Transcript: From the Dress Code to the Bottom Line: A CTO Business Primer

0:00 Scott Business is a game and the scorecard is the prop the P&L or it's also called the income statement

0:24 Scott To this week's episode of How Many CTOs Does It Take?

0:28 Scott My name is Scott Porad.

0:30 Scott I'm here with my trusty co-host,

0:32 Brad Brad Hefta-Gaub.

0:34 Scott Brad, what's on your mind these days?

0:37 Brad I don't know, man, but we look like a couple slobs, don't we?

0:41 Scott Slobs.

0:41 Scott Faces for radio.

0:43 Scott That's what they say.

0:44 Brad You know?

0:46 Brad It's funny you say that, right?

0:47 Brad Because I think that like,

0:49 Brad I don't know, we shouldn't spend a whole 30 minutes talking about this, but there is this sort of like,

0:55 Brad I feel like

0:55 Scott Well,

0:55 Brad I

0:55 Scott if we're not, sorry,

0:56 Scott let me interrupt you.

0:57 Scott If we're not going to spend 30,

0:58 Scott let's spend 45.

1:01 Brad was going to say like,

1:02 Brad what is your take on sort of like

1:05 Brad how engineers engineers are there's like this classic sense of like a lot of engineers sort of being like not necessarily like it's a profession it's a white collar profession that you can basically show up wearing whatever right like how many times have you had you know engineers that showed up at the office wearing Birkenstocks and cargo shorts and stuff like that right but then as the CTO there's often these times when we gotta

1:30 Brad We got to show up at the board meeting or we got to show up and we got to like put on our fancy clothes instead.

1:36 Brad I don't know.

1:37 Brad Maybe there's something.

1:38 Brad Maybe there's something.

1:39 Brad Are we being more authentic here by showing up at this podcast with our scruffy T-shirts and our unshaven faces?

1:49 Scott Well, I've got three initial reactions to what you said.

1:53 Scott The first is I'm always reminded of something I learned at one of my first jobs from a guy who had led business development.

2:00 Scott He said,

2:01 Scott nice clothes open doors.

2:03 Brad There you go.

2:04 Scott So there's one thing.

2:05 Scott The second thing, I was early.

2:10 Scott And I hit to the remote work thing early from

2:14 Brad Oh yeah, so did I.

2:15 Scott about 2007 to 2012,

2:18 Scott I was part of a five years, I was part of a startup that was largely remote.

2:22 Scott We had people all over the country. We even had a guy who lived in an RV.

2:25 Scott Did you know that a feature of RV parks is Wi-Fi?

2:30 Brad Yeah, that's pretty common.

2:31 Scott So he and his wife or girlfriend,

2:33 Scott I don't know, significant other,

2:35 Scott they were just driving around the country. They go to a place, sometimes they'd stay for a month, sometimes they'd stay for two days.

2:41 Scott Anyhow, so he's coming into the office one day.

2:45 Scott Actually, it's not this guy. It was another guy that we hired.

2:47 Scott So we, at this company,

2:49 Scott three or four times a year,

2:51 Scott we brought everybody to,

2:52 Scott we did have an office and we brought everybody to the office for a week.

2:55 Scott And we do this frequently to create connections in a variety of ways.

2:59 Scott And the person we hired,

3:01 Scott he actually sent me a message. He was like, hey, what's the dress code?

3:05 Brad Right.

3:07 Scott And this was over, at the time we weren't using Slack,

3:10 Scott we were using a tool called Campfire, which was a Slack-like tool.

3:14 Scott I don't know how Slack beat Campfire in the chat

3:17 Brad Is

3:17 Scott tools,

3:17 Brad a campfire

3:18 Scott but there's

3:18 Brad a 37 signals add-on?

3:21 Scott Basecamp.

3:22 Scott I don't remember.

3:23 Scott And I just wrote back to him,

3:25 Scott just don't show up naked.

3:30 Scott And that became sort of within that culture,

3:32 Scott you know, things sometimes happen in a culture that catch on and that thing that caught on, which was like, just don't show up naked.

3:39 Brad My wife and I just started watching this streaming show,

3:42 Brad The Chair Company.

