Soft Skills Engineering - Episode 23: Joining a startup as a CTO and asking for a raise

Episode Date: August 22, 2016

In episode 23, Jamison and Dave answer these questions: You are asked to be a CTO of a start-up. What questions would you ask in order to decide whether to join, and what things would you give most attention to, if you do join? I REALLY want and deserve a raise so I hope you two discuss how a nerdy introvert gets the CFO of a small privately owned business to want to give her more money when she’s already happily donating an additional 10-20 hours a week.

It takes more than writing great code to be a great engineer. It's another great day on the Soft Skills Engineering Podcast, and I'm your host, Dave Smith. I am your host, Jameson Dance. And together we are the Voltron of podcast makers. I missed my cue. I thought we were both about to say Soft Skills Engineering at the same time. Oh, dang it. If we do that, we have to add reverb. This is the beta version of the Voltron. Yes, and there is no final. It's just beta. We're like a Google product.

Yeah, the Google beta. uh before we get started i want to make one self-serving announcement i am looking for contract work i do front end back end uh specialty in javascript um but i i have a love for all all programming so if you're interested in building great products or if you're looking for help with uh kind of soft skills team related issues then i'd love to talk to you just send me a tweet at jergison or a direct message jamison really knows how to script the java i gotta tell you oh yeah he's a good java i've got an extensive array of scripts i want that was good i once saw a quote that said java has as much to do with javascript as cars have

or as a car has to do with carpet makes sense that's good all right those are hard skills yes which don't exist yeah those aren't don't exist here do you want me to read the first question hit us you were asked to be the cto of a startup what questions would you ask in order to decide whether to join and what things would you give the most attention to if you do join all right you want to be a cto or you think you want to be a cto and you've got the job what do you ask so i mean it seems like two parts like first how do you figure out if this is if this is the job you should do and second what do you do once you start right yes yep uh this is really really hard i don't think there's going to be a cut and

dried answer that'll work in all situations here because every company is so different but i think for me the number one thing i'm going to try to identify before i join this company is the level of dysfunction in the company you know like every company has it how much does this company have and is it surmountable what do you think jameson i think that is a solid thing to figure out i i think the other thing i would look at is how deeply do you understand the business that the company is in and and how much can you make yourself care about it yes because the higher up you are in an organization the more kind of businessy things creep into your technical work and cto is is pretty much like the peak of technical person in an organization and you deal

a lot with the business side one could say they are the chief technical person yeah that's i think yeah that's i'm gonna coin an acronym peak technical officer yeah pto pto perfect tpo technical peak operator um got it so if if they're making like beige widgets bait what just i think i just had a stroke beige widgets i don't care about the beige ones yeah if it's just like the most boring thing in the universe to you there there are fascinating people problems and scaling problems and engineering problems but a lot of your work is going to be on the business side um so so to me um understanding how much you can make yourself care about is important but also uh understanding how the business works because your technology

decisions directly affect the business and um you're making much broader you you have a much broader uh like lever to move the organization so you can change a lot of stuff um and have a huge effect on the business and knowing how that affects your position in the market and what your competitors are doing and and kind of all the financial stuff and that's that's all wrapped up in part of the job so i i would spend a lot of time um also just seeing what the state of the company is and what their visions for the future are and just kind of the businessy side of things you just said that you're going to have a lot of uh basically a lot of power to turn knobs in the business and change things and i want to push back on that a little bit because i think

it's an as a cto potential cto it's really important to figure out just how much autonomy you're going to be given maybe you have a ceo who won't let you do anything you know like oh you just worry about those code things and i'll take care of everything else or maybe you have a very empowering ceo who will let you make important and significant decisions that affect the business in meaningful ways but it's not a guarantee you know not all ceos are like that so i think it's going to be important to figure out if what kind of ceo you're going to have it also depends heavily on the size of the company if there are five people at the company cto is basically like head engineer and you're just writing code all day and you probably do a bunch of product stuff too

yeah um but i guess that's a good point too some some ctos are heavily involved in product and some are are not as much and there's a separate product organization or the ceo runs product or there's a chief product officer an actual c cpo that's right pco ocp we don't acronym well yeah yeah you're right those can often be separate organizations um i've seen it done both ways i've seen product which when we say product we're usually referring to like the product design product managers user experience designers um sometimes those people report through the marketing department sometimes they don't go through the cto at all so good thing to know before you get started i think one more question i would ask is um how how will i know if

