The Value of Fractional Executives in Startups: A Founder's Perspective

This is just a brain dump. I get asked about this a lot since I have been a fractional CTO for several companies.

Here's what is on my mind: the fine line between outsourcing critical thinking for your business and getting the help you need to achieve your vision. Startups of all sizes can easily fall into the trap of hiring expensive consultants who promise the world. It's tempting to hire big names like McKinsey Consulting or Boston Consulting Group when you land that sweet funding deal. It's not worth it, but "No one ever got fired for hiring IBM" is a real thing.¹

Don't get me wrong, sometimes we all need a little help from people with more experience than us. And as amazing as our mentors can be, they might not have the time or energy to build up the systems our businesses need. That's where fractional executives come in. They are basically someone who comes in part-time to help set up systems to power your business.

Take the Chief Financial Officer (CFO) for instance. A fractional CFO can help you find a controller, who in turn helps you find bookkeepers. They make sure you have clean data to make those big, important business decisions and can even help you build those nifty dashboards to guide your company. They ensure you're well-informed from a financial perspective. I've personally hired fractional CFOs, and I have never regretted it.

Then there's the CTO. Oh, boy. This can be such a mixed bag. I've seen people hire a CTO who talks big only to find out that they don't know how to build a team or manage a budget. I'll blog about this later, but you can't just hire a lone wolf coder to be your CTO. A CTO must know how to evaluate opportunities and make decisions that will help your company grow. They need to be able to build a team and manage a budget. They need to be able to communicate with the board. There's just . . . so much they need to be able to do. If you're a non-technical founder, you might not know what to look for.

CTOs bring so much value and knowledge to the table. I've discovered, as a CTO myself, that dabbling with new, cutting-edge technology has led to some pretty incredible opportunities. From joining startups and running engineering teams to being a co-founder and even speaking at events, this expertise is highly valuable to investors and boards of directors.

A CTO needs to be a jack of all trades - comfortable in a boardroom, knowledgeable about various topics, and well-connected. Those connections can help you bring in new talent or build systems to find the right people for your team. After all, getting the right people on your bus is essential for your startup's success.

But a good CTO needs to have a track record of doing stuff. You can't be an armchair leader in small and medium sized businesses. I think this is true in general for most roles.²

If you have a good board and good investors, they'll know this stuff. They'll recommend a good fractional executive to get you going.

And if they don't, maybe you need better (smarter) investors.