3:43 Brad There's like this whole storyline where this guy's upset because his boss convinced him that everybody worked naked and he showed up at work naked.

3:51 Scott No way.

3:52 Brad It's a super absurd show.

3:54 Brad It's like, anyway.

3:55 Scott So here's the third thing.

3:57 Scott I once, and this was about, let's say 2017.

4:02 Scott I was working at a company we were hiring.

4:06 Scott By the front in the lobby near the lobby there were some like small conference rooms that were used for interviews I was kind of the interview rooms So I come in one day and there's an engineering candidate in there and he's wearing a baseball cap And I really struggled with that.

4:21 Scott I don't know if we hired him if we didn't hire him.

4:23 Scott I have no recollection

4:24 Brad Then you wouldn't hire me with my scruffy baseball cap.

4:27 Scott But I just remember thinking like at an interview,

4:30 Scott like I can understand people wear baseball caps to work. I don't ever wear a baseball cap to work,

4:34 Scott but like people do.

4:36 Scott That's kind of a fashion thing.

4:37 Scott I'm okay with it.

4:38 Scott It's not me.

4:39 Scott But I just remember thinking like at an interview,

4:41 Scott like.

4:42 Brad Yeah.

4:44 Scott I don't know when I was a kid like if we were in a hat like we came to sit down at the dinner table you had to take your hat off like

4:49 Brad I got

4:49 Scott you couldn't have a hat at the table at our house

4:51 Brad oh man in my 20 in my 20s my wife and I my girlfriend at the time not my wife we were I think I'm pretty sure this was before we were married we um we were at some we were at some hotel lobby restaurant and eating dinner and or eating food or was like even like a brunch or something like that and I had a baseball cap on

5:10 Brad And some customer walked up to me and just told me I had to take my hat off. I was being rude.

5:15 Brad I was just like, how?

5:17 Scott I'm a little bit from that school.

5:19 Scott So anyway,

5:20 Scott I just remember walking into the interview and I was so rattled because I was just like, what?

5:24 Scott You can't wear a baseball cap in an interview?

5:27 Brad Well, it's funny.

5:28 Brad So like,

5:29 Brad did you do you feel like was this a person that you ended up interviewing or did you did you know anything about whether they got hired or not?

5:36 Scott No, yeah,

5:36 Scott I was the interviewer.

5:38 Brad Oh,

5:38 Scott I was like,

5:39 Brad it was literally a person you were interviewing.

5:40 Scott yeah,

5:41 Scott but like for the first.

5:42 Scott few minutes of the interview i was just so rattled i was like how

5:45 Brad Did

5:45 Scott could you you i

5:46 Brad hire them?

5:46 Scott don't recall i have no recollection i

5:49 Brad You just remember

5:50 Scott have

5:50 Brad the

5:50 Scott no recollection

5:50 Brad baseball cap.

5:50 Scott if i heard them

5:52 Scott I just remember the baseball cap and just being like shocked.

5:55 Scott Like, you know, people would show up to interviews in t-shirt, like you talk about, you know, t-shirts and cargo shorts and everything.

6:00 Scott And there'd be lots of times where I'd say, well, that's not how I dress for an interview,

6:03 Scott but whatever.

6:04 Scott This is the industry,

6:05 Scott but the baseball cap thing,

6:06 Scott man blew me away. Anyway, so that's what you're on your mind is fashion in the tech industry.

6:10 Brad Well,

6:10 Scott That's what you

6:10 Brad I

6:10 Scott want to go for

6:11 Brad don't

6:11 Scott today.

6:11 Brad know if I want to talk about it the whole way,

6:14 Brad but I think you like raised a couple.

6:17 Brad Well, you know, there's a couple of things.

6:18 Brad OK,

6:18 Brad so how do we make this how do we make this relevant to the how many CTOs podcast?

6:23 Brad OK,

6:23 Brad so like

6:24 Scott I'll tell

6:25 Brad I.

6:25 Scott you how to make it relevant.

6:26 Brad OK,

6:26 Brad tell me what your thoughts are,

6:27 Brad because I feel like there's a few threads to pull on here.

