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80% of Startups are formed by non-tech entrepreneurs. The business model and real-world market gap is the trigger for the formation of the Start-up.
Yet, without a solid tech background, most start-ups struggle to launch their first beta, as the minimum viable product takes ages to match the founder’s vision. Today no business can survive without tech, and tech enablement has become a hygiene factor.
Mobile App and Digital Transformation are essential for all businesses irrespective of their B2B or B2C business model. With customer loyalty becoming increasingly fickle, every start-up needs to work extra hard to enhance the consumer lifecycle value as the secret of future business scale and valuation is in this number. The unit margins, customer acquisition payback period or sales efficiency, and other metrics only hold importance when the business can get new customers on the one hand and retain and grow existing customers on the other hand.
To understand how the Tech Co-Founder enables a company to reach greater heights take the case of BookMyShow (India’s leading ticketing platform) which has three co-founders. Parikshit Dar has the Tech Co-founder role and has enabled the organizations in their journey across existential issues apart from strengthening the core offering.
During the dot com bust that happened in 2002, the company offered Customer Relationship Management solutions to fight the storm Parikshit ensured the tech platform was strong enough even in 2004 to service the highest number of tickets sold in a single month – more than 5 Million – 5,696,685. He added cool customer stickiness and acquisition features including Split Costs and Split Tickets.
Parikshit integrated half a dozen acquisitions and their platforms into the core offering/backend – one of the key enablers of increased services, customer acquisition, and valuation, and now during the COVID crisis, he has launched BookMyShow’s video streaming service to keep customer loyalty and create additional revenues.
Another sterling example is that of Delhivery (India’s largest B2B & C2C Logistic Courier Service Provider), which has Kapil Bharati as the CTO & Co-Founder (Tech Co-Founder).
It is believed that the organization started with two co-founders and then had to add a Tech Co-Founder to the founding team. Tech has been the enabler of the organizations rapidly growing business scale, including:
Servicing diverse requirements of enterprises and retail customers (10 thousand customers including all of India’s largest e-commerce companies and leading enterprises and successfully reaching 20 households every second across India).
Strategic commercial partnership with Aramex the multinational logistics, courier, and package delivery company expansion into 17500+ pin codes across 2300+ cities from its humble start with Delhi team size of 40000+ and their daily coordination and management across the 17500 plus pin codes across India 750 million orders delivered to more than 250 million households across India.
A capable CTO will safely navigate the start-up through the jungle of Product and SAAS platform, digital transformation, web and app development, blockchain and IoT solutions, and machine learning and AI integration. The question is – will this be enough. Also, what happens when he switches jobs, will there be enough organizational knowledge about the projects in the pipeline, the success of the past, and importantly the failures of the past?
And if, what the CTO brings to the table is enough, then is there any need for a Tech Co-founder? In a recent webinar hosted by a leading media house featuring the tech head of start-ups – 9 of the 13 panelists were Tech Co-founders. We thus obviously need to delve deeper into the advantage, a tech co-founder provides overall the earlier mentioned capabilities of CTOs.
The Tech-Cofounder (TCF) can look at stated IT requirements from a business and strategic advantage point of view as opposed to just implementation issues as s/he is invested in the long term success of the business. BCG says “most innovations (42%) fail due to a long development time. Selecting the wrong idea to innovate represents 32% of innovation failures.
The TCF also works closely with the founders to expand dreams into possibilities into implementable solutions. This happens when a small idea by one founder is built upon by the others resulting in greater insights and motivation to go ahead and do it.
The TCF is also not afraid to stop good money from being sunk after bad in case a scenario turns non-feasible. At times, a seemingly great service addition requiring significant-tech spend may be becoming redundant due to acquisition possibility or tech innovation. Thus, the Tech co-founder needs to and can take a tough business call.
Most importantly the TCF is with the company for the long ride and will not jump ship on being offered a better job. Many start-ups have sputtered and died as the CTO shift could not be managed cleanly.
It is these very advantages that enable the organization to create better value in the market and thus attract the attention of meaningful VCs. The VC valuation too will depend on strength of the founding team and their biztech acumen. It, therefore, becomes critical for businesses to onboard a TCF (Tech Co-founder) at the inception itself.