Going all-into CTO search

This serial-entrepreneur made me realize where I was wrong in my thinking

TLDR;

• Failed co-founder relationships shaping the incorrect mindset

• 2-mins into deciding the right co-founder you need: (CEO vs CTO)

• Why finding a CTO later rarely works (or has no positive upside)

• Solo founder challenges: Fundraising, Operational

Or watch the youtube version:

Introduction

Hey Fam, your forever problem-solving friend no longer wants to start solo :)

After nearly an year of doing it alone, someone finally convinced me to get a co-founder for my third startup attempt. Of course, many people have suggested it to me in the past. This is the first time someone went deeper and took the effort to challenge my assumptions and point out the flaws, at what points this approach is likely to fail.

I wanna share this so that people understand the exact thinking, rather than the blanket statement you need a co-founder.

Why I went solo in the first place?

I started off finding my journey by finding a co-founder through Entrepreneur First. We were both technical, though I have been working on side hustles as a kid, and was more than comfortable picking up the business aspects, using my tech knowledge to aid the market/product understanding. In the following two years, we shut down one company returning the funds and bootstrapping one to profitability, yet missed out on capturing the larger growing trend. Part of the reason I blame is for being the only one driving product innovation, and my co-founder executing my exact specification, which worked early stage but became tricker to maintain as I had to split my focus to other functions.

Additionally, the next innovation iterations depended on tech as much as discovery, which didn’t happen. I needed the technical partner to take more ownership. I tried to make it work for many months, and when it didn’t work, I somewhere started thinking I wouldn’t find a good co-founder altogether. This was the first realization I had from the conversation. Becoming aware of this psychological fear.

Due to this, I thought the best use of my time would be getting to early traction and in the future I can hire a co-founder or tech lead, offering them lower equity for facing lesser risk.

Learnings & Change in Mindset

Meeting Philippe

I met Philippe (co-founder & CTO of restack.io) at a hackathon in the MindsDB office in San Fransisco. I was subtly qualifying him as a lead for the developer impact efficiency platform I was thinking of building. 5 minutes, he started asking me more about my team and took an interest in why I was doing it solo. And then, we spent the next 30-40 mins in an extremely productive argument. Not enough people make this effort, so I love it when people do. (Coincidentally, this is similar to how I met Abhilash Inumella at the ETH Newyork hackathon last year, around the same time. He back then argued with me on how to make my second company alive, now that we have PMF, but a bad co-founding team. And he has since been one the closest mentors I’ve come to rely on).

Insight 1: Splitting responsibilities down the line: CEO or CTO?

At some point, the team will be larger than what you can manage on your own. Managing people is a resource-consuming task (both time and mental effort). The moment you have a team of more than 6-8 people, you will start seeing the need to have another person manage at least a sub-team. In most situations, this will be a split between Business (sales, marketing, growth, bd, fundraising) and Tech/Product (tech innovations, discovery, customer support, customer success).

At this point, you would be more inclined to handle one over the other. This realization should be kept a the forefront of starting a company. That, if things go well, in the next 3-9 months you can no longer manage a team on your own. What do you see yourself doing better at this point?? Handling Tech or Business? Both will own products imo. It’s the actual job of executing the specific responsibilities, which one do you see yourself doing better?

Before Philippe asked me this, my thinking was I could do it all currently. I have built large-scale data infra systems in unicorns on my own. I have led data teams. I’ve previously done enterprise sales and made the company profitable. But this specific framing, what you see when you can’t manage on your own, was super critical. I see myself handling the business and strategy more naturally and continuously innovating on tech.

This means I NEED TO FIND A CTO, ASAP. And that, I need to realize CTOs apt to work with me do exist. Even if the previous one didn’t. I need to go and find those out. Fortunately, because of my experiments in tech recruiting, I knew good techies were out shipping and needed to be poached.

Insight 2: Good startup CTOs don’t join later (or not for long)

Rockstar CTOs are passionate about specific domains. For me, it was Scaling Data Systems at one point. They care enough about certain spaces to take ownership of the tech and product and put their blood, sweat, and tears into innovating continuously, and rapidly.

It’s tough for them to feel the same level of ownership if they weren’t present creating the initial code, creating the first version of the product. It just doesn’t stick. You can get a good tech executive, but not a good person who is genuinely passionate about the same area of problems. Well, statistically very unlikely.

Also, now if you do, would you be willing to give the person the same ownership?? (50-50 equity split??)

Insight 2b: If you find one later, it won’t stick

In the past, there were situations where an early-stage CTO who has made some progress, offered me 10-30% of equity. I never ended up joining them, thinking I’d just start my own. A couple of friends of mine, some with PhD from top institutes, joined pre-seed/seed-funded startups as CTO, at 10-20% equity. All left within the next year. This was the next part he challenged.

That I can find a talented person from India, someone who is yet to recognize their value. But a year in, would that person still be equally clueless?? Will they not learn? Will they not be better aware of opportunities for someone with their skillset? Why would they stick for anything less than 50%?

Will they still have the same level of authority/ownership a kick-ass co-founder will deserve?

So yeah, any equity benefit from starting solo, is short-lived. Rather leads to permanent leadership instability in the company. There’s already a battle to win in the industry, doesn’t it make sense to keep your house sorted??

This stuck. So, selfish reasons went out.

Insight 3: Securing Capital from Investors

I don’t believe a company needs to be built for investors, but rather for solving the problem you are passionate about experimenting with. Nonetheless, capital is needed to do it well. Companies can be bootstrapped, capital helps get it done faster. So while my success criteria never has capital secured as a metric, it’s like health insurance for my company. And for accessing this policy, you need to convince investors the health of your company is sound enough for them to take work with you. Investors are aware of insights 1 and 2. So they do know the instability/challenges in scaling a company beyond the seed stage. Securing funding becomes much more challenging at the growth stage. Another area you’re just making it tough to get into.

Insight 4: Off days

When do you take off days? Even with well-paid people, the truth is, that progress happens when a person taking ownership is driving the team. If you’re not daily present course correcting people and ensuring alignment, who does? Why would they? Burnout is a real thing. No matter what people on Twitter will say about founder mode. I find myself most creative when I take time out for other activities and social circles to take inspiration from and relax specific sections of my brain.

Having a co-founder gives you that leeway. That ROI alone is amazing.

What next?

So I’m not actively spending 50% of my time finding and working with potential CTOs. The good thing is, now I have a refined criteria for qualifying potential co-founders. Will go deeper into how I’m finding and qualifying CTOs in the next post!