An abridged version of this post was published on IvyExec.com.
I just saw a really good article from Forbes on what constitutes a great, fundable, seed-stage startup team. Here is a quote from Ryan Broshar, the co-founder and managing partner of St. Paul-based venture capital firm Confluence Capital Partners.
Broshar believes a start-up team that wants to impress a VC should bring complementary sets of expertise and experience to the table. According to Broshar, that includes at least three roles: the hustler, boasting the most business know-how; the hacker, who brings the most technical expertise; and the designer, who crafts the product’s functionality and its visual aesthetic.
I have found this to be a universally true statement for startups at the seed stage. At this point in a startup’s lifecycle, the hacker/CTO is typically the only technical guru on board.
As the startup moves past seed stage and starts to hire employees, the hacker/CTO’s role starts to evolve, as he or she goes through a series of leadership transitions. The first transition comes when the hacker finds himself or herself becoming a first time manager. As the technical organization continues to grow, a second transition will start to appear. The work content for the technical leader starts to form two clusters – management work, and technical work.
In the beginning, the hacker/CTO would and should assume both clusters of responsibilities. As the engineering team continues to grow, and the headcount for the company goes past 15 or 20, the project and people management aspects of the job will start to dominate. Eventually the hacker/CTO might realize they are doing a lot of things that they don’t love (e.g. project and people management) and not getting time on the things that they do love (e.g. technical explorations). This is the time when startups ought to begin to think about bringing on a VP of Engineering.
Here is my take on the responsibilities of the CTO versus VP Engineering roles.
The CTO is the #1 technical guru of the company. He or she has deep insights in the protectable technologies and core competencies of the company. He or she stays abreast of cutting edge research and development in his or her area of expertise, and in adjacent areas of interest that might have an impact on the company’s technical direction.
The CTO loves technology, and often keeps his or her hands dirty doing advanced development for interesting new technologies. He or she sometimes maintain a small “CTO office” of research engineers who can help him or her prototype things. This group can be permanently assigned, or they can be organized on a rotating basis, so a series of different engineers can enjoy the experience of working with the company’s technical guru. The CTO usually does not maintain a large staff.
Since the CTO is responsible for thought leadership and for maintaining the technical edge of the company, he or she will often be a key contributor to the company blog. He or she is often tasked with managing the company’s patent portfolio as well. This involves working with the VP of Engineering and his or her staff, as well as with the company’s patent attorneys to craft and implement a solid intellectual property protection strategy, including filing patents to protect core technologies, performing competitive analysis to ensure the company has the freedom to practice its core technologies without infringing on existing patents and the like.
The CTO has heavy influence into the technical strategy, which they co-develop with the VP of Engineering. He or she is part of the face of the company and usually takes on a lot of speaking engagements outside the company as part of a brand building process. He or she will also be significantly involved in technical due diligence for potential M&A deals.
The VP Engineering role traditionally includes multiple aspects:
a) Personnel management – for small teams (up to 10 FTE), the VP Engineering is the direct supervisor of the technical staff. For larger teams (> 10 FTE), the VP E often manages contributing engineering managers, who serve as the direct supervisor of the technical staff. For teams at scale (> 100 FTE), the VP E’s direct reports will typically be senior level engineering directors, who in turn manage engineering managers.
b) Program management and engineering execution – the VP Engineering is responsible for ensuring that the product vision is realized through excellence in execution. There is typically an overall program plan that incorporates all inter-dependencies between functional disciplines (e.g. mechanical, electrical, controls, software), which in turn is a part of a company program plan that incorporates inter-dependencies between departments (e.g. engineering, marketing, business development)
c) Technical leadership – the VP Engineering is responsible for co-developing the technical strategy with the CTO, and for developing and maintaining a technical roadmap that will continue to innovate from a technical standpoint. The VP Engineering may personally serve as a systems architect, or may assign another engineer to assume that role.
d) Strategy development – the VP Engineering serves as part of the senior staff, working in an interdisciplinary manner with their peers in other departments (e.g. VP Marketing, VP Business Development, VP Manufacturing and Ops) as well as the CEO, CTO, and COO (if present) to develop company strategy and product strategy.