6:30 Scott I have received the following coaching,

6:33 Scott which I also had to give to somebody yesterday.

6:36 Scott It doesn't matter that you're right.

6:38 Scott You're still pissing them off in the way you say it.

6:41 Scott So

6:41 Brad Delivery.

6:41 Scott the container matters,

6:43 Scott right?

6:44 Scott Whether it's what you're saying, how you're saying it, what you're wearing,

6:46 Scott these things do make a difference because whether we like it or not.

6:51 Scott There are interpersonal relationships in the workplace.

6:55 Scott And I remember when I was given that feedback,

6:57 Scott I was like, but I'm right.

6:58 Scott And the person who had given me the feedback was like,

7:02 Scott I get it, but you're still pissing

7:04 Brad Yeah,

7:04 Scott them off.

7:05 Brad yeah, totally.

7:05 Brad Okay,

7:05 Brad so hold on a second.

7:06 Brad So hold on a second. So first of all, I love this framing here, right?

7:09 Brad So as a technology leader,

7:13 Brad as

7:15 Brad you know c-level executive or vp depending on the scale of the company depending on the stage of the company you've got different constituents that you you bring your you've got different contexts that you're operating and we always talk about this as a cto like you're you're that bridge between the other stakeholders and the engineering team okay

7:34 Scott Mm-hmm.

7:34 Brad and um i'm going to offer a

7:39 Brad hypothesis.

7:40 Brad And that is that I think that effective CTOs know how to code switch between working

7:50 Scott 100%

7:51 Brad with their engineers and working with external non-technical stakeholders.

7:56 Brad And part of that code switching might be depending on the context of the interaction.

8:03 Brad changing your clothes right dressing up for the occasion but a big part of that code switching is you know the language we use and and the sort of informality that we might use versus formality we might use in one direction or the other

8:19 Scott I 100% agree.

8:20 Scott And I don't mean to brag.

8:23 Scott That's not how my parents raised me.

8:25 Scott But if you were to ask me.

8:27 Scott Scott,

8:28 Scott what is the number one attribute that led you to get to this level?

8:32 Scott It would be a tie between two things.

8:34 Scott One of them is...

8:37 Scott project management,

8:38 Scott just the ability to organize people and get something done because that got rewarded. You delivered things and people wanted you to deliver more.

8:45 Scott But the other,

8:46 Scott which is equally if not more important,

8:48 Scott is the ability to explain technical concepts to non-technical people in ways that they'd understand so that they will support them.

8:59 Scott And I don't know how I got that.

9:01 Scott It just seemed to always be something I had a knack for.

9:04 Scott which was to try and explain it i think it's because you know i use a lot of drawings i use a lot of analogies and sometimes the analogies don't work but you're always striving to find an analogy just this week i was just talking yesterday to our ceo she was trying to understand what's an mcp server and why do we need one i

9:22 Brad Right.

9:23 Scott thought we were i thought we had an api do we also need an mcp server like you know being able to explain that

9:30 Scott so that she understood she's grateful and so she understood I think is a key part of this job and frankly it's a it's a skill to hone I mean I've definitely flopped at it a few times but you see those CTOs or engineering managers or whatever that get in there and the jargon with the whiteboard and their eyes gloss over and people were like I

9:50 Brad Yeah

9:50 Scott don't want to give you the money

9:52 Brad Yeah, totally,

9:53 Brad totally, totally.

9:53 Brad And I think that like, I think you kind of articulated a few of the things that matter,

9:57 Brad like the ability to.

10:01 Brad you know maybe make analogies or to draw pictures or to I don't want to say simplify it because it's not about simplifying it's about translating it into the language that matters but I think that one skill that's important to have in order to be successful at that is

10:20 Brad You need to have a business awareness as well.

10:23 Brad So it's sort of like, you know, this is one thing I would say, you know, coaching to engineers that want to move up in management,

10:32 Brad like being able to explain things to your non-technical stakeholders is critical.

10:37 Brad And one way that you're going to get better at that is if you spend a lot of time trying to learn more about understanding about how businesses operate.

