Technical diligence on people looks at how knowledge is concentrated, how the team hires and makes decisions, and whether technical leadership matches the company's next stage.
9 min read · Level 3
The best technical builder of a first product is not always the right person to lead a team of forty, and I think it is kinder and more useful to discuss that openly during diligence than to discover it in a board meeting two years later.
The engineering team determines how quickly and reliably the product improves. Diligence looks at five areas:
Area Questions Knowledge concentration Which parts of the system does only one person understand? Leadership Does the technical lead fit the next stage - hands-on builder versus team manager? Hiring How long do hires take? Why have engineers left? Decision-making How are technical choices made and documented? Incentives Are key engineers vested, and do they hold meaningful equity?
A simple test is to ask: if any one engineer left tomorrow, what would stop working, and how long would it take someone else to take over?
Engineers 10 Systems understood by only one person 4 of 7 core systems
Four core systems depend on a single person. If that person is also largely vested and has little remaining equity to earn, the risk is higher.
Because key-person risk in engineering is often invisible in the pitch. A founding engineer may hold critical knowledge that exists nowhere else.
Team quality also predicts whether the planned hiring will translate into faster progress or more coordination problems.
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Engineering attrition.
Engineers at start of year 10 Engineers who left 4 Engineers hired 6 Engineers at end of year 12 Annual attrition 4 / 10 = 40%
The team grew, but 40% of the starting team left. The investor speaks to one former engineer, who describes unclear technical direction and frequent rewrites. Those issues become central questions for the technical lead.
Judging the engineering team by its size or the credentials of its leader, without checking knowledge concentration and why people leave.
Ask which systems depend on a single person.
Judge whether the technical lead suits the next stage of growth.
Calculate turnover and speak to people who left.
Confirm key engineers have unvested equity keeping them committed.
During diligence on technology companies where product development is central.
Do not expect documented processes from very small teams; judge whether knowledge concentration is recognised and being addressed.
Software engineers commonly use the term 'bus factor' - the number of people who would need to leave before a project stalls - and research on open-source projects has found many critical projects depend heavily on very small numbers of maintainers.
A low bus factor is common and fixable, but it should be known.
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