CTO Salary and Equity Trends 2009-2011

Todd Gitlin of Safire Partners - a go to resource here in LA for recruiting C-level positions at startups - was nice enough to compile some data again this year (see last year's Startup CTO Salary and Equity Data and Equity for Early Employees in Early Stage ). Even better, my good friend and data visualization guru Steve Wexler of Data Revelations was able to create visualizations of the data.

Here's a live version of the data and below it is a bit of analysis of the trends.

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I'm showing snapshots below. I would be very curious to get reactions to what people find in the live data.

CTO Salary and Equity Comparison

My guess is that most people who come here are going to be Founders, CEOs and CTOs who want to compare salary and equity of the CTO Position in their organization vs. their peers. Or they are looking at Hiring a CTO and want to see what salary and equity ranges look like.
Well the easiest visualization to use is to go to the Benchmarks Tab.

You then make selections around aspects like Founder Status, Job Title, Headcount, Revenue, Development Stage, Capital Raised, Funding Round, etc. If you get too specific, then the counts will get very small and may not be the best comparison. You can also enter salary and equity data to see where you stand.
As was pointed out in last year's post, generally there's as companies get older, have more funding, revenue, headcount, maturity:

• Salaries go up
• Equity percentage goes down

Trend #1 - Sizable Salary Increases

I've been talking for a while about the increasing demand for CTOs the past few years and a similar challenge in finding developers in Los Angeles. What I had not realized is that this had translated into escalating salaries for CTOs and VP Engineering. I was expecting that over the past few years, the pressure on VCs maybe had translated into lower salaries. It has not.



I tried slicing this a few different ways, but in virtually every case the trend is clear. CTO salaries are escalating quickly.

Trend #2 - Early Stage Companies Lower Salary and Higher Equity (for Founder CTOs)

The one exception to Trend #1 seems to be for Startup CTOs at earlier stage companies. If you look at the year-over-year trends from 2009-2011 for companies that have raised less than $10M:



and another chart that is only startups with Seed or Series A according to development stage:




To me this is a very interesting set of trends that I would not have guessed without seeing the data.
Anyone else a little surprised? Or seeing something else that's interesting?

Hiring Developers Before Product/Market Fit?

Using my StartupRoar as a radar, I came across a great post by Gabriel Weinberg Do you really need a full-time hire for that?

Hiring seems to be the preferred use of seed funds (by investors and founders), whereas I'd prefer a focus on customer acquisition.

....

The problem is you don't yet have product/market fit, and until you do, you don't really know what to build. And that should be the focus of the founders -- to find the special fit that will make your company take off. When product vision is truly clear, then it makes sense to execute it, and hiring follows.

In the mean time, if you need some extra help, get some contractors to test out specific things. You may end up hiring these people eventually and you'll know more about them when you do.

I'm not sure I'd carry the argument quite as far as Gabriel does, but I completely agree with his central premise.  When I talk with early-stage companies, often the discussion starts with them asking me about Hiring a CTO for Your Startup, or  Finding a Technical Cofounder for Your Startup or How to Find Programmers for Your Startup.  In other words, they come in asking for help with sourcing and hiring.  These companies are very early-stage and definitely have not shown product/market fit.  Far from it.

In many cases, during my Free Startup CTO Consulting Session with them, we discuss where they are in in the process.  They are very early.  They need to determine product/market fit.  They need to conserve cash.

The startup founder is definitely not ready to hire a CTO.  And in most cases they are not ready to hire developers either.

Instead, what they should be considering is how to bridge the  Startup Founder Developer Gap and exactly what they need in terms of Startup CTO or Developer.

They most often really just need either a Part-Time CTO or Technology Advisor, and then some combination of hiring and/or outsourcing (on-shore or off-shore).  The Part-Time CTO or Technology Advisor will be able to help make that determination.

Of course, there's still hard work to be done to as the bad news is that its hard finding good Web Development in Los Angeles and certainly its tough  Finding Developers Here in Los Angeles. 

Great post Gabriel!