10:46 Brad and what what what success looks like in business right because what success looks like in engineering is not directly related to what success looks like in business a great software company succeeds when or a great company that has a technical component succeeds when the engineers aren't just engineering but they're engineering with the end goal of making the business stronger and so you have to understand how to make the business stronger

11:11 Scott A hundred percent. And I have some concrete advice for anybody listening

11:14 Brad Yeah,

11:15 Scott to this.

11:15 Brad yeah

11:16 Scott One,

11:16 Scott the scorecard business is a game and the scorecard is the P&L, the income statement.

11:22 Scott The profit and loss,

11:23 Scott P&L is profit and loss or it's also called the income statement.

11:27 Scott You don't have to go take accounting 101,

11:29 Scott although I think it's, I took two years of accounting, but taking accounting or just going and learning,

11:34 Scott learn how the income statement works. That is the scorecard.

11:39 Scott 100%.

11:39 Brad Want to pray?

11:39 Scott And learn how everything that your engineering team is doing is impacting something on that income statement.

11:48 Scott And there are people at that company who want the numbers to go either up or down.

11:53 Scott Are you growing with them or are you growing against them? So that's the first thing.

11:56 Scott The second thing is go learn about unit economics.

12:00 Scott In fact, that was a big unlock for me when I learned about unit economics and how it relates to our software businesses.

12:05 Brad You want to say a little bit more about that? Let's say more about that.

12:07 Scott A unit economics is what is the economics or the profitability of a given unit? And a unit could be an individual customer,

12:14 Scott it could be a partner,

12:16 Scott it could be if you are running a bunch of retail stores,

12:18 Scott it could be each store location,

12:20 Scott units change.

12:21 Scott But you could think of it simply as what does it cost to acquire this unit?

12:27 Scott And then what is the lifetime value in terms of profit of that unit? So I'll use an example from TaskRabbit where I'm working now is very simple. And then I'll also use an example of a startup I'm advising for, which is a brick and mortar,

12:39 Scott which is a little bit different.

12:40 Scott The unit at TaskRabbit is an individual consumer,

12:43 Scott right?

12:44 Scott And we spend money like on Google ads and things like that to acquire a customer.

12:50 Scott We get some customers for free via word of mouth and

12:53 Scott things like that but even when you do SEO you're spending money to develop your pages or whatever those those are all money you're spending to acquire customers and so if you take all the money you spent to acquire a customer and then you divide it by the number of new customers you got you get something called CAC CAC customer acquisition cost

13:16 Scott which is just the average amount it costs you.

13:18 Scott So now I'm giving a unit of economics

13:20 Brad Yep

13:20 Scott 101 here.

13:21 Scott So, okay,

13:22 Scott so you got your average cost of acquiring a customer,

13:25 Scott and then you have their lifetime value.

13:28 Scott So if they transact once with you, it's how much profit did you make on that transaction.

13:32 Scott If they keep on coming back.

13:35 Scott Over time, then, you know, the lifetime value grows.

13:38 Scott So I don't know if these are the real numbers of TaskRabbit because I don't know off the top of my head,

13:42 Scott but I'm just going to say it costs us $50 to acquire a customer.

13:47 Scott On average, we make $25 a transaction.

13:51 Scott Average customer transacts with us four times a year. And so a four-year LTV would be $400 over $25.

14:00 Scott What would that be?

14:01 Scott 16 to 1?

14:02 Scott That'd be amazing,

14:03 Scott by That's the way.

14:03 Brad a great CAC to LTV.

14:06 Scott Crazy sauce.

14:07 Scott I talked to an investor once. He said to me, look.

14:10 Scott If you're three or four to one, I'll take your call.

14:14 Scott I might listen.

14:15 Scott You know, if you're five to one ratio,

14:17 Scott I'm very,

14:18 Scott very interested.

14:19 Brad Yeah. Well,

14:19 Scott If you're

14:20 Brad and if you're if you're less than one over one, then you're not profitable.

14:24 Scott losing money.

14:24 Brad You're not profitable. You're you're like we're printing dollar bills and selling them for 80 cents a piece.

14:29 Scott That's right.

