The $8M CEO Hire Mistake

Healthcare SaaS company, $12M ARR, growing 80% YoY. Founder-CEO was brilliant product mind but struggled with enterprise sales and team management.

Board decided we needed "adult supervision"—a veteran CEO from a large healthcare company. We hired a search firm, interviewed 8 candidates. Found someone with perfect resume: 15 years at major healthcare company, managed 500-person P&L, closed deals with Fortune 500 hospitals. All references were stellar. Compensation: $400K salary, 4% equity, $200K signing bonus. Red flags I ignored: he'd never worked at a company under 5,000 people, asked detailed questions about "support staff" and "executive perks," seemed dismissive of founder's product vision.

Within 2 months, tension with founder was obvious. New CEO wanted to "professionalize" everything—hired 6 executives, implemented rigid processes, slowed product releases from monthly to quarterly. Engineering team revolted. CEO's enterprise sales expertise meant nothing—he was selling to CIOs, but our buyer was clinical staff. By month 6, MRR growth had dropped from 80% to 20%. Three key engineers quit. Founder threatened to leave. We tried coaching, mediation, performance plans. By month 10, we fired him. Severance: $800K. Total cost: $2.3M in direct comp, $6M in lost growth/momentum.

• Never hire "big company" executive for company under 100 people—culture mismatch is fatal
• Require candidates to work 2-3 days with team before final decision
• Check not just what they accomplished, but HOW—process style matters more than resume
• Red flag anyone who asks about perks before asking about product/customers
• Keep founder as CEO longer, hire strong VP Sales instead
• Structure equity vesting monthly, not yearly, for easier separation