Tiny DevOps episode #41 Morgan Craft — Is a fractional CTO right for your company?

April 26, 2022
Morgan Craft is a New York-based former software engineer and CTO, and currently a founder and Fractional CTO. He joins me to discuss the concept of a fractional CTO, why they're growing in popularity, and how to decide whether one is right for you.

In this episode

  • Why would a company hire a fractional CTO instead of a full-time CTO?
  • Why it's so hard for early-stage startups to hire a full-time CTO
  • How soon should a new company hire a fractional CTO?
  • What are the risks of continuing without a CTO?
  • How "hands-on" is a typical fractional CTO?
  • The relationship between the CTO and the product in small companies
  • How to choose a fractional CTO
  • How do you coach and mentor developers you work with?
  • Thoughts on working with off-shore developers?
  • Is a fractional CTO as committed as a full-time CTO?
  • What does it look like to graduate from a fractional CTO to a full-time CTO?
  • What does a fractional CTO cost?
  • Do fractional CTOs typically earn equity?
  • Using a fractional CTO to hire your first developer
  • How to connect with a fractional CTO


Resources


Guest
Morgan Craft
Web site: MorganCraft.com
LinkedIn: mgan59
gitBabel


Transcript

Speaker: Ladies and gentlemen, the Tiny DevOps guy.

[music]

Jonathan Hall: Hello, everybody. Welcome to another episode of the Tiny DevOps podcast, where we like to solve big problems with small teams. I'm your host, Jonathan Hall. Today you can see if you're watching, I'm sitting in a little bit of a dark room. You may recall last time, the wall behind me was just plasterboard. Now it's been painted, but I still don't have my lights up. This wall hasn't been finished, so I'm sitting in the dark. Please forgive the bad video, if you're watching this.

Today, we want to talk about fractional CTOs, what they are, what you might want one for if you're in the market for that sort of thing and to discuss this, I have my guest today Morgan Craft. Morgan, welcome to the show. Thanks for coming on. Would you tell the audience a little bit about what you do and your background with the fractional CTOing?

Morgan Craft: Just to jump in I'm based out of the New York City area, started my career here in New York as a software developer PHP jQuery is when I got my start.

Jonathan: Nice.

Morgan: Worked my way up into engineering leadership and eventually took over as a CTO at a Y-Combinator startup, took that company to an exit in 2019, and then left that to go found my own startup and was bootstrapping it. What ended up happening was, as I was bootstrapping, I was consulting just hired as a developer, but quickly came into a company and then they were like, "Can you just be our CTO?"

I was in the position where I'm building a startup, I have partners. I'm like, "I can't just be your CTO. I have my own startup," but that's when I learned that this fractional CTO was actually a thing I could do that companies, especially small startups getting started, that don't have technical founders, typically need a CTO. That led me to this path of a, "Oh, I could actually build a consultancy around just being a fractional CTO." That's how I got my start in the industry and going down this path of being a fractional CTO.

Jonathan: Awesome, so you've been doing this fractional CTO thing then for what, two or three years, is that about right?

Morgan: No, actually I'd say maybe 18 months now. Actually, maybe less. 14 months.

Jonathan: Okay.

Morgan: I've been a CTO previously for three, four years.

Jonathan: Yes. A full-time CTO longer than that.

Morgan: I already took a company through an exit, so along that journey. The company I was at was called Hickory Training. We were Y-Combinator 2015, and a lot of our customers were Bloomberg, BlackRock, Shopify, so I'd go on through this security due diligence process with multiple companies in getting through their actual compliance team. Part of my background as a CTO at that company was very, very diverse as you can imagine. At a small startup. I wore every hat you could possibly imagine, plus I would manage developers, you looking at code reviews, Django Python, React, so very still hands-on at that stage.

It was definitely a good experience for me to learn all these different areas and gave me then the skills as I'm now working as a fractional CTO, I really came into it as a generalist. Whatever you need me to do, I can do it from a technical leadership perspective. That's what I've been doing, but now as I've been going on, I'm starting to focus a little bit more around what is the offering, how do I help clients, and so on.

