By Harold Grousbeck, Pratap Mukherjee
1999 | Case No. E67

The case describes the founding and growth of Trellis Software from its origin to the point where the board tells the entrepreneur CEO that they want to bring in a new CEO. After giving background on the industry and the founding of the company, the case delves into a number of operational issues that the CEO faced. First, the CEO was having a difficult time recruiting much-needed talent with an insecure financial situation. He felt he was caught in a Catch 22 – can’t get people without money and can’t get money without people. Second, one of his most valued engineers asked for a huge compensation increase in salary and options at a time when he was needed to get the product out in time for their major deadline. The CEO needs to decide how to handle the situation – cave to the engineer’s demands or let him walk away or find some middle ground. Next, the CEO needs to consider drastically altering the sales quotas because sales performance was wildly off from targets. Should he keep the targets high and risk losing valuable people or lower the targets and potentially condition these employees that targets may be lowered if they do not meet them? Finally, at a board meeting, the board members abruptly tell the CEO that they need to bring in a new CEO for the company. The CEO feels that he has been betrayed – the company is performing better than expectations and he was not given any warning. He needs to consider how he let this happen and what he should do now. Teaching Note available.

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