i'm doing a good job great question depending on the this might be a salesy thing where you should have a an answer for this already and say like here's i'm gonna do all this stuff and i'm gonna sell sell high and buy low and like have this laid out plan that's project success but if if they're more kind of coming to you or you feel like you you're not trying to project this aura of omnipotence to them um you should just ask kind of what what do they expect a good cto to do and that will probably identify some dysfunction as well if they say uh like fire half the team and make the rest of the half work twice as hard oh yeah that's that's how you know and get a little pitchfork to poke people that's how you know that you're being successful when

people fear the tread of your foot uh that'll tell you some stuff you'll definitely learn some things things will be learned if this is a real small startup um you are probably going to have to be ready to do things that you haven't done before like jump on a support call with a customer who's having a technical problem or jump on a sales call with a salesperson who's trying to close a deal and they need some technical support from your side um or uh fire people you know like especially small companies that if they're growing they'll go through growing pains and a lot of times that involves changing people are out um hiring new people firing people so um ask but you have to call it right sizing if you're a cto

get ready for some bogus business phrases yes hopefully your synergy and paradigm shifting techniques are up to snuff yep just just speak like you're in the middle of a ted talk have you seen that ted talk that's about nothing yes it's fantastic get acquainted with that talk yeah uh you mentioned some financial stuff do you want to talk about what kinds of things you would look for yeah i would like to know if i were joining a startup like this um first of all there's a good chance that you will be compensated with some kind of equity instead of cash or in addition to cash. And as CTO, you should, especially for a small startup, you should expect to have a good sizable chunk of equity. If they come to you and say, we want to offer you

one-tenth of 1% in stock options for a small startup that's just getting started, that's a really weak position. You know, I would want to see multiple ones of percent, I think, for most small startups for a CTO. Secondly, I want to know how the company is financed. Do I have venture capital investors? Do I have private equity firm investors? Is it bootstrapped with cash? Are we cash flow positive? Are we cash flow negative? Is there a path to profitability? What's the exit strategy? What does my capitalization table look like? These are all questions that you absolutely will need to ask. And as a CTO who's coming in, you will not be looked at funny because this is the vocabulary of the CEO. These are the things that your CEO will be dealing with every day. So

he or she will have no problem answering those questions and if they do that's a red flag in my opinion because they just say like don't worry about it and wave their hands i know a guy yeah it's fine you ever heard of enron yeah they had tons of money don't even worry about it my finance guys learned everything they knew from that i also want to know if the ceo is honest now I don't want to jump on the bandwagon of giving CEOs a bad rap, but this is a situation where it's really important that your CEO is an honest person who will share with you complete and accurate details of all situations, because you're going to be basically partnering with this person. And likewise, the CEO will need your trust as well. So, you know, he or she will need to be

able to know that when you say something, it's legitimate and fact-based and not, you know, and if it is opinion to at least know that so you're going to have a close working relationship with this person very likely and so oh and the actions of your partnership will potentially influence the lives of many people if you're successful so if you have a good working dynamic that's really important sure all right i'm sure there's a thousand other things we could ask but you want to go to the second half of this question uh yeah so what do you do once once you join you rule with an iron fist i thought the first order of business was to install combination ping pong foosball tables that'll fix the culture problem yeah yeah the culture

because the culture problem was there were not enough foosball tables and now it's fixed booze party actually um i know yeah get some bro culture in your company that's what you need so um i think number one is culture number two is culture and number three is culture a good culture does so much and having a good culture is a whole episode that i think we could talk about and i would like to do at some point but culture culture somebody asked a question about culture yeah um so important for you to create good culture because now it's your job whereas before being in a leadership position like this you were a member of the culture and a contributor to the culture as a leader you can literally change the culture with words

you know it's it's a very strange situation but you can do that and people will listen and it's really really important that you set a good culture from the top that's really interesting that you said that because i agree that culture is super important if your business dies it doesn't matter how good the culture is that's true but i think having a good engineering culture will be a factor to contribute to your business not dying at least for engineering reasons you know yeah i mean a bad engineering culture can take down a company it can prevent you from being successful man i know a lot of successful companies with really bad engineering cultures though yeah it's a good

