CTO’s view at money in a start-up
This time let’s look at how a tech co-founder’s “builder” mentality can make or break a project, escalating conflicts.
As a former and current tech founder in various start-ups, I wanted to look at a tech co-founder’s role and how some CTO’s mindsets might brew conflicts within the company. Let’s focus on a most popular archetype of a tech founder — a builder.
XIX Century Steve Jobs
Let’s go back in time to meet XIX century Steve Jobs —polish army officer — Antoni Patek. Patek, while escaping from russian oppression, found himself in Geneva and decided to build a watch brand.
After some more or less successful ventures (including Patek & Czapek watch brand) he met a brilliant tech co-founder — Adrien Philippe (XIX century Steve Wozniak). The person who invented revolutionary automatic movement, allowing watchmakers to build watches not requiring daily winding.
At that time many watches had beautiful design. It was the technology that elevated the company. They built together — now legendary brand — Patek Philippe. A symbol of class and luxury, worn by royals and aristocracy, loved by collectors.
Digital Builders
Just like Steve Wozniak, Adrien Philipe was a builder — skilled craftsman, focus on the process. In this day and age programmers are a new generation of builders. Digital craft is often considered a key competitive advantage (scoring high in defensibility). Intellectual Property, power efficiency or a high quality system architecture allows start-ups to move faster and beat the competition.
The other way around ($$$)
Digital Builders — therefore — know the value of what they are doing. They understand the IP (intellectual property) and how a software can elevate the business in a way no money can do. So tech people start thinking about money as merely a lubricant rather than a rocket fuel.
It’s the other way around, compared to non-tech founders. And here lays the problem — and possible dissonance between tech and non-tech founders. Here also is hidden a potential conflict between a VC and a tech co-founder. While the narrative of a VC is usually that money is rocket fuel, for many tech people — again — it’s the other way around. Tech is the rocket fuel and the engine. Money is just a lubricant that allows you to run smoother and faster.
Money as lubricant
Capital as a lubricant allows you to iterate faster. If you want to be a CTO, you have to revisit your relation with technology and capital. Answer a question how you look at both.
If you look at capital as merely a component, you grade it lower than your non-tech cofounder and your VC. Here lays a potential conflict that might grow with each business or tech related decision.
I recently have left a start-up simply because of this dynamic dissonance — for me money was a lubricant and should be applied only when needed, not used to burn like a rocket fuel. I have left simply to avoid conflicts and frustrations within the team and let them grow without me.
How to grow a conflict within the team — tutorial
- Team building — if you are a tech person who sees twenty people in the team, knowing only five of them are really good, you might find yourself at odds with a VC strategy of “signalling that your start-up attracts people and is growing”. The rest of the founders will be delighted to get more people on board. For you extra team members seem like bags of sand in a hot air baloon. Great area to create conflict!
- “A person” is a standardised measurement unit. At least for business analysts and the HR department. Everyone who matches the description in a job offering, seems to be an equally competent candidate, from a non-tech co-founder. In reality, great people want to work only with great ones and being exclusive yields better results than being inclusive. Another conflict oportunity!
- Next round mindset — VC mindset quite often reminds the way of thinking of King Julian from Madagascar — lets go fast, and think later. As long as the company collects the next rounds, everything seems great. But to have the next round, you need to grow your company and increase your burn rate (this is why you need money after all). It doesn’t come along with smart people’s resourcefulness. If growth at all cost seems dumb for you, thinkg twice before jumping into CTO shoes. Otherwise you might grow a beefy, saucy conflict within the company.
- Quality always pays off but relies on speed. I’ve built over one hundred games and dozens of tech products. The approach that works well in most cases is: always prioritise quality. Those products will last, attract users and have a thicker long tail. But for quality — in digital products you need to iterate. You need this constant “test, measure, implement” cycle. Iterative process requires speed and speed requires a great team that also is as lean as possible. If you feel like growing for the sake of collecting the next round and satisfying your VC hurts the agility of your start-up, you will find yourself frustrated. The same applies to your best people.
I think that’s it for today. On a daily basis I’m managing teams for my clients, promoting my next gen, general purpose ML algorithms marieai.com but sometimes trying to reflect on what happened and how it could help others.
Cheers!
About Me
Hi, I’m Marcin. Former game developer and algorithms designer.
Currently working on a novel, general purpose algorithm, you can use offline on any device. My dream is to deliver solution that could be trained, up trained and work as a swarm, solving insanely complex problems.
This is how MarieAI (https://marieai.com/) was born.
Concept of a Digital Hippocampus
Data Layering technique, explained here.
Find me on LinkedIn: https://www.linkedin.com/in/marcin-rybicki-qa/