14:30 Scott That's right. I was in the startup once where we were we were printing we were selling dollar bills for 50 cents and we were growing really.

14:35 Scott Really fast customers like that.

14:37 Scott So, you know, your profit has to cover all your fixed costs, all your hosting,

14:41 Scott all of your employees,

14:43 Scott all of your rent,

14:44 Scott all that stuff. So you have to have enough of a ratio there to kind of generate enough volume.

14:49 Scott So that's your lifetime value to customer acquisition cost ratio is called.

14:55 Scott the unit economics so that's for like a consumer internet site which i just told you i have a friend who's i advise her startup which is a

15:05 Scott chain of local grocery stores she has five locations in the seattle area of small format grocery stores and in different neighborhoods and so her unit is a store it costs i don't remember the exact numbers roughly a million dollars to build out a store she breaks even basically within it she basically makes a million dollars a store a year she thinks the store will last her 10 years before she has to remodel it

15:30 Scott So her unit economics are 10

15:32 Brad Yep

15:32 Scott to 1 or something like that.

15:34 Scott And so there's another key piece there,

15:36 Scott which is to know about in the unit economics world,

15:39 Scott which is payback.

15:41 Scott So LTV to CAC tells you your profitability,

15:45 Scott then payback tells you your risk.

15:47 Scott If you get your money back in a year,

15:49 Scott that's very different than if you get it back in six months or if you get it back in 24 months because time has risk. So, again,

15:55 Scott from my understanding, at least in the consumer Internet world.

15:59 Scott 12 under 12 months you know nobody has less than six months when I say nobody I mean think of it like six to 12 months is good over 12 months not not you know over 18 months nobody's going to invest in you

16:10 Brad You

16:10 Scott and so mean forth

16:10 Brad as far

16:11 Scott pay

16:11 Brad as payback life, payback half?

16:12 Scott back like payback this is too risky too much could change in that time

16:16 Brad Well, so this is great. So I love it. So we went from punk rock sweatshirts and baseball caps to we just gave our budding CTO listeners a quick little mini lesson on lifetime value,

16:32 Brad customer acquisition cost and unit economics.

16:34 Brad And I think that I think those two things actually kind of tie in nicely because they're they're kind of speaking to this.

16:41 Brad um various modalities that as engineering leaders if you really want to be a strong engineering leader not only do you have to be really good at writing code and managing people to write code but you also need to be able to understand when the essentially unique economics aren't working out

16:59 Brad Now you need to understand, like,

17:01 Brad well,

17:02 Brad how do I respond as an engineering leader to help the business team find workable unit economics?

17:09 Brad And

17:10 Scott Mm-hmm.

17:10 Brad this is, of course,

17:12 Brad you know, I think one of the classic,

17:14 Brad one of the first, one of the first lessons that most engineering leaders learn about.

17:23 Brad in economics tends to be when they get the call from the business side of the house saying we are going to have a reduction in force and you now need to help identify how to restructure your engineering team to make this.

17:41 Brad make our business work and

17:43 Scott Yeah.

17:43 Brad i mean there's a lot of understandable reactions to that but one of the one of the reactions that i think i see with less experienced engineering leaders is oh my god if you take away my people then we're already behind we already have too much to do we already are underwater i'm just going to be that much further underwater

18:06 Brad And maybe something that we can try to kind of speak to here is like,

18:11 Brad OK,

18:11 Brad well,

18:12 Brad it doesn't really matter if you get the software done if the union economics aren't working out or

18:21 Scott Yeah, if you don't know what those projects,

18:24 Scott if they're not either essentially increasing your CAC or decreasing your CAC.

18:32 Scott Decreasing your CAC or increasing lifetime value or putting more units through the system

18:39 Scott And more volume.

18:39 Brad improving growth sure yeah

18:41 Scott Right.

18:42 Scott Essentially, each one of those units that goes through generates a little bit of profit.

18:47 Scott That ultimately every or you're lowering your fixed costs. Those are essentially the four things you're doing.

