The Burning Question Every Board Member Asked.
When I joined as C-level executive, the board had one question: “Can you fix the unit economics before we run out of runway?”
We were bleeding 12% EBITDA on a couple million in revenue. Cash flow was negative around $300K per month. The board had funded two extensions already and patience was wearing thin. Everyone knew the next twelve months would determine whether this SaaS company survived or became another cautionary tale about post-PMF companies that couldn’t scale profitably.
Thirty-six months later, we were operating at 21% EBITDA with positive cash flow and a gross margin that had expanded from 50% to 64%. The turnaround wasn’t a miracle—it was the result of one decision I made in my first 30 days that every advisor, consultant, and board member told me was premature, risky, and potentially catastrophic.
They were wrong. And understanding why reveals everything about what actually drives profitability in B2B SaaS companies once you’ve achieved product-market fit.
What Everyone Expected Me to Fix
The conventional wisdom was clear. When a SaaS company is burning cash with negative EBITDA, you focus on the usual levers: cut marketing spend, reduce server costs, renegotiate vendor contracts, freeze hiring, optimize the sales funnel, raise prices.
The board had read all the same McKinsey articles and SaaS profitability frameworks. They expected me to come in with a detailed cost-cutting plan, a revised go-to-market strategy, and a roadmap to operational efficiency.
I did none of that in the first 90 days.
Instead, I fired the Head of Sales, the VP of Engineering, and the Customer Success Director. All in the first 60 days. All three were well-liked. All three had been with the company for over three years. All three had relationships with the board. And all three were the primary reason we were hemorrhaging cash while revenue growth had slowed to 8% year-over-year despite a massive market opportunity.
This wasn’t a cost-cutting exercise. This was a performance intervention. And it’s the decision that made everything else possible.
The Leadership Mirage: When Experience Becomes Liability
Here’s what I saw in my first 30 days of diagnostic work:
The Head of Sales had a team of eight account executives and had been with the company since $500K in ARR. He was charismatic, loved by customers, and completely incapable of building a scalable sales organization. Every deal over $100K required his personal involvement. His forecast accuracy was 40% at best.
His team had no documented playbook, no qualification framework, and no accountability structure. When I asked him how he planned to scale to $50 million in ARR, he said “hire more AEs and I’ll keep closing the big deals.” That’s not a strategy—that’s hoping the founder’s Rolodex never runs out.
The VP of Engineering had built the original product and understood every line of the legacy codebase. He was brilliant technically and utterly incapable of managing a team of 35 engineers. Technical debt was compounding faster than we were paying it down. Feature velocity had collapsed to the point where we hadn’t shipped a major capability in nine months.
When I asked him about the multi-tenant architecture migration that would unlock our unit economics, he said “we’ll get to it after we ship these customer features.” We’d been saying that for two years. Meanwhile, every new customer required custom configuration work that destroyed our gross margin.
The Customer Success Director was empathetic, customer-obsessed, and completely reactive. Her team spent 80% of their time firefighting issues that should have been prevented by better onboarding, product improvements, or proactive health monitoring. Churn was creeping up because we were failing customers in the first 90 days, but she had no systematic approach to preventing it.
When I asked her what percentage of churn was avoidable, she said “most of it, but we’re too busy helping customers to build those systems.” That statement alone revealed the entire problem.
These weren’t bad people. They were good people in roles that had outgrown them.
The company had scaled from almost zero to $2 million in ARR, and they were still operating with the same mindset, systems, and capabilities they had at the beginning. They had become the bottleneck.
The Decision: Competence Over Comfort
I made the decision to move all three out within 60 days.
Not because I had replacements lined up. Not because the board demanded it. But because I knew that every week we delayed this decision was another week of compounding dysfunction that would make the turnaround harder.
The board was nervous. The CEO was supportive but worried about the disruption. The team was shocked. Customers who had relationships with these leaders called asking what was happening. And for about 45 days, things got worse before they got better.
Sales pipeline visibility dropped because the Head of Sales had kept everything in his head. Engineering velocity slowed even further because the VP had been the only person who understood critical parts of the architecture. Customer success response times increased because the team was overwhelmed without their leader.
But here’s what happened next:
Without the Head of Sales blocking every process improvement, we implemented a qualification framework that increased our win rate from 8% to 19% within six months. We documented our sales playbook. We started forecasting with 75% accuracy instead of 40%. And the two senior AEs who had been waiting for years to step up suddenly had the space to lead.
Without the VP of Engineering defending the legacy architecture, we allocated 40% of engineering capacity to the re-platforming work that had been deferred for two years. It took eight months and cost us approximately $2 million in opportunity cost, but it unlocked multi-tenant capabilities that reduced our cost to serve by 60% and became the foundation for everything that followed.
Without the Customer Success Director maintaining the firefighting culture, we built a proactive health monitoring system, restructured onboarding to focus on time-to-value, and reduced 90-day churn from 22% to 8%. The team went from reactive to strategic, and expansion revenue started growing faster than new logo revenue.
The Math: How People Decisions Compound Into EBITDA
Let me show you how this one decision cascaded into a 33-point EBITDA swing:
When you have the wrong people in leadership roles, every other optimization is fighting uphill. You can cut marketing spend, but if your sales team has an 8% win rate instead of 19%, you’re just reducing pipeline without improving efficiency.
