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Hiring a CTO July 30, 2026
>The $400K Blind Spot: How Founders Lose Money to Tech They Can’t Diagnose (And the $66K a Fractional CTO Recovered) >
A founder I spoke with last year had a CTO. Full-time. $280K base, benefits, equity. Eighteen months in, the product was late, the cloud bill had tripled, and nobody could tell him why. By the time he let that CTO go, he’d spent north of $400K and was further behind than when he started. That’s not a hiring story. That’s a diagnosis story — and the diagnosis came too late.
>The $400K Math Most Founders Don’t Run >
Let’s put real numbers on this.
A full-time CTO at a $5M–$100M company runs $250K–$350K in base salary. Add 30% for benefits, payroll tax, and equity dilution. Add recruiting fees — typically 20–25% of first-year comp. Add 3–6 months of ramp time where strategic decisions get deferred or made wrong.
You’re at $400K before the CTO has shipped a single thing that moves revenue.
Now layer in what I call The Empty Chair problem. Even after the hire, the chair can still be empty — strategically. A CTO who’s heads-down on delivery isn’t looking at your cloud infrastructure. A CTO who’s managing the engineering team isn’t auditing whether your AI stack is rented or owned. The title is filled. The function isn’t.
Most founders I talk to feel the bleed before they can name it. The cloud bill crept up and nobody flagged it. The MVP launched but somehow keeps costing money to maintain. The roadmap is full but revenue isn’t moving. That gap — between *feeling* the drain and being able to *diagnose* it — is where companies lose the most money.
Related: The $5M Ceiling: The Hidden Cost of Running Your Tech Org Without a CTO (and When Fractional Beats Full-Time)
>The 4 Places Tech Silently Bleeds Cash >
After working with founders across dozens of companies in the $5M–$100M range, the same four bleeding points show up on almost every Tech P&L I’ve reviewed.
>1. Over-Provisioned Infrastructure >
Your cloud provider loves you. You’re paying for capacity you reserved 18 months ago for a traffic spike that never came. AWS, GCP, Azure — they make it frictionless to provision, and painful to de-provision. Nobody owns the audit. So the bill grows 8–15% per quarter while your usage stays flat.
>2. Rented AI Stacks >
This is the Own Don’t Rent problem applied to AI. There’s a meaningful difference between *using* an AI API endpoint and *building leverage* with AI. If every query you run costs you per-token and you have no fine-tuned model, no proprietary data layer, no moat — you’re renting someone else’s intelligence. Permanently. Every month. With no equity in the outcome.
The companies winning with AI right now are the ones who moved from rent to own: they trained on their data, they built retrieval layers around their IP, they stopped paying full retail for intelligence they could produce wholesale.
>3. MVPs That Were Never Hardened >
The MVP was a success. It proved the concept. You raised on it, sold it, maybe won a few enterprise clients with it. And now it’s a liability disguised as a product.
MVPs are built to learn, not to scale. The technical debt is real — quick database choices that don’t hold under load, no monitoring, no automated testing, manual processes that a junior dev runs every Tuesday. Each of these is a time bomb with a dollar figure attached. The cost isn’t in the code. It’s in the engineering hours that go to firefighting instead of building, and in the enterprise deals you lose because you can’t pass a security review.
Related: Legacy Modernization vs. Replacement: Cost Comparison
>4. Roadmap-to-Revenue Misalignment >
This one is the quietest and the most expensive. Your engineering team ships. They ship a lot. But what they ship doesn’t close deals, doesn’t reduce churn, doesn’t unlock the enterprise tier your sales team keeps promising.
The DERISK → UNCLOG → SCALE framework I use with every engagement starts here. Before we build anything new, we ask: what’s blocking revenue right now? What’s creating risk? What, if removed, would let the whole system move faster? Most roadmaps skip this question and go straight to features. That’s how you spend $800K on engineering in a year and end up with a slower sales cycle.
>The Objections I Hear (And Why They Usually Backfire) >
”I already have a VP of Engineering.” Great. A VP of Eng is responsible for delivery — building the thing the roadmap says to build. A CTO function is responsible for strategy — deciding what’s worth building, whether the architecture will hold, and whether the tech investments are generating return. These are different jobs. If your VP of Eng is doing both, one of them is being done badly.
”A fractional won’t know my business well enough.” This one has merit — if the fractional CTO you’re considering doesn’t have a structured diagnostic process. The ones who parachute in and make generic recommendations deserve this skepticism. What you want is someone who runs a Tech P&L audit first, before making a single recommendation. Know the numbers. Then talk strategy.
”I can’t afford another leadership hire right now.” Invert this. You can’t afford not to diagnose. If your cloud bill is 40% over-provisioned, if your AI spend has no ownership model, if your MVP is eating engineering hours in maintenance — the cost of *not* knowing is compounding every month. A fractional engagement runs $8K–$20K per month depending on scope. One infrastructure audit that recovers $66K in annual spend pays for eight months of that engagement before you’ve touched roadmap strategy.
Related: The Full-Time CTO Myth: Why Smart Founders Are Choosing Fractional (And Why You Should Too)
>The $66K That Was Already There >
Here’s a real outcome from a recent engagement — numbers used with permission, company name kept private.
A founder came to us with a cloud bill that had grown 3x over 24 months without a corresponding growth in users or revenue. He had a senior engineer who was competent but not focused on infrastructure optimization — that wasn’t in the job description, so it didn’t get done.
We ran a Tech P&L audit. Three findings came back in the first two weeks.
First: over-provisioned compute. Reserved instances from a 2022 capacity plan that no longer matched actual usage. Rightsizing those instances recovered $28K annually.
Second: an AI integration that was calling a third-party API for every user session — including sessions that never needed the AI feature. The call was triggered by default, not by intent. Fixing the trigger logic recovered $19K annually and reduced latency.
Third: a data pipeline running hourly for a report that the business team checked weekly. Rescheduling it reduced compute costs by another $19K annually.
Total: $66K in annual savings. Found in 30 days. None of it required a rewrite. All of it required someone asking the right diagnostic questions.
This is the Own Don’t Rent principle applied to cost: when you understand what you’re running, why you’re running it, and what it’s actually costing you — you stop paying for waste by default. You control it by design.
>The Structured Path: From Bleed to Control >
The framework I use with every hire-track engagement is AAA: Assess, Architect, Accelerate.
Assess is the Tech P&L audit — 30 days, no assumptions. We look at infrastructure costs, AI spend, engineering velocity, roadmap-to-revenue alignment, and architectural risk. You get a written diagnostic with named dollar figures attached to each finding.
Architect is where we build the blueprint. Which bleeding points get stopped first? What does the 90-day roadmap look like if we prioritize revenue-unlocking work over feature-building? Where does the current architecture hold and where does it need to be hardened?
Accelerate is execution with accountability. Not a strategy deck that sits in Notion. A working cadence — with your engineering team, your product org, and your leadership — that keeps the roadmap tied to revenue outcomes.
No-Go Zones apply here too. There are categories of technical debt and architectural decisions where the right answer is ‘don’t touch it right now — the risk outweighs the return.’ Part of the value of the Assess phase is knowing what *not* to fix. Undirected technical cleanup is just a different kind of waste.
The goal isn’t to hand you a list of problems. It’s to leave you running a Tech P&L you can actually read — one that shows you where money is going, what it’s generating, and what to do when something starts bleeding again.
If any of this felt familiar — the cloud bill that crept up, the roadmap that doesn’t map to revenue, the CTO seat that’s technically filled but strategically empty — the first step is a diagnostic, not a commitment. Book a Tech P&L Diagnostic and we’ll spend 45 minutes mapping where the bleed is most likely coming from in your specific business. No pitch deck. Just the math.
I have a client just happened to be was one of my recent new clients. Well, I really wanted the client like I wanted the I wanted the relationship. I knew I could help them and so on. But this the but they've never paid for a CTO, never paid for a tech leader and my cash retainer pitch was high. So like uh I don't know like you know what I have high confidence in this. So here's what we're going to do. I'm going to defer payment for 90 days. So 3 months and I'm going to work as usual but come day 90 mark you're going to pay me for 180 days. They're going to pay me for the last 3 months and 3 months forward. And by day 89 maybe even day 90. If you decide it's not working out, no problem. No skin off your back. I'm out. You owe me zero zilch. And sure enough, that created enough d-risk proposition on their end. Uh, and now we're happy go like everything is great. Like they think I created way more value than even the six months of payment that they had done. Uh, and I know I'm going to really create eight figure value for them. Um, or rather nine figure value for them and be able to tap into an eight figureure opportunity.
That client paid nothing for ninety days, then wrote a check covering six months. What changed between day zero and day ninety-one? Someone finally audited the technology spend with the same rigor a CFO applies to the P&L.
We kind of like to explain consultants are hired to solve a problem. Meaning somebody in the business, usually the CEO or leadership had defined a specific problem and they're looking for subject matter experts to come in and just make that problem go away and then leave. Just like when you hire any executive, let's say you hire a full-time CTO, full-time COO, CMO, any of these positions, you're not giving them a specific problem to solve. You're rather kind of saying, "Hey, in this area of the business, whether it's technology, marketing, finance, I want you to own all of the problems or what we say, they're hired to define the problems."
That distinction matters more than founders realize. When you hire someone to define problems rather than solve the ones you've already named, you get a different function entirely. You get someone asking why the infrastructure bill doubled last quarter. You also get someone who looks at your roadmap and asks which features actually drive revenue.
The reason we don't like to describe part-time even though in effect it is not full-time is because the label part-time really also infers part effort, right? Or part impact. So that's why we prefer to use the word fractional uh because it's a better label for that describes the relationship and the impact rather than you know the effort coming in. We want business owners and we certainly want CTO's to focus on delivering value and impact not be so worried about the input and the effort that's coming in but rather really really focus on what is the actual result from the engagement.
Fractional describes the cost structure, not the scope of accountability. A fractional CTO auditing your technology spend does the same diagnostic work a $400,000 full-time hire would do, but the engagement scales to what your business actually needs right now.