Jonathan: You did a recent interview on the manager's club podcast if I'm not mistaken where you talked about some of the same things from your perspective, from the perspective of somebody who's going into being a fractional CTO. If anybody's interested in that topic, by the way, I'll have a link in the show notes to that interview. I'm interested in hearing the other side. You've taken a startup to exit before, so maybe we can try to put that hat on right now, the founder hat. When does it makes sense in your opinion for a company, whether they're a startup or not, any company, when does it make sense for them to look for a fractional CTO as opposed to a full-time CTO? Why would you make that choice?

Morgan: I think the big piece to the hiring a full-time CTO and what I tell a lot of my clients, good luck, because the problem you're going to run into, especially here in the New York City area, but it could be anywhere, obviously, Google, Facebook, they all hire developers and they're willing to pay a CTO, let's say 250, 300K plus benefits and options to come work there. If you're a small startup, that's maybe raised $1 million, you don't have that money to go spend on a fractional CTO or on a CTO. Good luck. At the same time, depending on what you're building, if you're building a small B2B, or I'm sorry, B2C company, that CTO is not going to come to your startup. They just won't.

I think the struggle that really happens for folks is that you can't hire a full-time CTO because you can't afford them and good luck recruiting them, because they're going to go to a larger company or a cooler, better, well-funded startup. The market itself is there. There's so much venture capital. There are so many startups, they're all fighting over a small pool of CTOs, and I think what's evolving now is this realization that every company is becoming a software company. I don't care what you do anymore.

You have marketing tech, you have so many pieces in your stack that are technology-driven and you ultimately end up meeting some technical leader to come in and provide strategy and to provide the ability to build an internal software team to some degree, whether it's one or two engineers. In your question of when does it make sense? My answer is for most folks, it makes sense as soon as you possibly can, and you realize that's what you need to do because every company ends up needing some sort of technical leader. What I'm finding now with my clients, a lot of them are small startups that have been venture-backed. In some cases, they don't have a technical founder.

I work with a couple of VCs here in New York City, and they give me portfolio companies where they've backed a set of founders that have a great mission and a lot of great experience in some vertical, let's say, but they don't have a technical founder. They need someone to come in, and in these cases, they may have an engineer. They may not, it depends, but in some cases they have one or two developers, maybe they're local, maybe they're overseas. Essentially, my role is to come in and help start to get that team functioning, create ownership, accountability, start to help the founders.

Basically, I become a partner for them in a way and I'm helping them figure out what's the strategy? Who are we hiring? How are we hiring? What are we building? What's the road roadmap? In many cases, having a founder myself, I have my own startup that I run, plus having built and sold a startup, I become very close with these founders and helping guide them. I've created that vertical for my software. I'm focused on these smaller startups, but there are so many companies out there that having raised money, somehow they've managed to build a company and have revenue, I kid you not, and they are making a go of it without a CTO, but they are struggling on the software side.

Jonathan: Oh, I'd like to touch on that a little bit too, because I can imagine a lot of people, especially if you're bootstrapping you're thinking, "I'll just make it a little bit longer without a CTO, without real technical leadership." What are the pains that come from that approach? Is it ever appropriate, and if not, what are the pains that come from that?

Morgan: [chuckles] I think in some of the stories I have heard from clients, some of them are the same. I've spent $100,000, $300,000, 9 months of time on these developers overseas or offshore and I don't know what they're doing. I don't know what's wrong, but I know something's not right because nothing's been delivered and it's been nine months and I come in, and then I start to look and I get access to the codebase and I can tell like the developers just aren't doing anything. Then I'm asking those questions, "Do you have a staging environment? Do you have weekly demos?" and the answer is, "No, I don't have any of those."

