Posted by Emily Leinbach on September 17th, 2019
Originally published on LinkedIn by Paul Manning, Managing Director, Software & Technology at The Bowdoin Group.
We all know that great CTOs can have an enormous impact on innovation. They position companies to take great leaps forward—take Amazon CTO, Werner Vogels, or Uber CTO, Thuam Pham, for example.
One thing I’ve learned working with many tech companies is that regardless of their technical prowess, a great CTO doesn’t necessarily equate to scalable business growth.
After 20 years of hiring these types of roles, I often get the same questions:
- Why isn’t a CTO enough?
- When do I add to my technical team?
- What roles do I need? CTO? VP Engineering? Chief Architect?
- Oh… and how much should I be paying them?
I’ll cover the answers here and include “back of the napkin” compensation information for the average small to mid-sized company (obviously, it can vary extensively from an emerging Series A round company to a large company).
Chief Technology Officer (CTO)
A CTO is a visionary—plain and simple. They are highly knowledgeable about the market, are experts in modern development technologies, and understand the current players in the space. CTOs are always thinking about innovation and new product directions. As a result, they’re always building the next great solution.
When should you hire a CTO?
If you’re a startup with a strong technical component, one of your founders is generally a CTO. He or she leads engineering operations through the series A round. As your company approaches the B round, companies typically start to see challenges within engineering operations and solve for those issues by promoting someone from within or hiring a VP of Engineering. On occasion, the CTO is more operational than innovative. In those instances, you may want to hire a CTO and move that person into the VP of Engineering role.
How much should you plan to invest in a CTO if hiring from outside the company?
For a small to mid-sized company, compensation for a CTO typically includes:
- Base salary: Ranges from $200-250K
- Bonus: 20% of salary
- Equity: 1.0-4.0%*
VP of Engineering (VPE)
The VP of Engineering has a strong operational mindset and thinks about the balance between higher production and quality of code. They are methodical, process-oriented, and laser-focused on KPIs. They establish focus for the engineering team as its leader and make sure that deadlines are met. In two words: they ensure execution. A strong VP of Engineering understands how to build systems and processes that are appropriate for the size of their team and are always considering how to evolve them as the team scales. The VP of Engineering is often an executive leadership position, and generally reports either to the CEO (70% of the time) or CTO (30% of the time).
When should you hire a VPE?
Around the B round or when the engineering team reaches ~15—whichever comes first. If a VP of Engineering is involved before the B round, they may be rolling up their sleeves and possibly even doing some code reviews. You’ll want someone who is not so far removed from the work itself that they can’t get their hands dirty, but who can grow and scale operations through people and processes. As the company grows, the VPE becomes a maestro to a growing technical team, so they need to be able to effectively manage teams without getting too far in the weeds.
How much should you plan to invest in a VPE?
For a small to mid-sized company, compensation for a VP of Engineering typically includes:
- Base: $200-225K
- Bonus: Less opportunity for bonus, more opportunity for equity
- Equity: 0.75-1.5%*
Don’t be fooled by the word “Chief” here—the Chief Architect is not an executive leadership position. The Chief Architect typically reports in to whoever is running engineering. Early on, this role is typically played by either a senior developer or the CTO. They take the prototype and build it for commercial use. Just like an architect building a house, they design a product that lasts versus one that has to be rebuilt three years down the road. They work hand-in-hand with the CTO to discuss the feasibility of new ideas and the VP of Engineering to determine how they’re going to get there. They thrive on solving complex problems and are at the table when important technical decisions are discussed.
When should you hire a Chief Architect?
The answer to this is generally tied to product complexity and the skills you have within your current engineering organization. When your technology challenges begin to grow beyond your current team’s capabilities or the technical changes are becoming very complex, it’s probably time to hire the Chief Architect. Alternatively, when you’re feeling like there’s a gap between your CTO’s vision and your VPE’s ability to see it through, you may need this role to make black and white out of the CTO’s gray.
How much should you plan to invest in a Chief Architect?
For a small to mid-sized company, compensation for a Chief Architect typically includes:
- Base salary: Ranges from $170-190K
- Bonus: 20-25%
- Equity: 0.5-1.0%*
What is your take on the differences between these three roles? Are there any nuances within your organization? I’d love to hear your thoughts.
*There are many factors that play a role in compensation. These number are rough estimates based on numerous searches we have completed and conversations we have had with industry leaders. If you are interested in learning more about the specifics, please feel free to reach out to me directly: [email protected].