I think one of my personal superpowers is in creating minimal viable products. And there was a company I worked with. This was probably 6 years ago at this point maybe seven. And the entrepreneur came to me and this was a real estate analytics. So he was he has 20 years of experience was a big shot CEO of software companies in the space and he came up with this idea to take multiple data sources and creating this [Music] um uh huge dashboard with a lot of real estate commercial data. So like rental and and occupancy stuff like that and sell it to his network that was very extensive of these huge multif family organizations. and he lays out this entire product road map and uh with screenshots. He already paid a designer and had this grand vision and um and and he was already ready and and he could raise like $950,000 to build this in the next, you know, six or nine months, whatever it is. And I look at the whole thing and I asked him, "Hey, what do they do right now?" And he's like, "Oh, they use Excel. They use spreadsheets." And the premise was they're going to sign up to this, log in, and see these new kinds of reports, right? Beautiful reports, beautiful dashboards, and then um uh basically sell this massive subscription. I'm like, I have a better idea. Let's just automate the spreadsheet. And he's like, what do you mean? I'm like, let's just What do they do? What's their best What are they doing right now? And he's like, they're looking into Excel. They have their templates. And this company, for example, spending $250,000 on the labor cost. I'm like, great. Send me the spreadsheet. Sends me the spreadsheet. Within 20 days and $8,000, we created a full automation for something that took them weeks to do that. Now they could do in minutes. He closed $120,000 a year contract on that simple automation. Come on. So, not only he didn't have to raise, you know, $900,000, kept all of his equity, he got the contract and he got the business up and running because a CTO level person was able to look at the problem and say, "We don't need to build this because I looked at the result he was trying to get and I had a better how to get it."
Twenty days and $8,000 replaced a $950,000 capital raise. That happened because someone with the authority to question the roadmap actually questioned it. The founder had already paid a designer for screenshots. The vision was fully formed. What the vision lacked was anyone asking whether customers needed the beautiful dashboard or whether they needed their weeks-long spreadsheet process to take minutes instead.
This is the first place the blind spot costs money: unhardened MVPs and overbuilt products that never get challenged before capital commits. A diagnostic function looks at what the customer actually does today and asks whether the expensive thing you're about to build solves a problem they have or a problem you imagine they have.
The second place is rented AI and infrastructure bloat. Founders sign up for services, add integrations, layer tools on tools, and nobody with technical authority reviews whether the stack matches the actual requirements. The bills arrive monthly. Nobody questions them because nobody owns the technology P&L.
A friend of mine that I was consulting with uh he's a financial adviser and so he works with like high net worth families and he has a small office 10 12 employees something like that and a ton of inefficiencies when we look at the work like how they you know create content or uh schedule a meeting with a client and send a report when I say inefficiency I mean it takes them six hours it can take them one but nobody's going to get fired If six moves to one, the team right now has capacity and he needs all the team members. Again, nobody's going to get fired if those pieces are more efficient. The team has enough capacity for him to quadruple the amount of clients as it is right now without hiring anyone else. So, I told him, you're in the convenience kind of category. Yes, we can unclog, but there's no financial impact to it. You're not going to get more clients. You're not going to save any money. So if you want to do the project, sure, the only implication is you're going to create a better work environment for your employees, which is super valuable, but it's a different standard to optimize. It's not a standard you optimize and you create enterprise value, meaning the company is worth more or is more profitable or makes more money because you did the activity. super valuable and I recommend that people should do it because they can create a better work environment for their employees and you know retain them and all those things but it's a different standard that you operate with.
Notice what happened there. The audit surfaced inefficiency, but the diagnosis concluded the fix would not create enterprise value. Six hours compressed to one hour sounds like a win until you realize the team has capacity already and nobody gets fired. The financial adviser would get happier employees, not a more profitable company.
That kind of clarity requires someone who understands both the technology and the business model. Without it, founders either over-invest in projects that feel productive but change nothing, or they under-invest in projects that would actually move revenue because nobody quantified the return.
As soon as you get into the hour space, you have an advantage of kind of say in quotes confidently securing your efficiency, right? So, you're kind of saying, "Yeah, I know that for every hour I put up, I'm going to uh introduce this kind of an income on the CTO side." But really, if you think about it, the hourly relationship is negative on both ends. At the beginning of the month, um, if you're a CTO working on an hourly basis, you're thinking, man, what if I'm not going to put in any hours this week? I'm not going to put in any money. at the end of the month, the person that's paying your invoice is thinking, "Man, I really hope he's not charging me that 300 bucks an hour for that Zoom meeting where he did nothing, right?" So, um, they have anxiety in the end of the month and making sure that you didn't rack up too many hours. Uh, and that those hours were each one of them were valuable. For you, the service provider, you're anxious about not putting in enough effort, enough time, uh, because otherwise you're not going to get paid. So instead we really recommend thinking about on both ends both the business side and the CTO side on retainer type models which means it's more valuedriven and value based you could always add it add along upside which we recommend as well because again you keep aligning your your effort and your impact with what the business needs rather than just making sure that uh you're making money and the business pays that money. Everything is oriented around impact. So a lot of these retainers you know go from anywhere 3 4,000 a month on like advisory side to 10 or 15,000 a month independent of the hours worked.
Retainers between $3,000 and $15,000 a month buy the diagnostic function without the $400,000 salary. The founder gets someone accountable for technology outcomes. The CTO gets aligned incentives. A retainer keeps everyone focused on results by pricing the value instead of the hours.
The third place the blind spot costs money is the roadmap-revenue gap. Features get built because they seemed like a good idea in a planning meeting. Engineering ships them. Sales never sells them. Customers never use them. The roadmap drifts further from revenue with each sprint, and nobody with technical authority stops to ask whether the next thing on the list will actually generate income.
The second is from pure sales aspect, you want them to focus on outcome, and that's how you do that. You just get them into visioning. What are you trying to do? Why are you trying to do it? Focus on outcome. And and they learn that they can talk to you on the vision level. That's key difference between a CTO and let's say a VP or a director, right? A leader versus a manager. And lastly, pure uh uh tactically speaking, you don't want to share your price until the outcome is like exciting in the prospect's mind. So, if you get to the what and why, and they're like, "Yep, we're going to do this, add 2 million, save 10, add 50 million to the business." Okay, I can solve all of this for $150,000 a year. So by the time you talk about your cause quote unquote, it's in the context of this big result that both of you were just elevating yourself and inside the conversation. So it helps you both uh solidify you as a visionary, as a leader, as a copout because you're talking about vision and leadership and impact and not about how, not about cost, right? About outcome. And second, it positions you for just a a much better conversation when numbers do come in play because then when your number comes in, it's in the context of the big aspiration of your client and not in the context of like hours or effort or other costs involved.
Add two million, save ten, add fifty million to the business. Those outcomes justify a $150,000 investment because the diagnostic function surfaces where the money actually leaks. Founders who skip the audit keep paying for infrastructure they do not need, AI services they could replace with simpler solutions, and engineering cycles spent on features that will never sell.
The fourth place is timing. Founders delay the diagnostic because they assume they need a full-time CTO first. They budget for the salary, wait until they can afford it, and lose money every month the blind spot persists. The fractional model exists because the diagnostic function scales independently of the hours worked.
So, it depends on the kind of deal. Uh very common in the accelerator, for example, when people do workshops. So, uh they might pitch it for like $7,500. And I tell them, hey, let's change this. Let's say it's 15,000, but it's 7500 down and 7500 at the end when you deliver if they're satisfied. And that frame is super interesting because it puts from a perception standpoint on the client, it puts this perception that they're not going to pay the full price unless they're satisfied. From a CTO perspective, from a service provider, you basically got 100% of the money you would have done it anyway, but upfront. And now it actually puts it on you to make sure that they're satisfied. So it gets to this point where they're paying more if they're happy to pay more. and they're going to pay more if you made them happy. So, it's a dual position where it makes the deal better for both sides, both on the renumeration perspective and on the quality. So, the risk is suddenly priced, right? I'm basically paying 50%. You know, so it's not zero. Now, some of the d-risk element you can say zero, don't pay me at all. Sometimes I do it. So, like I had a fractional client um just this year that said, "Hey, for just pay me in 3 months. You're going to pay me zero for the first 90 days, but day 91 you're going to pay me for six months. So, you're going to pay me for the last three months and the next three months." And that's also a great d-risk. Now, I in that po in that in that in that kind of deal, I'm taking 100% of the risk because if by day 90 it didn't work out, I'm I'm all out. But that kind of a deal allowed me to uh command a retainer that's double, you know, most people normal retainer because I'm actually positioning. It's like, hey, if in 3 months, we're not going to know if this is a good fit. Don't worry about it. But if we know it's a good fit, I want a birectional commitment, right? I'm going to commit to you. You're going to commit to me uh with uh with a higher fee retainer with a split payment model.
Zero for ninety days, then a check covering six months. The founder who took that deal now believes the value exceeds the payment. That outcome required someone willing to audit the technology spend before asking for money, and confident enough in the findings to defer compensation until the client agreed.
The blind spot persists because founders assume technology leadership means writing code or managing engineers. Technology leadership means asking what the customer does right now and whether the infrastructure bill reflects actual requirements. Those questions do not require forty hours a week. They require someone with the authority to ask them and the experience to act on the answers.
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Hiring a CTO August 12, 2026
>The $5M Ceiling: The Hidden Cost of Running Your Tech Org Without a CTO (and When Fractional Beats Full-Time) >
Most founders I talk to know something is broken in their tech org. They just can't name it yet — and that gap between 'something feels off' and 'here's what it's actually costing you' is where the $5M ceiling lives.
>The Symptoms Show Up Before the Diagnosis Does >
You're somewhere between $5M and $50M in revenue. You have engineers. Maybe a VP of Engineering or a senior developer who's been with you since the early days. On paper, you have tech leadership.
But here's what's actually happening:
The roadmap keeps slipping. Not because the team is lazy — because every sprint is fighting yesterday's shortcuts. The codebase that was "good enough" at $1M is now a load-bearing wall made of duct tape.
One or two engineers know how everything works. If they leave — or just take a vacation — the whole org holds its breath.
You're paying for six AI tools that your team swears are essential. Nobody can tell you which ones are actually moving revenue.
A compliance audit is coming. Or a big enterprise customer asked for your SOC 2. And nobody in your org has done that before.
These aren't random bad luck. They're predictable failure modes that emerge at scale without senior technical judgment at the table. I call it the Empty Chair problem: the seat where a CTO should sit is empty, but the org is making CTO-level decisions every day — just without anyone qualified to make them.
The cost isn't a single catastrophic event. It's slow compounding. Roadmap velocity drops 20-30% as tech debt accrues. Recruiting gets harder because strong engineers smell a chaotic codebase from the interview. Enterprise deals stall on security questionnaires. Each of these is a quiet tax on your growth.
Related: 7 Signs Your Business Needs a Fractional CTO
>The AI Amplifier: Why This Problem Is Worse Right Now >
Here's what's changed in the last 18 months: it's never been easier to build, and it's never been harder to build something that actually matters.
Every vendor has an AI story. Your team is getting pitched new tools weekly. And without senior judgment to filter signal from noise, most companies end up in what I call AI vendor sprawl — stacking subscriptions, running disconnected pilots, and renting capabilities they could own.