Very quickly, it's just creating that process of establishing a staging environment. Getting the work, and getting ownership and accountability, I'd say that's probably the biggest pain. Right off the bat is that the executive, the CEO, or the operator isn't technical and can't hold the individuals accountable for the work getting delivered ultimately. I think that's one of the biggest pains that I see, is that piece of it. The other would be recruiting developers for a company is very hard as you can imagine. Just recruiting the developers is hard, even if you're a technical recruiting developers is challenging. For someone who is not technical, that vetting and hiring a developer, it's very hard as well.

A lot of my clients, I end up doing that piece as well. A lot of it is recruiting. I'm going to be honest on that, I do a lot of recruiting at this point.

Jonathan: I'm curious how much hands-on work you do because I was originally talking to a startup who's looking to hire a CTO, and they want somebody who can come in and continue development on their Python codebase, but also help strategy and your driving business? Do you do that, or as a fractional CTO, do you stay more strategic and recruitment sort of focused?

Morgan: Yes, I can do that. I don't like to do that for my clients, because it doesn't scale for me, it does not scale. I can't be in a bunch of different codebases, writing code, opening PRs, doing code reviews on other developers, it's very time-consuming. To be honest, for someone to get me to do that for a client, you would have to pay me a lot of money, just because I would have to kill all my other folk. It would be a lot of effort. I can do it, I understand the motion, but I try to not do that.

I try to sit a little bit higher up in the stack in which I am the person there to help find that person who is maybe a technical lead. They're in the position where they want to become maybe an engineering manager, maybe run the team of, let's say, a small squad of two to three developers Ideally, I'd find that person, help mentor them, get them to the position to do that role. That is typically what I'm trying to do as the fractional CTO. is to actually mold that process and to put that process into place and to find the people and the team that I can hand that over to.

I would say, though, the one thing I'm still hands-on, though, for a lot of my clients, would be product grooming and that piece of story writing, because I find also really, back to the pain and challenges writing the stories and building a product roadmap. Clients coming to me, they may have a product person, and that would be the next piece and goes to the CTO side of this. As a CTO at a small startup, you're going to end up owning product, and so you have to learn to do product.. When I work with a team that doesn't have a product mindset, I end up filling that gap as well as a contributor.

Very much, I'm helping figure out the roadmap. A lot of it is the reading the stories and planning the work and then teaching the team what a good story looks like. I would say for now, that's definitely a large chunk of my contribution effort, is putting that into place because product feeds engineering, so it sits upstream. A lot of my work is in that area as well.

Jonathan: You talked a little bit about how difficult it is to hire developers and I think, any technical role, whether it's a developer or operations engineer, or anything like that, that's hard. Especially if you're not a technical person, if you're a non-technical founder, you have a great idea, but you don't know how to implement it. Hiring those people is hard, but there's a chicken and egg problem, they need to hire a CTO or fractional CTO, how do they vet somebody like you? How do they know that you know what you're talking about and you can help? How do you break that cycle of ignorance? [chuckles]

Morgan: That I'm still trying to figure it out. I would say right now, it's referrals. I think that's where some founders have an advantage, especially if they have VCs or some advisor, they can get help. There are people out there that do technical advising. I thought there for a while I can do it myself. Typically though, technical advisors aren't always paid. In my experience with a small startup, my advisors, I pay them equity. They can be helpful from that perspective, if you have advisors that can help, but I think the rubric for finding a good fractional CTO can be a challenge still.

I think, as an industry, it's still early days, I think we're going to start to figure it out. There's starting to be some marketplaces that exist out there to potentially find a fractional CTO. I would say, when you're talking to someone, depending on what stage you're at, that's the big piece of it. Look for someone who's done. It depends on what you're building. If you're building a payments platform, and you have to do security and governance and you have all these banking laws you have to follow, in that case, you need a fractional CTO that has done security audits and understands compliance and those sorts of things.

If you're building a B2C that sells shoes on Instagram, but you need someone to help you build a platform around Shopify, and you need like Klaviyo and you have all these integrations, in that case, you probably don't need that fractional CTO to have that security piece and that payment or with a governance background. You can maybe go with a fractional CTO that actually does D2C, understands Facebook ads, growth, marketing, building that sort of marketing engine. I think the rubric for examining which fractional CTO to hire really depends on what niche you're in, but you really need to talk to someone about their unique experiences.

