How to be a chief technology officer at a modern startup

Jonathan Lister Parsons

by , CTO

at PensionBee

27 July 2016 /  

July 2016

How to be a chief technology officer at a modern startup

Most entrepreneur networking events are populated by business types looking for a technical cofounder - a CTO or chief technology officer.

The job of a modern CTO is to take an entrepreneur’s idea and to help it take shape as a real-world product.

As a result it is an incredibly broad role, covering everything from product development and software engineering, to information security and data protection, to systems procurement and recruitment.

CEO + CTO = the possible start of something big

The fact that a two-person team of a CEO and CTO can bring an idea to life - at least enough to raise further funding and start acquiring customers - is a result of two major trends in the software industry: the widespread availability of high-quality open source software and the huge and continued drop in the cost of hardware.

The importance of open source

Open source - software with source code that’s openly available for other developers to use and build on - has been around for several decades, and for a long time has powered the IT infrastructure that runs the internet.

What is new is that open source is now the de facto form of creation and expression for software developers (so much so we require an open source profile as part of a job application). It is free, global knowledge-sharing on a massive scale.

And open source is discoverable in a way that it previously was not. Sourceforge, for all its importance in the early days of the web, is nothing like modern package management and collaboration platforms like npm and github.

The net result of all this software is that a million niche problems and a few very big problems have already been solved, so you have a huge head start when creating a new product.

Rapidly shrinking set-up costs

So much for software. Hardware was the other massive cost for early internet startups: remember what happened to The story goes that it used to cost $1m to get a startup off the ground, and a lot of that went into servers and the attendant network engineers.

This fell to $100,000 once virtualisation allowed companies to rent Linux boxes on demand. Then the cost fell to $10,000 with the rise of Amazon Web Services and its ilk, which delivered packaged IT services at an astoundingly and constantly falling price point.

The end result of this is that the infrastructure cost of trying a new idea in a marketplace is rapidly approaching zero, and the human cost is by far the dominant cost.

What does this mean for venture capital?

One of the questions this raises is where does this leave venture capitalists? The venture capital (VC) industry grew up making large investments in a smallish number of companies, and provided the gateway to a startup’s business.

But in a world where teams can evaluate an idea practically over a weekend (the first Launch48 conference was in 2004…) what role do VCs play? Can they contribute meaningfully to more companies taking two orders of magnitude less funding? Or will they stick with what they know and insist on high-growth, high-capital burn?

The role of today’s CTO

As a CTO, I’m excited about the way that technology is changing the way that teams create, experiment and bring products to life.

It used to be the case that the CIO (chief information officer) department would set up the email server, buy the computers and Microsoft Office and then leave the employees to it, after suitably locking their hardware and software down.

The business landscape today is completely different. If an employee wants to sign up to use a new productivity boosting cloud app, there is not a lot the company can do about it, particularly because the account might be created on a team member’s own laptop, and integrate with other sources of data stored online.

Instead, I think the right approach is to recognise that technology allows people to scale their own abilities, like a developer would scale a server in response to increased demand. Great improvements in personal and team productivity can be achieved by selecting the right tools and rolling them out across a team.

The CTO picks up where the enthusiastic team member who signs up to the hot new thing leaves off: by helping to create a culture of harmonious use of common tools across teams, and communicating about security and behaviour in a way that prioritises the integrity of customer and business data.

Find out more about what it’s like to work at PensionBee, and if you have a burning question for Jonathan, leave it in the comments section below.

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