Own Don't Rent is one of the first frameworks I install with any client. The principle is simple: if a capability is core to your competitive moat, you should own it — build it, train it, control it. If it's commodity, rent away. The problem is that most teams, without a CTO, can't tell the difference. They're renting what they should own and trying to build what they should rent.
The second thing that happens without senior oversight: no one is setting No-Go Zones. These are the explicit guardrails — the categories of AI use, vendor access, or technical decision-making that are off-limits until a proper evaluation framework exists. No-Go Zones aren't about being cautious. They're about not letting your team make $500K decisions by accident while trying to save $50K on a vendor contract.
I worked with a SaaS company in the $12M ARR range that had accumulated 11 separate AI tool subscriptions across their product and ops teams. Nobody had a full picture of what data was being shared with which vendors. Two of those tools had contractual terms that would have given the vendor rights to model outputs trained on the client's proprietary data. A CTO-level review in week one flagged both. That's not a nice-to-have. That's existential risk dressed up as a productivity tool.
Related: NIST AI RMF: What CTOs Need to Know
>What the Numbers Actually Look Like >
Let me be specific, because this is where the conversation usually gets real.
In one engagement, we traced $62K in recovered or newly closed contract value directly to decisions made in the first 90 days of fractional CTO involvement. That included an enterprise deal that had stalled on a security review — unblocked once we had a proper compliance roadmap in place — and two engineering hires that were re-scoped before offers went out, saving a mis-hire cost that typically runs 1.5-2x annual salary.
The framework I use to sequence the work is DERISK → UNCLOG → SCALE. First, you take the risk off the table — the compliance gaps, the single points of failure, the vendor exposure. Then you unclog the roadmap — clear the tech debt blockers that are slowing sprint velocity. Then, and only then, you build for scale.
Most companies I talk to are trying to SCALE before they've DERISK'd anything. That's why growth feels harder than it should.
Here's the ROI math that makes the fractional model work:
A full-time CTO at this stage costs $250K-$400K in total comp. A fractional CTO engagement runs $8K-$25K per month depending on scope. If you're not yet at the scale where you need daily CTO presence — and most companies under $30M aren't — you're paying for a lot of calendar hours that don't move the needle. The fractional model gives you the judgment without the overhead.
One founder I work with put it this way: 'I didn't need a CTO full-time. I needed a CTO for the twelve hardest decisions I make each year.'
That's exactly right.
>Fractional vs. Full-Time: The Honest Decision Matrix >
This is the question I get most. Here's my straight answer.
Go fractional if:
You're between $5M and $30M in revenue You don't yet have a product-market fit strong enough to justify the full comp package Your tech decisions happen weekly, not daily You need senior judgment and a roadmap, not a hands-on engineering manager You want to reduce hiring risk — use fractional to define the role before you hire into it full-time
Go full-time if:
You're above $30M and have a dedicated engineering org of 10+ people Your product complexity requires daily architectural oversight You're raising a Series B or later and investors expect a named CTO on the team You've already used fractional to build the foundation and you're ready to staff it
The mistake I see most often: founders hire a VP of Engineering when they need a CTO. These are different roles. A VP of Eng executes. A CTO decides. If the strategic layer is missing, a great VP of Eng will still be operating without the context they need — and you'll wonder why things still feel stuck.
Fractional works as the risk-reversed first move. You get CTO-level thinking without a 12-month comp commitment. If it works — and you can measure whether it works because you define the outcomes upfront — you have a much clearer picture of what full-time looks like and who should fill it.
Related: How to Build an AI-Powered Engineering Team: The Fractional CTO’s Playbook for 2025
>The Cost of the Empty Chair >
I want to name the thing that's hard to say out loud in a board meeting or a leadership team offsite.
Every month you run a $10M, $20M, $50M business without a qualified technical voice at the strategy table, you're not in a holding pattern. You're falling behind. The architecture debt is compounding. The AI decisions your team is making without guardrails are creating risk you haven't priced. The enterprise deals that require a credible security story aren't closing.
This isn't about whether your engineers are good. They probably are. This is about whether the right decisions are being made at the right level — by design, not by default.
The Empty Chair doesn't stay empty. It gets filled by whoever is loudest in the room, or most confident, or most recently promoted. Sometimes that works. More often, it's how you end up with an architecture that made sense at $2M and is strangling you at $15M.
The good news: this is a solvable problem. And it's faster to solve than most founders expect, once the right person is in the seat.
If you're reading this and recognizing your org in any of these patterns — the stalled roadmap, the AI sprawl, the compliance question you've been avoiding — let's make the diagnosis concrete. Book a free strategy call. We'll spend 45 minutes mapping your specific gaps, what they're actually costing you, and whether fractional is the right first move. No deck, no pitch. Just a diagnostic. Schedule your call at CTOx.
I used to run an agency, and I didn't want to sell hours because I didn't want to get locked into hours. And I realized, man, some hours I'm brilliant. I'm giving them this insight that was worth $100,000 and some hours I'm kind of wasting everybody's time. So I realized, you know what? I'm just going to go on a retainer model because then I can focus on overdelivering. They know exactly the budget because if we agree this is going to be a $10,000 a month engagement, then they budget it and they promise to pay me, maybe even they pay me at the beginning of the month and now I have all the opportunity in the world to overdeliver.
That shift changed how I work with every client since. And if you're running a company somewhere between $5M and $30M, that shift is exactly the one you need your technology leadership to make, whether that leadership sits in a full-time chair or a fractional one.
It's very common, technology leaders, consultants in general, executive consultants, it's very common to price hourly, sell hourly, think in hourly, think about your success and how many hours you sold, how much are you making per hour. And the challenge is both for you and the client, you're actually creating an adversarial relationship.
What happens at the beginning of the month? You as the person selling your time are thinking, man, if I don't put in time this week, I'm not going to make any money. So you're trying to figure out how to collect the hours. By the end of the month, your client is looking at an invoice and they literally just have anxiety as to how many hours this person billed me this month. And they're really hoping that that one hour that they were on Zoom with you, that you did nothing and you were just staring at the screen, you didn't bill your fancy $450 an hour rate. So it frames the entire engagement around effort and not around outcome.
The hourly relationship is negative on both ends. At the beginning of the month, if you're a CTO working on an hourly basis, you're thinking, man, what if I'm not going to put in any hours this week? At the end of the month, the person that's paying your invoice is thinking, man, I really hope he's not charging me that 300 bucks an hour for that Zoom meeting where he did nothing. They have anxiety at the end of the month making sure that you didn't rack up too many hours and that those hours were each one of them valuable. For you, the service provider, you're anxious about not putting in enough effort, enough time, because otherwise you're not going to get paid.
I had this conversation play out in real time with a prospect. They ask, but how many hours do I get? I say unlimited hours. Why do I say unlimited hours? The only reason they're asking that question is they're trying to do math. They're trying to take the $10,000 a month pitch to 20 hours and say, man, 500 bucks an hour, so much. And so again, they're focused on effort, focused on cost, not focused on value and outcomes.
So I say unlimited hours, one, because you can't divide by unlimited. It gives you an error. Their brain kind of gets stuck. The second is it makes the point that I say whatever is needed, I'm going to be there. If suddenly we need to work weekends, if suddenly I need to fly to the client, that's exactly what's going to happen. And that's what I focus on. That's what I reframe on.
Focusing immediately on outcome and value as opposed to time and effort is very, very important because you're going to just find yourself in an anxious position trying to rack up the hours and they're going to keep trying to measure those hours to make sure that they got the value out of them.
I've used this against RFPs too. I went on two things, availability and unlimited. So if it's a project that's unlimited design, unlimited iteration, unlimited meetings, I always say it because nobody asked for it. I've literally, I don't think in my life, one time somebody abused it. Every time a company actually bids an RFP, they're creating guardrails. How many meetings a week? How many hours? How many hours from project management? How many hours on design? And I come in, oh, it's unlimited everything. So I just win it.
Most growing companies treat the CTO question as a capacity question, more hours and more features shipped. The decisions that tax growth in this range have nothing to do with volume.
I had a friend I was consulting with, a financial adviser who works with high net worth families. He has a small office, 10, 12 employees, something like that. And a ton of inefficiencies when we look at the work, how they create content or schedule a meeting with a client and send a report. When I say inefficiency, I mean it takes them six hours, it can take them one. But nobody's going to get fired if six moves to one. The team right now has capacity and he needs all the team members. The team has enough capacity for him to quadruple the amount of clients as it is right now without hiring anyone else.
So I told him, you're in the convenience kind of category. Yes, we can unclog, but there's no financial impact to it. You're not going to get more clients. You're not going to save any money. The only implication is you're going to create a better work environment for your employees, which is super valuable, but it's a different standard to optimize. It's not a standard you optimize and you create enterprise value, meaning the company is worth more or is more profitable or makes more money because you did the activity.
That distinction is what a senior technology leader brings. The ability to look at an operational bottleneck and tell you whether fixing it creates enterprise value or just makes the office more pleasant.
And sometimes the bottleneck is real. If you're saying, yep, I know how to onboard a client, I know how to service them, let's just get a thousand clients. But then you realize, oh, well, it takes me two days to onboard a single client and now I have a thousand of them. So what do I do? This is like a classic manufacturing issue. We see this a lot in the Kickstarter realm where you have these orders and now you have an actual manufacturing bottleneck. That creates risk because somebody paid you money, you can't fulfill on it, and at some point their patience is going to go away and they're going to ask for a refund and you built the system to support it and it's a whole thing. So scale in my philosophy really should come last as opposed to first, because you don't want to expose the business to these operational challenges and the actual risk.
One of the first big reality breakdowns we try to do at the accelerator is shifting people's mindset from hourly to retainer. The next one, once we convince them it's not about the hourly, it's not about the effort, it's about the outcome and the output, the next one is really creating this upside. And the context is tying into outcome and results.
If you can't tie your value to results, you'll always be stuck justifying your rate. And when you can shift the conversation into outcome and results, then it's much easier to also anchor into much more reward, much more payoff. I have cases where I saved companies literally $400,000 a month by re-engineering their team differently, or created millions of dollars of savings or tens of millions in revenue because of the systems that I built.
Even if you can charge a premium rate as a fractional CTO, let's say you do manage to charge the highest end of our industry, like 15, 20, 30,000 a month, that's very different than being able to command another $100,000 bonus or a half a million dollar bonus or of course equity and upside in the company's performance as a whole.
I get it. You've never paid for technology leadership at this level and the number feels like a leap. I had a client, one of my recent new clients. I really wanted the relationship. I knew I could help them. But they'd never paid for a CTO, never paid for a tech leader, and my cash retainer pitch was high.