I'm going to be honest, it's not easy. I think there's a lot to be done in this space still around how we hire and source and find fractional CTOs.

Jonathan: How important is it do you think for a fractional CTO to be well versed in a particular tech stack you're using, or if you're working in a more strategic level, is that less important?

Morgan: Yes, I think it can be important. I'm not going to say it's not. I would say if someone came to me and they wanted me to help them, and they were Rails, I would be somewhat a no, potentially, or at least I'd be very clear with them, like, "Rails is not my jam. I do a lot of other languages. I can do Django Python, Node, I can do some GoLang, but definitely, .NET, no, and Rails, no, they're not my go-tos." I can read Rails code, but don't expect me to do a code review for that. It's not my area. I think that that actually can be critical because it's hard to-- A lot of what I end up doing is I need context for where we are at.

Even if I'm high level up, and I'm not writing code, I do look at code reviews, I do look at pull requests, I am tracking what's getting built. Because when I go into that product grooming meeting with the founders, I need to know where we're at so I help us figure out where we're going to go and I can't get that context unless two things are happening. Mazing documentation, which some teams are great at, others are not. That's always a flyball, whether or not I have the documentation in place to help me understand what's getting changed.

Then the code reviews, like pull requests, and those sorts of things. If they're not organized or if I can't look at them, and 20, 30 seconds, understand what's going on, it creates a challenge for me to get context for where we need to go. Ultimately, at the end of the day, my role is to report up to the founders and give them direction. Like I mentioned, if I don't know where we're going, it's hard to tell them where we're at, essentially.

Jonathan: To what extent and in what areas do you generally coach the developers working under you? You already talked about writing stories. Are you coaching them on how to organize pull requests and how to use Git and Agile practices and things like that? How in the weeds do you get in that sort of stuff?

Morgan: Hopefully, I don't have to do a lot of Git training. I specifically will make my technical assessment. I do take-homes, I structure them so that I at least know you know Git to some degree, the way I do the take home. I don't necessarily focus on that, but some of the areas I do focus on, pull requests. I love pull request templates. You put the template into the GitHub repo, and it can give you a formulaic at least template, and then I create that expectation on the developer, that, "Please fill this out." You could give me a sentence. Just give me something though. The last thing I want is an empty pull request description.

What ends up happening, I parachute into a pull request, as I usually call it. I jump in, I have no idea what I'm going to get when I open up a pull request. Getting in and looking at the descriptions and understanding what is in this PR, that's step one in getting developers on board. I think in a lot of ways it's about them managing up to me, to keep me in the loop with context, helping them understand how do I properly document a pull request? How do I update a story? Moving the stories around on the board for stand-up. Those are some of, I guess, the administrative things around it, but the actual code itself, I rarely--

I actually make it a point not to tell them how to do things from an implementation perspective. I will typically say, "That's not my job. I don't tell you how to do it. I tell you what we need to do and why, that's my role, but I don't tell you how to do it." I've run into this issue with some of my clients where I don't pick the tech stacks because it's, again, not my role. I've gone through the Tailwind versus styled components in React. I don't know if you're familiar with these frameworks.

I had a client where one developer came in, started with Tailwind, they hired two more devs, they didn't like Tailwind. Then we had this issue in the struggle where some of them wanted to move off the Tailwind, some of them did, and at the same time, I don't want to get involved because I don't write the code. I don't want to force my opinions on the developers who do the work. With that said, I try not to get too nitty-gritty with the folks around it. However, if they're junior developers, and this specifically for more senior developers, I'm not going to get involved, but for the junior developers, I will definitely make more of an effort though to give them some pointers.

Maybe if I see something in their PR, I'll be like, "Hey," I can get a little nitpicky, "Create a constant file. Don't have these strings just defined wherever and then you're checking them." I'm like, "Make a constant file. Put things in a constant file." Or maybe I might ask around the testing-- That's another big piece in the PRs is making sure that-- I love GitHub Actions for this. I'll set up those GitHub Actions to make sure that the tests are getting written and I'll push on people about tests. I guess I do get a little hands-on in some of those areas.

