What We Think

Scaling Consumer Technology

14th July 2017 /

Most entrepreneurs find that scaling technology functions is an ‘unknown unknown’ if they have not personally lived through certain phases of growth. Getting insights from CTOs who have overcome those challenges can prove invaluable. At our CTO breakfast, we asked Paul Cutter, Mike Warriner, Mark Tsimelzon, and a small selection of prominent CTOs to answer some key questions from founders and investors regarding the management of technical teams in the scaling process. Below is a summary of an interactive discussion hosted by Erevena on 22nd March.

At each stage of building a company there are different challenges connected with the development of the engineering team. Paul Cutter suggested an approach illustrated by the table below, which was later discussed by our guests.
 

For a start-up – defined for our purposes as a company with up to 25 people in its technical team – the key is to hire a few highly skilled people.

That sounds simple enough, but in fact it immediately raises several new challenges. Firstly, finding great young technical talent is hard, not only because of the global shortage, but because identifying the difference between good and great is harder in this field than in many others. Leaders should live by the rule that only technical people can identify greatness in other technical people. That means the ability to spot great technical talent is one of the skills you need to look for in your very first hires. And secondly, that can create another risk: becoming over-dependent on one or two people.

Start-ups also face the eternal dilemma of finding the right mix between experience and youthful energy. Among older workers, it is useful to look for evidence that they are constantly learning new tricks, picking up new technologies. And for the younger ones, a Computer Science degree can be a useful signal – perhaps not so much for what the candidate has learned, as for what it says about their theoretical background, their ability to learn new things, and the discipline of picking up a textbook and extracting knowledge from it.

 

After the start-up phase, comes the phase of rapid expansion, where companies go from two dozen engineers to more than two hundred.

A group of self-starters in a single room suddenly becomes a set of teams, including individuals with a wide range of personalities and working styles. That kind of growth brings with it a huge increase in what goes on outside the engineering department: the leadership pulling the organization forward, and the operational support services that provide a solid basis for success.

In general, people are either good at engineering or at operations, but rarely at both. If you are not constantly aware of this difference and seeking to manage it, it is very easy for fault lines to emerge between the two groups through a lack of mutual respect. Openness in discussing the tensions goes a long way, as does hiring the most operations-minded engineers you can find and matching them with the most engineering-minded operators. It is also key to ensure that your support teams are stakeholders in the company’s success, and thus included in the success criteria.

As a leader, one of your most important roles is to ensure that your marketing, product, engineering, and commercial teams are all working as a single team, communicating regularly in an agile way. The teams need to see each other as partners: the most dangerous developer is the one who makes assumptions rather than going back to the product owner, who is engaged with the user. Modelling and encouraging this kind of behavior will help you build an organization that is resistant to unforeseen challenges.

Finally, keep your product targets tight. Set high-level targets and leave it to your employees to figure out how to get there. Tell them to climb the mountain, do not show them the trail. The best employees will be better than you are at identifying the most elegant and efficient routes.

 

Once you’re operating at scale, with 250 to 500 engineers or more, the challenges shift yet again.

By this point, process must be embedded in everything you do. But be sure to keep a perspective on process: it is a way of ensuring you do things right, not an end in itself. The emergence of Word documents detailing processes is a sure sign that the wrong behaviors are creeping in. Do not place reporting at the end of the chain; instead, establish ongoing daily releases. Culture is what drives releases, and maintaining a good culture is the best way to retain your best engineers. Another tip: engineers who believe passionately in the product, and who also use it, tend to stay around for longer.

At this stage, you will also face several key policy decisions that are common to all companies of this scope:

Build vs. buy: the rule here is that everything that is core IP must be built. The rest can be commoditised.

Tech spending: 20-25% of your total revenue should be spent on tech. CTOs want to work for tech-forward CEOs, who are happy to invest this way.

Compensation: while stock options may have become the standard, there are signs that they are not a priority for millennials. Be sure to listen to employees and provide whatever it is that keeps them motivated.

Lastly, as your company begins setting up local tech teams outside your home country, there are several key considerations. Look for locations with several good technical universities; this is a good rough indicator of how easy it will be to find staff. You want people with good English skills, but it is not only about that: you also need people with a global mind-set. Look for good transport links to your headquarters; it is just not possible to run your entire business relationship over the phone. Finally, look at the political ethos of the country. This means more than just the current ruling party. Is the country’s political climate friendly to business? To foreign companies?

Once you have found the perfect location, be sure to grant the right degree of autonomy, while still establishing clear processes and lines of communication. Autonomy is a great motivator for local teams. Another one is to ensure the product they are developing is tied to revenue. And build a tech-driven culture throughout your company: tech is not just something that is done by people “over there” in a cost center; it is at the heart of what everybody does.

As the founder, CEO, or investor, you will frequently be getting to the point where you realise that there are ‘unknown unknowns’ ahead of you. But even if you cannot predict them, it is possible to prepare for them. Getting input from people who have faced similar challenges before is usually a good first step to prepare yourself for whatever the future may bring.