The Unexpected Spike in CEO Recruitment

2019 Sees Dramatic Growth in Outside Appointments

Mark Lonergan, May 9th, 2019

Start­ing in the mid­dle of 2018, the demand for CEO recruit­ment start­ed to spike for all class­es of tech com­pa­nies: Pub­lic, Ven­ture-backed and Pri­vate Equi­ty-backed com­pa­nies. As one of Sil­i­con Valley’s lead­ing exec­u­tive recruit­ing firms, we have dou­bled the num­ber of CEO projects in the past year. 

Why is now the time when the mar­ket has redis­cov­ered the notion of search­ing out­side for their next CEO leader? Over the past four weeks, I have asked a num­ber of board mem­bers and investors this ques­tion. Here is what I heard:

  • Com­pa­ny begin­ning to Stall The last five years have seen huge mar­ket and rev­enue growth under long-time lead­ers. Exhaus­tion can set in, espe­cial­ly in pub­lic com­pa­nies which depend on new prod­ucts and new strate­gies to com­pete. A great CEO recruit­ed from out­side can pro­vide a real cat­a­lyst for growth.
  • One Product/​One Mar­ket Ear­ly in a company’s his­to­ry, it focus­es on one set of tech­nolo­gies and one set of users. After $200 mil­lion, diver­si­fi­ca­tion is need­ed to sus­tain growth and build depend­able per­for­mance. Pro­fes­sion­al CEOs can help build on the ear­ly successes.
  • Extend­ing beyond Founders High val­u­a­tions have meant that more founders retain vot­ing con­trol in their com­pa­nies longer. While many of these founders were indis­pens­able ear­ly, they some­times fail to adapt as their com­pa­nies become more diver­si­fied and inter­na­tion­al. A pro­fes­sion­al CEO can often sup­port a founder, work­ing togeth­er to build some­thing special.
  • Senior Man­age­ment becomes Stale The econ­o­my from 2009 – 2019 has seen the longest con­tin­u­ous improve­ment in Amer­i­can his­to­ry. Many man­age­ment teams in Sil­i­con Val­ley have been intact for over a decade. And while those teams work togeth­er smooth­ly, they some­times fail to chal­lenge them­selves to keep the com­pa­ny mov­ing for­ward. An inspired leader from out­side the com­pa­ny can help.

In recent weeks, we have seen some spec­tac­u­lar exam­ples of CEO place­ments made inside young com­pa­nies: Frank Sloot­man to Snowflake Com­put­ing (Ven­ture) and Tony Bates to Genesys (Pri­vate Equi­ty). The age of the out­sider CEO has come again, and there are some out­stand­ing lead­ers wait­ing to get involved.