Jonathan: What's your thought or experience working with offshore developers? I imagine that has happened-- at least, a lot of the companies that I've experienced who might be in the market for a fractional CTO, they hired an offshore team to build their stuff on the cheap and it turned out not to be cheap, so you come in and you're dealing with these offshores versus maybe you're trying to hire in-house, what's your thought around that whole topic?

Morgan: I have a lot of opinions.

Jonathan: [laughs]

Morgan: I would say take my opinions with a grain of salt, but this has been my experience. I believe that we are in a global market and a good developer knows what they're worth. A good developer that is senior, writes their own stories, can manage their work, opens up great pull requests, writes tests, that developer can get paid between $80 to $120 an hour. That's the market rate for that developer. I don't care where they live, that's what it is. Now, what happens. Let's say, the lower end market, a developer starting out, maybe $25 to $40 an hour, and there's some room between all that.

Now, where you live does start to factor in because someone, let's say, I have a client and they think, "Well, I only want to spend $30, $25 an hour on a developer. I instantly think that I should go overseas to get that developer because I'm going to get the cheapest developer possible." That's true. You can get some fairly inexpensive developers for $25 an hour anywhere though. You can technically get them here in the United States. You can get a bootcamp grad for $25 an hour here in the United States as well. The thing is though you might be able to get someone, let's say, in, I'm just going to pick a country like India.

You might be able to get a $25 developer in India who's maybe a little more senior than the bootcamp grad. Your mileage may vary, but end of the day what I've seen is this piece of I had a client who was only willing to spend $20 an hour on developer and they weren't getting good results. I had to be honest with them, like, "Well, it's $25 developer. What do you expect? They're an okay developer, but they're not going to go above and beyond. They don't care about your business. They show up, they write code and that's it. They're not going to solve problems. They're not a partner."

You want someone to come in here and actually take ownership over this codebase and give you high-quality code? You're going to have to pay more money, simple as that. I think it ends up being that piece where you're going to spend what you're going to spend on developers. Really it comes down to assembling a team that works together and finding those folks and putting it together. The one piece that ends up coming though is, who runs that team, ultimately? Because for my clients, a lot of the offshore or outsourcing we do, I'm still there running the show, making sure code is getting merged.

One of the interesting things, and this is your area, is the DevOps piece. Getting developers to do the DevOps, do deployments, and release management, is a whole nother piece of the technical system. Releases happen every week and they take coordination and effort. I think my clients sometimes don't get that and you explain to them like, "You can't have a $20 developer doing that. You're going to have to hire someone a little more senior in charge of your infrastructure and your release strategy." I think in those challenges, it's communicating to them that DevOps professionals and that infrastructure release management, that is a different piece.

I think there's, unfortunately, a really big gap in that area around project management release. My clients that want to replace me, that's where the wheels come off, essentially, is you can't find a senior technical product manager who's willing to come in and do all this for $20 an hour. That person knows very well that they could go make a significant amount of money working at any other software company because any company is going to easily hire them for $140, $150 to run that process, at least, if not more.

Jonathan: You talked about being a partner that higher-paid developers act more like partners. When you join a company as a fractional CTO, what is your take on your partnership with the company? Because I imagine it's less than if you were full time, or at least I can imagine that most people think that, maybe it's not true. It probably feels like you're less committed. What's your take on that? Are you just as committed or is it somewhere between?

Morgan: [chuckles] It's a good question. It depends on the client. I'll say that. It does depend on the client. Some clients, they keep you a little bit of a distance because you aren't fully committed. I've had that where I'm not really in the team, I'm not invited to all the events, there's conversations that I'm not part of. In those cases, yes, I don't feel as involved because I'm not. That's very natural to feel that way, that I'm just there to keep put the cart on the rail and keep it there and make sure it moves, and that's fine. I show up and do that work.