So I said, I have high confidence in this. Here's what we're going to do. I'm going to defer payment for 90 days. So 3 months, and I'm going to work as usual, but come day 90 mark, you're going to pay me for 180 days. They're going to pay me for the last 3 months and 3 months forward. And by day 89, maybe even day 90, if you decide it's not working out, no problem. No skin off your back. I'm out. You owe me zero, zilch.
And sure enough, that created enough derisk proposition on their end. And now everything is great. They think I created way more value than even the six months of payment that they had done.
We use a version of this in the accelerator all the time. When people pitch workshops for like $7,500, I tell them, hey, let's change this. Let's say it's 15,000, but it's 7,500 down and 7,500 at the end when you deliver, if they're satisfied. From a perception standpoint on the client, it puts this perception that they're not going to pay the full price unless they're satisfied. From a service provider perspective, you basically got 100% of the money you would have done it anyway, but upfront. And now it actually puts it on you to make sure that they're satisfied.
I don't do standing meetings. I don't want people to get used to my time and my presence. I want them to enjoy the impact, enjoy the value that I bring. So all of my engagements and all of the way they experience me is in that context, and it's never in the context of, oh yeah, they expect Lior to be in this sprint review meeting or this planning meeting, because then they just expect my time and effort rather than all the impact that I bring in.
A fractional CTO at the $5M to $30M stage is buying judgment on a handful of decisions that carry outsized consequences. Compliance posture before an enterprise deal stalls. A single point of failure in your infrastructure before it takes down a launch. Whether to build AI capability in-house or rent it. These are the calls where a wrong answer costs six or seven figures and a right one clears the runway for your next stage of growth.
The retainers for this kind of work go from anywhere 3, 4,000 a month on the advisory side to 10 or 15,000 a month, independent of the hours worked. The hours are irrelevant. What matters is that when the high-stakes decision lands on your desk, someone who has made it before is in the room.
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Hiring a CTO July 23, 2026
>The Cost of the Empty Chair: What Founders Really Pay for Skipping Senior Tech Leadership >
There’s a chair at the head of your engineering table that’s empty. You’re paying for it whether you know it or not — in stalled roadmaps, wasted sprints, and AI features your team shipped that nobody uses. The cost just doesn’t show up as a line item.
>What ‘We Can’t Afford a CTO’ Actually Costs You >
I hear this from founders constantly. Revenue’s real. Headcount is real. A $350K CTO salary feels like a luxury when you’re watching burn rate.
But here’s the math nobody does.
A typical $10M ARR company with a 6-person engineering team is spending $900K–$1.2M a year on engineering. Without senior technical leadership, research suggests 30–40% of that spend goes toward the wrong things — rework, architectural debt, features that miss the mark, integrations that collapse under load.
That’s $270K–$480K a year. Quietly. Invisibly.
The empty chair isn’t free. It’s just billed in a currency founders don’t track: wasted capacity, delayed revenue, and compounding technical debt that makes every future decision slower and more expensive.
The most expensive line item on your P&L is the one that isn’t there.
Related: The $5M Ceiling: The Hidden Cost of Running Your Tech Org Without a CTO (and When Fractional Beats Full-Time)
>The AI Trap: Easy to Build, Hard to Matter >
Here’s where I’m seeing founders bleed right now, in 2025.
AI tools are cheap. Your engineers can build something that looks impressive in a demo in two weeks. So they do. And then three months later, you’re asking why adoption is flat and the feature isn’t driving retention.
This is the ‘Easy to Build, Hard to Matter’ trap.
Building AI features is not the hard part. Deciding *which* AI capability actually moves your business — that’s the hard part. That’s a strategy call, not an engineering call. And without someone in the chair who can hold that line, your team will default to what’s technically interesting instead of what’s commercially valuable.
I’ve watched companies spend $80K–$120K in engineering time on AI initiatives that had zero measurable impact on revenue or retention. Not because the engineers were bad. Because nobody was asking the right question before the sprint started: ‘Does this matter to the business?’
>The Credibility Problem >
There’s a second cost here that’s harder to quantify but very real.
When your AI features don’t land, you don’t just waste the sprint. You burn credibility — with your board, your customers, and your engineering team. Engineers who keep shipping features that go nowhere lose faith in the roadmap. Attrition follows. And replacing a senior engineer costs 1.5–2x their annual salary in recruiting, ramp time, and lost velocity.
One bad AI bet, multiplied through the team, can cost you $400K before you’ve had a chance to course-correct.
Senior technical leadership — by design, not by default — creates the filter that stops that from happening.
Related: How Fractional CTOs Assess AI Readiness
>The Win That Changed How I Think About This >
Last year, one of our CTOx engagements produced 7 new client wins and $66K in revenue traced directly to a single strategic shift.
Here’s what actually happened.
The company was a $12M ARR SaaS business. Solid product, decent team, founder who was technical but stretched thin across sales, ops, and fundraising. Engineering was running on gut instinct and good intentions. The roadmap was reactive — whatever the biggest customer complained about this month became Q3’s priority.
We put a fractional CTO in the chair. Day one.
>What Changed >
First thing: a No-Go Zones audit. We mapped every initiative the team was working on against three filters — does this retain revenue, generate revenue, or protect revenue? Anything that failed all three got parked. Two ‘exciting’ AI projects got shelved. Three long-running maintenance sprints got killed.
That freed up 40% of engineering capacity.
We redirected that capacity toward a single integration that three enterprise prospects had been asking for. Six weeks to ship. Three of those prospects converted within 90 days.
The other wins came from something subtler: the founder could finally walk into sales conversations and say, with confidence, ‘Here’s our technical roadmap and here’s the person accountable for it.’ That credibility closed deals that had been stalling for months.
This is the DERISK → UNCLOG → SCALE sequence in practice. You can’t scale a clogged system. But most founders try anyway, and wonder why growth feels like pushing against a wall.
>Full-Time vs. Fractional: The Real ROI Comparison >
Let’s do the math directly.
A senior CTO in a major market costs $300K–$400K in base salary, plus equity, plus benefits. You’re at $400K–$500K all-in before they’ve shipped a line of code. Add a 60–90 day ramp before they’re making real decisions. And the market for that caliber of talent is brutal — you might spend 4–6 months recruiting, which means 4–6 more months with the chair empty.
A fractional CTO through CTOx is $8K–$20K per month, depending on intensity. No equity. No 90-day ramp. Senior judgment on day one.
But the real difference isn’t cost. It’s the ‘Own Don’t Rent’ principle applied correctly.
Founders sometimes hear ‘fractional’ and think ‘renting.’ I’d flip that. When you hire a full-time CTO before you’ve validated the strategic direction, you’re renting a title and hoping it works out. When you bring in fractional leadership with a clear mandate and a defined outcome, you own the strategy — with someone accountable for executing it.
The fractional model is not a compromise. For companies between $5M and $100M in revenue, it’s often the higher-ROI choice. You get the judgment without the overhead, at the exact intensity your roadmap actually needs.
Related: The Full-Time CTO Myth: Why Smart Founders Are Choosing Fractional (And Why You Should Too)
>The Three Objections I Hear (And What I Say Back) >
Founders push back in predictable ways. I’ll address them directly.
’We’ll just promote our senior engineer.’
Maybe. But managing a team and setting technical strategy are different skills. Putting a brilliant engineer in a strategy role without the support structure usually burns two things at once: you lose their engineering output, and you get strategy that’s shaped by what’s technically possible rather than what’s commercially necessary. It’s not fair to them, and it’s expensive for you.
’We’ll wait until after the next funding round.’
This is exactly backwards. Investors are backing your team’s ability to execute. Walking into a Series B without a credible technical leader — or without someone who can articulate the technical roadmap — is a valuation problem, not just an operational one. The empty chair costs you points on your multiple.
’We don’t have the budget right now.’
Go back to the math. If you’re spending $900K on engineering and 30% is misdirected, you have $270K in recoverable spend. Redirecting even a fraction of that through better prioritization — which is what a fractional CTO does — pays for itself in the first quarter. The question isn’t whether you can afford it. It’s whether you can afford another quarter without it.
>The Chair Doesn’t Stay Empty >
Here’s the thing about the empty chair.
It doesn’t actually stay empty. Something fills it. Usually, it’s the founder, stretched thin and making technical calls out of their depth. Or the most senior engineer, who’s now split between coding and strategy and doing neither well. Or the loudest customer, whose feature requests become your de facto roadmap.
None of those are by design. All of them are expensive.
The companies I’ve watched scale cleanly from $10M to $50M have one thing in common: someone in the chair who is specifically accountable for making technical strategy a business asset, not a cost center. They didn’t all have full-time CTOs. But they all had that function covered, intentionally.
By design, not by default.
If you’re running a $5M–$100M business and you’ve felt this drag — the stalled roadmap, the AI features that didn’t land, the engineering budget that’s hard to account for — let’s talk. Schedule a free strategy call and we’ll map exactly where the empty chair is costing you, and what it would take to fill it.
A friend of mine that I was consulting with, he's a financial adviser and so he works with high net worth families and he has a small office, 10, 12 employees something like that, and a ton of inefficiencies when we look at the work like how they create content or schedule a meeting with a client and send a report. When I say inefficiency I mean it takes them six hours, it can take them one, but nobody's going to get fired if six moves to one. The team right now has capacity and he needs all the team members. Again, nobody's going to get fired if those pieces are more efficient. The team has enough capacity for him to quadruple the amount of clients as it is right now without hiring anyone else.
So I told him, you're in the convenience kind of category. Yes, we can unclog, but there's no financial impact to it. You won't get more clients or save any money. So if you want to do the project, sure, the only implication is you're going to create a better work environment for your employees, which is super valuable, but it's a different standard to optimize. It's not a standard you optimize and you create enterprise value, meaning the company is worth more or is more profitable or makes more money because you did the activity. Super valuable and I recommend that people should do it because they can create a better work environment for their employees and you know retain them and all those things, but it's a different standard that you operate with.
That story is the whole argument for senior tech leadership compressed into one office. Somebody had to look at a six-hour task, see that it could take one, and still say: don't do it, it creates nothing. That call saved the owner from spending money to feel productive while the P&L stayed exactly where it was. Most companies without senior tech leadership never get that call made, and the spend keeps moving in the wrong direction with nobody stopping it.
Let's say you have a task that's a compounded task, meaning three people are doing it and one person it takes one hour, another person it takes an hour, last person takes an hour, and you found that the middle person you can drop an hour to 1 minute, right, let's say with like a GPT or something. But if you hadn't changed anything in the book ends of the task, then you didn't create any impact to the team or the organization because that person would have started their job at 12 to 1 and then handed off to the other person at 1 to 2 and they would have handed it off at 2 to 3. And that 12 to 1 and 2 to 3 are going to stay exactly where they are. Which means both from a calendar perspective and total growth time for the task, it's still 3 hours. It doesn't matter that the middle task suddenly took a minute instead of 59. That's like a 60x efficiency, right? Um, but it just doesn't matter.
