A Complete Guide to the Ideal Tech Startup Team Structure
February 22, 2023
15 mins read
A startup is only as strong as its team. Finding the right team structure for your tech startup is essential to its success. While there is no one-size-fits-all formula, founders must follow some basic principles. In this guide, we will outline the key things you need to focus on and tips for assembling the perfect team. Let’s get started!
- From the idea to IPO, A startup journey involves several stages, and the team should constantly evolve along with your startup evolution.
- In the early stages of your startup, having top management like CEO, CTO, CMO, etc., is enough. When you enter into the growth phase, you need to build your entire team.
- You can build in-house, offshore, or hybrid teams based on your need and resources.
- No matter what type of team you build, there are some essential elements of a clear organizational structure. You need to make sure your startup has those elements.
- Last but not least, there are some common mistakes founders make. You must avoid those mistakes to set up an ideal team and succeed.
You know about Netflix, right? From the beginning of Netflix, it spread like wildfire, although there was a bigger fish in the pond, Blockbuster. It’s not like their start was trouble-free, but they overcame their shortcomings; but how? There were several reasons, but one of the significant reasons was their innovative management practice.
I won’t waste your time explaining Netflix’s management practice or organizational structure. Nor I’m saying that Netflix’s model would work for your company.
What I want to say is figuring out the perfect organizational structure at the beginning is crucial for your company’s success. But you need to emphasize a few significant aspects from the very beginning to figure out the perfect structure for you. Let’s start with the basic organizational structure at a different stage.
Evaluation of startup team structure
The fundamental team structure constantly evaluates, corresponding to your startup evaluation. Your startup team structure contains; each department with experts having roles and responsibilities associated with the relevant startup stage.
Stage 1: Pre-seed phase
This phase is considered the early stage of your startup. In this stage, having only the startup management team is enough, and you need the 4 most essential people.
CEO: Chief executive officer
Your chief executive officer (CEO) is the highest-ranking executive in the startup. He/she is the dreamer and creator of your startup’s vision, culture, and overall direction.
CTO: Chief technology officer
Your tech startup’s chief technology officer (CTO) is equally important as the CEO. He/she is responsible for the technical strategy, building the technology, and the tech team.
CMO: Chief marketing officer
Your Chief Marketing Officer (CMO) ensures your company’s mission and vision are being accurately conveyed to the public. He/she manages the marketing side of your startup.
CSO: Chief sales officer
Your chief sales officer (CSO) will be the person who closes deals and oversees the sales function. Whenever it’s time to hustle for new business, your CSO is ready to act.
These people can help you go through from your startup’s early days to the next stage where your startup starts growing.
Stage 2: The seed phase
In this stage, now that your startup has started growing, you need more people on your team. It’s time you onboard your chief financial officer (CFO), business development manager, and customer service representative. These people will be responsible for tasks and outcomes.
Chief financial officer (CFO)
Your CFO is going to all aspects of financial matters and your organization’s decision-making, including financial reporting, accounting, tax, etc.
Business development manager
Your business development manager informs others about your startup’s products and services. Also, he acts as the point of contact for new and existing clients.
Customer service representative
Your Customer service representative helps customers with complaints, answers their questions, and gives them information about products and services. In one sentence, he/she takes care of your customers. Some startup appoints CSR at the growth phase. But it’s better to have a dedicated person to ensure customer satisfaction from the beginning if you have a viable product at this stage.
When your startup started to grow, you entered the third stage. At this stage, you need to build entire teams along with the board members stated above. As a tech startup, take extra care of your development team.
Stage 3: Growth
To ensure the productivity of your development team, you need to add some more people to the board to ensure your tech startup organizational structure.
Your software architect plans software solutions and most aspects of the development process, including gathering and organizing requirements, code reviews, designing project parts, etc.
Tech team leader
Your tech team is the in-charge our your tach team. Form conducting meetings and tech breakdowns to problem-solving and motivating the team, your tech team lead will handle everything.
HR & other development and marketing personnel
At the growth stage, your startup will grow faster than ever. So, Your organizational structure and the team’s size will expand to keep up with the growth. So, you will include numerous development and business personnel in your team. If your team grows too big, it’s critical to have an HR manager too.
As we mentioned, it’s common to have a different startup organizational design in various startups. But no matter which startup you see, they all have people assigned for specific tasks. We will discuss the elements letter in the post, but now let’s look at a startup organizational chart.