You can try to improve gross margin, but if your product requires custom configurations because you won’t invest in multi-tenancy, you’re treating symptoms instead of causes.
You can hire more customer success managers, but if they’re all firefighting instead of preventing churn, you’re scaling inefficiency.
The leadership changes unlocked everything else. Better sales leadership meant we could reduce customer acquisition cost by 35% while increasing average contract value by 28% because we were qualifying properly and selling value instead of discounting to close.
Better engineering leadership meant we could complete the re-platforming that took our gross margin from 50% to 64% by eliminating manual configuration work and reducing infrastructure costs per customer. Better customer success leadership meant our net revenue retention improved from 92% to 118%, which meant every dollar we spent acquiring customers compounded instead of leaked out through churn.
Within 12 months, we had reduced our cash burn from negative $400K per month to breakeven. Within 24 months, we were cashflow positive. Within 36 months, we were operating at 21% EBITDA while revenue had tripled.
None of this would have been possible with the original leadership team in place, no matter how many consultants we hired or how many cost-cutting initiatives we implemented.
What This Reveals About SaaS Turnarounds
Most turnaround advice focuses on tactics: cut costs, optimize pricing, improve conversion rates, reduce churn. These matter, but they’re second-order effects. The first-order question is whether you have leaders capable of executing those tactics at scale.
I’ve done four SaaS turnarounds now, and the pattern is identical every time. The companies that successfully swing from negative to positive EBITDA don’t start with spreadsheets and cost reduction plans. They start with honest assessments of whether their leadership team has the capabilities required for the next phase of growth. And when the answer is no, they make the hard people decisions quickly.
The companies that fail to turn around spend months optimizing around their leadership constraints, hoping they can coach people into capabilities they’ve never demonstrated, avoiding conflict in the name of preserving culture and relationships.
Meanwhile, the gap between what the business needs and what the leadership can deliver keeps widening until the company either raises dilutive capital, sells at a discount, or shuts down.
The Framework: Evaluating Leadership for Scale
If you’re a COO, CEO, or board member evaluating whether your leadership team can take you from negative to positive EBITDA, ask these diagnostic questions about each executive:
Can they build systems that work without them, or are they the system? If the sales leader needs to be on every important call, the engineering leader needs to approve every technical decision, or the customer success leader needs to personally handle escalations, you don’t have leadership—you have highly paid individual contributors.
Can they hire people better than themselves, or do they feel threatened by strong performers? Leaders who are confident bring in people who challenge them and fill their gaps. Insecure leaders hire people they can control, which caps your organizational capability at their personal ceiling.
Do they use data to make decisions, or do they rely on intuition and anecdotes? Early-stage companies can run on founder intuition, but scaling requires systematic decision-making based on metrics, cohort analysis, and predictive indicators.
Can they have hard conversations about performance, or do they avoid conflict? Scaling requires constant calibration of who’s working and who isn’t. Leaders who can’t have direct conversations about performance create cultures where mediocrity is tolerated and top performers leave.
Do they take ownership of outcomes, or do they blame circumstances? When revenue misses, does your sales leader own the forecast accuracy problem or blame the product? When customers churn, does your CS leader own the onboarding failure or blame the customer?
Ownership is the difference between leaders who improve and leaders who make excuses.
Where This Applies
This leadership-first approach to EBITDA improvement is most critical if you’re a B2B SaaS company that has achieved product-market fit but is struggling with profitability despite reasonable revenue scale.
If you’re between $2 million and $50 million in ARR, burning cash with negative EBITDA, and your leadership team has been in place since the early days, the problem is likely not your market opportunity or your product—it’s whether your leaders have evolved with the company.
The signal is usually obvious once you look for it: growth is slowing despite market demand, gross margin is stuck or declining, sales efficiency is poor despite hiring more reps, churn is creeping up, and every strategic initiative takes twice as long as planned.
These aren’t execution problems—they’re leadership capacity problems.
The Choice Nobody Wants to Make
The reason most companies don’t make early leadership changes is simple: it feels risky and disloyal. These are people who believed in the company early, who worked nights and weekends to get you to this point, who have relationships with customers and the team.
Letting them go feels like betrayal.
But here’s the harder truth. Keeping people in roles they’ve outgrown is more disloyal than transitioning them out. You’re setting them up to fail publicly, to be blamed when the company misses targets, to watch their reputation erode as the gap between expectations and capabilities becomes undeniable. And you’re risking the jobs of everyone else in the company who depends on you making hard decisions to keep the business viable.
I wish I could tell you there’s a gentler way.
That you can coach people into capabilities they’ve never demonstrated.
That you can restructure around their limitations.
That you can wait for them to self-select out.
In 20 years of operating and turning around companies, I’ve never seen that work at the pace required to save a struggling business.
Conclusion: The EBITDA Decision Is a People Decision
We went from -12% to +21% EBITDA in 36 months.
When people ask how, they expect me to talk about pricing optimization, cost reduction, or go-to-market efficiency.
The real answer is simpler and harder: I replaced the leaders who couldn’t scale with leaders who could. Everything else followed from that decision.
If you’re trying to turn around a SaaS company’s profitability and you’re starting with tactics instead of people, you’re optimizing the wrong variable.
Fix the leadership team first. The EBITDA will follow.