Early Stage CTOs … Can Be Bad For Your Wealth

What happens when the founders and early team hires who launched a company, suddenly find themselves with investor money in their pocket and a rocket ship on their hands?

Sometimes it’s a successful formula and they can grow alongside the demands of fast growth but often, without the right support and guidance, it can be a recipe for operational chaos and value disintegration.

Those who follow the “Book of the Week” recommendations in our weekly newsletter might recall that we once recommended a book called “Disrupted” written by Dan Lyons.

Lyons is a talented screenwriter who for a brief moment in his career joined Hubspot, then a high profile inbound marketing company blazing a direct path to IPO.

The book amusingly captures his thoughts on the colourful growing pains and dysfunctional operations he witnessed as the Hubspot management drove a senior team that largely consisted of over promoted early hires to achieve a breathless pace of growth.

For all the authors humour and cynicism about what went on behind the scenes at Hubspot, it proved to be a successful formula for those founders and investors as they closed their IPO in October 2014 but the book  highlights issues that can emerge when early hires, often recruited in a rush, retain key senior positions despite the demands of growth far outstripping their skill set.

We’re often brought into companies where the wheels have started to fall off and the value of that business and those investments is suffering badly as a result.

This problem is particularly true in situations where the early tech hires have been quickly promoted but without providing them with the support or training needed for them to be effective or indeed cope, with a range of challenges they are unprepared for.

So many of our early stage CTOs suffer from a lack of experience and simply not knowing what they don’t know.

That early stage CTO is often one of the founders who helped sketch out the original hypothesis for their start up on the back of a beer mat but now, with $millions raised and increasing expectations on growth and product, it’s the one key person who is feeling (and performing) out of their depth.

Hardly surprising given the speed of change and the importance of the role but it’s why the support they receive is so important, whether in recruitment, up-skilling and/or the recognition that they might need to carve out time to learn, not just to implement.

The traditional method of learning on the job within an early stage company remains valuable but the reality on the ground is it’s often more about fire fighting than structured learning.

The early stage CTO needs some space to develop their skill set and become the visionary tech leader their CEO and investor needs. Too often the focus is on the technical without enabling them to grow as leaders and it’s the latter that will help drive value.

Ultimately by not taking their leadership development seriously there is a risk of short changing their opportunity to lead effectively and by implication, of short changing the impact they can have on the growth and value creation within that business.

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