Insights
January 13, 2025
How our customers leverage AI in their business
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How do you hire the right engineering team to achieve your business goals? Having been both a CTO of a startup and running an agency, I have a bird’s eye view of the problem.
If the value of the company is dependent on the originality of the software - meaning there is a technological moat - then you need a CTO. Most businesses aren’t in that position, but rather technology is a conductor to the business and not the moat. Ask yourself if the technology can be copied. If it can, then it probably means you don’t have a moat, and your business relies more on your distributions, sales, incumbency, partnerships, branding...etc. Technology can help reduce cost of distribution, increase availability of your business, streamline operations to remain competitive in your market and is just an optimization to your business.
If the technology you are building has a name: a dating app, an e-commerce shop, uber for this or that… then it’s more likely that you don’t need a CTO to build your technology. Consider boiling down the technology you need to something existing with some tweaks that apply to your audience. This will streamline the communication to the engineering team, and help with architecture. Often, an agency can be quicker, more cost effective, and bring higher quality to named pieces of technology.
If your business didn’t receive any external investments, it’s more likely to hire an agency. If your startup is dependent on investments, the venture capitalist will have an opinion on how you build your technology. Y Combinator is famous for demanding having a CTO as a partner of the company; while other VC firms are willing to invest a few million dollars to pay the salary of a “CTO” and reduce his share in the company. The latter case will often hire a CTO who manages an external agency to do the heavy lifting.
Finding true technological moats today are hard to find, and the barrier to entry gets lower and lower especially with AI. That’s one of the reasons agencies are more and more likely to get more business.
Hiring a CTO or an agency presents the same risk: you do not know if the app/website will ever launch, and if it’s built the right way to scale the company.
To pick the right agency, find an agency that has built similar technology to what you are trying to build. Often, developers will say yes to everything, get the money, and not deliver and ask for more. If the agency hasn’t built something similar in the past, then it won’t be that cost effective for them to do a great job at building yours. For a CTO, they will have to have launched a product, run tech operations and have hired a team. Hiring an agency that hasn’t built it before, or a CTO who’s never launched and run a product before will make your launch risky and most likely will never happen.
Does the CTO or agency have a good track record of running a product? The only way I know to successfully run products is to have extensive monitoring of your software. Without monitoring, you cannot evaluate the quality of your software. The first question to ask your CTO and/or agency is “how do you monitor the application”, and ask them to give you logins to the monitoring platforms. Your monitoring should say “0 bugs” - that’s the expectations of every user whether B2B or B2C. And Yes, that is very much possible - ask us about our bug reports for software we’ve built. Most developers won’t care about bugs, but we surely care about our tech operations and running businesses smoothly.
A tech leader’s responsibility (CTO or Agency) needs to have the capability to build a product following the rule of three. It has to be of quality, not too expensive, and built at a reasonable speed.
Playing with quality is a big no-no. I have heard too many mis-interpreated quotes from Zuckerberg about breaking eggs - it doesn’t mean you can lower the quality of your software to cut cost / improve speed. Quality can only mean achieving exactly the right amount of effort for meeting the expectations of your users. For instance, a B2B application for a niche market will have drastically lower expectations in terms of UI than a B2C application in a broad market. In that case, understanding that the business outcome will be the same with a lesser UI is crucial to get it built for the right price at the right speed.
Speed can refer to the time to launch. Luckily with the newer technologies you can derisk making updates to software with good infrastructure. For instance, if you have the ability to revert an update that isn’t successful, you are limiting the impact on your users. And therefore, you can manage to have slightly less strict rules on your QA - quality insurance. That shouldn’t be the rule, but the exception. Rocket scientists don’t have the ability to revert a rocket launch - and that’s why they cannot reduce their QA. Amazon’s famous double door quote: if a door revolves both ways, making a decision isn’t crucial as opposed to a door that opens only one way (terrible contractors would make doors that you can’t open, right? ;) ).
Improving speed and quality while increasing cost - yes that’s possible and it means hiring more engineers. Building technology should lead to more profit, which can be re-invested in building more technology. That’s also a key piece of information when picking an agency or a CTO. Will they be able to scale your team and your software? If you pass the first step of making a product, and finding product market fit, scaling becomes a completely different job where most CTOs and Agencies get fired and replaced with higher caliber technologists. To prevent that: you need to assess people, technology, and business processes. We’ll cover scaling a business in another blog post, but ADM is part of how we do it.
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