New Relic, one of Portland’s biggest tech employers, names new CEO after tumultuous year – OregonLive
Software company New Relic said Thursday that founding CEO Lew Cirne is stepping down after a contentious year characterized by dramatically slower growth and his increasingly difficult relationship with employees. He will now be executive chairman.
Cirne clashed with employees over workplace culture and his efforts to keep the company out of the national political foment that accompanied last year’s racial justice protests and preceded November’s presidential election.
Some workers also expressed concern about Cirne’s private charitable contributions, which included sums to a private school in Texas that excludes gay students and an evangelical preacher who seeks to convert Jews to Christianity.
Replacing Cirne is Bill Staples, a longtime Microsoft executive whom New Relic hired last year as chief product officer, then promoted to president in January. Staples, himself the focus of some employees’ ire, will receive a $500,000 salary and stock grants worth $11 million, vesting over four years.
The tumult at New Relic parallels disputes within other tech companies, among them Coinbase and Basecamp, which have struggled to navigate the treacherous political climate and alienated employees with declarations that they would shut down political discussions internally.
Outwardly, New Relic gave no indication that internal dissension played any role in Cirne’s exit.
“When we recruited Bill into the company, we thought that he would be the natural successor to me as CEO at the right time,” Cirne said in a written statement. “Bill has exceeded our highest expectations as a strategic thinker and operational leader, making now the right time to make this transition.”
New Relic’s headquarters are in San Francisco but the company’s engineering team is in Portland. More than 600 people worked in New Relic’s downtown office before the start of the work-from-home era that accompanied the pandemic.
Large organizations use New Relic’s software to monitor the performance of their own websites and gauge how customers are using clients’ online tools. Its revenues totaled $668 million in the last fiscal year, according to financial results released Thursday, with losses of $174 million.
New Relic’s annual sales growth has slowed dramatically over the past several years, from more than 40% as recently as 2017 to 11% in the fiscal year just completed. New Relic forecast growth of just 6% this year.
The slowdown has produced mounting pressure from investors. New Relic’s share price is down more than 40% over the past two years, a period the broader market has risen by a comparable amount. Shares fell about 3% in after-hours trading Thursday, after New Relic announced the new CEO and fourth-quarter results.
Accompanying the slower sales has been mounting turmoil within the company – and a sharp divide between Cirne and some employees over how it should respond to the nation’s resurgent racial justice movement.
Last June, Cirne sent a memo chiding employees for his company’s poor performance and calling on them to work harder.
“We are not a lifestyle company,” he declared, telling them the company had an “urgent need to get back on track.”
And Cirne told employees New Relic is not a political organization, and that he wanted no more internal debate about which clients the company does business with. He invited employees to quit if they didn’t agree, and wrote, “From now on, this matter is off the table for further discussion.”
Founding CEOs are often closely linked with their organizations’ culture and image, but in New Relic’s case the tie is especially close. The company’s name is an anagram of the CEO’s name (“Lew Cirne.”)
Tensions continued to mount last year as New Relic bungled a small layoff, inadvertently notifying laid-off employees of their pending termination through an automated email notice that they were losing access to their work accounts.
While New Relic quickly apologized for the gaffe, some employees turned on Staples, who was then chief product officer, showering him with middle-finger emojis in the company’s Slack internal communications. That triggered an online “code of conduct” that New Relic adopted last July.
The new policy banned discriminatory remarks in the company’s online discussion forum, according to a copy reviewed by The Oregonian/OregonLive, but it alienated some employees by going further and blocking them from “revisiting a discussion that has already been addressed” or using emojis to endorse online remarks that violate the rules.
New Relic warned it might fire employees who violate the rules.
In October, The Oregonian/OregonLive reported on Cirne’s charitable giving through his family’s private, $140 million foundation.
While Cirne gave the most money to established and reputable charities, he gave tens of thousands of dollars to a private school that condemns homosexuality and bars gay students. Some employees said that belied the company’s outward commitment to diversity.
Cirne also donated to the evangelical preacher Sid Roth, who has been condemned by the Anti-Defamation League. The organization said Roth presented mailings as authentically Jewish but said they were actually an effort to convert Jews to Christianity.
Criticism of Cirne erupted online after The Oregonian/OregonLive’s October report. New Relic did not respond to inquiries last year about Cirne’s donations, but in an emotional all-hands meeting after the story’s publication, Cirne defended the company’s record on inclusivity and described New Relic as a rare technology company that also will welcome conservative Christians like him.
“It’s not my job to convert anyone,” according to a recording of the meeting reviewed by The Oregonian/OregonLive. “It’s just my job to be genuine to who I am and hopefully represent my faith in a positive way.”
And Cirne stood up for Staples, who was then chief product officer, saying Staples was taking New Relic through a necessary – and necessarily difficult – transition.
“I believe in Bill Staples. I think he’s been transformative for this company. I think it’s been horrible what some of you have said about him,” Cirne told employees.
“He’s a compassionate, loving, visionary, brilliant leader who is taking the product organization through the necessary cultural change we have to go through if we are going to survive and thrive,” Cirne said. “It’s going to hurt. I’m going through some pain right now. I think that’s pretty obvious.”
— Mike Rogoway | mrogoway@oregonian.com | twitter: @rogoway | 503-294-7699