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Tech Due Diligence from CTO's perspective - Talk at code.talks commerce

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Being a CTO and a Tech Due Diligence reviewer, I give some insight into how to master a Tech Due Diligence.

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Tech Due Diligence from CTO's perspective - Talk at code.talks commerce

  1. 1. Tech Due Diligence From a CTO’s Perspective Chris Philipps cphilipps@me.com powered by (AKA: Survival Tips for the Wilderness)
  2. 2. Chris Philipps • Tech Advisor for Startups and Investors • Working in Tech since 2000 • Interim CTO since 2010 • Tech Due Diligence since 2010
  3. 3. Chris Philipps • Roles: • “CTO under DD” • DD reviewer • Sparring partner for CEOs & CTOs (DD test-runs) • Performed dozens of DDs from 100k seed over 40M Series C round to >300M acquisitions
  4. 4. What About You? • Who of you is • CEO? • CTO? • Investor? • Who is currently (or soon) in a funding process?
  5. 5. A Common Issue Me as “CTO under DD” in 2010: • dramatically unprepared • no clue what’s going on • we probably got the funding *despite* me, not because of me …and so are many CTOs http://2.bp.blogspot.com/-epF_a-sEMrw/TyqZHHJJUII/AAAAAAAAHME/ hAJMGKTwt88/s1600/surprised-monkey-national-geographic.jpg
  6. 6. What is a DD (and what isn’t) • A DD is a general health check • Identification of assets and risks • Evaluation of • Leadership • Team • Technology http://www.amusingtime.com/images/09/funny-inspection-of-monkey.jpg
  7. 7. A DD is Highly Collaborative Work • A first test for • common understanding • trust • dealing with conflict • BONUS: It is the most honest and thorough feedback you can get http://www.amusingtime.com/images/09/funny-inspection-of-monkey.jpg
  8. 8. It is NOT: * • hide-and-seek • us against them • a show * at least it shouldn’t be. Well, not entirely. http://www.amusingtime.com/images/09/funny-joker-monkey-picture.jpg
  9. 9. • No standard for Startup Tech DD’s (yet) • Very different approaches http://www.amusingtime.com/images/09/funny-inspection-of-monkey.jpg Please Note:
  10. 10. Different Stages of Funding http://awsassets.wwfmz.panda.org/img/original/rhinos_1.jpg
  11. 11. Different Stages of Funding Stage: Seed / Angel
 Biz Focus: Build DD Focus: Potential Stage: Series A,B,C Biz Focus: Grow DD Focus: Scalability, ability to adapt quickly Stage: Series D
 Biz Focus: Expand DD Focus: Maturity Stage: IPO ?
  12. 12. “But how the F*** do I survive a DD?”
  13. 13. Do You Know Your Investors’ Expectations? • Ability to grow and scale • Ability to change • Leadership and team skills • Risk assessability https://nationalzoo.si.edu/sites/default/files/animals/africanlion-005_0.jpg
  14. 14. Do You Know Your CEO’s Story? • What is the story your company wants to raise money with? • Is it a “growth story”? Or focussing on profitability? • What is your USP? • Are you a Tech or a Retail company? https://shechive.files.wordpress.com/2015/12/kittens-doing-very- human-ish-things-15.jpg?quality=100&strip=info&w=600
  15. 15. The First Contact • It already starts with the intro • It is not only about WHAT but also about HOW https://shechive.files.wordpress.com/2015/12/kittens-doing-very-human- ish-things-15.jpg?quality=100&strip=info&w=600
  16. 16. Have Your Documents Ready Basics: • Tech Strategy • Product Roadmap • Hosting Diagram • Software Architecture • Technical Debts • Org Chart Don’t forget: • Key Metrics • SLAs • IP Rights in contracts • Software Licences http://i.dailymail.co.uk/i/pix/2014/10/07/1412674620644_wps_21_Pic_By_HotSpot_Media_CHEE.jpg
  17. 17. Recap: Main Questions • Is the company able to grow / scale? • Is the CTO (CPO) able to provide great leadership? • Is the team motivated and highly skilled? • Are they able to (fail and) learn quickly? • What are main complexity drivers? • What are major challenges and risks?
  18. 18. Review Topics: • Company view
  19. 19. Review Topics: • Company view • Product
  20. 20. Review Topics: • Company view • Product • Technical leadership
  21. 21. Review Topics: • Company view • Product • Technical leadership • Development process
  22. 22. Review Topics: • Company view • Product • Technical leadership • Development process • Hosting
