Don't give your first engineer the CTO title just because they asked, unless the job is already CTO-sized. Give them the work instead: a title that matches it, such as head of engineering or founding engineer. Add a one-page agreement on scope, equity, a review point and what happens if you hire a CTO above them. The title is cheap to give and expensive to take back, so settle what sits behind it now.
What is your first engineer actually asking for?
Usually one of four things, and the title is only the visible one. Our read: they want status with outsiders (customers, investors, recruiters), authority over technical decisions, a bigger share of the upside, or protection in case you hire someone senior over them later.
Ask them which one it is: "If I gave you the title tomorrow, what would it change for you?" Then ask the harder one: "What would you want to happen if I hired a CTO next year?" The answer to that second question is the only evidence you'll get about how they'd take a CTO above them.
If the honest answer is authority and equity, you can give both without the word CTO. That's the cheapest outcome for everyone.
Should you give the CTO title, or another one?
Not by default. A title costs nothing to hand over and a great deal to reclaim (amazingcto makes the same point). Most early-stage startups need a strong founding engineer, not a CTO on day one. techstaq calls this the title trap, and says the CTO title fits a true technical co-founder, a regulated or safety-critical product, or a founding team with no technical owner.
| Option | What it commits you to | Fits when |
|---|---|---|
| CTO now | The title, a leadership voice, a hard walk-back | The job is already CTO-sized |
| Head of Engineering | Ownership of the team, with room above | They run delivery and hiring |
| Founding engineer | Senior early status, no claim on leadership | They mainly want recognition |
| CTO with a written review point | The title now, re-decided on a date or trigger | You want the exit written down |
| Fractional CTO above them | Leadership over them from the start | You need strategy cover, they build |
Fullscale says that under about 15 engineers one person covers both the CTO and head of engineering roles, so a small team doesn't need two titles. What matters is whether they'd be doing the CTO's job, or the senior engineer's job with a bigger label. Our rule: give the CTO title only when the job is CTO-sized today, and attach a review point when you do.
If you're still deciding who the first hire should be, read hiring your first engineer as a non-technical founder.
What do you say when they ask?
Keep it short and don't argue the title in the room. A script that works:
- Acknowledge it: say you're glad they asked and that you want them to have the authority and upside that go with the job.
- Name the job: they own architecture and the next two hires.
- Offer the title that fits, such as head of engineering.
- Propose the paper: "Let's write down scope, equity and what happens as we grow, and sign it within two weeks."
The two-week deadline matters. An unanswered ask turns into a grievance, and a vague promise to revisit it later is what makes the title feel owed. You aren't saying no. You're moving the conversation from a label to terms you can both read.
What to put in writing: the one-page agreement
One page is enough. Each line below should be a sentence or two, and both of you should sign it.
- Title, and what it isn't. State the title and that it isn't a promise of the CTO title later.
- Scope and decision rights. List what they decide alone (stack, architecture, engineering hires up to a number) and what needs you.
- Equity. State the grant and the vesting. Unvested shares stop vesting when the person leaves, so write down whether they're an employee or a consultant and what happens to what's unvested. Index Ventures calls four years, usually with a one-year cliff, the standard shape in the US and Europe, and Orrick's founder-vesting FAQ ties vesting to continuous service in either status.
- Review point. A date or a trigger, such as your first senior technical hire or the funding round. "When we're bigger" isn't a review point.
- If you hire a CTO. Who the engineer reports to, what their title and scope become, and whether they're consulted on the hire.
- The change clause. Write the possible change into the contract now, so it doesn't need a fresh negotiation later.
On that last line: if your engineer is employed in the UK, ACAS guidance says a change to the contract needs both sides to agree unless the contract already allows the employer to make it. Forcing one through risks a breach-of-contract or constructive dismissal claim. Elsewhere, check the local rule. The full mechanics of changing an existing CTO's role are in what changes for a CTO who steps back.
For sizing the grant, Index Ventures says a CTO hired at Series A or B typically gets an option grant of about 0.7% of fully diluted equity in Europe (1% in the US). That's the typical grant for a CTO at that stage, so it frames the engineer's grant. The survey year isn't stated. Option schemes and contract types by country are in hiring a founding engineer in Europe.