The startup we are talking about is Adalo, and they managed to grow 1900% in the last 5 years, so they have done something good and probably found the best organizational structure for startup for them.
To see the detailed team structure of Adalo, click here
What type of team can you build?
The most challenging team to build for a startup is the development team or tech team. So, we will discuss only the types of development teams you can make.
There are three types of tech teams you can build for your startup. Team type will not depend on the stage of your startup but factors like resources, developer availability, etc.
In-house development team
Building an in-house team means they are your employee; startup team members work directly for you and are fully dedicated to your projects. The in-house development team usually works in your office as your other departments; they can collaborate better on different projects. On top of that, in-house development has several benefits, including better control over the final product quality and greater flexibility in customizing the software to meet the company’s specific needs.
In-house development also allows companies to build up their own expertise in-house rather than relying on outside contractors. However, in-house development can also be more costly and time-consuming than outsourcing, and it may require a larger up-front investment in terms of staff and infrastructure. As a result, companies must carefully weigh the costs and benefits of in-house software development before deciding.
Outsourcing or offshore development team
Outsourcing development efforts can be a great way to get product development done without breaking the bank. When you outsource software development, you’re essentially hiring a company or individual to develop a software application for you. This might be anything from a web app to a complex software application. The benefits of outsourcing software development are numerous.
First, it can save you money. Development work can be expensive, especially if you need someone with expert knowledge. Outsourcing development to an offshore company can reduce your costs by up to 60%.
Second, it can save you time. When you choose to outsource software development, you don’t have to worry about the project’s planning, coding, testing, and deployment phases. All of that is handled by the outsourcing company.
Third, it can improve your quality. When you outsource software development, you’re hiring experts to do the work for you. This means that they’re more likely to produce high-quality code that meets your needs and expectations.
Finally, it can reduce your risk. When you outsource software development, you’re not responsible for the success or failure of the project. If the project fails, the Outsourcing company takes the loss, not you.
But this process is not entirely effortless or risk-free. It’s hard to manage a team offshore, and finding the right company as the development partner is difficult. But with the right development partner, the offshore development team model can be your best choice.
Hybrid teams consist of a core in-house team that expands to an outsourcing team. You can partner up with outsourcing agencies for hybrid teams. You can get special rates for the entire development process. Sometimes you get benefits like free maintenance and additional team member support if any team member leaves. For example, at Technext, we always keep backup developers for our client projects.
If you want to know more about the startup team
If you are unsure about which one to choose and want to know more, read our detailed comparison of in-house development teams vs. outsourcing.
No matter what stage you are in, or chich team model you chose, it would help if you make a clear startup organization structure.
Essential elements of a clear startup organizational structure
Essential elements comprise your organizational plan and create the organizational structure itself.
Work specialization is assigning specific tasks to your employees based on their expertise. Employees can focus on learning special skills to complete their tasks and gain experience. It also enables you to focus less on training and redirect your energy and resources to other company needs. Work specialization is very effective for your tech startup organizational structure.
Departmentalization is grouping up your employees based on their tasks and skill. This way, each department can focus on a specific task and achieve their goals. As per your startup organizational structure, you can combine two or more departments and takes the best out of teams if necessary. Later, when your organization grows, its departments will grow, and more sub-units will be created.
Chain of command
The chain of command describes the hierarchy for passing instructions and reporting within your startup. In this system, Supervisors supervise and share knowledge with employees. Also, support and encourages your employees. You can have a strict or flexible chain of command based on your tech startup organizational structure.
Formalization of elements
Formalization shapes your workplace culture. It determines the roles, relationships, and communications within your organization. Formalization also clarifies your workspace rules which are very important for startup organizational structure.
Centralization and decentralization
In a centralized structure, business decisions are made in the head office or at the top of the business and distributed down. Your leaders get the final control over any decision-making within the organization.
As for decentralized structure, decisions are taken from all levels of management. Your employees can be involved in decision-making.
Both of these methods are important. You can choose one or a combination of both as your startup requirement.
The Benefit of having a clear startup organizational structure
There are many benefits to tech startup team structure. Here are some.
Impact on decision-making
Your startup’s decisions depend on information gathered at a time. It’s essential sending information from the executive management to employees responsible for completing the task. Your clean tech startup team structure can be effective for this decision-making process.
Upgrade employee performance
Your tech team structure creates a layout for your employee responsibilities. This process informs which employees have which tasks and which manager supervises which employees.