  23. 23. Review Topics: • Company view • Product • Technical leadership • Development process • Hosting • Deployment
  24. 24. Review Topics: • Company view • Product • Technical leadership • Development process • Hosting • Deployment • Software architecture
  25. 25. Review Topics: • Company view • Product • Technical leadership • Development process • Hosting • Deployment • Software architecture • Quality Assurance
  26. 26. Review Topics: • Company view • Product • Technical leadership • Development process • Hosting • Deployment • Software architecture • Quality Assurance • Stakeholder collaboration
  27. 27. Review Topics: • Company view • Product • Technical leadership • Development process • Hosting • Deployment • Software architecture • Quality Assurance • Stakeholder collaboration • Company culture and tech ecosystem
  28. 28. Optional Topics: • Data Analysis / Business Intelligence • Data Science / Machine Learning • R & D • Compliance: Data security, Privacy, etc. • Internal IT • Hiring • …
  29. 29. Potentially Involved People: CEO / founder(s) CTO Head of Engineering CPO Head of Product Product Owner(s) Scrum Master(s) Agile Coach Project Manager(s) Mobile Engineers Software Engineer(s) Operations Engineer DevOps QA Test Engineer(s) Security Engineer Data / BI team Selected stakeholders such as Customer Support, Marketing, Sales Internal IT DataScientist(s) Architect(s)
  30. 30. eCommerce Focus • Tooling / components: Make or buy? • Standard or custom solutions? • Is there any real Intellectual Property? • Focus Topics: • Scalability • Payment • ERP: Stock, Accounting, … • BI / Analytics
  31. 31. Review Format: • 1:1 Interviews • Group Interviews (e.g. dev teams) • Whiteboard discussions (e.g. architecture) • Documentation Review Also: • Code Walks / Code Samples • Live samples (e.g. from CI or monitoring tools) • Actual usage of the product • Observing a Standup Meeting
  32. 32. Examples of Questions “What parts of your tech landscape keeps you awake at night?” “Which changes would you apply to your current architecture 
 if you had to scale from 
 n (unique visitors / transactions / requests) 2n, 10n, 100n, …?” “Can you explain the reasoning behind the choice of XY? 
 Why didn’t you [make / buy] it?” “Can you describe your role and responsibilities as CTO?”
  33. 33. Examples of Questions “Describe your software architecture incl. 3rd party components, technology stack, protocols” “Do you have test automation in place? 
 Describe your toolchain and your process “ “What is your test coverage?” “Can we have a quick look at the latest build on the CI server? >:-]”
  34. 34. Examples of Typical Red Flags / Antipatterns Not-intented-here (NIH) Syndrome: “We are SO different! So we decided to write our own ERP.” http://www.dreamindemon.com/wp-content/uploads/smiling-lion.jpg
  35. 35. Examples of Typical Red Flags / Antipatterns No idea about the own landscape: “What do you mean with ‘Software Architecture’?” http://www.dreamindemon.com/wp-content/uploads/smiling-lion.jpg
  36. 36. Examples of Typical Red Flags / Antipatterns Tech Archeology: Hearing too often “this is for historical reasons” http://www.dreamindemon.com/wp-content/uploads/smiling-lion.jpg
  37. 37. Examples of Typical Red Flags / Antipatterns Lack of Test Automation (AKA “we didn’t have time for this”) http://www.dreamindemon.com/wp-content/uploads/smiling-lion.jpg
  38. 38. Examples of Typical Red Flags / Antipatterns Not knowing the business perspective (as a tech person): “Please ask BI about the conversion rate, it’s been a while that I checked it” http://www.dreamindemon.com/wp-content/uploads/smiling-lion.jpg
  39. 39. Prepare your Team • Give them context • State importance of DD • Eliminate fear • Give clear guidelines regarding disclosure of information • “Challenges instead of problems” http://images.photowall.com/products/46854/zebras-in-a-group.jpg?h=650&q=90&
  40. 40. Your Skeletons in the Closet • Relax: EVERYONE has them! • Adress them proactively • Provide a plan how to tackle them • Problem awareness and problem solving skills are way more important than problems https://de.pinterest.com/pin/65935582023920155/
  41. 41. Q & A
  42. 42. Thanks! Questions? cphilipps@me.com Twitter: @chphilipps

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