Then I have the other clients that they truly value my insight, my feedback and I have very candid calls with them. Especially the early-stage founders that have raised money and it might be their first time run running a startup, and which it's a rollercoaster for them, especially as a CEO. Being able to really have that on one with another CEO and have that CEO to CEO conversation around how hard it is, how are we going to hire? What's the runway? How much money do we have? A big piece of it also, I've been on the other side of the boardroom.

When I was at Hickory, I was in the boardroom meetings and would hear investors talk. Understanding the pressure in that room that happens to the founders. I think in those situations I formed a really close partnership with these founders because in some ways it's almost therapy for them to have someone else that's not an investor, I'm not judging them. I'm not going to go tell on them like, "Hey, this founder's doing this." It's not what I'm there for. I think in a lot of ways in those relationships, it's much closer and I feel very connected to the team versus the other clients that may or may not have that relationship with me.

I think it can range, but usually, I give it my all if I can, if they let me in. That's how I work.

Jonathan: Okay. What's your personal exit strategy? I don't mean for the startups, but as a fractional CTO, what's your goal? Is your goal to help them graduate to a full-time CTO and replace you or is there some other goal that you're aiming for?

Morgan: It could be a few different states. For some, it is, "Let's get you to a place where you go get a CTO at some point." I believe there is something to be said and I can't take care of it for this. This is Nelly Yusupova, she's also a fractional CTO though she's a little-- She's also here in New York, but she sells more on the startup side and does a little bit more upfront planning work. She once made this great comment that you don't hire a CTO, you earn your CTOs and that you have to get your company to a place where you can attract a CTO. I'd agree with her assessment on that. I think it's very true.

From my perspective, helping a startup get further along in the company that they could actually recruit and retain a CTO on their own would be the goal and a lot of times for these companies. That is what I am doing with one of my clients right now. I've been there now three months, got them through a big security governance compliance process with a banking for their payments. Now we're hiring some more developers. We've launched the pilot. I believe by August, they're going to probably raise another round. At that point, I think they could probably go hire a full-time CTO because they'll have the extra money, they'll have a product launched.

They'll have an engineering team already in place and so hiring a CTO will be much easier. Because one piece to it, you can't hire a CTO if you don't have any developers. I've seen a client try and do that game where there's no developers and they're just saying, "We're going to go hire a CTO," and I'm saying, "No, you're not, no CTO will come here with zero engineers. They don't want to start from scratch. No CTO wants that headache. Most CTOs don't want to do recruiting, so good luck finding someone to come here and start from square one."

Jonathan: Let's talk about the dirty topic of money for a minute. [chuckles]

Morgan: [chuckles]

Jonathan: What does it cost to hire a fractional CTO? I'm sure there's a range because fractional could be anywhere from one-tenth to half maybe, I don't know how that works.

Morgan: Yes. Here's and I'm just trying to work out the pricing, and as you mentioned the previous interview I did with Managers Club, I definitely talk about some of the numbers as well because I think it's good to be transparent to folks. If you're not familiar with Rands list, it's a Slack channel for engineers, senior leaders and in there I've seen people quote $200, $300 an hour for fractional CTOs. I think that's possible if you're billing hourly, but as you know, because you and I have met through the JS group, there's what you would call value-based retainers, and structuring-- not charging hourly is a big piece of how you price.

If you're looking to hire a fractional CTO, you need to be aware of that. If you're going to pay someone hourly, they're going to charge you most likely more money and you could go from anywhere in that range. You can end up getting a fractional CTO, let's say, sub $200, so let's say one $40 to $180, you might be able to get a fractional CTO per hour and give you some level of commitment. The thing about a fractional CTO is that it comes down to how much bandwidth they're willing to give you. When I first got started, I would sometimes give people an intro because they'd be like, "How do I know you're any good? I don't know you."

