Why CTOs Should Know Accounting
No one talks about how important it is for your CTO to learn the business side of things. That needs to change. If you’re a co-founder or senior executive at a startup or growth stage company, you need to be more than just an expert in your area. I know that’s asking a lot. Becoming an expert is a massive task. But it’s not enough. Each senior leader needs to be familiar with engineering, marketing, sales, and accounting if you want to maximize your chance for success.
This concept has been popularized for non-technical founders for some time, through efforts like Mayor Bloomberg’s Learn to Code and Business Week’s magnum opus What is Code. But I’ll wager if you’re a CEO, you suck at social media. You probably don’t understand it, even though it’s the future of customer engagement. That needs to change. And this change needs to extend beyond giving non-technical founders technical skills. We need to help CTOs get business savvy.
Perform a Self Assessment
If you had to take over any of your company’s functional roles (marketing, sales, etc.) for a short period, would you be able to lead effectively? If the answer’s yes, great. Proceed. But if not, you’ve identified a major need.
Things happen, and you need to prepare for contingencies. Not only that, how can you screen and hire the right person if you can’t speak the same language?
Non-technical CEO’s should code so they can:
- Understand how the sausage gets made
- Talk to their team with the right vocabulary (i.e. Agile, Scrum, and Kanban)
If you’re the CTO, don’t you want to be relevant in business meetings? You won’t be as strong in marketing as your CMO, but you can add value and influence decisions.
If you outsource business decisions to your non-technical co-founder, there will be consequences. Best case scenario? You disengage from the business side.
Worst case: your disengagement leaves your CEO to feel lonely and stressed. And then one day, you wake up to a phone call from that person saying, “Hey, we’re out of money.”
Don’t let that happen to you.
Jump into the Business Side
I love founding teams comprised of engineers because:
- Less technical risk
- Solve their own problems
- Shared background with me
I’ve been a CTO many times in my career, and I’ve exited multiple companies. But heading back to grab my MBA still made me a better CTO.
I don’t think all developers should get an MBA even though, unlike many of my peers, I think there’s value in one. Instead, I’d suggest creating your self-study MBA.
Design Your Personal MBA
Here are my suggestions for a practical education that will make you a better leader in every functional area.
All techies should read The Essentials of Finance and Accounting for Nonfinancial Managers by Edward Fields (who was my Accounting professor in business school).
It’s not exactly A Song of Ice and Fire, but you shouldn’t want to put this book down. You’ll get familiar with:
- Balance sheets
- Income statements
- Cash flow statements
- Budgets and forecasts
- Annual statements
I know. It’s dry. But the book is so necessary.
If you want to supplement it, take an online accounting and finance crash-course like this one at Udemy.
Al Ries and Jack Trout wrote The 22 Immutable Laws of Marketing. The book was published over two decades ago, but it’s still essential. Learn from real world case-studies.
And remember this lesson: if people don’t read your website or emails, they’ll never buy your stuff.
To improve your copywriting, try the great Gary Halbert’s Boron Letters.
Sales makes the world go round. Here are two great books:
- He may have been a little corny, but Zig Ziglar’s Secrets of Closing the Sale is excellent. He knows objection handling better than most.
- Then there’s The Little Red Book of Sales. It’s short, sweet, and to the point. It’s a great reference book.
And finally, for our non-developer friends who’ve stuck through this:
Read the Bloomberg article What Is Code that I mentioned before. It’s an interactive history lesson that walks through everything developer and even delves a little into philosophy.
At the very least, you should get familiar with HTML & CSS so you don’t need to bother your developers on trivial tasks. Brush up over at Codecademy.
You’re never going to be an expert in all of these roles. But at a minimum, you need to be conversational.
Have a bias for action and carve some time out for learning. Let me know how it goes.
* Image by Flickr user foam