18:52 Brad lowering your fixed cost also has a direct improvement to the total lifetime value right like if you know that if you know that essentially like a customer is as loyal as they are they they definitely interact with you four times

19:03 Brad a year for four years and that's pretty given anything you can do to lower the cost of goods of

19:10 Scott Mm

19:10 Brad that

19:10 Scott -hmm.

19:11 Brad interaction is also improving the the capture from the lifetime value a

19:16 Scott Yeah.

19:17 Brad lot of times lifetime value is listed as the top as the top line so it's more like

19:22 Brad Lifetime top top line revenue finance

19:23 Scott Maybe we should teach a special class finance for CTOs

19:28 Brad I mean, there's a lot of I would I would I would suppose that there's probably a lot of demand for that,

19:36 Brad especially how long it's been 21 minutes into this episode and it's time for the ding ding ding ding ding talk about AI.

19:46 Brad Right.

19:47 Scott Yeah.

19:47 Brad Like I would say that AI is, you know, as you know, I'm bullish on on the use of AI. And one of the ways to use AI is to lower your fixed cost of your of your energy.

19:59 Scott in

20:00 Brad Mm-hmm.

20:00 Scott its ability to generate more software to drive the economic engine of your technology company.

20:09 Brad Mm-hmm.

20:10 Brad Yeah.

20:11 Brad Either lower the cost or grow faster.

20:13 Brad That's right.

20:15 Brad So I think there's something important that we kind of brushed over earlier.

20:19 Brad It's a little sad,

20:20 Brad but it's just a fact of life.

20:23 Brad is for software engineers software leaders that work in the commercial software world like i do and you do you talked about we have to translate languages from our language to the business language and unfortunately we have to operate i'm going to make this very us and them we have to operate in their world

20:47 Brad They don't often come and operate in our world, right?

20:50 Scott Right

20:50 Brad All the business people want us to understand the finances and want us to reduce the costs, so on and so forth.

20:56 Brad But I never, you know, I never have the CFO coming over and talking to the cloud infrastructure team about how to configure the network,

21:04 Brad right?

21:04 Brad So like it is just,

21:06 Brad there's a little bit of asymmetry there.

21:09 Brad And some people resist it. Some people really try to spend a lot of time teaching business folks all the ins and outs of the technology.

21:16 Brad But the truth is, whoever you are, like you and I, Brad, but whoever you are out there listening,

21:20 Brad you've got decades of experience doing this. You're never going to be able to teach someone.

21:25 Brad You can teach them at a high level.

21:27 Brad But there is some amount that you have to gloss over when teaching them.

21:32 Brad And so we do have to go learn to play in their space.

21:35 Scott Yeah, I mean, 100% agree with that statement. And I guess it's interesting.

21:41 Scott I'm pondering when was there ever a time? Well,

21:45 Scott okay,

21:45 Scott the times in my past lives where I have

21:50 Scott used, you know, done my best to inform engineering concepts or engineering challenges to my business partners.

22:01 Brad Mm-hmm.

22:02 Scott I can only think of times that I did that where

22:06 Scott It was a fundamental question that mattered about the business,

22:10 Scott right?

22:10 Scott Like we want to go take on this new initiative.

22:13 Scott Okay.

22:14 Scott At that point, I want to go take on this new initiative.

22:16 Scott It may be the case that like having a conversation about the cost structure of taking on that new initiative,

22:22 Scott the challenges of it,

22:24 Scott the complexity of it, the overall like some of the engineering details about what it would take to take on that new venture.

22:32 Scott That might be a time when you need to explain like,

22:34 Scott oh, you're asking us to, you know, kind of joking about this, like bend the laws of physics there,

22:42 Scott right?

22:42 Scott Like, well, that's like a, that's going to be a technical conversation that matters to the business owners so that they can understand like,

22:51 Scott oh, yes,

22:52 Scott we could do that. Like we could, I don't know.

22:57 Scott Can you make your whole system?

23:00 Scott run on you know one-tenth the power consumption and you know uh 10 times faster okay well if it's an old you know um riddled with tech debt you know legacy system then it may be technically possible to get it to run 10 times faster on one-tenth the the compute resource like that

23:23 Brad Mm-hmm.

