What’s your startup all about? The people? The idea? The mission? All of those are true and important in their own ways. However, at some point, you’re going to need something to show for all the effort put in, you’re going to need to build something. That’s where ownership of your technology kicks in.
A startup that has complete control over its tech is extremely attractive to investors. Tech is the power to be creative, drive value, and bring something new to the market. It also opens avenues for patents and exclusive control over your innovation giving you a massive competitive advantage of those that do not own their tech.
Put simply, owning your tech is how you win.
Investors love to see a CTO or Lead Engineer on the founding team that ‘owns’ a startup’s code. This person should have an intimate understanding of your product roadmap and what engineering hires need to be made to take the software to the next level.
Controlling your product also provides the ability to be reactive or better yet, proactive! No third party to negotiate with, or be stuck with long lead times to have a product delivered or a bug fixed. When you own the tech stack, direct action can be taken to respond to feedback from customers and improve their user experience quickly.
I know what some of you are thinking – “Marc, what do I tell an investor if I don’t own my technology? What if I’m using a third party? I’m not a technical founder – when should I hire a CTO?’
The best time to own your tech is when beginning your startup, but (good news, here!) the second best time is after your seed round and before your ‘A’. It’s not the end of the world if you use a third party for some or all of your software development pre-seed. However, your seed round use of funds should be heavily focused on in-housing the tech and building out the tech team, including a head of technology or a CTO.
Of course the best advice anyone has ever given on use of funds is Steve Balmer in 2008. Hang on to his every word HERE – he really had it figured out!