What is a Fractional CTO
What is a Fractional CTO or fCTO? A question asked often.
Let’s begin with a story of two startups.
The first one, let’s call it ABC Co. and was started by a sales-savvy founder, who identified a new market for a product he was familiar with. In a short time, he was met with overwhelming demand for his product, a great position to be in, but ultimately his startup failed. For as much as he tried, he couldn’t get his engineering team to deliver a quality product with the necessary features needed to maintain market dominance and prevent churn.
The next startup, let’s call it Next Co. was started by a product-focused founder who was “scratching an itch,” her “itch,” she realized was also shared by a large untapped market, which prompted her to turn her solution into a subscription SaaS offering. The founder was exceptionally talented in identifying the vision and defining the necessary features and had minimal experience building, managing, and scaling a software engineering team. She reached out to her network for advice, and was introduced to a Fractional CTO (fCTO) that advised and helped her build the engineering capability of her startup on a part-time, budget-friendly basis. Presently, her company is profitable and experiencing double-digit revenue growth rates. Features are making it to production on a regular basis, and the company was able to hire a full time CTO to lead the company through the next phases of its evolution.
Let’s define the fCTO role…
Definition
An fCTO is an experienced tech leader that works with startups and/or founders on a part-time (hence Fractional) basis to help them navigate all things tech from strategy, architecture, implementation and most importantly accessing the situation and developing a plan to support it.
fCTO’s have gained experience working in leadership capacities at startups or companies over time. The most common roles they would have held are CTO, VP of Product, VP of Engineering to name a few. Their ability to utilize this experience and pattern match, and provide recommendations based on various situations is what differentiates them the most.
An fCTO is an advisor and a coach to a CEO, founder, or lead engineer looking to transition into a VP of Engineering or CTO role. A top fCTO can provide guidance on vision/mission, fund raising initiatives, leadership, culture and operations to a CEO or founder. For a lead engineer looking to enter management roles, a fCTO can provide them mentoring, resources, and what that next level requires from a business and tech perspective.
Let’s look at the why behind the fCTO role…
Why
Any founder or entrepreneur who is involved in a startup but lacks the experience of building and managing a team that is tasked with building a software (or other technical) product. The fractional nature of a fCTO makes it economical for startups to engage with an experienced tech leader where it would be cost-prohibitive or wouldn’t make sense on a full-time basis.
So why is there a high demand for fCTOs? There are primarily two core drivers for this increased demand, let’s take a look.
Remote work:
👉 Opens the doors and takes down geo bariers and attracts the desired profiles
👉 The more async the company the better, as they’re able to break down the workload into smaller chunks to guess who is waiting? That’s right, the fCTOs
High salaries for highly skilled techies:
👉 Higher wages make it harder for startups to hire full-time tech leaders
👉 It is not only fCTOs that this applies to but also to other tech roles such as DevOps, Infra, Dev, etc.
The cool thing is, just like for full-timers, rates for part-timers are through the roof these days. So now all of a sudden just putting in 10–20 hours/week can make as much as a full-timer did a few years back. It’s the remote companies that are driving this async culture of demand at scale.
Let’s look at the scope of work for a fCTO role…
Scope of Work
Strategy — Review the existing business and technology strategy within the company, make recommendations, and working with the CEO or founder to implement them.
Roadmapping — Define or understand the vision and mission of the company, the business/product objectives and strategy, and create a product roadmap that ties back to the vision, mission, and objectives.
Advisory — fCTOs often act as an advisor and coach to founders, CEOs, and other executives. In many cases fCTOs can provide un-biased feedback as well as providing advice on how to approach challenges in the company as they are always looking in from the outside in.
Hiring & Firing — Usually limited to interviewing and screening technical candidates, however some fCTOs will manage the full recruitment process if the startup doesn’t have a recruiter on board. Recruiting is often not the best use of a fCTOs time, but often necessary for the very early stage startups. The ability of the fCTO to adapt is a key feature.
Product Management — In most instances the fCTO acts as the first product manager on the team, understanding the founder’s product vision and turning it into deliverable outcomes for the development team.
Engineering Management — The fCTO is responsible for directly managing the engineering team until the startup fills this role with a dedicated Engineering Lead.
Fundraising & M&A — The fCTO is often designated as the CTO on pitch decks and is involved in fundraising conversations with investors. fCTOs are also involved in due diligence conversations with companies or VC firms involved in M&A activities.
Technical Auditing — Reviewing the existing codebases and architectures and evaluating them for quality, scalability, tech debt, and other relevant metrics.
Let’s look at the usual rates for a fCTO role…
Rates
A fCTO is a seasoned tech leader who works on a part-time or project-based basis, providing the same level of expertise and experience as a full-time CTO but at a lower cost and commitment. This type of arrangement can be especially beneficial for early-stage startups, as it allows them to access the technical guidance and leadership they need without breaking the bank. Trust me when I say, stretching that bank is key for early-stage startups.
The rates can vary depending on experience, niche skillsets, and other needs but mostly can range as follows:
👉 $100/hour to create a roadmap and/or build an MVP for an early-stage startup
👉 $1000/hour to perform tech due diligence for a VC/PE before investment rounds
The middle ground is usually between $150-$300/hour across everything. I know what you are thinking, wow that seems like a lot but actually its not as the focus should be on the value-generated vs the dollars. I am open for the community to correct me and also for others to share rates across geographies, so that we can all gain understanding across regions.
Being an fCTO is not for everyone as revenue is not fixed. Some months the pay can be great and some months that pay can be zero. It is also possible that you might spend more time on screening calls and interviews than actual work, so it is important to understand the role before diving deep into it.
If you do decide to dive in, make sure to find your Client Persona (yes, just like a User Experience Designer), so that you can differentiate and provide more value to your clients. Here are some guidelines:
👉 Early stage startup
👉 Solid funding
👉 Company without a full-time CTO
👉 Focused on a specific vertical
Conclusion
In conclusion, fCTOs are in high demand due to the nature of the work they perform and how they add value to a company. This demand will only continue to rise over time.
