Dear SaaStr: Under What Circumstances Should the Board Fire the CEO?
Almost never unless you have no choice, or there is fraud, harassment, or other ethical or legal issues, once you have real, happy customers. See, e.g. Steve Jobs, Marc Benioff (although he had a brief, early stint where he wasn’t CEO at Salesforce), Facebook, Microsoft, etc.
In fact, almost 90% of leading public SaaS companies are still run by their founder-CEO.
That’s the preferred path for VCs and founders alike. That data here:
And the great CEOs know. They know when it’s no longer their time — if ever.
Let me dig in a bit more in SaaS.
In SaaS I think it’s particularly dangerous to change CEOs before $40-$50m ARR if you have any other options.
>> The reason is, for a loooong time … most SaaS products require just an amazing fluency in the product — past, present, and future — from the CEO. And SaaS products are much, much complex from an end-user perspective (if not behind the scenes, where often they’re really more rudimentary) than B2C. 1000s of workflows, 100s of use-cases, etc. etc.
The customers are expecting this product-level fluency in the CEO. They’re not really buying the Box of ’23. They’re just as much buying Aaron Levie’s vision of where it’s going in ’28. Because in the enterprise at least, they’re really making a 4-5 year commitment to a big business process change.
Some day … the product is “done”. Innovation is over. For whatever reason.
Then, sure, bring in a Knobs-and-Dials CEO if you really want, I guess. If you’re done with true innovation. Then, operationally at least, it probably will be an improvement in many cases, at least for a few years. They’ll hire a whole different group of SVPs, who don’t really understand the product either. But they’ll know how to run the Playbook.
But do this much before $20m-$30m+ ARR, or maybe even later … I often see disaster. Or if not disaster, at least — it’s very, very risky. Grow slows rather than increases. Because the competition is going to remain highly innovative. And you’ll lose that in your company.
So help the CEO get help. Help them recruit an amazing management team.
And help make sure she or he doesn’t just get too tired after 5 years. That’s the real risk. Getting too tired by not bringing in enough help.
If the customers love the CEO, and she can See The Future … seasoned role players can help them do all the rest. Recruit a great bench of VPs once you have something, and the sky really is the limit as a founder-CEO.
