Dear SaaStr: What Does a CEO Do to Deserve Such an Exorbitant Salary?
I struggled with this myself a bit in the early days, in my first start-up job. I realized once I was an exec for the first time that a lot of us we working just as hard as the founders. At least, a few of us were. No way I deserved to make as much. But were they really doing so, so much more than the rest of us?
Yes. Because, in the end, 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 than a top engineer or marketer 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.
And a founder CEO? You’re not only responsible for all that. But you also can’t quit. You’re always responsible. Forever.
That’s a unique job.
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Aaron Levie and I dug into this and some great related topics here:
