Hello! I have been getting a lot of requests to be a fractional CTO and needed advice on how the model works? Any Fractional CTOs here, do you usually charge $$ or take equity (how much should I be thinking?) or both? I’ll be working with seed, series A and B funded startups. Thanks!
You either have package options or custom tailor it around the opportunity.
I recommend trying to avoid hourly rates.
My best strategy is to sell an audit / discovery package first. I have about 12 sections on a report I do and give each a proprietary/opinionated score based on my findings. I also have a second factor I call risk, which helps set my opinion on priority. A few of my categories are documentation, team, security posture, data model, disaster recovery, scalability, code review(s).
I usually write a page or two for each section based on my process.
They give me free reign to come in and poke around, access to the resources (people) I need to accomplish my research. It’s empowering to get into everything, under the hood and point out all their problems.
I provide an example audit report and sell it based on the customer, but usually 10-20k for about 2 weeks worth of work with a 30 day delivery window. I’ve also waived the fee when I felt I could work in a $100k+ deal for it. Even if they want me to fix a specific thing I always start with an audit, it just immediately puts you in a position of strength and the knowledge you’ll have once you go through it will make you invaluable to the company. It’s also very easy to sell, you ultimately eliminate the complexity of trying to negotiate solving a specific problem - which you can’t do blind and need to dive in anyway to make an intelligent decision. Without a package, the research can become implied as free as part of a scoping estimate. You also only have to sell two things - your expertise and their trust.
This allows me to get a package project with a fixed timeline out of the way as soon as possible and not waste time… it also serves the purpose of providing a deep dive into all aspects of the business and can identify opportunities for work.
The secret with tech audits is you will ALWAYS find something that needs addressed, and you’re the person who found it, documented it and hopefully knows how to fix it. As a true CTO, you may not even need to fix it yourself hands on, just know how to find the best options to get it fixed.
There a community or set of resources for fractional CTOs?
I sent a dm about this.
Excellent thoughts. Can you refer something to workout the audit and the template? Been trying to zero in on an approach as I hear[/think] many “non-tech” founders are looking for fractional CTOs.
Related business and our model is similar and has been successful- selling a short, defined fixed deliverable (like your audit) that is primarily discovery on my end as a lead in.
Pros of this is the small financial commitment for them (compared to a full contract/project), allows me to get paid to deeply diagnose the problems, allows us both to make sure we’d like to work together, and provides them something of actual value even if they don’t decide to go forward.
Yes, I agree - the take away is that the document has value, hopefully tremendous value in understanding where they stand. Most CEOs not being technical need someone they can trust to provide a true assessment and give them an ‘unbiased’ report on the state of their business. Especially the fast growth startups where everything seems to be falling apart and they just can’t seem to get a real solution. Often times I’ll report the staff is shorthanded for what’s necessary to maintain a business at their pace… I try to do my best to stay on the good side of the existing teams and not crap on them directly. Being in tech for over 25 years and getting shit on by outside parties is too common from people trying to make a quick buck. I like to think I bring an ethical approach to doing what’s best for the business.
Also - getting access to their actual order system helps me fully understand the risk / opportunity of the situation.
I do something similar. An intro call turns into an assessment. When I complete the assessment, the prospect picks from 3 possible packages that scale based on how much access they want.