Dear SaaStr: What Are The Common Problems With “Founder CEO’s”?

Founder CEOs are better, all things being equal. 

  • They go the distance.
  • They care the most.
  • They know it cold.

And in fact, about 90% of SaaS companies that IPO still have their founder as CEO:

SaaS CEOs That Go The Distance, To IPO … Tend To Be Founder-CEOs (Updated)

Ultimately I see only one problem with founder CEOs:

If they can’t constantly recruit, and recruit again, and recruit again, a world class management team.

Experienced CEOs usually if nothing else are good at recruiting.

Most CEOs spend 30–50%+ of their time recruiting, in one form or another. Here’s Tiago Paiva, CEO of $10B Talkdesk, talking about how he spends 80% of his time recruiting now … up from 0% at $1m ARR:

It’s OK you haven’t done it before. You’ll figure out how to sell your product in the early days — after all, you know it better than anyone else. You’ll figure out how to manage a small team of engineers. You’ll figure out how to do initial content marketing. The early phase 1 stuff you’ll be terrible at, but you’ll figure it out, albeit painfully.

After that you have to recruit the best of the best to win. It doesn’t matter how good an individual contributor, how good of a hacker, how good of a small team lead you are/were. That’s not enough to scale.

Recruiting is hard. Constantly recruiting is even harder. Getting great engineers, great VPs, great anythings … to pick you over Uber, over Google, over Stripe is hard.

And you have to recruit in parallel. You can’t recruit one VP here, then another. Not after $5m-$6m in ARR or so. You have to be constantly recruiting multiple senior positions at the same time. This often means 20+ interviews a week!

Founder CEOs of almost any background can almost always go the distance if they can >constantly and continuously< recruit great VPs under them. You will learn the rest, how to hack it, and then when you are big enough, you can hire great VPs to take you to the next level.

But if you can’t recruit those leaders under you, really great ones … you can’t scale.

Step aside once that time comes.

A related post here:

How To Get Better at Recruiting. (We All Need To).

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