The Coming "CTO" shortage
14 minute read
Not too long ago, I was told by an internationally situated Kenyan senior "cloud guru" working for an established software company in Europe that, while at the last Nairobi PyCon, he tried to interest developers to apply to the new Google PDC to Nairobi. Two of the devs were working for European companies remotely. They said a $113,000 annual salary would not cut it. One said he was making over $210,000 per year as it is.
The move to remote work has accelerated and it has brought about some human resource developments that were not visible five years ago. Established and mature companies that have a sizeable employed workforce are navigating with the staff how to work, and to make it work, remotely. COVID has forced companies that were reluctant to “digitise” to get serious with the digital migration of their core offerings, whether product or service, or face an inevitable demise. The services and products that make remote work possible have surged in both value and in reach. Two obvious examples are Microsoft Teams and Zoom.
Companies have had a “sudden” realisation that they do not need to have the talent behind the service or product sitting in one place. The large companies have been decentralising the business by setting up business units near the markets they are interested in. Microsoft and Twitter are the latest companies to set up business units on the African continent.
Banking has been changed for ever and so too has telecommunication. Today, companies are expected to have an online financial transaction process for business to continue, with or without the pandemic restrictions. So not only do the financial services need to be secure, but the connections also need to be secure.
There are companies that integrate banking and communication technologies to offer “Infrastructure / Platform / Software as a Service” that are also experiencing the shift to remote working. Many of these did not have a strategy or an interest in decentralising their operations physically. However, as the pandemic clears and the epidemic sets in, whatever disadvantages that came with remote working now have to be factored into the cost of doing business in this new “normal”. Zoom Careers has listed about 40% of the available jobs as “remote” jobs on their web site and on other job sites.
The CTO crisis
For start-ups, a crisis has emerged and will continue for the foreseeable future. Here in Kenya the global tech companies are sucking up all the top-level talent in the region. Start-up founders who want to set up shop with a cloud-first tech stack, offering an online product or service, have to not only find software or web developers who are interested in the idea, but these “techies” have to be “cloud ready” and “business aware” from day one. That level of talent is in high demand. That talent comes in at the CTO level.
Traditionally, a CTO candidate must love the idea. CTOs are well versed in how the whole industry works and are pragmatic when it comes to applying their skill, time and energy. They are harder to impress than CMOs and CIOs. This is the major challenge.
Secondly, CTO must like you and other non-techie team members. It is a works like courtship. Long talks over dinners and drinks. Introductions to close associates and working the grapevine, sizing up each other. This is another challenge.
Thirdly, CTO must accept the compensation proposal consisting of a salary and bonus shares or options or both. It is well documented that more than a half of the success in a technology-based start-up is the CTO’s effort, be that founding or co-founding CTO. In this case both salary and especially the bonus must be sizeable for CTO. This is global “best practice”. Here in Kenya, ESOPs and the taxation around income make this a major undertaking, not adding to the fact that a CTO contract will stipulate that the CTO has to work in the company for 5 to 10 years to receive some shares.
Thus, a good CTO is contracted to stay in the company for at least 5 years and yet all the valuable work is normally finished in one or two years. This CTO helps the start-up owner with strategy, team development, the roadmap then launches the technology. The question then becomes, should the CTO stay after the important period just to get a bonus and the salary? The CTO can join another project after 1–2 years and help build more great products and not have to stay to complete the 5 years.
Having a tech-savvy person as a cofounder is not always possible for every start-up or SME. Most of these firms have little or no money to acquire a full-time CTO. It is also is becoming increasingly difficult to meet get a good and available CTO by leveraging the IT networks for a non-techie founder. The offer, especially of stability in the pandemic-ridden African market, of a “safe, big bucks” job has made even “techie” CTO start-up founders close shop, shelve their products / services and take a hiatus take for a number of years as they wait for the right time to get “back on the wheel”.
But you can’t wait. To do that is to lose the opportunity you have. So where is this “co-founder” material?
There are also “techies” who are waiting out the turbulence and for the arising opportunities but don’t want the distraction that comes with co-founding or a job, or with building some big company’s dream and growing the shareholders’ bank accounts, knowing very well that there would be no love lost, were they to leave the company. These techies want do more than just build a web site or a mobile app. They want to be involved with a start-up whose idea they love and can be more than a “lead developer”.
The question remains. How and where do you find a CTO level co-founder, who loves your idea and wants to spend at least five years slogging it out with you?
CTO as a Service
Like my fellow techie consultants, we live and breathe the tech stacks we work on. But more importantly, the solutions we offer must meet the business objectives of the client and must be driven by them. The technology is always changing but the need to get to market and find the fit to the market quickly, remains the same. This and other factors have made handling technology a very expensive affair and usually, founders don't know where or how to start.
I have been working with a particular start-up as a client for four years now and I found that I am in an interesting emerging space, that at best I would call CTO-as-a-Service. As I researched about this, I found that it is indeed a "thing". I have noted that this CTO-as-a-Service solves the challenge “non-techie” founder conundrum we have just elaborated. How? The founder gets a good CTO with all the industry trappings and can afford to pay them less than a full CTO salary including all the managerial and ownership overhead.
There is only one caveat: It will work very well so long as the start-up is not offering a technology as a service but is offering financial, agriculture, education, logistics or any service where technology can be a major boost in operations.
There is also a very important lesson I learnt recently. I started a role as a Lead Developer and was in my love of the idea, I quickly accepted to act as CTO. It was a disaster. It does not work that way. Founders, do not fall for the temptation that as the relationship with the lead developer improves, that there is an upgrade to CTO. The roles are markedly different.
CTO-as-a-Service approach is undervalued because everyone thinks that founding members of the team must stay with the start-up until they are or the start-up is dead. What then should those interested in a CTO-as-a-Service expect?
· Business performance growth
· Deliver immediate value through experience at a lower cost
· Develop your own leadership & talent development plan
· Keep Investors happy with long-term financial planning
· Reduced operational risks and improved risk mitigation strategy
· Oversee the industry market trends and transform the business
· Define a clear roadmap and avoid costly aberrations
· Advice on the upcoming technologies and select the proper technology stack for the product
· Develop corporate strategy regarding infrastructure and capital to achieve business goals
· Build software architecture
· Design and optimise the workflow for the company
· Mentor the team and help them to improve their skills
· Helps in building and fill technical gaps in the team by hiring new resources
· Focus on the target markets of the business and deploy IT projects to support customer experiences
· Able to solve the business-related technical issues
The search for a CTO is still like courtship. This should be what the founder should be looking for.
· Leadership Skills: The CTO should be an effective leader to motivate the employees, inspiring them to achieve business goals
· Communication Skills: The CTO should be able to express the business ideas, vision and goals to the team members as well as stakeholders who are from non-technical backgrounds.
· Decision-making: Being the tech-leader of the company, a CTO should be able to make important decisions regarding technology selection, resource allocation, outsourcing services and changing the third-party vendors
· Strategic Thinking: CTO should have the ability to forecast the future needs of the company in terms of short, medium and long-term goals.
· Mentoring: CTO’s responsibility is to provide the team with mentorship. He should look out ways in helping the team to grow both with their code and professionally
· Willing and always learning: The CTO should be up-to-date with the emerging technologies & trends and should possess skills such as curiosity and willingness to learn new technologies
· Time Management: The CTO should have good time management skills with the responsibility of setting tasks and deadlines for the team
As finance, agriculture, education and logistics are settling in for the long haul, another sector in need of CTO-level interactions is the civil society. The need for collecting proper and accurate data for reporting and for policy development is key. Alternately, the growth in and of repressive regimes and the need to communicate securely amongst civil society and with the populace quickly and effectively will be required. While social media works, robust technologies allowing operations to continue while countering “fake” news and other disruptions such as Internet gateway shutdowns, will increasingly be needed. These are areas are important to our collective well-being as a country and as a society.
In another five years, solar power will be widely available, even in some of the remotest places in Kenya. Many more people will be served by 4G networks, which will become the new standard in edge telecommunication networks. Maybe satellite companies, Starlink and OneWeb will be linking the truly remote areas to the Internet.
Whatever way we look at it, with new ideas appearing and changing as the enabling digital infrastructure continues to be laid down, everyone is beginning to focus on the last demographically young continent on the planet. If senior developers are earning 2x of Google's proposed salary remotely while sitting in Kenya, how much harder will it be to get seasoned CTO-caliber with strong “technical leadership” rather than operational management?
Africa is going to be one interesting place for CTO talent and we will need to be investigated and a middle ground established for CTO-as-a-Service to build our startups.
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