point but also you got to think of this not from a holistic life perspective in my in my opinion it's not just about whether your business succeeds it's about whether the people there were happy i mean these are people you know i mean yeah okay your business might fail granted it's a startup it probably will fail um but do you want it to fail and never be able to speak to any of these people again because you all hate each other or do you want it to fail and you know you go down go out in a blaze of glory together and go on to the next awesome thing together yeah it's it's like you're building a ship now instead of crewing a ship and you get to decide what kind of ship it is and you still have to go somewhere but you can have like people chained up

in the bottom and this big beefy guy beating a drum like in uh what's that movie it's not is it spartan movies is that something like that i don't know probably i i don't know but anyways that could be your ship or you could have like this just happy ship where everyone works together and people are appreciated and valued and they row super fast but like the love boat yeah i've never seen an episode i haven't either but i yeah i assume it's like everyone is just really uh deeply loves each other as a human being that's right and there's no drama yeah i imagine there isn't i don't know what they would make a show about though i guess but just all the love good stuff happening it's it's more of an aspirational show like demonstrating

correct human behavior i i imagine utopia on the water yeah yeah i mean what else what what else you focus on james uh there's a ton of stuff i mean one of the things is developing people this a lot of this is stuff you focus on as a manager but just more and maybe a couple levels more so you're trying to um either create or identify people that that you believe could make the engineering organization have the culture that you want it to have and and work more smoothly uh and and so i think a lot of your effort goes towards um giving those people the confidence they need to do that and kind of identifying them and giving them harder stuff to do and uh yeah so people people development i guess that can come in from hiring too but but kind of working

with the team you have that's a i think that's an important part of it i mean we already kind of talked about the the product side and working with the business side but there's there's going to be a ton of like budgeting and i don't know financial projections and planning but i think you will you will focus on that by default you can't really not focus on it but i i think the culture and the and the people stuff are things that um are possible to not focus on and still have the job and then you would you would be missing out on things if that makes sense yeah Yeah, I agree. I also think you should focus on good process. Like, are your engineers wasting time getting approvals? Or are they? Is there inefficient, wasteful, painful process that they

have to go through? Or are they empowered to do things quickly and efficiently? Having good process in place is good. Now, some companies say, well, you shouldn't have any process. But I disagree with that. I think you should have process. And it should be the correct weight of process, not too heavy, not too light. And people should know how to do things in a reliable way that won't cause issues and that will get things done effectively. And I think that's the CTO's job to establish from the top. One slightly tangential question. Do you imagine that you do these things by sending out kind of the email that says like, we do code reviews and here's how we do it or or is the cto in the trenches and the cto just does a code review and models like

if you want to be like like me no i think it has to be more overt than that i think you can't just do it and be like all right everyone copy me you know what do you think i think there's a mix i think a lot of the cultural stuff uh can be implicit in in someone's behavior and what they what they ask people for and what they reward but i think you're right that a lot of the process stuff could be a little bit more explicit than that i think the ideal situation would be that the leader cto in this case gets involved enough to feel the pain of the current process and and tries you know to see exactly what it's like and then gets input from the team by talking with them about how it's going and helping brains you know facilitate discussions i think a good leader

doesn't just come up with ideas and then write edicts, but rather facilitates ideas to flow from the team. And then the best ones can be selected and then put in place as process. And then I think something does need to be written up, like a wiki or something to explain, here's how the process should be. I disagree. I think the best leaders buy business books at the airport and then read them and then do what they say at the airport i love that yeah it's e-myth manager month here at software consulting llc i just read this great book i don't know why but the little bit about at the airport is just just made that story so much better that's where i see them all i i have heard those kinds of books called business erotica because they purport to be about business but they

present a very unrealistic view of how the real world works that is hilarious yeah i i kind of like reading them but take take those with a grain of salt okay my last my last thing i would focus on is empowerment is making sure and this goes back to culture but making sure the people who need to do the job that they're assigned to do are empowered to do it fully without any impediments and this is these are just general principles i think they're not really specific advice but it's and and you're gonna have to assess this forever it's not like a one and done okay you're all empowered now let's move on to the next thing you know you have to constantly be assessing and i think one of the things people don't recognize about engineering leadership