When I first got started, I would do I think 20 hour-- or no, I'd do 10 hours a week, so 40 in total for the month. I would bill that hourly and my role would just be, come in, do some code reviews, maybe run a standup or two. That was enough in the early days at 10 hours, but that's only maybe 2 developers on the team. If you have more than 2 of developers, that's not going to work because one thing I've realized to manage a developer it's between 5 to 10 hours a week per developer. If you have 2 developers, I could potentially need 20 hours to manage them.

By manage, I mean I'm grooming the work, I'm figuring out what they're working on, I'm doing the code reviews. There there's a bunch of activities that I'm doing in that. That's one way to look at the, like, if you're going to hire someone, what are you looking at? To get an intro and so at that $120, let's say, $150 an hour, you're looking at probably $5,000, $6,000 for the month I think at that point for a factional CTO. Then I think what can end up happening is let's say you want to bring someone in a little bit more, like now you want this fractional CTO to maybe give you 80 hours a month and not 40.

In that case, now you're going to start to look at probably a $14,000 to $15,000 commitment, and in that sense per month, you're looking to have someone who's probably making $180,000 a year in salary. It starts to get very much in line with that. I think the trade-off to realize is that the fractional CTO does have a limit to how much they can do. For myself, I can really only do two clients at a time. I've spoken to some fractional CTOs who claim they do more. I don't know if they're just bumping their chest and saying they have extra clients and it's not true. I'm going to be honest and say, I can really only do two.

The one piece that I also run my own startup, gitBabel, so that also factors in. Technically, I'm running three clients, but one of them is my own and the other two are just basically, I have two clients that I'm helping at a time. I make that very clear to everybody, it's like, "I only have two clients," and so it does work in my favor because like create some FOMO. I'm like, "If you're not going to commit, I'm going to go find another client and since I have limited bandwidth, you have to commit back to me in our retainers essentially."

Jonathan: Does equity ever play into a compensation for a fractional CTO? It usually does, I think, for especially a founding CTO, but as a fractional CTO, do they offer you that or how does that go?

Morgan: As I've been going in over time with the clients over the last year, now they're starting to offer me equity as I'm looking to transition out of the organization and looking to draw down on my retainers. In those cases, I am looking to take on some. The thing about equity is the more you take, the more involved you have to be. You have to ask yourself, how involved do you want to be in this company? Because if you're going to take-- not someone should ever do this to a fractional CTO, but let's say someone gave me 5% of the company or offered me 5%.

I probably want to take it because that's a lot of equity to give someone that's not going to be a day-to-day contributor in that organization. I've had this conversation with folks before that are like, "Oh, I could get 30% of the company." I'm like, "Why would you do that to the founder? You're going to mess them up. They might not realize what that means, but I can tell you that that's a lot of equity to take and you're not actually contributing. You're just going to get on a call once a week with the person and talk." I'm like, "Don't do that to them."

I think similarly, I wouldn't do that to a founder, I want to take a big chunk of equity. I think it's good to have some equity on the upside because, to be honest, if I've spent six months helping you build and create an engineering, an organization that can now ship and deliver on its own, that's valuable and I would want a little bit of equity possibly from that. I'm not opposed to taking it, especially if I know I've built this company to succeed. Maybe I should get a little bit of the upside on that. I'm not opposed to taking equity. I would be just reluctant to take a lot.

For me personally, I probably wouldn't take anything more than 1%, so maybe quarter points. Quarter and half points are very common in the world of advising if you're not getting paid and you're just taking equity because you can do that as it's very common in startups to have a board of advisors and you're paying them all a quarter-point of equity every year.

Jonathan: Okay, cool. Early in our conversation, you said no CTO wants to join before you have developers. Would you say the same about fractional CTO or would it make sense to hire a fractional CTO to hire your first developer for you?

Morgan: [chuckles] I think a fractional CTO could do that. That's definitely something that I do is I pitch to clients that are looking to hire me, potentially, is if they have no developers, I'm like, "It works for me. We'll build a process and go get you some developers and go from there." My one caveat would usually be, "Do you have a product roadmap? Do you know what you're building? Do you have anything?" Because what could happen there is that they don't have anything built yet and so then I do have to figure out like, what is the stack? Are we doing it all in node? Because I don't know what developer we're hiring.