Knowing that, you can look at these opportunities and understand what's the actual business impact and how do you articulate the business impact and then prioritize it in a work plan because anything you do is going to take time, money, resources. It's a big part of what I do besides just mapping out the opportunities. I'm a firm believer that not all opportunities for efficiency should be pursued.
Read that again and price it. Every week a company runs without this lens, someone is greenlighting the 60x efficiency that changes nothing and funding the convenience project. This is where the invisible line item lives. The brief for this post puts it plainly: the empty CTO chair costs 30 to 40% of engineering spend, and the mechanism is exactly what you just saw. Work gets approved because it sounds efficient, and nobody in the room asks whether the company is worth more or more profitable or makes more money because you did the activity.
You might assume a strong engineering manager or a diligent VP covers this. They don't, and the reason is structural.
There's a key difference between a CTO and let's say a VP or a director, right? A leader versus a manager. From the pure sales aspect, you want them to focus on outcome, and that's how you do that. You just get them into visioning. What are you trying to do? Why are you trying to do it? Focus on outcome. And they learn that they can talk to you on the vision level.
Managers are paid to keep the machine running and the roadmap on schedule. Their job rewards shipping, not stopping. Nobody's performance review ever said "killed a convenient project before it burned a quarter of engineering time." The filter that says convenience versus enterprise value sits one level up, at the seat that's empty, and that filter is the thing a fractional CTO actually sells.
The obvious pushback is the price. Companies that have never had senior tech leadership flinch at the retainer, because their mental model is wrong.
First of all, all of them at the beginning, for the clients, are surprising amounts, right? Because their frame for a CTO is normally in the starting frame of 20, 30,000 a month. So you're already introducing kind of low five figures and low four figures as like novel. So they're curious. It also disarms them on a pilot period, right? Because in their mind, for them to hire a full-time CTO is like a huge commitment, very scary, usually comes with severance issues and stuff like that if it doesn't work out, and all of these modalities of pricing seem cheaper, which creates the other side of it, which you need to communicate the value and the outcome.
These retainers go from anywhere 3, 4,000 a month on like the advisory side to 10 or 15,000 a month, independent of the hours worked. Hold that against the full-time frame of 20 to 30,000 a month, and then hold it against 30 to 40% of engineering spend leaking out of the building. The retainer is the cheapest line in the whole budget, and it's the only line whose entire job is shrinking the most expensive one.
The reason we don't like to describe part-time, even though in effect it is not full-time, is because the label part-time really also infers part effort, right? Or part impact. So that's why we prefer to use the word fractional because it's a better label that describes the relationship and the impact rather than the effort coming in. We want business owners and we certainly want CTOs to focus on delivering value and impact, not be so worried about the input and the effort that's coming in, but rather really, really focus on what is the actual result from the engagement.
When the numbers finally do come up, the conversation should already be about the outcome.
Pure tactically speaking, you don't want to share your price until the outcome is exciting in the prospect's mind. So if you get to the what and why, and they're like, "Yep, we're going to do this, add 2 million, save 10, add 50 million to the business." Okay, I can solve all of this for $150,000 a year. So by the time you talk about your cost, quote unquote, it's in the context of this big result that both of you were just elevating yourself inside the conversation.
I love to use the price as this: I can give you 100% of the outcome for a fraction of the cost. Let's use the savings and pay the people that are going to do the work. So it's not just your price that I want you to think about. It's also the cost and value creating for the organization as a whole. Your retainer is great, but the cost of technology is going to be way higher than your retainer. The whole context is you're being in charge and not in control. Somebody else is doing the work.
That's the whole economics of the fractional model in one move. The leader prices the judgment, and the savings fund the hands.
Fine. Then structure the deal so the risk is priced and the proof comes before the invoice. This is what I actually do.
I have a client, just happened to be one of my recent new clients. Well, I really wanted the client, like I wanted the relationship. I knew I could help them and so on. But they've never paid for a CTO, never paid for a tech leader, and my cash retainer pitch was high. So like, I don't know, like, you know what, I have high confidence in this. So here's what we're going to do. I'm going to defer payment for 90 days. So 3 months and I'm going to work as usual, but come day 90 mark you're going to pay me for 180 days. They're going to pay me for the last 3 months and 3 months forward. And by day 89, maybe even day 90, if you decide it's not working out, no problem. No skin off your back. I'm out. You owe me zero, zilch. And sure enough, that created enough d-risk proposition on their end. And now we're happy, everything is great. Like they think I created way more value than even the six months of payment that they had done. And I know I'm going to really create nine-figure value for them and be able to tap into an eight-figure opportunity.
Deferral of payment is really good. One of the common ones we recommend in the program when people pitch workshops for like 5, 10, 15 grand is I kind of say, "Hey, just do half up front and half at the end when I deliver, if you like the delivery." That's a very common derisk, which makes a lot of sense because if you're pitching 10,000 you're getting five right now, so you know they can pay and you know they're serious, and at the end, well, if you're not delivering a product people want, maybe you don't deserve the other five.
Some of the d-risk element you can say zero, don't pay me at all. Sometimes I do it. I had a fractional client just this year that said, "Hey, just pay me in 3 months. You're going to pay me zero for the first 90 days, but day 91 you're going to pay me for six months. So you're going to pay me for the last three months and the next three months." And that's also a great d-risk. Now, in that kind of deal, I'm taking 100% of the risk because if by day 90 it didn't work out, I'm all out. But that kind of a deal allowed me to command a retainer that's double most people's normal retainer because I'm actually positioning. It's like, hey, if in 3 months we're not going to know if this is a good fit, don't worry about it. But if we know it's a good fit, I want a bidirectional commitment, right? I'm going to commit to you. You're going to commit to me, with a higher fee retainer, with a split payment model.
So it gets to this point where they're paying more if they're happy to pay more, and they're going to pay more if you made them happy. So it's a dual position where it makes the deal better for both sides, both on the remuneration perspective and on the quality. So the risk is suddenly priced.
A leader confident enough to work 90 days unpaid is telling you something about what the next 90 days will look like. A vendor who needs the money up front to feel safe is telling you something too.
One more thing about how the engagement feels from inside the company, because it matters for how you hold the relationship.
I don't do standing meetings. I don't want people to get used to my time and my presence. I want them to enjoy the impact, enjoy the value that I bring. So all of my engagements and all of the way they experience me is in that context, and it's never in the context of oh yeah, they expect Lior to be in this kind of sprint review meeting or this planning meeting, because then they just expect my time and effort rather than all the impact that I bring in.
The hourly relationship is negative on both ends. At the beginning of the month, if you're a CTO working on an hourly basis, you're thinking, man, what if I'm not going to put in any hours this week? I'm not going to make any money. At the end of the month, the person that's paying your invoice is thinking, "Man, I really hope he's not charging me that 300 bucks an hour for that Zoom meeting where he did nothing." They have anxiety at the end of the month making sure you didn't rack up too many hours and that each one of those hours was valuable. For you, the service provider, you're anxious about not putting in enough effort, enough time, because otherwise you're not going to get paid. Instead we really recommend thinking on both ends, both the business side and the CTO side, on retainer type models, which means it's more value-driven and value-based, because you keep aligning your effort and your impact with what the business needs. Everything is oriented around impact.
Price creates value. The fact that you pitch a certain price for a certain amount of value or effort or presence actually elevates your value and makes people respect you more, and makes sure that their focus is value as well as your focus is value, because now you want to overdeliver and be able to command that premium price.
If somebody's paying you 3,000 a month, and certainly if their mental model for a CTO is like 20, 30 full-time, they know they can't expect from you something that's equivalent to 20 to 30. Even on the 10,000 a month, they know they can't expect from you to go into all the meetings every week and to be there 24/7, because that's not the frame of the relationship. The frame of the relationship is outcome and impact. In all cases, as long as you framed around the value, then the attention you're going to get is going to be based about the outcome you're creating for the company.
Go back to the financial adviser's office. Six hours that could be one, and the right answer was to leave it alone. Somebody had to know that the team's real constraint was client acquisition, that capacity was already there to quadruple the book without a single hire, and that unclogging the workflow belonged in a different category of spend entirely. That is one decision, in one small office, that never showed up on an invoice.
Now run the same lens over your own roadmap. The compounded task where the middle hour just got 60x faster and nothing else moved. The AI bet that demos beautifully and protects no revenue, and the convenience project your team would enjoy and your margins would never notice. Every one of those is a decision somebody is making by default, with nobody senior enough in the room to kill it.
The chair costs 30 to 40% of engineering spend. The retainer that fills it costs 3, 4,000 a month on the advisory side, 10 or 15 on the engaged side, and it can start with 90 days where you owe zero, zilch if it doesn't work. The only line item in your budget whose entire job is to shrink every other line item is the one you're calling too expensive.
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Hiring a CTO August 12, 2026
>The $400K Mistake: Why a Bad Full-Time CTO Hire Costs More Than You Think (And How a Fractional CTO Found $66K Hiding in the Books) >
A founder I know spent $400K on a CTO hire that lasted 14 months. When I walked into his business six weeks after that person left, I found $66K in revenue sitting in untagged deals — money the team had earned but never properly attributed. He didn't have a tech problem. He had a visibility problem. And the wrong hire made it invisible for over a year.
>The Real Cost of a Bad CTO Hire (It's Not the Salary) >
Let's do the math nobody wants to run.
A mid-market CTO in 2024 costs $200K–$280K in base salary. Add equity — typically 0.5–1.5% for a company at your stage. Add benefits, onboarding, the recruiter fee (usually 20–25% of first-year comp). Now add the opportunity cost of 60–90 days of interviews while your tech debt quietly compounds.
You're already past $350K before they've shipped a single feature.
But that's not where it bleeds most.
The real cost is what happens in months 4 through 14 when the wrong person is making architectural decisions that will take years to unwind. When your team is building on a stack that doesn't scale. When deals stall because integrations are brittle. When your engineering team — your best people — start quietly updating their LinkedIn profiles because the new CTO's instinct is to control, not enable.
I've seen this pattern more times than I care to count. A founder who runs a tight, financially disciplined operation hands the keys to a technical leader who seems impressive in interviews, then watches margin erode for the better part of a year before they can name what's wrong.
By the time severance is paid and the search restarts, you're looking at $400K–$600K in total cost of a single bad hire. That's not a tech problem. That's a strategic risk you absorbed without knowing it.