is just how repetitive it can be because it's like constant course corrections like okay is everyone empowered this week you know you have to ask that question constantly and you're going to be asking yourself the same question because empowerment is going to be important today and also important a month from now sure and every month thereafter you know and good process same thing so sure two i have two things i want to say the first thing is as you kind of move up levels in management i think you can see yourself you can see your role as to to stand fast against the evil outside influences of the business and you're defending your engineering team and like protecting them from sales people tapping them on the shoulder unrealistic deadlines proverbial

crap umbrella yeah you're you're this warrior and that can produce a lot of really good things uh and and it feels like that you you have to work a little bit more collaboratively maybe this is unrealistic expectations of what the real world is like but i i feel like the cto uh your job isn't just to say no to everyone that asks you to do stuff engineering wise it's to figure out ways to work together productively so yeah i think yeah once once you get to that level there's a little bit more compromise and and asking your team to do things instead of saying like don't you tap jenny on the shoulder she's deep in this intense bug and how dare you send her this email i'm like i don't know that is a very hard balance to strike yeah it is because

if you do too much of that too much of of asking your team to compromise then they see you as not sticking up for them and and you've lost them yeah and they don't get as much done yeah but if you don't do enough of it then they become insulated from the rest of the business and they don't feel like a connection and responsibility you know yep i'm sure you'll do fine one the last thing i would say uh this so there's a woman camille fournier her last name looks french which means i'm automatically pronouncing it wrong uh she's the person i heard that business erotica quote from and she has also written quite a bit about engineering management and her role she was the cto of rent the runway which is this cool uh fashion tech company and she's written a bunch

about it so uh it's it's all i mean obviously from her viewpoint and she has very kind of specific opinions about the right way to do things but she's got great stuff about kind of the role of a cto and the role of engineering management in general cool question answered yep we good luck being a cto you'll do great i'm sure you will just just use this advice and you can't go wrong uh by then i believe it will be standard to just cite time stamps into this episode in place of arguments and so they'll say like uh here's what we're gonna offer you for equity and then you just say like oh um episode 23 13 minutes where dave said you get 99 of equity i'm pretty sure that's Cohen. Yeah, and good luck to you. Sounds like a really cool opportunity. Use that tip too. Do you

want to read the next question, Dave? Yeah, here we go. So we've actually gotten this question from multiple people. So if you ask this question, but with different words, this is your answer. I'm going to read one of the instances of the question. It says, I really want and deserve a raise. So I hope you two can discuss how a nerdy introvert, there are no nerdy introverts in software development by the way they're all extroverts uh you must be the only one dear listener how a nerdy introvert gets the cfo of a small privately owned business to want to give her more money when she's already happily donating an additional 10 to 20 hours a week all right how do we do it hmm hmm okay i'm gonna start off with this this is kind of like what i started off with

the last question but you you should know how your business makes money and what your work does in relation to that there's this idea that's that i've heard a bunch of places it's probably pretty common but if you haven't heard of it it's this idea of profit and cost centers or sometimes it's loss profit and loss centers to uh drop the pnl acronym your cfo will be impressed Wow. I learned a soft skill. And some portions of the business are seen as cost centers or loss centers where it's like we pay rent that costs money. It doesn't make us any money. It's just an expense we pay to be in business. Whereas your sales team is directly connected to profit and you pay their salary and then they make sales and bring in money. and you can say we paid this woman X amount of dollars and she brought in X plus a bunch of money in sales and so she brought in profit.

And it's a lot easier to show value if your work is related to a profit center versus a loss or cost center. An example I hear a lot is at Google, all of their money is from ads and they do a ton of other stuff, but they make all their money from ads. And so I've heard, I have no idea if this is true, but I've heard that the engineers associated with ads generally command higher salaries because their work is more directly connected to what makes the company money.