They may or may not have a job description yet and that would be the starting point, is figuring out what is we're building. In some cases, they may have code. Maybe they've hired a developer and they've fired that developer and so they do have some legacy piece of code. Then I got to figure out, "Do we start from scratch or do I pick up where this developer left off?" If so, let's say they're building a Django app, it might just be like, "Okay, we're just going to keep using Django," because I can manage a Django project and I'll just keep moving that forward. I do, do that.

I think one thing that I haven't mentioned, there are some fractional CTOs out there that have their own dev teams, and what they do is they operate more as an agency. I don't run that business model, but some do. The piece being there, then some clients don't want to actually go hire developers, they actually want a fractional CTO that has a team of devs on the bench that they can just utilize, not all but some. There's a trade-off there because, in my estimation, the type of clients I like to help build teams is that I want you to own your team.

They're your developers. You want them building value for you long-term and make that investment in your company. If they're my developers, they're my developers and when I leave, they come with me. It's two very different fractional CTO businesses that you end up building. What ends up happening is you become more of an agency once you start going that route and you have developers that you lease as, I would call it, to a client

Jonathan: Fascinating. If someone is listening to this and they decided that maybe a fractional CTO was right for them or they at least want to look into it more, what do you recommend they do? You mentioned there's some marketplaces. Do you recommend any or should you look on LinkedIn? How do you connect with somebody who might help you with this?

Morgan: I think it's going to become more prevalent that there'll be these marketplaces, and then ultimately, it's sort of like anything, you'll be able to sort through folks and again, figure out which ones you might want to hire. Here's the thing, they all take a cut, so you're going to pay more. Any CTO on there, they're going to get probably 20% of their take to this agency and so if you're able to find-- and you're going to pay for that. That's the thing you run into when you hire people off marketplaces is that there's a cut in there and you pay for that, essentially. If you're able to source your own person, it could be a better route.

Jonathan: Good. Of course, you said you only handle two clients, so it doesn't sound like you're looking for new clients right now and even if you are, at some point in the future, your availability is extremely limited, but if somebody's interested in getting in contact with you, do you have a website to share or social media?

Morgan: Yes. I'm just morgancraft.com. You can totally go to my site. It's nothing fancy. It's just got some information about me, a bio, it's got my contact forms. You can email me there and that'll go directly to me. Also, a great place to connect with me, on LinkedIn. I'm active on LinkedIn. I think a lot of the fractional CTO community is definitely active on LinkedIn because it's just a great place for us to be, whether we're sharing content, social media posts, or even just messaging one another. There's some folks there. I would say those are two really great channels to connect with me. I'm happy to engage with folks if you have any questions whatsoever. Happy to talk.

Jonathan: Wonderful. Thanks a lot for coming on. I've enjoyed the conversation. Is there anything you would like to add before we sign off for today?

Morgan: Maybe just a plug for my personal startup gitBabel. I'm building a learning and knowledge platform for engineers. How it started off, I've been involving it now to the fractional CTO side. I think one of the things I've now learned is being a manager of-- at one point, I had four clients, and so that essentially meant I had five development teams across eight time zones. [chuckles] It was mayhem to manage 20 developers in a bunch of different teams, essentially. That context switching was challenging and so one of the things that I've been focusing on with what I do at gitBabel is how do I build a platform for fractional CTOs?

If anyone's interested in a different type of engineering management solution, I'm definitely working on that. Come over and definitely check it out. I'm happy to answer any questions, or if you have ideas on what are challenges that you have and are looking to solve, definitely reach out. I'm also happy to talk about that as well.

Jonathan: Very good. Well, once again, thanks, Morgan, for coming on, it's been an educational conversation. I and all of our listeners, I promise, we'll check out gitBabel and we'll be in touch.

Morgan: No, that was great. I appreciate being here. Thank you so much. Have a good day. Cheers.

Jonathan: Cheers.

Morgan: Bye.

[00:43:19] [END OF AUDIO]

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