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.