So you can either do that by kind of aligning your work that way or just by recognizing how the effects of the work you already do relates to what the company does to make money. Awesome insight. if you are in a cost or loss area like maybe you're building internal tools that let's simplify it to kloss center a kloss center uh like maybe you're building internal software that the hr team uses to manage uh benefits or something um what can you do then and that was a rhetorical question that i am going to answer great because i was going to ask you no no you what can you do then Um, what you can do is you can identify money saved by virtue of the tools that you built. So I don't know, dear listener, if you're in this camp, but if you are, you could say,

we used to have three HR benefits specialists who had to work with these manual spreadsheets. And I built tools so that one of them can do it in a week instead of having three full-time people employed doing it. Look at all that money I saved you. You killed jobs though. Yes. Another way to identify money saved is how many people did you get laid off? no those people did other valuable work other productive things yes like sipping

frou-frou drinks on the beach which is what i would do if i were anyway um that's that's one thing i would do if i was in a a loss center like if i were not in google ads i would try to identify uh savings efficiency gains that the company has gotten as a result of my work what else jameson i saw on the movie office space that you can just like steal a bunch of money and that's like a raise embezzlement yeah and and it's like the company paying you more money but you don't well you do have to do more work to get it a little more yeah um well let's focus on this part she says she's already donating 10 to 20 hours a week that is a lot of free time yeah they the business sure is happy you're doing all that extra work for for free they're they're they're

doing great they're enjoying it i you know that's a hard one like what if the cfo knew that you know the cfo could be like oh you're already working 10 to 20 hours per week per week for free um i like this arrangement like why would i change it you're happy i'm happy you know yeah i could see it the other way too where um you're you're working extra to prove your value and and this is one way to do it and demonstrate hey i can do all this extra stuff check it out and then show show worth but it seems like it could also be taken advantage of a little bit i have gone into a raise review in the past and said hey i've worked a lot of nights and weekends this year i think uh i am worth more to the company than what you're paying me right now and i think that

has been a good argument actually so the fact that you're doing this could actually be a benefit um like Jameson was saying, you could very well use it as a way to say, I'm definitely generating more value than what you're paying me for right now. You mentioned generating value versus what you're paying. And I think you have some good ideas around identifying that. How do you figure out what your value to the business is? Some of it is the P&L stuff, but I think there are other ideas too that you've talked about before. This is actually really hard in an engineering organization to directly correlate what value you generate for the company in a way that a CFO can really sink their teeth into. But if you have another engineer who's responsible for your raises,

I've done things like talking about mentoring other engineers, helping facilitate others to make them more effective in their jobs, identifying a multiplying effect that you're having on other people around you to enhance their abilities and their contributions. But honestly, it's just a really hard thing in my experience to talk to a person who's very financially oriented about this what about your peers that i was attempting to softball you a question and i i did not saw what our listeners don't know i threw it directly to the left jason and i have shared notes that we're both looking at and he was trying to pitch my next note i i pitched it right into the stands

swing and a miss dave so it was unhittable not your fault okay what are your peers making um this is uh this can be tricky territory because many companies don't want you to disclose to each other how much you're being paid but you can find out what your peers are making at other companies and this is a now a market argument about how much you are valued in the marketplace not necessarily for this particular company but just in general and so knowing how much you can make uh at other companies is a great way to know how much your company should be paying you and and that strategy works to the extent that it's easy to get another job uh if it's not then the company is like well i don't i don't care good luck yeah exactly like if your actual alternative is a zero

dollar layoff situation yeah or months of unemployment and then maybe finding a job then yeah but right now it's great for engineers it absolutely is right now in pretty much every area of the country i think and if not you know relocation i guess but um here there's a little game that one of my uh former co-workers calls the salary game and he says i may have talked about this before but he says i'll share my salary with you if you promise to share yours with me there's only one rule we both have to oh no there's only two rules we both have to share no matter what and number two uh no one is allowed to get mad those are the two rules of the game if you agree to those up front then you can play the game and exchange salaries so that's one way to

talk to your peers about how much you're making sure uh i i think i tweeted something about this a while ago but i've i've had good experiences sharing salaries um not everyone has but i feel like I've benefited a lot from it. One other kind of more tactical thing is keeping a record of what you do. This applies especially if you have yearly reviews or regular performance reviews that are tied to salaries. People are biased by recency.

