To a Better Place: When is It Time as CEO/Founder to Move On? (Updated)

In the age of Unicorns, there’s often a story folks miss.  It’s when about 5 years in, at a reasonably successful company, the founder moves on.  I don’t mean fired.  I mean after 4.5-5 hard years, of finally getting the company to $5m or $10m or $8.32m in ARR, the founder CEO thinks it’s just time to Bring Someone Better In.  And raises their hand.

Which brings up a question, as a CEO / founder:  When is it time to move on?

Obviously, if your start-up fails completely, it’s a question to ignore.  If it explodes beyond your wildest dream, and you can manage to keep up and build a strong team, the answer is usually a long time.  Gates and Ballmer.

Where it gets harder, is when you are doing well, but not completely killing it.  For SaaS, this often can be growing in the 30-60% YoY range.  Not > 100%, when it all comes together.  Not < 30%-40% … where it clearly isn’t quite working.

In this mid-range, you have to wonder: Would the company do better with a new CEO?  “a real CEO”?  New blood?  Could he or she recruit a better team?  Raise (more) capital?  Or even if you are great, is it just time for a change?

It’s a question that, to be honest, most founders ask themselves, but can never really share with anyone.  You certainly can’t ask your team if it’s time.

Being objective, now on the outside, I think I see a few key answers, though:

  • When in doubt, stay on.  If you have some traction, then the company is probably better, and you are doing better, than you think.  Give yourself more credit.
  • If it’s early, stay on.  Shai made it 5+ years.  If you’re just exhausted, buck up.  Somehow.  Find a way to do another tour of duty.
  • Meet some theoretical CEO candidates — to learn.  You may learn you are, pound for pound, better than all of them.  They may have longer resumes, but you know your company soup-to-nuts.
  • Build out your team as much as you can.  Get some of the load taken off your shoulders with a few A players on your team.  You’ll be amazed what just one more A player on your senior team will do here.  Often, just one great new VP of Marketing or Sales or Customer Success or Product will tilt the curve enough that you’d back to Better Growth.  With less stress.
  • Realize what you’re doing now may be your best idea ever.  Many founders think they can just do it again, and sometimes you can.  But for most of us, once you have even a few million in ARR … well, that’s a real business.  Lightning often doesn’t strike twice.

SaaS start-ups take time.  I think it’s hard to give 100%, 60-100 hours a week, for more than 4 or 5 years.  Hopefully, in SaaS, by that point, you’re large enough to have a strong bench to carry a lot of the load.  If not, but you are still making progress — then think about it.  Not before.

image from here.

(note: an updated SaaStr Classic post)

Published on December 30, 2022

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