There are typically two types of software CEOs – the sales-led CEO who drives the organization from a sales perspective, and the product-led CEO who leads the product roadmap. Steve Jobs at Apple was the quintessential product CEO. Amazon, Facebook, and Google are also examples of product-led organizations. On the other end of the spectrum, IBM and Cisco are clearly sales-led organizations today (although they were founded as product organizations).
If you want to be a global software vendor you need to continue to grow and innovate regardless of your size. To achieve that, your organization needs to be led by someone who cares deeply about the product and understands how customers use it – a product CEO.
The product should drive the company
What sets a product-led organization apart from a sales-led one is that the CEO has ultimate responsibility for the roadmap of the product. They think about their organization in terms of the product, its strategy, and its place in the future marketplace. This dictates where resources are focused and how they push the organization forward.
A product CEO is someone who understands market forces and what products are likely to be successful now and in the future. They have a deep understanding of where their product is going and they bring their entire company along with their product strategy. When it comes to software, if you don’t have a strategy behind your product you can lose your position quickly. There’s no turning the ship around if you’ve invested two or three years of product development into something that doesn’t reflect where the market is heading.
If you look at the great software companies today, they’re product-led – Google, Facebook, Airbnb, Salesforce. Their product is at the forefront of the business. They have then built great sales and ops around a product core.
Sales matter. But sales should not guide the direction of the organization
In a sales organization, the business is driven purely by sales. Anyone can build a sales organization. Sales is ultimately a process-led exercise – if you build great processes you can build a great sales organization, but that doesn’t necessarily equate to having great vision or a good strategy behind your product. It just means you know how to sell well.
The founder of most software startups is typically a product person, so most begin as product-led organizations. But there comes a point in time, particularly if they’ve taken VC money, that there’s pressure to drive sales. That’s generally when a sales-led CEO is brought in. If this happens before the product has matured to the point where it can really scale, then the organization can diminish their ability to innovate in the future.
If the CEO stops driving the product, it puts the future direction of the organization at risk. The organization’s ability to innovate and continue to bring new products to market diminishes significantly.
Examples from our industry
An example that stands out in the BI space is Tableau. For a long time, the CEO and core executive team were all product people. This team understood the market intimately and drove substantial innovation.
But after their IPO, a sales-led CEO was appointed. This may have been due to the pressures of listing and the financial requirements that come with that. With a salesperson now running the company, I expect their ability to stay ahead of the market and to resource their product team effectively will be diminished.
A similar thing has happened to Qlik. Lars Bjork resigned at the end of last year. He had a history of delivering a great product and bringing new innovations to market. Now with a salesperson at the helm, we’re already seeing this reflected in their product direction and level of innovation.
Product organizations are far more resilient and sustainable across time horizons, events, and changes in the marketplace. While a sales organization can be very successful at a point in time, as the market shifts and those horizons change they don’t have the resilience to last.
At Yellowfin, I’m the owner of the product. While I’m not as hands-on with the product as I was, the core product decisions all still come through me. I lead the discussion about where we’re going, the product roadmap, and what we want to achieve. As a product-led CEO, I know that Yellowfin is laser-focused on the future.