, by the way.
Speaker 1:It's been about 18 months trying to write a new software platform to replace the existing software platform while letting the existing software platform languish while they were trying to service customers and generate revenue off of it. And that experiment went about 18 months, and then that CTO was fired. This company, it just the opportunity cost of of those two events, I think just ultimately killed the business. You know, they weren't able to actually adapt and move and stay up with the market, and, it was pretty terrible to watch. It was it was it was horrible to see something with a great idea and promise and vision just not execute and then not execute again and not execute a third time.
Speaker 1:And is it wasn't the CTO's fault. You know, it wasn't the first one. It wasn't the second one. I mean, they did exactly what they were hired to do with the skill sets that they had. So, you know, there was a CEO and it was the board, ultimately, because that's what they hired and that's what they wanted to do, and that's the oversight that they gave.
Speaker 1:So, you know, lesson learned for myself is just how critical that is and and paying attention to it and understanding who you're hiring, why you're hiring them, what your expectations are, what you should expect to achieve out of them. Like, for instance, if you're a if you've got a strategic value because you have a, scrappy on premise infrastructure and you hire somebody who's a, cloud cloud cloud cloud cloud CTO, you cannot be surprised when in a year to 2 years, they kill off your on premise infrastructure and take you to the cloud. And is that what you wanted? And maybe it is what you want. Make sure it's what you want.
Speaker 1:I am rambling off into the camera now. I'm Max Clark. Let's, quick.
