CTO, VPE, or both?
It depends!
Timing as usual is 90% of everything and all companies are different because of the people, market, and technology.
In the journey of building a technology startup, the roles of Chief Technology Officer (CTO) and Vice President of Engineering (VPE) play critical roles; however, deciding which role(s) to prioritize can be a challenging and dynamic process.
CTO
The role of CTO emerged in the 1980s as businesses started to recognize the importance of technology in achieving their strategic goals. The CTO role became more prevalent with the rise of the internet and digital technologies in the 1990s and 2000s.
The CTO is typically responsible for overseeing the technological needs of a company and its development in line with its strategic goals. In a technology startup, the CTO often plays a critical role in product development and technology strategy.
VPE
The role of VPE is much older than the CTO and is harder to pinpoint. In technology companies and startups, the VPE often works closely with the CTO to develop and implement technology strategies, manage the engineering team, and oversee product development.
Don’t panic. Some overlap is fine. Strategy is only a strategy if executed.
TL;DR
The role(s) you need will change over time as will their function. Various organization reporting structures help facilitate these growth stages.
Examples
Let’s delve into a few common organization charts that technology startups typically encounter as they progress from the founding stage to an Initial Public Offering (IPO). Each stage presents unique challenges and opportunities for aligning the company’s vision with its technological capabilities.
Founding
How many founders?
Technically as many as you like though 2–4/5 are most common. Personally, as an Open Source Advocate, I like odd numbers so you can break ties and avoid log jams. So that gives us 3 or 5. It's not just 2002 but now it's 2023 and pretty much every technology startup comes with a co-founding CTO who codes the product and supports it.
Note, Artificial Intelligence (AI) may change this Real Soon Now(tm)
With a 3-person setup, the remaining folks are likely a CEO and Product Manager/Designer.
With a 5-person setup, you have some additional choices in exchange for giving up 13.3% of equity each. 1–2 additional “Founding Engineers” and a Community Manager (it is the age of social media; for now….).
There is not yet a VPE. So which role holds those responsibilities? Well, it could be the CEO, CTO, or everyone. Most literature you read online will say the CTO. It comes down to who has the execution skill set and when it's needed.
Nobody is likely being paid at this stage which makes finding the relevant cross-section of skills hard. So you have to make choices. Much of the future growth is untangling these trade-offs.
From here on out, roles subdivide to support, scale, and specialize in various scopes. Until they split, their responsibilities are performed by the above folks.
Seed
You might be getting a little money now. Something like Neo, YCombinator, TechStars, etc. YCombinator’s 2022 standard is 500k + 375k (uncapped safe with MFN). You can probably get maybe 1 more engineer out of that. You could have the Founding Engineer report to the CTO, but do you really want to burden a coder with people management and have two with this few people?
Series A
HaZah! You’re likely sitting on a $20–30m check! I previously wrote about How to Hire the VP Eng you need NOT the one you want at this stage. If you only have the CEO and/or CTO interview the VPE you’re probably in for a world of hurt. You’ll have to hire some balance of the roles that the CEO and CTO are going to be split into first and likely not all of them.
Choices.
Whomever you have hired though, assuming the VPE has the skills in the above article you should be looking to fill the gaps in the skill sets OR those the CEO/CTO wants to offload. Product and Engineering are tightly coupled. One of those choices is you can have Product under the CTO which may affect the soon-to-be VPE.
If the CTO has the P&L responsibility for the division, group, or function, the VP of Product should report to the CTO. If the VP of product has the P&L responsibility for his division, she may or may not report to the CEO depending on the size of the company.
During your journey in Series A, you’ll go from ~3/5 to around 50 people.
Now is the time to build good practices and minimize siloing.
Side note, “The 3 biggest reasons startups failed in 2022, according to a poll of almost 500 founders”
Series B
Yay, another check! The pivots required of the CEO/CTO should be a well-oiled machine by now or you’re going to have log jams, disconnects, and deep trouble. Now the VPE is going to have to be removed 1 step from the product and its role carved up again. The VPE is likely going to go from 10–15 to 25–35 people.
This is a double. This is one of the most challenging feats in technology. This is a 3–5 large-scale re-teaming to align with product areas and value streams over about 1.5 years or almost 1 per quarter. Some sage advice on how to do this
7 Things Everyone Should Know When Doubling Their Engineering Teams
Doubling an engineering team and keeping it high performing. This is what the VPE is doing such that it delivers the product according to the CTO's vision based on the CEO’s pitch.
Around the start of your Series B, the VPE’s direct reports aka Engineering Managers and/or Directors will stop their hands-on functions while staying current in the industry and company.
Series C
The VPE is now likely two steps removed from the product. Now the VPE is going to 90–110 people. You can look at this as a triple, but instead, two successive doubles are easier to understand in the context of a startup. Aka, it's hard and not everyone knows everyone anymore. Departments probably have erected silos despite your best intentions.
Series D or IPO
Uh oh. It's very likely the people you hired around 5–10 years ago probably do not have M&A, discounted cash flow (DCF) analysis, due diligence, or IPO skills. Time to make some more hard choices.
Now we’re looking at 800–1,200 people in the company. In a technology company, it's likely a concentration of that is in Engineering and under the VPE. It's time to split the VPE role into other specialized VPs; thus, creating VP levels such as VP, Managing VP, Senior VP, Executive VP…
Final Thoughts
Within the last 2 years, and especially the last 6 months, a good portion of the VPE and CTO role will need to be augmented by AI, and a good portion of the engineering and product team not to mention the entire organization will need some AI in their DNA. As time goes on, more and more VPEs will have the needed AI skills.
If AI, won’t replace the VPE, then it must be a creative role and express empathy.
In this article, we focused on team structure. This is far from the only distinction and needed skills of a VPE.
There are also companies where the VPE can and should report to the CEO and the CTO could be a hands-on technical visionary genius possibly without direct reports. That founding, coding, hands-on CTO you hired….. They may not be a fan of sales pitches or even public speaking!
A word to the reader
To quote, Rufus, Dogma (1999) —
I think it’s better to have ideas. You can change an idea. Changing a belief is trickier…