Evaluation of the organization
Your tech team, as well as your organization, evolves within organizal structure. In that case, if there is any issue in any area, you can find and resolve this efficiently.
With team structure, every employee understands their own responsibilities. This helps them complete their tasks in time and complete your startup’s aim.
Reduce financial mismanagement
Sometimes different teams complete similar functions, which can cause financial mismanagement. But if your team is structured, that can reduce these types of financial mismanagement.
While creating your Tech startup team structure, the structure is essential, but the persons who will follow the structure are equally important. Your startup team needs the right people to have your desired tech startup team structure.
How do you find the right people to fill your startup team?
Finding and hiring developers & programmers is the hardest among all the people a startup needs at its initial stage. Hiring the right developers can minimize issues like lack of planning, time management challenges, cyber security threat, challenge management even finding the right developers in the future. However, finding the right developers for your startup is difficult, considering the facts like competitive rivalry with other businesses, Unreliable Applicants, High Wages, etc.
Try to finalize your product idea, business plan, and budget before even starting hiring for your startup. Also, finalize your hiring model and team functionality. Before making a final decision, always look for the hard and soft skills candidates have. Then crosscheck their abilities via programming portfolio, GitHub account, live coding test, or real-world problem-solving. Last but not least, don’t forget to take an interview so you can access their soft skills and know more about their expectations.
The process is a little different if you are trying to hire a senior developer or CTO for your startup because of the small team size, unitability, and limited resources. Try finding developers who Want to do meaningful work. You can impress them with your objective and work culture. You can also offer them generous equity, partnership or authority.
If you are a nontech founder, it’s better if you check your portfolio and client references and maybe have a video chat. Ask for the sprint-wise breakdown and the support tenure. If you are a founder with no management experience, research the tools used for the project management and that update frequency of the task. Prepare testimonials from previous clients. You can get the task breakdown with the timeline.
For startups, finding developers is difficult, but building the ideal team is the most difficult. As a good leader, to ensure your team’s success, you can motivate them to keep on track and accomplish company milestones and goals.
If you want to read detail on this topic, you can read our article How to Hire Developers for Startup (A Definitive Guide)
Common mistakes founders make while setting tech startup team Structure
Here are some common mistakes you can make while setting a tech startup team structure
Designing the structure without input from others
As a founder, you should not try to create the tech startup team Structure alone without taking opinions from the persons related to the structure, like your other founders, managerial members, or even employees.
The team information system is not alienated from the structure of the organization
When your tech team information is not alienated from the organization structure, you won’t be able to determine which team member is underperforming and causing difficulty in your team.
Not evolving the team structure as the organization evolves
Your organization is constantly evolving. If you don’t evolve your tech team structure according to your organization, this will create problems.
In an organization, conflicts will arise. But while structuring, if you avoid the conflicts instead of solving them with time, this will go out of hand and affect your team structure.
Not aligning structure with your team’s mission
Your team structure needs to be aligned with your team’s mission because a structure’s whole point is achieving your tech team’s goal.
While you try to avoid these mistakes. Hopefully, the following tips will help you to improve.
Top tips for building a tech startup team
One team, one goal
Make sure the whole team has one common goal. Always share your plans with your team members and vice versa. This way, corporate culture will be created, and the one on the team and joining the team will be on the same page.
Employee relationship matters
The overall employee relationship matters when it comes to team structure. It would help if you were careful about disagreements in your team. Interpersonal relationships should not interfere with work. All members must work well together and move forward.
Choose the right candidate
It would help if you chose the right candidate for your team structure. Always be careful; the new candidate needs the right skill that adds value to your startup. And also fits into your team culture.
Quick at firing
If you hire someone who is not fitted to your team, fire quickly. The more you keep an unfit into your team, you are going to cause trouble for your team. So, many experts suggest a startup founder should be quick at firing to save their limited resources. But firing people may have impact on your team moral. So, Instead of firing, you should take your time to hire the right people.
Bring diversity to your team
Diversity in employees helps create a creative environment. Each of them will bring their own personality to your team. These individuals with diverse backgrounds and skill sets help develop innovative solutions for problems, which can lead you down unexpected paths of thought-provoking creativity.
After reading this article, you probably understand the different types of tech startup team structures and which would be best for your company. Remember, no structure is perfect, so be prepared to adapt as your company grows. The key thing to sucess is to start with a clear structure and stick to it! And if you’re not sure where to start or need help putting together your tech startup team, reach out to us. We’d love to help you build the foundation for success.
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