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As Finance Fridays continues, we are introducing the concept of the CapTable. This week they set out to create their captable and hire a CTO. The vesting schedule protects each of the co-founders in case one gets hit by a bus or decides to drop the project after a short period of time.
You’ll need to hire and retain talen to grow your company. The more senior members you have (say you already have a CEO, CTO, VP marketing, VP Biz Dev, VP Products) then the less options you’ll need and vice versa. But this example above is all entrepreneur math, not the VC’s. That’s normal.
They were referring to non-founder engineers, most commonly the first hire for technology businesses. A reason might be that negotiation techniques are not a part of their training. Captables sound intimidating. Every time a startup raises capital, all common shareholders are diluted.
Main February 23, 2010 Advice for CTO Founders: Dont Let Business Kill the Business Founding a technology company is an amazing thing. Too often, however, I have found CTO / Founders paired with business people who not only don't add value, but frequently detract from the value of the business. So my advice to CTO / Founders?
Ever met a CTO/VP Engineering or CEO/CTO? If youre highly technical and drive the technology vision of the company, people will get it without you tacking on the CTO title. Maybe the CEO got his cousin from Omaha to be their lawyer or theres been some serious messing around with the captable. Yeah me neither.
If the founding team is non-technical and you can’t figure out whether you are being screwed by your developers or whether your potential new CTO is amazing, a tech advisor can help by joining you in interviews and reviewing commits. You’ll need to keep hiring tech guys. Situations where advisors can add huge value.
The reality however is that entrepreneurs should only play the equity game with newer, very focused firms that specialize in this practice and not traditional work for hire or a blend. Development firms that advertise part equity and cash are simply not mature in defining their model, and thus they have no business taking stakes in others.
HW: As Flexport grew and created a leadership team, how did you decide about promoting from within versus hiring from the outside? And in the event you hired from outside, did existing high performers chafe at being ‘topped?’ In that way, very similar to a great CEO/CTO partnership in a startup. See you on some captables!
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