Op-Ed: A Silicon Valley Founder on Why He Replaced Himself as CEO

  • Manish Sood, chief technology officer, founder and chairman of cloud data management company Reltio, decided after a decade of growth that his firm needed a new CEO. 
  • The technology entrepreneur says too many Silicon Valley founders dominate companies beyond the point where it is in the company's best interest.
  • Leadership succession planning is a strategic issue for companies inside Silicon Valley and beyond it, but the best CEOs recognize that just because you founded the firm doesn't mean you will always be the right person to run it in perpetuity.

For most entrepreneurs, especially in Silicon Valley, where I have spent my career, starting a new company or launching a new technology is everything. Few spend time thinking about how that company, once established and thriving, grows beyond them. That may be part of the reason the tech sector is full of companies dominated by singular personalities. 

Mary E. Shacklett of InformationWeek recently wrote that "Companies don't like to talk about [succession planning] because it's a 'dark' topic that focuses on replacing people." 

I feel exactly the opposite. 

When I started Reltio almost a decade ago, our team had a vision for changing the way companies understand and use data to deliver personalized and engaging customer experiences, both in brick-and-mortar locations and across digital platforms. Companies in a variety of industries — retail, health care, financial services — use Reltio cloud technology to fully understand their customers, partners, products and markets. With a complete view of enterprise data, Reltio provides a foundation for decision-making in every aspect of their business.

After nine years of steady revenue and customer subscription growth, we saw an opportunity for exponential growth as a large majority of companies began taking a "cloud-first" approach to technology investments. But we needed to move fast. 

That is exactly what catalyzed our board of directors, of which I am chairman, to assess the make-up of Reltio's leadership team — and replace me as CEO. I transitioned to a newly-created chief technology officer (CTO) role. In conjunction with our board of directors, we began a search for an executive with experience operating at scale in a hyper-growth environment. I was thrilled when we found Chris Hylen. Chris was most recently the CEO of Imperva, a cybersecurity software and services company, where he led a turnaround and negotiated a $2.3 billion sale of the company within two years of joining.  

Snowflake made similar C-suite changes on its path to stellar growth. The company's first CEO, Mike Speiser, was on the team that got the company off the ground in 2012. A new CEO was appointed in 2014 just before Snowflake emerged from stealth mode, and one year before Snowflake's cloud data warehouse was generally available. Bob Muglia, a former Microsoft executive, brought experience running operations at scale and ran the company until 2019 when Frank Slootman, the company's current head, took the reins. Slootman had taken two software companies public, including ServiceNow. Less than six months later, he announced that Snowflake might go public. And as we all know, that occurred in September 2020; the largest software company to IPO in the U.S. ever.

(Disclosure: Snowflake is a Reltio partner, and we share customers and a similar vision of the future of enterprise data: Cloud is where it's at.)

Most organizations are bad at succession planning

Silicon Valley isn't alone in its avoidance of succession planning. According to a study from Deloitte, while 86% of leaders believe leadership succession planning is of utmost importance, only 14% think their organization does it well.

Succession planning shouldn't be just about people. Organizational structure and tone are important considerations.

As we started down the path of succession planning at Reltio, we looked at architecting a leadership team that would ensure the right balance of business, culture, and technological leadership in our long-term goals. We ultimately decided to divide responsibilities between a CEO and a new CTO role. Security, product, and technology responsibilities would fall to the CTO, while responsibility for operations and strategic business planning would fall to the CEO. Dividing responsibilities between a CEO and CTO would accelerate both growth and technology innovation. I also recognized that to sustain predictable hyper-growth requires a special set of skills, and Reltio would require a CEO with experience leading public companies.  

Awareness is a primary role of leadership. Some founders and leaders have trouble seeing a future for their organizations that goes beyond them. But as a leader, you have to be confident in knowing what you're doing, why you are doing it, and what you've learned. Then you can evaluate how and why you are going to adjust. Leading with confidence means driving the company forward and being open to taking on a new role. That experience should be a positive experience.

Preparing for growth takes courage at all phases. In the beginning, entrepreneurs often risk everything to start companies because they believe in a new or different vision. They often face seemingly insurmountable obstacles. It takes a great deal of insight to recognize when an emerging growth company needs to pivot or change direction as it grows. Most founders expect and understand these challenges. They need to also understand that succession planning is about yet another phase of growth for their vision, and if they take clear, concise action, they will be able to see their company through for the long term.  

By Manish Sood, Reltio's CTO, founder & chairman, and a member of the CNBC Technology Executive Council

Copyright CNBC
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