Related: The Empty Chair: What Every Month Without a CTO Is Really Costing Your Company (And the ROI-Positive Fix)
>The $66K Case Study: What 'The Team Has It Handled' Actually Looks Like >
Let me tell you about a real engagement — anonymized, but the numbers are exact.
A founder running a $12M ARR SaaS company brought me in six weeks after parting ways with their full-time CTO. He wasn't sure what he needed. He just knew something felt off. Revenue had flatlined despite the sales team hitting their numbers. The engineering team was shipping, but nothing felt connected to outcomes.
This is what I call The Empty Chair problem — not the literal empty seat, but the leadership vacuum where no one is translating business goals into technical priorities. The former CTO had been busy. Just busy on the wrong things.
>The Silent Leak >
In week one of the diagnostic, I pulled deal data alongside the product usage logs. The sales team had been closing deals in a vertical the company had never formally prioritized — a segment with 40% better retention and 22% higher ACV than their core market. But because nobody had tagged these deals in the CRM with a vertical flag, and nobody had connected the CRM to the product analytics, this was invisible.
The revenue was real. The insight was not.
>The Diagnosis >
The leak wasn't a bug. It was a systems gap — a failure of what I call Own Don't Rent thinking. The team had rented its data infrastructure from three different tools that didn't talk to each other. Nobody owned the full picture. The CTO had been managing the engineering team. Nobody was managing the information architecture.
This is where senior pattern recognition matters more than full-time presence. A fractional CTO who has seen 30 companies at your stage knows where to look in week one. A junior VP of Engineering promoted into the role — which happens more often than founders admit — will spend six months learning the terrain you're paying them to navigate.
>The Named Outcome >
By tagging the existing unattributed deals and building a simple attribution layer between the CRM and the product database — a two-week engineering project — we surfaced $66K in recoverable revenue from deals that were closed but never properly processed. Not new deals. Money already earned, sitting unattributed in the books.
We also identified the vertical opportunity. The founder is now building a dedicated motion for it. The downstream value is multiples of that $66K. But the $66K was the proof point that something was broken and that fixing it was fast and cheap.
Related: How Fractional CTOs Show ROI to Clients
>Three Objections I Hear Every Time (And What I Tell Founders) >
Founders who need this kind of help are often the last to book the call. Here's why — and why the math doesn't support waiting.
>'I Can't Afford Another Executive Right Now' >
You're already paying for one. You're paying in stalled releases, in margin you can't account for, in the engineering hours spent rebuilding things that were built wrong the first time. A fractional engagement — typically $8K–$20K per month depending on depth — is a fraction of what the leak costs you each month. The question isn't whether you can afford the diagnostic. It's whether you can afford to keep running blind.
>'How Can Someone Part-Time Really Understand My Business?' >
This is the intuition that sounds right but inverts the actual dynamic. A fractional CTO who has operated inside 20–30 companies at your stage brings pattern recognition you cannot hire full-time. The value isn't presence — it's diagnosis. A doctor doesn't need to live in your house to tell you what's wrong. They need to know what to look for. Systematized diagnosis beats full-time presence when the problem is a pattern, not a personality.
The DERISK → UNCLOG → SCALE framework I use in every engagement is specifically designed to sequence the work: first, find and stop what's bleeding (DERISK); then remove what's blocking velocity (UNCLOG); then build the infrastructure that compounds (SCALE). You can get meaningful DERISK results in four to six weeks. That's not part-time. That's focused.
>'How Do I Even Know If My Tech Is The Problem?' >
Fair question. Here are five signals I look for in the first conversation with a founder:
Your releases are slowing down, not speeding up — even as the team grows. Headcount scaling without velocity scaling is a systems problem. You can't tell me which features drove your last $500K in expansion revenue. If the answer is 'I'd have to ask,' attribution is broken. Your engineers are fixing the same categories of bugs repeatedly. Recurring bug types mean architectural debt, not execution problems. You have data in three or more tools that don't talk to each other. Every gap between tools is a gap in your visibility. You've lost a key technical person in the last 12 months and you're not sure why. Retention is a leading indicator of leadership and system health.
If two or more of these are true, your tech is costing you money you haven't quantified yet.
Related: 7 Signs Your Business Needs a Fractional CTO
>Why 'By Design' Beats 'By Default' Every Time >
The founder who lost $66K didn't make bad decisions. He made no decisions — because he didn't know there were decisions to make. His technical infrastructure was running by default: tools chosen opportunistically, processes inherited from the previous team, data sitting in silos nobody had deliberately connected.
This is the No-Go Zone I try to get founders out of fastest: the zone where the business is scaling but the technical decision-making is on autopilot. Autopilot works until it doesn't. And when it stops working at $15M ARR, the cost of fixing it is substantially higher than it would have been at $8M.
The companies I've seen scale cleanly through $10M to $50M share one thing: their technical systems were designed, not inherited. Decisions about what to build, what to buy, and what to connect were made intentionally — by someone who could see the whole picture and translate it into business outcomes.
That's what a fractional CTO does at its best. Not coding. Not managing sprints. Translating. Connecting the business you're trying to build to the technical systems that either enable it or quietly tax it.
The $400K mistake isn't hiring the wrong person. It's assuming the technical layer of your business can run without that kind of stewardship — and finding out the hard way what the gap was costing you.
If two or more of those five signals hit close to home, let's run the diagnostic together. Book a Tech Cost Diagnostic call — one conversation, no deck, no pitch. We look at your actual numbers and I tell you what I see. That's it. Schedule your free strategy call at CTOx.
A friend of mine that I was consulting with, he's a financial adviser, works with high net worth families, has a small office, 10, 12 employees, and a ton of inefficiencies. When I say inefficiency I mean it takes them six hours it can take them one, but nobody's going to get fired if six moves to one. The team has enough capacity for him to quadruple the amount of clients without hiring anyone else. So I told him, you're in the convenience kind of category. Yes, we can unclog, but there's no financial impact to it. You're not going to get more clients. You're not going to save any money. It's a different standard to optimize. It's not a standard you optimize and you create enterprise value.
That distinction matters more than most CEOs realize, and it sits at the heart of the most expensive hire you can make.
Consultants are hired to solve a problem. Somebody in the business, usually the CEO, defined a specific problem and they're looking for subject matter experts to come in and make that problem go away and leave. When you hire a full-time CTO, you're not giving them a specific problem. You're saying, "Hey, in this area of the business, I want you to own all of the problems." They're hired to define the problems. The CEO sets a vision and says, "Figure out if we want to go there, what are all the problems that need to be solved, and go ahead and do them." It's better to think about the fractional leader as a co-pilot to the CEO rather than a consultant.
That framing sounds clean. In practice, it means a full-time CTO walks in on day one with a mandate to find things to fix. Every system gets audited. Every workflow gets scrutinized. And the CTO, because that's the job, will find problems. The question is whether the problems they find are the ones that actually cost you money.
I think one of my personal superpowers is in creating minimal viable products. There was a company I worked with, probably six or seven years ago, real estate analytics. The entrepreneur had 20 years of experience, was a big shot CEO of software companies in the space. He came up with this idea to take multiple data sources and create this huge dashboard with real estate commercial data, rental and occupancy stuff, and sell it to his network of huge multifamily organizations. He lays out this entire product road map with screenshots. He already paid a designer. He could raise like $950,000 to build this. And I asked him, "Hey, what do they do right now?" And he's like, "Oh, they use Excel. They use spreadsheets." The premise was they're going to sign up, log in, see these beautiful reports, and buy this massive subscription. I'm like, I have a better idea. Let's just automate the spreadsheet.
He looked at me like, what do you mean? I'm like, what are they doing right now? They're looking into Excel, they have their templates, and this company was spending $250,000 on the labor cost. Send me the spreadsheet. Within 20 days and $8,000, we created a full automation for something that took them weeks. Now they could do it in minutes. He closed a $120,000 a year contract on that simple automation. He didn't have to raise $900,000. He kept all of his equity. He got the business up and running because a CTO level person was able to look at the problem and say, "We don't need to build this." I looked at the result he was trying to get and I had a better how to get there.
A full-time CTO on salary has every incentive to build the platform. That's the job description. Own the technology. Scope the solution. Build the thing. The fractional CTO's incentive runs the other direction: find the cheapest path to the outcome, because that's what the client is paying for.
I've saved companies literally $400,000 a month by re-engineering their team differently, created millions in savings or tens of millions in revenue because of the systems that I built. When you have the right relationship and the right frame, tying your reward to those savings and those business outcomes is profound. Instead of even if you can charge a premium rate as a fractional CTO, let's say the highest end of our industry, $15,000, $20,000, $30,000 a month, that's very different than being able to command another $100,000 bonus or half a million dollar bonus or equity in the company's performance.
The $400,000 a month came from a team structure that a full-time hire had every reason to perpetuate, because fixing it meant shrinking the kingdom they were hired to rule. The fractional CTO has no kingdom. The engagement only continues if the value shows up.
It's very common for technology leaders, consultants, executive consultants, to price hourly, sell hourly, think in hourly, think about your success as how many hours you sold, how much are you making per hour. And the challenge is both for you and the client, you're creating an adversarial relationship. At the beginning of the month you're thinking, man, if I don't put in time this week I'm not going to make any money. By the end of the month, your client is looking at an invoice with anxiety as to how many hours this person billed. They're hoping that one hour on Zoom where you were just staring at the screen, you didn't bill your fancy $450 an hour rate. It frames the entire engagement around effort, not around outcome.
When I ran an agency, I didn't want to sell hours because I didn't want to get locked into hours. Some hours I'm brilliant. I'm giving them an insight worth $100,000. Some hours I'm wasting everybody's time. So I went on a retainer model. Then I can focus on overdelivering. They know exactly the budget. If we agree this is a $10,000 a month engagement, they budget it, maybe they even pay at the beginning of the month, and now I have all the opportunity in the world to overdeliver.
The label matters too. The reason we don't like "part-time" even though in effect it is not full-time is because part-time infers part effort, part impact. We prefer "fractional" because it describes the relationship and the impact, not the effort coming in. Focus on delivering value and impact, not on the input.
People ask, but how many hours do I get? I say unlimited hours. Why do I say unlimited hours? The only reason they're asking is they're trying to do math. They're trying to take the $10,000 a month, pitch to 20 hours, and say, man, 500 bucks an hour, so much. They're focused on effort, focused on cost, not focused on value and outcomes. So I say unlimited hours, one because you can't divide by unlimited. Their brain kind of gets stuck. The second is it makes the point that whatever is needed I'm going to be there. If suddenly we need to work weekends, if suddenly I need to fly to the client, that's exactly what's going to happen.