23:23 Scott actually may be a practical thing to do but

23:27 Scott It's probably going to be a very expensive project to lots of engineering hours effort to do it.

23:35 Brad Mm

23:35 Scott And

23:36 Brad -hmm.

23:36 Scott that's the one type of scenario where I can picture myself trying to.

23:42 Scott engage with the business owners to help them understand the technical thing that they're asking for and

23:46 Brad Mm-hmm.

23:47 Scott that might require some explaining technical but I only am able to do that conversation if I'm already playing in their space of understanding why they're asking for the business and then being able to map my engineering awareness onto business terms that make sense to them right this is how many people it's going to take to do this this is how long it would take

24:07 Scott would take to do that right and therefore this is how much it's going to cost us if we take this on and I guess that's my way of saying like I can't think of that many times when it's been beneficial for me to spend a lot of time trying to explain engineering stuff to a business if they ask I'll certainly want to give them as much detail as they're interested in knowing

24:28 Scott But they really own,

24:29 Scott I think they rightfully only care about it insofar as it affects the business,

24:33 Scott the P&L.

24:35 Brad Yeah, although I would simply add I've observed that many times when I explain a technical concept effectively, people are really appreciative.

24:45 Brad And I think it's because there's this big, important and expensive thing in their company that's kind of a mystery to them.

24:54 Brad And

24:54 Scott Yeah.

24:54 Brad so it feels really good to like understand what you're talking about,

25:00 Brad right?

25:00 Scott I agree with that.

25:02 Brad Because so many times I think that things are explained in a way that they don't understand.

25:08 Brad but also so they just kind of nod and say yeah yeah yeah and that makes them feel really held hostage isn't the right word but like i am i am really

25:17 Scott out

25:17 Brad at the yeah

25:18 Scott of control okay

25:18 Brad out of control i'm really out of control but i have to trust this person and they're just saying stuff to me that like they're talking about this thing called kubernetes and containers and how it's all going to be better and blah blah blah like i have no idea what they're talking about

25:31 Scott so first of all i i that i 100 agree with i i think that there's

25:35 Scott a ton of value to be had in building trust between yourself as the engineering leader and your your business counterparts like building that trust i think is 100 required and you build that trust a couple different ways and one of the ways that you can build that trust is by by saying like hey i'd be happy to explain this um would you like to learn more about this would you you know would it help you

25:58 Scott if i explained this you know to you and i agree with you that uh many you know like i that that that little those little micro conversations happen all the time almost always around like wait why aren't you done with this yet or why do you think it's going to take two months to do that or you know why has the you know data engineering team why are they why did why do they seem to take so long to respond

26:25 Scott on to new uh bi analysis questions you

26:28 Brad Mm

26:28 Scott know or

26:28 Brad -hmm.

26:28 Scott or why do you guys keep having you know uh customer complaints about bugginess of xyz uh feature right like taking the time to say oh yeah let me let's let's walk through that let's walk through why those particular challenges exist so that i agree with i just want to like i i have also seen like really strong engine

26:51 Scott engineers who are who are practicing and growing learning the the business side of things right or if they're resistant to learning the business side of things and they think that they can kind of like build that trust by just engineering explaining like you don't understand how hard this is let me explain how hard this is like you're not gonna you're not that's not gonna get you where you want to get to

27:15 Brad No, because they just want the outcome.

27:18 Scott Well, not just that they want the outcome,

27:20 Scott but just saying like you it's really hard, you know, let me tell you how hard it is like that does like what you said earlier that just sort of like increases the sense of of I don't understand what you're saying to me. Right.

27:34 Scott But if you pivot that language to be like,

27:36 Scott hey, let's let's talk a little bit about like, you know, show them that you understand their pain point as well. Show them.

27:43 Scott Show your

27:43 Brad Mm-hmm.

27:43 Scott business counterparts that you understand the reason they're asking for it sooner or the reason they're asking for it cheaper or the reason they're asking for it to be more reliable. Show them that you understand that.

27:57 Scott Make sure you get the business needs and then use your understanding of the business needs to speak to the technical challenges you're facing.

28:08 Brad Yeah, I think that's right.

