Does a Startup Need a CTO?

We can divide companies into two types:

• Deep Tech: pursuing technological breakthroughs and solving major global challenges, requiring substantial R&D investment, long development cycles, and funding. Examples include healthcare, climate change, AI, and so on. Note that AI here does not refer to the application layer, but to actually developing and training models.
• Industry solutions: you have a solution that can solve the problems faced by a specific industry

Most startups in Taiwan are focused on industry solutions.

Under this premise, in the early stage, what matters more than how to implement features is whether you have a deep understanding of the industry and know exactly where these people’s pain points are.

Especially in the age of AI development, the barrier to implementing features itself has dropped to an unprecedented level. I believe what is more scarce are PMs with fast-moving minds — truly outstanding PMs can already use AI tools to build PoCs on their own.

This is also why I think recruiting a CTO or senior technical leader is relatively difficult:

• You would want them to have sufficiently deep technical expertise; at the same time, you would want them to have enough industry knowledge to contribute to the company’s business strategy
• Even if they join in the role of CTO, they still need to participate heavily in development at the beginning; as the product stage changes, they may not be able to transition smoothly. (For example, shifting from hands-on execution to strategy-heavy work; or from trying multiple approaches to being driven by metrics)
• Joining a domestic startup is a relatively low-ROI move

Why do I say the ROI is relatively low? For a CTO role, if you receive a single-digit percentage in SO, you have to endure several years of uncertainty, equity dilution, and a salary below market rate. Even if you manage to stay until an exit, the return may not be worth it after averaging everything out.

There are many unglamorous things in startup operations: going into the trenches to handle customer support, rushing out a campaign page within a day, constantly changing business logic, custom requests, all kinds of miscellaneous tasks, customers cutting in with urgent demands. When resources are scarce, early team members have to do a huge amount of work. I like this kind of fuzzy division of roles, but to be fair, it is not necessarily the kind of environment developers want to pursue.

In an environment like this, if you don’t have a strong belief in or passion for the company and the industry itself, or your own life goals to pursue, it is very hard to keep someone around. The accumulation of technical debt, unclear processes, and incomplete systems will naturally make developers want to back away.

As mentioned above, for a startup that is just getting off the ground, when it comes to functionality, one experienced developer plus one quick-thinking PM is enough to start validating the market — a senior executive is not necessarily required.

Although a senior executive may not be necessary, decisions still need to be made. If the founder does not have enough technical background, it is difficult to fully grasp the technical architecture, especially since I believe some things need to be planned from the very beginning; otherwise, the cost of changing them later is very high:

• Database design: including how to design the schema and indexes, and how to split things according to business logic. Once you have data, it is very hard to tear everything down and rebuild it. You may even deliberately choose NoSQL to preserve flexibility
• Infrastructure: including business logic, information security, and deployment methods
• Hiring: the initial team will determine the direction of the entire development process, and for startups, hiring the wrong person is very costly
• Tradeoffs: which things should be done, and which things can be left aside for now

This made me think of a term used overseas: Fractional CTO. Instead of hiring someone full-time, you directly bring in a CTO who is familiar with the industry and bill by project.

They can help with early-stage architecture design, hiring, development processes, team building, and more. On the one hand, this avoids the risk of a mismatch after hiring; on the other hand, it solves the problem of not being able to find the right person; and it also eliminates the burden of carrying a role that is often not needed, yet indispensable at critical moments.