Time, readiness, and availability are a big part of the value prop. I've won RFPs on two things: availability and unlimited. Every time a company bids an RFP, they're creating guardrails. How many meetings a week? How many hours on project management? How many hours on design? And I come in, it's unlimited everything. Nobody ever abused it. Maybe one time. I just win it.
I have a client, one of my recent ones. I really wanted the relationship. But they'd never paid for a CTO, never paid for a tech leader, and my cash retainer pitch was high. So I said, I have high confidence in this. Here's what we're going to do. I'm going to defer payment for 90 days. I'm going to work as usual, but come day 90 you're going to pay me for 180 days, the last 3 months and 3 months forward. By day 89, if you decide it's not working out, no problem. You owe me zero. That created enough of a de-risk proposition on their end, and now they think I created way more value than even the six months of payment.
Very common in the accelerator, when people pitch workshops for like $7,500, I tell them, change it. Say it's $15,000, but it's $7,500 down and $7,500 at the end when you deliver if they're satisfied. From the client's perception, they're not going to pay the full price unless they're satisfied. From the CTO's side, you got 100% of the money you would have done it anyway, upfront. Now it's on you to make sure they're satisfied. They're paying more if they're happy to pay more, and they're going to pay more if you made them happy. The risk is suddenly priced.
From a pure sales aspect, you want them to focus on outcome. Get them into visioning. What are you trying to do? Why are you trying to do it? They learn that they can talk to you on the vision level. That's the key difference between a CTO and a VP or a director. A leader versus a manager. And tactically speaking, you don't want to share your price until the outcome is exciting in the prospect's mind. If you get to the what and why, and they're like, "Yep, we're going to do this, add 2 million, save 10, add 50 million to the business," okay, I can solve all of this for $150,000 a year. By the time you talk about cost, it's in the context of this big result. It positions you for a much better conversation because when your number comes in, it's in the context of the big aspiration, not hours or effort.
A misaligned hire can burn $400,000 a month in inefficiencies no one is incentivized to fix. A well-matched fractional CTO can find a $120,000-a-year revenue opportunity hidden in a spreadsheet. The gap between those two outcomes is what this hire actually costs.
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Becoming a CTO July 9, 2026
>You Have the Experience. You’re Still Failing Fractional. Here’s Why. >
Meet David. Twenty-two years in tech. Ex-VP at a company you’ve definitely heard of. Shipped products used by tens of millions of people. Went fractional eighteen months ago — and last year, he earned less than the senior engineers he used to manage.
This isn’t a cautionary tale about incompetence. David is brilliant. The problem is that brilliant doesn’t bill.
>The Entry Fee Nobody Mentions >
Every fractional CTO I’ve met came from somewhere impressive. FAANG. Series C. IPO. They carry the scars of midnight incidents, board presentations, and roadmaps they fought for in rooms full of people who didn’t understand what they were building.
That experience is real. It’s valuable. And it is exactly the wrong thing to lead with when you go fractional.
Here’s the brutal truth: your experience is the entry fee. It gets you in the room. It does not get you the contract. It does not build the pipeline. It does not stop the feast-famine cycle that quietly breaks most fractional practices in year one.
The fractional CTO market is filling up with world-class technologists who are failing commercially. Not because they’re not sharp — but because no one told them they’d moved from one game to a completely different one.
You left corporate because you were done shipping roadmaps designed by committee. Done navigating the Corporate Red Tape Tax — that invisible surcharge on every good idea, measured in approval cycles, politics, and quarterly resets. You wanted autonomy. Impact on your own terms. Work that actually moves.
Those are the right reasons to go fractional. They’re just not a business model.
Let’s talk about what actually is.
Related: The $5M Ceiling: The Hidden Cost of Running Your Tech Org Without a CTO (and When Fractional Beats Full-Time)
>Gap #1: The Positioning Gap — You’re Selling Experience to Buyers Who Don’t Care >
When a founder or CEO hires a fractional CTO, they’re not buying your resume. They’re buying an outcome. Specifically: they want their technology to stop being the reason the company can’t grow.
Most fractional CTOs position like this: *”I’ve led engineering teams at scale. I’ve built distributed systems. I’ve managed 40-person orgs.”*
The buyer hears: *”I’m expensive and I’ll need time to learn your business.”*
The positioning that actually converts sounds more like: *”I help Series A companies stop losing deals because their platform can’t handle enterprise security reviews — and I do it without a full-time executive hire.”*
One is a credential. One is a result. Buyers — especially founders who’ve never hired a CTO before — are not equipped to translate credentials into results. That translation is your job.
>Own Don’t Rent applies here >
When you position on experience, you’re renting attention. Every competitor with a similar background competes with you directly. When you position on a specific outcome for a specific buyer in a specific situation, you own that territory. Nobody else is saying exactly that thing, to exactly that person, about exactly that problem.
The fix isn’t complicated but it does require honesty. Write down the three deals you’re most proud of winning. Not what you did — what changed for the company because you were there. Build your positioning around that. Test it in one paragraph. If it could appear on any consulting firm’s website without editing, delete it and start over.
>Gap #2: The Pipeline Gap — Referrals Are Not a Strategy >
I’ll say this plainly because nobody else will: if your entire business development strategy is “I’ll tell some people I’m available and see what happens,” you don’t have a pipeline. You have a wish.
Referrals feel like a strategy because they worked in your first few months. The network mobilizes when you announce the transition. Contracts appear. You think: *this is going to be fine.*
Then those contracts end. And the network has moved on. And you’re starting from zero in month nine.
This is the feast-famine cycle. And it will absolutely destroy your practice if you don’t interrupt it by design.
>What a real pipeline looks like >
A sustainable fractional practice needs three things running in parallel:
1. A consistent signal — something you publish, share, or say regularly that reminds the right people you exist and what you’re about. Not a newsletter nobody reads. A point of view that earns attention.
2. A referral system — not hoping former colleagues remember you, but actively asking specific people for specific introductions to specific types of companies, on a cadence you control.
3. A reactivation loop — past clients, warm leads, people who said “not right now” six months ago. Most fractional CTOs never follow up. The ones who do close deals that didn’t exist before they sent the email.
Pipeline is not a personality trait. It’s a system. Build it by design, not by default.
>Gap #3: The Pricing Gap — You’re Charging for Hours, Not Outcomes >
Here’s a number that will either validate you or sting a little: the average fractional CTO charges somewhere between $200 and $350 per hour when they start out. The ones with sustainable, growing practices are often charging two to three times that — not because they’re more experienced, but because they’ve built a value narrative that a C-suite buyer can actually justify.
Hourly pricing is a trap. It commoditizes you. It puts you in a conversation about how many hours something takes rather than what it’s worth when it’s done. It makes every proposal feel like a negotiation.
The shift is from time-based to outcome-based engagement structures. What does it cost a $10M ARR company to not have a clear technology roadmap for six months? What’s the deal they lose because their security posture isn’t enterprise-ready? What does one bad architecture decision cost them in eighteen months of re-platforming?
When you can put numbers on the problem, the fee for solving it stops being the question.
>The DERISK → UNCLOG → SCALE framework >
Most early-stage companies need their fractional CTO to do exactly these three things in sequence: remove technical risk (DERISK), remove the bottleneck slowing growth (UNCLOG), and build the infrastructure for the next phase (SCALE).
Each phase has a different value. Each can be priced as a distinct engagement. This is how you move from one rolling retainer — always at risk of cancellation — to a structured relationship with natural expansion points built in.
Scope the first engagement to DERISK. Deliver it well. Then you’re already in the room when it’s time to UNCLOG.
Related: The Full-Time CTO Myth: Why Smart Founders Are Choosing Fractional (And Why You Should Too)
>Gap #4: The Engagement Gap — Winging It Is Not a Framework >
You know how to run a technology organization. You’ve done it. What most fractional practitioners don’t have is a repeatable way to onboard a new client, scope the work, deliver it, and then expand the relationship — without reinventing the process every single time.
Every time you start a new engagement from scratch, you’re losing time you can’t bill, energy you can’t recycle, and leverage you can’t build.
The fractional model only works at scale — financially and personally — if you have a practice architecture. A way of starting engagements that lets you get to value faster. A scoping conversation that surfaces the right problems without a two-week discovery process. An onboarding that builds trust quickly without requiring you to be on every call.
>No-Go Zones protect the model >
Part of engagement architecture is knowing what you will not do. No-Go Zones are the work that looks like it fits but quietly pulls you back into the role you left. The fractional CTO who ends up managing sprint planning every week. The one who becomes the de facto Head of Engineering because nobody else stepped up.
Those are full-time jobs billed at fractional rates. They don’t scale. They burn you out. And they crowd out the clients who actually need what you’re best at.
Define your No-Go Zones early. Put them in your proposals. Hold the line.
>What Actually Builds a Practice >
I want to be direct here because I’ve watched too many sharp people spend year one learning the wrong lessons.
Going fractional doesn’t automatically make you a business. It makes you self-employed. There’s a meaningful difference. A business has positioning that attracts the right clients. A pipeline that doesn’t depend on luck. Pricing that reflects the value being delivered. And engagement structures that scale without requiring more of you every time a new client signs.
None of this is beyond you. You’ve built harder things. You’ve led organizations through more complexity than this.
But it requires the same thing you’d tell any founder who tried to scale a product without architecture: you have to build the system, not just the feature.
The fractional CTOs who hit predictable revenue in year one didn’t do it because they were smarter or more credentialed. They did it because they had a structured path — a way to build the commercial side of their practice with the same rigor they brought to the technical side.
That’s exactly what the CTOx Accelerator is built to provide.
If you’re already fractional — or seriously thinking about making the move — and you want to build a practice that’s predictable, not just possible, apply to the CTOx Accelerator. It’s a structured program built specifically for senior technologists who are done guessing at the commercial side. The next cohort has limited spots. Apply here and let’s see if it’s the right fit.
Ready to go fractional? Get Started
"I have a client just happened to be was one of my recent new clients. Well, I really wanted the client like I wanted the I wanted the relationship. I knew I could help them and so on. But they've never paid for a CTO, never paid for a tech leader and my cash retainer pitch was high. So like uh I don't know like you know what I have high confidence in this. So here's what we're going to do. I'm going to defer payment for 90 days. So 3 months and I'm going to work as usual but come day 90 mark you're going to pay me for 180 days. They're going to pay me for the last 3 months and 3 months forward. And by day 89 maybe even day 90. If you decide it's not working out, no problem. No skin off your back. I'm out. You owe me zero zilch. And sure enough, that created enough d-risk proposition on their end. Uh, and now we're happy go like everything is great. Like they think I created way more value than even the six months of payment that they had done."
