‘Tech is good but it isn’t the answer for everything’: how the CTO of THG controls costs

With almost a decade of experience at THG under his belt, Schalk Van Der Merwe talks about his unconventional approach to the CTO’s role and how he keeps tech stack costs down

Thg Headshot

In many ways, Schalk Van Der Merwe’s approach to the CTO role is rather unorthodox. He’s someone who’s reluctant to splash out on the latest software, prefers a practical solution where possible and claims his most valuable lessons were learnt during his MBA in finance and accounting.

But despite this, he still enjoys getting involved in the nitty-gritty when required. “If it looks and smells like tech, I’ll get my mitts on it,” he says. His daily tasks at the ecommerce group THG, which operates the websites Lookfantastic and Myprotein, can involve anything from automating warehouse operations, to monitoring the business’s cybersecurity and developing AI-enabled search for its websites. “I’m doing something different every day, I never get bored,” he says.

Perhaps one of the most common misconceptions about the role of a CTO is that it means spending most of the time in front of a computer screen, says Van Der Merwe. “We need to be able to take what we know in the online world and apply it to the physical one,” he explains.

If it looks and smells like tech, I’ll get my mitts on it

Recently, he has been spending a lot of time working with the warehouse packing teams, which has led to a new way of working dubbed the ‘pick-to-light’ system. The change means that where warehouse workers would previously have to identify items from codes made up of numbers and letters, they now use a coloured light system to tell people which item to put in which box. Van Der Merwe claims this single change has increased packing speed threefold. “It’s looking pretty incredible so far,” he says.

The change also speaks to one of his core tenets as a CTO. “Tech is good but it isn’t the answer for everything,” Van Der Merwe explains. “You might use tech to solve a problem but the last thing I ever want my team to do is to find a problem so they can use a cool new piece of tech because that often just makes the problem worse.” 

In his opinion, this is the issue that lies at the core of many digital transformation failures. “You need to have a clear understanding of the problem you’re trying to solve,” he adds. “This needs to be paramount, rather than using the latest piece of tech to get there.”

Why THG’s CTO shuns cloud computing

This philosophy underpins THG’s entire tech stack. Van Der Merwe’s preference is for his team to build their own solutions, rather than being reliant on third-party providers. “As a company, we try to make do with what we have. There’s nothing that we expect or take for granted,” he says.

Although THG does work with some cloud providers, including Google and Cloudflare, he tries to limit the amount the company spends with them. In most instances, he opts to use THG’s own data centres. 

This mindset has been particularly helpful given the current inflationary economic climate, which he claims has made cost “the key focus” of many technology chiefs. Software companies have been steadily increasing prices over the past 12 months, with research estimating that SaaS pricing inflation has risen four times faster than consumer price inflation in the UK. Google, for example, has announced price rises of up to 50% for some of its cloud computing products. 

If you’re prepared to put in the hard work, you can make your stack more cost-effective

“A lot of CTOs are looking at their budgets and assessing what is superfluous and how they can get more out of what they already have,” Van Der Merwe adds. “Because we build a lot of our tech stack, it means that we’re not beholden to these price rises or subscription charges that other businesses are now facing.”

This strategy is the opposite of what many businesses are pursuing, with McKinsey reporting that large organisations aim to have 60% of their environment hosted in the cloud by 2025. Van Der Merwe admits that going against the crowd is a challenge, but adds: “If you’re prepared to put in the hard work, you can make your stack more cost-effective.”

How THG is closing the tech skills gap

The biggest hurdle he faces in developing THG’s proprietary tech stack is finding the people to create it. For Van Der Merwe, having the right attitude and fitting in with the company culture are the most important attributes. “I can teach skills,” he says. “But you need to find people who really want to be here and help us build.” 

One way that THG has worked to close this skills gap is through the creation of an accelerator programme, which it’s been running since 2018. “It’s the thing I’m most proud of,” says Van Der Merwe. “It came from a realisation that many people leaving university didn’t have the skills to interview for a software engineering role but were smart enough to pick these skills up fast.”

The six-month programme aims to give people the foundational skills required to become a developer and there are still people from the initial 25-person strong cohort working in THG’s tech department today. Van Der Merwe claims that the programme has been so successful that his engineering managers now compete to get as many graduates as possible onto their team.

Setting sights on the CEO role

Van Der Merwe is not shy about developing his own skills either. In 2011, he graduated with an MBA in accounting and finance. He describes it as “one of the most important things I ever did” and claims that it taught him new ways to communicate with other teams within the business.

“I learnt new language skills, which allowed me to change the conversations I was having,” he adds. “Before, I often wondered why finance would ask me so many questions, when all I wanted was to solve a problem facing the company. Now I realise that, if you can explain the problem in words they understand, they’re more likely to accept it.”

I still have endeavours to one day be a CEO

At the time Van Der Merwe was working for mobile messaging company MBlox, which was partly responsible for inflicting the Crazy Frog ringtone on UK consumers. “I still have endeavours to one day be a CEO,” he says. “I knew, if I wanted to achieve that, I needed to know more and that’s why I did the MBA.”

With the exception of technology companies, it’s more common for chief executives to have previously held the position of CFO or COO. But Van Der Merwe thinks we’ll see more CTOs making the transition to CEO in the future. “The basis of what a CTO does is fixing problems,” he says. “And if you’re good at fixing problems, you’re good at setting the vision and the strategy as well.” 

Despite these clear ambitions, Van Der Merwe is keen to stress he’s not trying to take THG’s current CEO Matt Moulding’s job. He has more to achieve as its CTO first.