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How to Hire a CTO or Technical Co-Founder

Who Can Be a Tech Co-Founder?

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https://www.cleveroad.com/blog/technical-co-founder-equity/#what-to-look-for-in-a-tech-co-founder⁠

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A tech co-founder is not a regular developer who will take care of the coding part. It's a person who's deeply invested in the company, owns founder-level responsibility, and takes part in setting the overall vision.

Tech co-founders can be responsible for:

Hiring and organizing a development team

Shaping a development strategy

Building the project’s MVP

Drawing up the project’s tech stack

Before we move on with technical co-founder shares, let’s review three high-level roles—senior developers, CTO, and a tech co-founder. And see how they’re different.

Three high-level roles: senior developers, CTO, and a tech co-founder.

Option #1. Senior Programmer

A senior programmer has 5+ years of experience, lots of completed projects, and has already dealt with problems you're about to face.

The senior developer you’re partnering with needs to be someone who already knows the industry. Especially with the development team as they’ll interview, hire, and monitor employees.

This could be tricky for senior programmers as they're often more experienced in programming than managing a team.

A tech co-founder or a specialist performing

CTO roles and responsibilities⁠

shouldn’t be one-sided programmers. Search for people with a combination of technical and business background.

Tech co-founder equity: Senior programmers are ready to work for a small amount of equity. Still, you should pay them a competitive salary instead.

Option #2. CTO

A CTO is different from one-sided programmers. They're more skilled at seeing the full picture, and they're fantastic programmers, too.

If you want to

hire a CTO⁠

look for people with a combination of technical and business background. A good CTO knows how to manage people and build a team, what strategy to choose for product development, and how to put efficient programming processes in place.

Tech co-founder equity: Hiring a CTO is the right choice if you can afford tech salary and a fair amount of equity.

Option #3. Already a Tech Co-Founder

A co-founder is an enhanced form of a CTO. They have a voice in the company and are compensated with equity. That's why they're 'co-founders' and not regular employees on a salary.

It’s a partnership, not a hire.

A tech co-founder has the same programming and management skills as a CTO, but they're more invested in the company.

Co-founders share founder's responsibilities like:

Providing strategic, tech-based thinking on the business

Working on the software product itself

Building the tech team—interviewing, hiring, managing

Following current tech trends and advancements

Tech co-founder equity: If you’re just starting out and could use support in every aspect of crafting your startup, be ready to part with a sizable amount of equity (up to 50%).

What to Look For in a Tech Co-Founder

Let’s see what skills make a great technical co-founder:

Communication skills. Check how good the person is at listening—good communication isn’t all about talking.

Long-term thinking. It takes 7-10 years to make your startup a success. You need partners who are thinking 5-10 years into the future but are executing now.

Be a strong team-player. Great co-founders build great teams and put the success of their team before their own success.

Extra strengths. Find a person who will complement you: if your actions are too cautious, look for someone who's risk-tolerant. They will help you with the risky decisions any startup faces.

If the person has little interest in the business side and only cares about tech details, you probably found a programmer, not a co-founder.

Same when they agree to work for free. If they’re not interested in technical co-founder shares, they're not interested in the business.

Start getting to know your co-founder by asking questions:

Where will this company be in 5 years? Why?

What qualities would you look for most when hiring team members and why?

What personal motivation did you have in founding a company / being involved with this company? (like personal growth, financial gain, solving a problem)

How to Convince a Tech Co-Founder

We’ll review two options—paying a salary to your tech guy, offering

technical co-founder equity⁠

, or both. But first, let’s see what you should do to look attractive as a co-founder yourself.

How to Be Attractive As a Co-Founder

Know your niche

Do customer research, consult about your product, gather evidence, and show numbers. If you’re only starting out, try filling in Alex Osterwalder's Business Model Canvas. It’ll help you write down all details like your target audience, key partners, resources, and so on.

Accept that your idea may not work

Chances are it's been done before, maybe in a slightly different way. Anyone can come up with an idea, so don't get too caught up with yours. Ideas are great, but it's the execution that rocks. Make sure you know your niche and realize what product you want to build. Create a product roadmap, outsource the creation of an MVP. And don't expect someone else will do all the job as this is a team effort.

Learn how to sell

You may not know all tech details (that's what you need a tech guy for) but need to work on marketing, sales, fundraising.

As the tech guy, your partner will focus on building the product and managing the team. Your job is to be out there selling the product, bringing in the clients, and generating revenue.

Get at least basic tech skills

It may sound controversial, but at least some tech skills are must-haves. You need to know some of the terminology, and be able to have a conversation about your technology with customers.

Salary

Of course, you offer them technical co-founder equity (we’ll see how to split it in the next part). But that doesn’t mean your tech co-founder will work on sheer enthusiasm.

If they're skilled enough to be your tech co-founder, they're skilled enough to make money somewhere else.

That’s why you don’t want to skip a salary altogether.

According to Glassdoor, co-founders get $102,055/yr in the United States. You don’t have to pay the market rate or higher, but it’s a good move to make sure they get enough money to pay the rent and buy groceries.

Tech Co-Founder Equity

As you’re reading this article, we suppose you’d want to learn more about offering equity to a technical co-founder.

Different teams have different approaches to splitting the shares. Some do it right away, others get to know each other first, then split the equity.

There’s a formula to follow, called the Founders Pie Calculator. It’s a method of dividing equity created by Frank Demmler, an Adjunct Teaching Professor of Entrepreneurship at Carnegie Mellon University.

In contrast to popular notion, the shares are not distributed equally just because 'it's fair.' Demmler suggests to evaluate each of these aspects:

Idea

Business knowledge

Domain expertise

Commitment and risk

Responsibilities

You need to assign weight to each, and rate the founders in each of these aspects on a scale of 0-to-10.

Assigning weight to a tech startup aspects

Assigning weight to a tech startup aspects

Aspect

Weigth

Idea

Business Plan

Domain expertise

Commitment & risk

Responsibilities

There are no rows in this table

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Next, evaluate the founders. Who came up with the idea? Who has more expertise? Who's responsible for the tech side? Let's image your working on a high-tech startup with four members of the founding team:

The founder who came up with the idea

Technologist, the inventor's right-hand

The guy who brings business knowledge to the company

A research team member who hasn't contributed much to the company

Aspect

Weight

Founder

Tech co-founder

Business guy

Research guy

Idea

Business plan

Domain expertise

Commitment & risk

Responsibilities

There are no rows in this table

⁠

Multiply each of the founder’s values by the factor’s value to calculate the scores. Then add up the numbers for each founder, sum those totals, and calculate the percentages.

How much equity to give a tech cofounder (according to Founders Pie Calculator)

Aspect

Weight

Founder

Tech co-founder

Business guy

Research guy

Idea

Business plan

Domain expertise

Commitment & risk

Responsibilities

Points

106

142

Equity

32,12%

43,03%

18,79%

6,06%

There are no rows in this table

⁠

Frank Demmler’s calculator is just one of the ways to share equity for technical co-founder. Some people offer an equal share, some split the equity depending on the contribution but using a different formula.

Anyway, give each member an equal chance to contribute and make sure that the final decision makes everyone feel valued.

Where to Look for a Tech Co-Founder

You won't find a co-founder with a decent tech background in a day or two. Of course, if you don't have a bunch of tech-savvy friends ready to step in.

To find the right person, you need to monitor several resources, have a wide network of contacts, and spend weeks researching.