Most fractional CTOs never get to that moment because they're still competing on technical credentials. Elite technical experience gets you the meeting. Three commercial gaps decide whether the practice lasts. The first is positioning built on buyer outcomes. Then comes a pipeline that survives after referrals stop, and finally pricing anchored to the result.
The first gap opens when you lead with your resume instead of the buyer's result. "The second is from pure sales aspect, you want them to focus on outcome, and that's how you do that. You just get them into visioning. What are you trying to do? Why are you trying to do it? Focus on outcome. And and they learn that they can talk to you on the vision level. That's key difference between a CTO and let's say a VP or a director, right? A leader versus a manager."
Until you have confidence in a specific niche, you can certainly just say fractional CTO. Provide technology leadership at a fraction of the cost. The label itself frames the relationship. "The reason we don't like to describe part-time even though in effect it is not full-time is because the label part-time really also infers part effort, right? Or part impact. So that's why we prefer to use the word fractional because it's a better label for that describes the relationship and the impact rather than you know the effort coming in. We want business owners and we certainly want CTO's to focus on delivering value and impact not be so worried about the input and the effort that's coming in but rather really really focus on what is the actual result from the engagement."
That positioning work starts before you ever pitch. "The biggest one in Atlanta would be ATDC Yeah. By far. So go to ATDC. They have an entrepreneur night. You know? I built their mentor program almost fifteen years ago fourteen years ago. So I built it up over, like, the course of three, four years, and it's great. Great for networking. Got a bunch of a bunch of projects and contracts through ATDC, and it's really just really good networking." Even when the room feels hostile, early conversations build the muscle. "I think especially early on, you know, when I was a young start up entrepreneur, we had a couple of these VCs in Israel that were a nightmare to pitch because they were just, like, so so difficult. Right? Like, bad energy, 50 questions, notoriously hard to get money from. And everybody went to pitch now because it's great practice. It's great practice. So right now, you need practice. Why not? The the very least, you're building a network. Yeah. Right? Because you want a network with CEOs that hire CTOs. They also know CEOs that hire CTOs. So it gives you a chance to get in the room with them."
Referrals dry up. A designed pipeline keeps working when the referrals stop.
"No. When you when you have referral channels like that, they're doing the sale for you. Remember, all marketing activities, the purpose of them is to get a meeting. Purpose of them is to go to sales. Right? Once you have the meeting, it's like the purpose of a high school diploma is to go to college. Once you're in college, nobody fucking cares about your high school diploma. So once you're in the meeting, all your marketing content means nothing. And and when when it's a referral channel, they're the one getting you the meeting. They're the one fishing for you, not your brochure. The brochure is just like they're gonna oh, I have this friend's her video. She can I really feel like she can help you? Here's something about her. It's what they say that gets you the meeting. It's not what they send. Got it. Okay. So that does not have to be new specific until and when you have a specific niche you want to focus on. But for now, just you, your background, kind of like a one page resume is fine or, like, a one pager that we recommend in the program is fine."
A one pager gets you in the door. After that, availability and readiness become part of the value proposition. "Time time is a big deal. Time and, like, read ready, readiness and availability is a big deal part of your value prop, the fact that you're just ready to go. And sometimes you guys can I've I've had these cases before where people went to NARFE, and that's how I went. I went on two things, availability and unlimited. So if it's a project that's unlimited design, unlimited iteration, unlimited meetings, I always say it because nobody asked for it. I've literally I don't think in my life, like, one time somebody abused it. Well, I had one time. We're just talking about this morning. But besides a single time, nobody ever, like, took me up on it. And, and that's how I went against RFPs. Because every time a company actually bids an RFP, they're creating guardrails. How many meetings a week? How many hours? How many hours from project management? How many hours on design? How many hours whatever it is. And I come in, oh, it's unlimited everything. So I just, win it."
The third gap shows up when you quote hours instead of outcomes. "We highly recommend again don't use the word hours. Don't use the word effort. So, don't add to your menu item like, oh, this is going to give you five hours of my time a week or a month. Just don't say that. Just don't don't train your client to think about you in terms of effort. So, we really recommend not saying it and certainly not writing it or publishing it. The other thing is not publishing the menu. The menu, what happens if you publish a menu? So, meaning you you actually showcase your pricing on the website or a PDF or an email, you're letting marketing do sales for you. And that's not a good that's not a good idea. you really want to do sales meeting in the context of discovery, in the context of a pain or a problem, you position the solution so you can solve it. And if somebody just sees 3,000 or 10,000 and they're like automatically, oh, that's too expensive or I can't afford it. Well, it's not in they weren't sold, right? And they weren't sold, meaning you didn't help them contextualize your value with their problem. So, we really think you shouldn't do that. You should you can publish the menu in terms of service offerings, but don't publish the pricing because it's going to give you more flexibility. It's going to make sure that the sales conversations happen in a sales context and not in a marketing context."
When the conversation does turn to numbers, keep it anchored in the result. "Lastly, pure uh uh tactically speaking, you don't want to share your price until the outcome is like exciting in the prospect's mind. So, if you get to the what and why, and they're like, 'Yep, we're going to do this, add 2 million, save 10, add 50 million to the business.' Okay, I can solve all of this for $150,000 a year. So by the time you talk about your cause quote unquote, it's in the context of this big result that both of you were just elevating yourself and inside the conversation. So it helps you both uh solidify you as a visionary, as a leader, as a copout because you're talking about vision and leadership and impact and not about how, not about cost, right? About outcome. And second, it positions you for just a a much better conversation when numbers do come in play because then when your number comes in, it's in the context of the big aspiration of your client and not in the context of like hours or effort or other costs involved."
Prospects often expect a full-time hire to cost 20 or 30,000 a month. "So um first of all all of them at the beginning for the clients are surprising amounts right because their frame for a CTO is normally in the starting frame of 20 30,000 a month. Yeah. So you're already introducing kind of low five figures and low four figures is like novel. So they're curious. Um, it also disarms them on a pilot period, right? Because in their mind, uh, for them to hire a full-time CTO is like a huge commitment, very scary, you know, usually comes with like, you know, severance issues and and stuff like that if it doesn't work out and all of these modalities of pricing seem cheaper, which uh creates the other side of it, which you need to communicate the value and the outcome."
You can charge premium rates while making the decision safe. "So, it depends on the kind of deal. Uh very common in the accelerator, for example, when people do workshops. So, uh they might pitch it for like $7,500. And I tell them, hey, let's change this. Let's say it's 15,000, but it's 7500 down and 7500 at the end when you deliver if they're satisfied. And that frame is super interesting because it puts from a perception standpoint on the client, it puts this perception that they're not going to pay the full price unless they're satisfied. From a CTO perspective, from a service provider, you basically got 100% of the money you would have done it anyway, but upfront. And now it actually puts it on you to make sure that they're satisfied. So it gets to this point where they're paying more if they're happy to pay more. and they're going to pay more if you made them happy. So, it's a dual position where it makes the deal better for both sides, both on the renumeration perspective and on the quality. So, the risk is suddenly priced, right? I'm basically paying 50%. You know, so it's not zero. Now, some of the d-risk element you can say zero, don't pay me at all. Sometimes I do it. So, like I had a fractional client um just this year that said, 'Hey, for just pay me in 3 months. You're going to pay me zero for the first 90 days, but day 91 you're going to pay me for six months. So, you're going to pay me for the last three months and the next three months.' And that's also a great d-risk. Now, I in that po in that in that kind of deal, I'm taking 100% of the risk because if by day 90 it didn't work out, I'm I'm all out. But that kind of a deal allowed me to uh command a retainer that's double, you know, most people normal retainer because I'm actually positioning. It's like, hey, if in 3 months, we're not going to know if this is a good fit. Don't worry about it. But if we know it's a good fit, I want a birectional commitment, right? I'm going to commit to you. You're going to commit to me uh with uh with a higher fee retainer with a split payment model."
Deferral of payment is really good. One of the common ones we recommend in the program when people pitch workshops for like 5, 10, 15 grand is I kind of say, "Hey, just do, you know, half up front and half at the end when I deliver if you like the delivery." That's a very common derisk, which makes a lot of sense because if you're pitching 10,000, you're getting five right now. So, you know they can pay and uh you know they're serious and at the end, well, if you're not delivering a product people want, maybe you don't deserve the other five. So, I think it puts both of both sides on deck to make sure both sides are attentive and they're delivering and nobody's abusive.
Price also protects the perception of impact. "No. In fact, I uh like Lior for example, I don't do standing meetings. I don't want people to get used to my time and my presence. I want them to enjoy the impact, enjoy the value that I bring. So all of my engagements and all of the way they experience me is in that context and it's never in the context of oh yeah they expect Lior to be in this kind of sprint review meeting or this planning meetings because then they just expect my time and effort rather than all the impact that I bring in. So there's uh there's a lot of value and and of course there's just pure basic pricing. It's the classic, you know, all these experiments of people drinking the exact same wine, like a $30 bottle of wine, but one it has this thousand label. Another one has this the store kind of $30 label. And people when they drink the $1,000 one, they they start, you know, being very poetic about it, right? Uh but here's the reality. Uh price does create value. And the fact that you pitch a certain price for a certain amount of value or effort or presence actually elevates your value and makes people respect you more and make sure that their focus is value as well as your focus is value because now you want to overd deliver and be able to command that premium price."
The fractional frame works when the client understands they're buying the outcome, not your calendar. "So you want to contextualize the services with whatever you were talking about. So if they have a need to manage a team in order to accomplish the goal and so you can talk about your engage level service for example the 10,000 12,000 in that context. So our big previs for the pitch, right, for the big retainer is I can give you 100% of the outcome for a fraction of the price. And we make sure to frame the fraction in the context of the cost and not the context of the outcome. Cuz most people conflate the two. They say, 'Oh, part time, part result. Fraction effort, fraction result.' The reality is you're just you have a big gun. You're a shotgun. and they don't need it. They don't need your entire ammunition. That's why you're fractional. Not because more of your time is going to make more effort. It's because there's no need for more of your time because it's only a 5% engineering team and you can manage 80. So why would they pay for it? Why would you waste the time watching paint dry? So just framing that alone is a big deal. like making sure that we're talking about the right context of fraction and that you can drive the outcome, the value, the why for less cost and alternatively or you know um in a standard way would have uh come to light which is a full-time hire of a technology leader that is you know dramatically more expens it's it's in multiple more expensive than standard retainers of fractional leaders on all on all fractional fronts technology or not. So making sure that frame is there, making sure you contextualize your service your whatever menu it is."
Fix the positioning and the pricing, and the pipeline follows.
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