So they'll remember the actions of the past couple of weeks much more vividly and it'll weigh much more into their assessment of you than what you actually did over the whole period of the assessment. So I just do this for other reasons, but I keep this developer diary of what I do each day and kind of like what I get stuck on and what I learn and what I get done. And that's really helpful for me when I want to figure out what did I do

like this past month and being able to point to it and remind people this is what I actually did is easier to demonstrate or makes it can make it easier to demonstrate your value that's awesome i love that it's a really good idea thanks along those same lines uh one of the things that a lot of people don't know is that some companies make salary decisions months ahead of the actual review day so if your anniversary is coming up you might think oh on my anniversary i'll go talk to my manager about my raise. But that could be way too late. And so if you want a raise, you should get that ball rolling months before your anniversary. And you should talk to your manager about, hey,

what would it take for me to earn this much money at this company? And sometimes it's hard for managers to respond to those questions, because there's often not a like predefined set of obvious things that you can achieve to earn that much money. But sometimes there is. And sometimes it's just general guidance. But in any case, you really want to get that ball rolling beforehand. I actually one time walked into an annual review thinking it was going to be a negotiation. But my man, this is like 10 years ago, but my manager literally already had all the paperwork all filled out, signed by both him and his like leadership up the chain and just handed it to me. I was like, here's your raise. And I'm like, oh, I thought we were going to talk about this. Like

I came in with talking points, you know, I was ready to go. But there was no discussion to be had at that point. That discussion had already happened. I want to talk about an interesting model I've seen at Khan Academy. If you don't know what they do, they build a platform for free educational content, basically. And they have an awesome engineering team and they have some interesting technical and cultural writings out there. But the way they handle raises and salary is they they do not do negotiation at all everyone at the same level makes the same amount of money and that's kind of to uh correct for biasing in favor of people that are better at negotiation like they're trying to say that's not a skill that is important to your career

necessarily you shouldn't be penalized for for not thinking to negotiate or not being comfortable negotiating and they have a very i mean this there's always subjectivity in in these things But but they have a pretty detailed guide of like they break it down into different categories of technical and communication and planning and execution and maturity. And they have this ladder and say, like, at this level of the ladder, someone at this level in planning does these things. And then someone at the next level does these additional things. And so it's pretty easy to say, like, I do this stuff. therefore i deserve to be paid at at this chunk or at this ladder that can be really nice it can be really nice it requires a pretty mature organization to identify it and to stick to it

as well i'm gonna guess that based on the way this listener wrote this question that she does not have that kind of a company yeah most people don't small privately owned business they probably don't have like salary bans written up and stuff yeah i uh i think i got the individual categories wrong anyways but they but they're broken down into specific categories that you can identify and evaluate yourself against the last thing i'll say is that sometimes at a single company it's very hard and i don't know if it's a psychological thing but it's very hard for companies to give employees a significant pay raise now um i've seen this in play i've also seen counter examples to it. So it's not always true all the time. But I think there might be a psychological barrier

where it's like, I'm paying this person x, why would I pay them 20% more than x? If they're already working for x, you know, it's like, oh, it's like a big chunk of change they have to part with in their budget for the year. Sure. And so some people have reported to me actually lots of people that they get the biggest salary raises when they change jobs. So that's just something to keep in mind yep again very specific to the market and to engineering at this point in time but i agree wholeheartedly with that it's much easier to go get a different job generally that will pay you more by default than it is to ask your current job for a raise at least it's easier in the sense of getting the salary you want but there's obviously a lot of

other oh yeah just associated with that yeah that's true that sounds like super unhelpful that's our cop-out advice you didn't like any of our other advice go get a different job we say that a lot though don't we it it's it's pretty great advice it must be if we say it so much anything else you want to say about this topic no good luck to you i hope that you can get an awesome raise that'd be really cool i agree and again make sure to cite uh just like chapter and verse site episode and timestamp and if you want us to go to bat for you for your see it you know to your cfo just give us a call no we'll probably screw that up what could go wrong who are these goofy weirdos you brought in to talk about salary

they're my administrative team we'll dress in matching matching suits with briefcases yeah that are full of shredded the newspaper we'll be silent and as imposing as we can be which is pretty imposing let me tell you yes our imposition is impressive dave has got a mean loom he just looms over people i've caused storms in neighboring counties with my loom well dave what can people do if they want to uh get in touch with us go to our new website soft skills dot audio i'll bet you didn't know dot audio was a top level domain but it is softskills.audio you can follow us on twitter at softskillseng and that's the best place to

submit a question if you'd like us to answer something else on the air get in touch with us give us a tweet thanks so much to those who have left questions recently there are so many of them we are working through them one episode at a time thank you very much for listening we'll talk to you next week