What does a CEO do to deserve such an exorbitant salary?

I struggled with this myself a bit in the early days.

In the end, there is a simple answer: the CEO is the one responsible for the entire plan. Everything. ALL the revenue. ALL the profits.

That includes … everything. Hiring the entire management team. Getting everything right that matters. Taking enough of the right risks.

And at that level, you get power law effects when the CEO delivers.

If a SaaS company under a great CEO grows from say $1m to $100m in ARR … the valuation and value could easily grow from $10m to $1b.

That’s $990,000,000 of added value — when done right.

A lot of CEOs don’t deserve their pay packages. There is a lot of room for disalignment and issues. It can seem crazy how much more a CEO can make that an engineer or marketing or support professional working almost or even just as hard. Sometimes, market pull really matters more than what any CEO does, especially in the short-term, and especially in B2C.

But at the end of the day, someone has to be responsible for adding that $990,000,000 in value. Someone has to be in charge of getting that done.

That’s the CEO.

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Published on January 23, 2019

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