The VP Engineering is traditionally responsible for managing the annual bottom-up budget for the engineering department, which is often the biggest cost center for a technology based startup. This includes: headcount, consulting spend, prototyping costs, equipment cost, travel and entertainment, professional development, patent costs and more.
Can one person do both jobs?
Absolutely yes, especially in the beginning of a startup’s life cycle, with two conditions:
- The team is small enough that the management overhead is not overwhelming.
- The person involved enjoys and is competent and successful in both roles.
As the company scales, it is rare to see the same person continue to be responsible for both roles. In my entire career, I have met probably 2 or 3 fantastic combination CTO/VP Engineering leaders who can juggle both sides with equal grace. I would say that they are by far the exception rather than the rule.
Most people are far more energized by one side or the other. Making them do both often makes them miserable, and their effectiveness on the side of the job they don’t love could be very compromised indeed.
At what point should a startup bring on a VP of Engineering?
Most of the time, if the total company headcount is fewer than 10, and the company is able to make good progress with the one technical leader in house, my advice is to hold off on bringing in a VP of Engineering to keep the overhead down. At such a small headcount it is much more strategic to maximize implementors and minimize managers.
When the headcount gets to a point where symptoms of pain start to arise from the ranks, either from lack of management oversight, lack of effective development processes, communications breakdown, schedule overruns and the like, that’s when a startup should assess the situation and decide whether they should bring in a VP of Engineering to focus on the team development, team process and team management aspects of technical leadership.
Beware title inflation and hiring ahead of the job
One thing I see many startups do is to start recruiting for a seasoned VP of Engineering very early in the game (when they have, oh, 5 or 7 people and are either pre-funding or at seed stage). Generally, I think that’s too early in the game.
A lot of times, I find that what the startup needs is not a highly experienced engineering executive who can handle strategy as well as talent recruitment and development, but a project manager to run point and make sure short term tactical objectives are met.
While project management might be part of the job of a VP Engineering in small teams, a project manager is not a VP Engineering. A project manager’s primary responsibility is to create and maintain a schedule (often in the form of a Gantt chart for hardware companies, or a burndown chart and other agile process artifacts for software companies).
The schedule is maintained as a live document and all inter-dependencies are identified and actively managed. The project manager flags and escalates any issues when the program appears to be at risk for either a budget overrun or a schedule slippage.The project manager is detail-oriented and has excellent communications skills, enabling them to lead by influence. It is a much more functional role, with far greater focus on implementation and execution than a typical VP Engineering role.
In that event, my advice would be to hire an engineer and put him or her in the project manager role. This role might appropriately be called the Director of Engineering at most.
If instead, you bring in a VP of Engineering at this stage, you might get lucky, and find someone who is great now and who can grow with the job over the next 12-24 months. Or you might run into one of these two situations.
- You have hired the right talent for the project management job they need to do for the next 12 months, with a massive title inflation. You then run into trouble a year later, when the person isn’t growing fast enough to meet the changing demands of the VP E job. Now you are faced with hiring, oh, a Global Executive Senior Vice President of Engineering and Technology over the head of your existing VP of E. (Egads!) Alternatively, you could shunt your faithful, loyal, hard working, very bright but inexperienced existing VP E aside to make room (and basically penalizing them with an apparent demotion when they had poured their heart and soul into their job, and had done everything you asked them to do and more).
- You have hired the right person for the job they will have in 24 months, who is not very good doing the job they have right now. You may never achieve all the milestones that justifies your decision to hire ahead of the team and the work, because your team isn’t equipped to take you from here to there.
Of course these are just general guidelines, and each startup has a unique set of skills in their founding teams and early employees. So the decision to bring on the VP of Engineering should always take the specific circumstances of the startup into consideration.
A great resource: Mark Suster’s blog post on the same topic
To close this post, I’d like to point you to a fantastic post by Mark Suster, with an excellent 2×2 graphic depicting how the VP Engineering, CTO and Program manager are positioned on the axes of technical capability and process orientation. Enjoy.