28:10 Brad And if you can, I find sometimes helpful when I'm trying to explain a technical thing to start with kind of a business impact.

28:21 Brad Let me give an example of what I mean. A minute ago, I talked about trying to explain why we need to containerize things and use Kubernetes.

28:29 Brad Just imagine,

28:30 Brad Brad,

28:30 Brad you're the CFO.

28:31 Brad Brad, look,

28:32 Brad at the end of the day.

28:34 Brad This is just a more flexible and more efficient way to manage our infrastructure,

28:39 Brad which in theory should allow us to have a lower hosting cost with AWS,

28:47 Brad therefore our cost to serve will be lower.

28:51 Brad Can I tell you exactly how much?

28:54 Brad right at this moment i mean maybe if we modeled it out i could but like i'm just telling you conceptually it's just a more efficient and more flexible way which allows us to do things more efficiently that's why we're doing it and so then you can get into what a container is and how they work and all this crazy stuff but at least they're anchored and understanding like oh they're trying to do something to make my business more efficient

29:14 Scott What's interesting is that's a great explanation for.

29:19 Scott If the team has decided to modernize using Kubernetes,

29:23 Scott that's a great explanation, and I think that's at least the start of the conversation with your non-technical business stakeholder.

29:30 Scott It's funny,

29:30 Scott I recently had to explain this exact choice to a...

29:36 Scott you know, the product owner, not as technical business owner.

29:40 Scott And I had two cards up my sleeve. The first one was that, like, hey,

29:45 Scott this actually allows us to, you know, instead of dedicating specific resource types in AWS,

29:51 Scott actually it's more fluid and it allows things to scale more easily.

29:55 Scott And we can shuffle things around without essentially like, you know, spinning up the more expensive versions of AWS components.

30:01 Scott And so it'll make us cheaper to run the infrastructure that we're doing.

30:04 Scott And also that business was going through a phase where they were like standing up additional tenants for customers.

30:11 Scott And this had the advantage that like,

30:14 Scott oh,

30:14 Scott this makes it super easy for us to stand up new tenants for other customers.

30:18 Scott Like that's what it's really good at doing, you know. So that was kind of a double whammy of like two

30:23 Brad Mm

30:23 Scott business

30:23 Brad -hmm.

30:23 Scott needs that mattered that this particular technical choice happened to.

30:28 Scott you know facilitate but

30:30 Scott But again,

30:31 Scott like just saying like hey,

30:32 Scott it's it's Kubernetes. It's way better.

30:34 Scott It's it's the latest and greatest technology It'll make everything easier like

30:38 Brad Yeah,

30:38 Scott that's

30:38 Brad as soon as you start talking about Helm charts,

30:40 Brad they're like, what?

30:44 Brad Okay,

30:45 Brad I think this is a great spot to end it for today.

30:48 Scott There you go.

30:48 Scott We solved the world's problem.

30:50 Scott You are allowed to wear a sweatshirt or a scruffy baseball cap if you're good at explaining to your non-technical stakeholders in terms that matter to them, which is business,

31:02 Scott P&L, CAC,

31:03 Scott total lifetime value and unit economics.

31:06 Brad That's right.

31:07 Brad And if you are interested.

31:09 Brad in a class on finance for CTOs, I don't know, reach out to Brad or I mean, we'll put something like that together.

31:14 Scott Yeah,

31:15 Scott that sounds like a good time.

31:17 Brad All right.

31:18 Brad Smash rate and review, everybody.

31:20 Scott Smash that subscribe button,

31:21 Scott rate and review.

31:22 Brad We got to say it, otherwise we're not even really doing a podcast.

31:24 Scott Oh yeah,

31:25 Scott exactly.

31:25 Scott If you don't say smash that subscribe button,

31:27 Scott are you really doing a podcast?

31:28 Brad I don't even know.

31:29 Scott All right. Nice talking to you, Scott.

31:30 Brad Bye,

31:31 Scott Until

31:31 Brad Brad.

31:31 Scott next week.

31:33 Scott This episode of How Many CTOs Does It Take Podcast was edited by Safran Epigow.

31:38 Scott Our theme song was AI Generated by Brad.

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