Dear SaaStr: What Role Do Founders Play Once They Hire an Outside CEO?

Dear SaaStr: What Role Do Founders Play Once They Hire an Outside CEO?

Let me take a slightly different take on the question.

Maybe you are really asking – “Am I still on the hook if we hire a ‘real’ CEO to run the company? ‘Cause I’m tired/stressed/don’t really enjoy running this thing. I’d rather just be running product/coding/hanging out at events/whatever.”

My learnings and experiences are this: if you want your start-up to really make it … then you will be just as much on the hook as ever.

This new CEO, no matter how great she/he is:

  • Does not understand your domain the way you do
  • Probably, is more operational than strategic in terms of understanding the space
  • Maybe, will never really see the future the way you do, only the present
  • And maybe, can’t see the cracks below 5,000 feet and won’t know when and where and how to fix them.

If you bring in an outside CEO, and then check out, or leave … you will be seriously damaging the value of your equity. You just know so much at this point. Because you had to do it all, and learn so much, getting 10, then 100, then 1000 customers. Which is borderline impossible. There’s a reason most start-ups don’t get this far.

So don’t bring in an outside CEO to get some rest. Only do it if it increases your equity value, because he/she will make the company worth even more. Because if you want to win, you won’t be getting any vacation if you leave sub-$40-100m ARR.

Published on September 1, 2022

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