Many companies come to me with questions about early technical hiring. Do I need a cofounder? Do I need a CTO? There’s several major recurring personas I see in this process. I’ll attempt to at least list them, so you can see which one is most relevant to your situation.
Technical Cofounder Link to heading
Tech Cofounders are most useful pre-build into building. This persona should be someone who’s absolutely essential in getting the technology off the ground. Right now with AI, non-tech cofounders have a lot more building ability available to them. If you’re building a basic CRUD (Create Read Update Delete) app, ask yourself if you really need advanced tech talent to build this for you. By definition this person must be a builder, unless you wish to immediately scale with offshore talent.
The exception here is if you’re going after a program that requires cofounders like YCombinator.
Typical Cofounder equity ranges from 35-49%.
CTO Link to heading
CTO is one of the roles with the most diversity between companies and between stages. CTOs can be engineering or hands-on focused. For the purposes of this article, we’re assuming that they do not join as a founder (because then they are CTO and cofounder, and cofounder takes priority).
Early startups need to index on building potential - a CTO who is early who does no hands-on coding may not have visibility into the system they are building. Oppositely, a late CTO who is very hands-on may be a net drag on the organization if they function as a bottleneck for review or actual work completion.
You must choose the right CTO for your bottleneck. If you need to iterate more rapidly toward product market fit, a hands on CTO may be more helpful. If you need to scale your organization, you may need a more managerial CTO. Founders should be aware that organizational needs change too, so look for CTOs who can transition seamlessly between the two. 0 management is usually expensive, and 0 hands-on tends to result in later paid, so look for someone who is at least competent in both.
This variability shows in CTO equity compensation, which can range from 1-49% depending on stage.
Principal Engineer Link to heading
Principal Engineers are useful as independant operators who will solve technical unknowns for you. They are best deployed with large uncertain roadmaps, to verify feasibility. They can proactively prove out roadmap and de-risk initiatives.
Typical equity compensation may be low single digits, 1-2%.
Head of Engineering Link to heading
Heads of Engineering are useful in developing systems for scaling engineering. They are better deployed with less feasibility concerns, when you need to scale teams to attack feature work. A great example is integration-heavy applications. Feasibility is given (the APIs exist), but execution is a concern due to scale. This role is mainly useful with scaled headcount for management, whether contract or W2.
Typical equity compensation may be 1-4%
Founding Engineer Link to heading
Founding engineers are unique in that they are not unique - this is the generalist execution role. This role supplements all of the roles above in providing that execution. They can be swapped for contract talent, but a core of equity compensated individuals makes on-call rotations and other activities more economical.
Typical equity compensation may be .1-2%.
Overall, I hope this has shone some light on different options for early technical hiring. It’s not about choosing the perfect role, but instead understanding which persona/archetype most matches your economic needs, and finding someone for whom that set of responsibilities is ideal.