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The unsurprising rise of the Chief Revenue Officer

Chief Revenue Officer Chief Revenue Officer
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Mish Sukharev

Silicon Valley has given birth to the Chief Revenue Officer in recent years. The question is, are these executives the natural successor to the CEO?

Walter Isaacson, in his 2011 biography of Steve Jobs, included the following quote from the founder and former CEO of Apple:

“I have my own theory about why the decline happens at companies like IBM or Microsoft. The company does a great job, innovates and becomes a monopoly or close to it in some field, and then the quality of the product becomes less important. The product starts valuing the great salesmen, because they’re the ones who can move the needle on revenues, not the product engineers and designers. So the salespeople end up running the company.”

Jobs, who existed as a staunch believer in product oriented CEOs, was notoriously critical of his short-lived replacement at Apple, John Sculley, and Microsoft’s former CEO, Steve Ballmer, who he felt was ‘product challenged’.

Whilst Jobs is not alone in his belief in product-led CEOs, his criticism of Steve Ballmer is, at least based on revenue growth, unfair.

Under Ballmer’s tenure as CEO, Microsoft’s annual revenue grew from $25 billion to $70 billion, whilst its net income increased 215% to $23 billion.

Whilst those stats don’t paint the full picture of Ballmer’s reign, they contribute to a strong argument for having a revenue driven CEO at the helm.

The existence of a commercial, revenue focused CEO, is however, not the norm.

Particularly in the early stages of a tech company’s existence.

As of April 2015, 75% of the top 20 unicorn startups by valuation were led by founders with technical backgrounds, typically a Computer Science degree.

That list included high-profile names such as Drew Houston at Dropbox, the Collinson brothers at Stripe and Jack Dorsey, current CEO of both Twitter and Square.

Whilst there are some product-led founders who develop into fully-rounded CEOs, many technical founders require the close support of sales, marketing, and commercial acumen at the appropriate stage in the company’s life-cycle.

That has been attested to by the recent rise in popularity and importance of the role of the Chief Revenue Officer.

Zorian Rotenberg, founder & CEO of Boston-based Atiim and a former senior sales and marketing executive, defines the Chief Revenue Officer role as being, “responsible for all revenue-generating processes and execution at a company. By definition, this is a combination of sales and marketing and can also include running a customer success team.”

He states that the role has 2x-3x more responsibility and accountability than an individual VP of Sales or Marketing (and is compensated accordingly).

LaVon Koerner, President of Revenue Storm, a US-based sales and marketing consultancy, explains in a white paper entitled, ‘The Role of a Chief Revenue Officer’ that, “someone (a CRO) should be identified as the official owner/guardian of the entire revenue generation process… providing leadership and management to assure the success of its installation and execution.”

Ramsey Masri, Chief Revenue Officer at mobile marketing automation platform, Swrve, describes the Chief Revenue Officer role as the “merger between sales, services, marketing, and operations.”

Chris Merritt, current Chief Revenue Officer at Silicon Valley-based unicorn CloudFlare says, “it is a luxury for the CEO to have one person to go to and ensure there is great forecasting, execution, and engagement with customers. In that sense it’s very simple.”

Koerner continues by saying that, in the absence of a Chief Revenue Officer position, many companies do exactly the wrong thing when they attempt to accelerate the growth of profitable revenue.

As Marc Kiven, Chief Revenue Officer of marketing tech company, Signal, says, “nothing happens until something gets sold.”

That sentiment is clearly resonating as many a tech darling has sought to add the role to their C-level roster.

The likes of SoundCloud, Zendesk and Splunk are just three of the more high-profile businesses to have invested in their revenue generation capability in 2016. All 3 hired CROs for the first time this year.

And they are arguably behind the curve.

It was over four years ago in March 2012, that Paul Albright, the then Chief Revenue Officer of Marketo, contributed an article for Forbes entitled ‘The CEO’s new secret weapon: The Chief Revenue Officer’.

He began by stating, “Today’s business of any size implores a singular goal: grow efficient, predictable revenue, faster.”

In April 2015, Jim Herbold, who at the time was Chief Revenue Officer of Infer, wrote an article for VentureBeat with the title, ‘The Rise of the Chief Revenue Officer: Silicon Valley’s new secret sauce’.

He argues that,“building scalable and sustainable revenue generation is the best way to gain first-mover advantage in a new category…competition will come but a Chief Revenue Officer is the best chance you have to dominate a market first and fastest.”

The question is; has the Chief Revenue Officer transitioned from the CEO’s secret weapon or Silicon Valley’s secret sauce to the natural successor to the CEO themselves?

Several studies have been published recently including by LinkedIn and Burning Glass that found that those who focused in one industry but acquired a more cross-functional skill set were more likely to end up at the helm.

Arguably anyone in a sales management role has taken that career trajectory by focusing on one industry to build their network and working with other parts of the company including finance and product to align objectives.

As Tad Martin, CEO of Collective[i], the leading network and technology for sales professionals worldwide, says, “sales is one of the few functions that has to understand how every facet of the company operates in order to deliver the end result that is the only thing that matters – revenue.”

Ironically it could be the very advent of the kind of product many are selling, SaaS, that could expedite the path to CEO.

Martin continues, “As sales leaders become technology buyers and more and more complex technology gets delivered via AI-powered applications, so goes the last barrier to their ascension to the CEO office.”

It’s already happening.

Merritt says, “there are plenty of examples or use cases where commercially minded executives, whether it’s the CRO or other functions have done by well having stepped into the CEO spot.”

Masri distinguishes between the Chief Revenue Officer and a VP Sales, stating that “the CRO would be a better stepping stone to the CEO role than a VP Sales because they’ve run the whole customer lifecycle.”

Merritt continues by explaining that a reason for this success is, “they [commercial executives] generally have a well-informed lens as to what the market and customers are dealing with, what those challenges are that need to be solved in the marketplace and how the company is best positioned to deal with those challenges versus its competition. That is a grounding in the discipline of running revenue that you need to have.”

Take for example the third largest software company in the world, SAP. Bill McDermott, its CEO, rose through the ranks in sales and exists as an ambassador for the profession.

In his book, Winners Dream: A Journey from Corner Store to Corner Office, McDermott chronicles his path, which notably did not start in building products, but rather selling them.

Marc Benioff at Salesforce, Ginni Rometty at IBM, Chuck Robbins at Cisco and Howard Schultz at Starbucks are other high profile examples of technology CEOs that have risen up via the commercial route.

The irony for Steve Jobs’ stance on sales driven CEOs is that the current leader of Apple, Tim Cook, also comes from a background of operations and sales, rather than product.

Martin offers an explanation, “When you are launching a new industry, it makes sense to have a technologist at the helm. When you want growth, it’s all about having a sales leader.”

And in the year that Cook celebrates his 5th anniversary as CEO of the most valuable public company in the world, it is worth considering the impact he has had in growing the business to a roughly $615 billion market capitalization.

As a recent Quartz article explains, “Apple has never sold more than it has under Cook’s watch.”

This is a truth that has to be good news for Chief Revenue Officers and Sales Leaders the world over.