Not Every Startup is a Software Company
I’ll let you in on a secret: many startups heavily over-invest in software engineering talent. Even before AI, teams were spending valuable equity and cash on “technical” talent they didn’t need.
The equation for many modern startups is clean: take an old problem, then apply new technology and a fresh, nimble organizational model to it. We’re so accustomed to “new technology” meaning software that we assume every startup needs a CTO. No matter what industry you’re in, if you’re coming from a non-software background, you’d better start working your network to find your cousin’s best friend who managed a team at Google — and shine up that founding team for the VCs.
But in many industries, software isn’t the primary competitive advantage. This has become more true as good software and polished digital experiences have become table stakes across all industries.
Health “Tech”: Emphasis on Health
Health tech is an easy place to see this. Many health tech startups deploy new device technology and/or clinical models to old problems. Software is often integral to these approaches, but it isn’t the primary product. Many health startups benefit primarily from the clean slate advantage: they get to build infrastructure from the ground up using the best available technology. That advantage alone can make them extremely competitive against legacy providers saddled with decades of technical debt.
Don’t Over-Index on Software Talent
Sadly, many health tech founders mistake software itself as their core advantage. Flashy digital marketing and beautiful patient experiences are essential — but they typically aren’t the product. Think of it this way: should you build your own scheduling system? Would you try to force a custom EHR on your clinical staff, let alone convince a hospital or institutional partner to adopt your custom technology? These are clearly “buy not build” scenarios for almost all health tech startups.
And even where you do need to invest in building your own software, that investment doesn’t require heavy technical ability on the founding team.
But What About Our Patient-Facing Apps?
Patient dashboards and apps are a good example. They’re integral to the product experience, they handle PHI, they distribute sensitive health guidance. Surely this is the biggest reason to get a CTO on board early?
Even before AI, someone with strong digital product experience could marshal outsourced tech teams to deliver custom apps at a fraction of the cost of a full-time engineer. With AI, there’s a good chance you can reduce the role of the outsourced team dramatically.
Product First, Engineering Second
When it comes to software in most health tech startups, prioritize product expertise over software engineering on your founding team. If you find someone with engineering experience and deep product-oriented knowledge of health products — pay up in equity. Their versatility will let you build a top-tier digital experience with sound technical fundamentals, and their CV will hold up to investor scrutiny. This person is the unicorn.
But if you can’t catch a unicorn, don’t overcompensate by bringing on both a CTO and a CPO. And don’t burn seed money on technical hires or consultants before you’ve proven your thesis. Every dollar you raise needs to go toward validating the brilliant device, clinical model, or other secret sauce that gets you to your next round.
The Bottom Line
The most successful health tech founders I’ve worked with share a common trait: they resist the pressure to build a “tech company” when what they’re actually building is a better care model, a smarter device, or a more efficient clinical workflow. Software is the vehicle, not the destination. Get the right product thinker in the room early, stay lean on pure engineering until you have real signal, and don’t let the myth of the technical co-founder drain resources from what actually makes your company worth funding.
Building a health tech venture and figuring out your founding team? Let’s talk — I work with early-stage founders on exactly these questions.