Scaling to $20MM Series: From Skynet to WALL-E: Navigating Tech Takeovers as a Startup
If you’ve started your company in the last decade, chances are that technology has already overtaken your business. Like Skynet, is it creeping into everything threatening to take control of your business? Or like WALL-E could it be a kinder tech that is helping you to run key aspects of your business?
Whether your company is a SaaS business, or you’re launching a product that you’re looking to introduce to new markets, technology rules the roost. Not only has technology created entirely new industries, but it has made standard business processes so much easier.
Payroll administration, inventory management, sales forecasting and budgeting have all been made so much easier through technology. It is many of those same SaaS products that have allowed companies to function efficiently from almost anywhere, whether the whole team is located within an office or traveling all around the world.
So who’s responsible for building out your technology and your tech stack, and how does that technology grow and evolve as the business continues to develop?
The answer may mean working with different people at different times.
In the earliest days of your company, any founder is wearing multiple hats, and ‘Chief Technology Officer’ is likely one of just several C-suite roles that you and any partners have taken on. This means that you’ve made decisions about which technologies that you’ll implement, and which processes you can automate for greater efficiency.
These decisions aren’t always sophisticated, or made based on extensive expertise. Need the right software solution? Ask family, friends, or colleagues in the industry. If they’re not able to help, turn to Google, or examine some free trials to conduct your own product reviews. Efficiency may be the end goal, but in the earliest days the immediate pressures are to keep the company afloat and sturdy enough to weather the storm.
If you’re previously coming from the world of ‘big tech,’ this can definitely prove as a culture shock. If you’ve cut your teeth in a large company where everything is process-based, it may be jarring to then have to write those same processes from scratch. This means having to deal with processes for setting up and handling your tech stack, along with processes for everything from hiring to payroll to day-to-day operations.
Nimesh Patel, is currently the CTO of the Carson Group, but had previously been a startup founder after stepping away from the world of big tech. He describes his time in the startup world as “really rewarding, very challenging, very nerve wracking, and very fulfilling all at the same time.”
According to Patel, so much of that agility comes from thinking about multiple options at the same time while you’re simultaneously struggling to make your first option work. As he put it, “you have to have conviction that Option A is the right option, but you always have to be able to act on Option B or Option C in a timely manner.”
Patel added that the other reality to a start-up is that so much is based on trust. The core relationships in the beginning between founders, partners, and early employees are often ones based on trust – a trust that supersedes written documents or these standardized processes. You as a founder are trusting that everyone involved is making the best decisions for the future of the company, and everyone else is trusting that you’ll do the same.
This trust is crucial in those early days because so much work is done to establish product market fit, with tweaks being made to processes along the way. If something is not working properly, you can course-correct in real time, and then implement measures to ensure that the problem does not reoccur. This often involves implementing a tech-based solution, such as formulating a new process using existing technology, or procuring new technology for future use.
Yet as the company picks up steam, things inevitably start to change.
The larger the team grows for example, processes become less malleable. It’s difficult to run a sizable operation successfully on an ‘ad hoc’ basis, and so it becomes more crucial that processes are designed and followed, and that solutions are readily available so that those hard at work are not left scrambling each and every time with no learning from prior mistakes.
Similarly when it comes to tech-based solutions, problem solving is less about working something out on the fly, and more about that strategy-based vision. While your initial head of tech may have been “a coder who has a bit of strategic thinking,” said Patel, it ultimately needs to move towards someone with significantly more strategic vision.
The reality is that the CTO who helped build the tech stack to get you to $5MM may not be the same person that you need at $10MM or $20MM. At that stage of growth, it’s less important to have a CTO with hands-on tech knowledge, and more important to have someone who understands the business’ competitive advantage, and who can think strategically about how to maintain differentiation in the marketplace.
“A lot of people can create,” added Patel, “but it’s not easy to preserve.” In order to stay on top, the CTO needs to be part of that strategic leadership team who can come up with solutions, and then delegate the labor to those on the team better equipped to do that hands-on work.
It’s difficult changing high-level team members, especially if that means original employees deciding to move on. Yet be careful about sacrificing growth opportunities for the sake of perceived loyalty. That strategic insight is crucial in all positions, but particularly in technology. If you’re preparing for a first-round investment and your CTO is still spending their days and nights coding, it may be time to reassess your situation.