A worked example
Mira is a non-technical founder with a seed-stage SaaS product. Dan, her first engineer, asks for the CTO title after eight months. Mira expects to hire a CTO after Series A, and Dan is employed in the UK. The values below are invented for illustration.
Mira says yes to the work and writes the one-pager. Dan becomes head of engineering. He owns architecture and the hiring of the next two engineers. His equity vests over four years with a one-year cliff. The review happens at the first senior technical hire or at the raise, whichever comes first. If a CTO joins, the schedule fixes Dan's reporting line, title and scope, and he's consulted on the hire.
Eighteen months later the CTO arrives. Without the paper, that hire is a renegotiation where Dan holds the stronger hand. Under UK rules, a change to his role needs his agreement unless his contract already allows it. With the paper, the change was agreed before anyone had feelings about it, and Mira is applying a clause instead of asking a favour.
What happens when you hire a CTO above them?
Three paths are possible, and the written terms should say which one you're choosing.
The default is that the engineer becomes head of engineering and reports to the CTO, the standard structure in Fullscale's description. They keep the team and lose the top seat.
The second path is that they stay a senior individual contributor and the CTO builds management around them. That suits an engineer who wanted authority over the code and not over people.
The third is that they leave with the equity they've vested. The exit is clean if the vesting terms are plain.
techstaq warns that putting a more senior executive above or alongside an outgrown first technical leader can read as a demotion. Our view is that the feeling comes from surprise, and that's why this change only works if it was agreed in advance. An engineer who signed a schedule saying a CTO may join above them, and what they keep if so, has been told. One who was told "you're the CTO" has not. For the later hire itself, see how to hire a CTO.
What this means for your first-engineer decision
You're deciding the shape of your technical team and the terms it runs on. Our recommendation: sign the one-pager within weeks of the ask, with a title that matches the job today and a review trigger tied to your first senior technical hire or your raise. Give the CTO title only if the job is CTO-sized now, and even then attach the review point.
Then ask Dan, or your Dan, the question about a CTO next year before you sign. If the answer worries you, you've learned it cheaply. The wider set of founder-side decisions around leadership, diligence and first hires sits in our startup CTO guides.
Getting technical leadership above your first engineer through HighCircl
If you need technical leadership above your first engineer without the title fight, and a full-time CTO isn't a hire you're ready to make yet, a fractional CTO is one way to get it. The one-pager already says how that person fits. HighCircl matches you with vetted senior engineers in 72 hours, and if the engagement isn't working, we replace the person at no additional recruitment cost. See fractional CTOs through HighCircl.
FAQ
Is a CTO higher than a VP of Engineering?
Often, yes. The CTO usually sets technical direction and the VP of Engineering runs delivery, but some companies reverse it, so check the reporting line.
Can I take the CTO title back later?
Only with the engineer's agreement unless the contract says otherwise, under UK guidance from ACAS (elsewhere, check the local rule). Without a clause, a forced change risks a breach-of-contract or constructive dismissal claim. Write the possible change into the agreement before you give the title.
Should the first engineer's equity vest?
Yes. Index Ventures calls four years, usually with a one-year cliff, standard in the US and Europe. Vesting continues while they remain in service as an employee or consultant, so state which they are and what happens to unvested shares if they go.
Do I need a lawyer for the one-pager?
For the equity and contract wording, yes. A lawyer in the engineer's country can tell you whether the change clause holds there. The conversation and the outline of the terms you can do yourself.
Is a founding engineer a co-founder?
No. A founding engineer is an early senior employee, and a co-founder shares ownership and decision rights from day one. If your engineer wants the second, that's a different negotiation and a different equity conversation.
Sources
- ACAS: Changing an employment contract, employer responsibilities
- Orrick: What is vesting, and should initial shares sold to founders be subject to vesting?
- Index Ventures: Rewarding talent, how much and who gets it
- techstaq: Founding engineer vs first CTO
- amazingcto: Do you need a CTO as a startup?
- Fullscale: Head of engineering vs CTO