Have startup boards become too deferential to founders?

Harry Stebbings · Oct 11, 2021

VCs have lost their voice — they are terrified of saying anything critical to founders and stay silent in board meetings when someone needs to speak up

They fear founders will badmouth them and damage their reputation; power has swung so far toward founders that no one is willing to say anything negative

26:15 20VC: Chris Sacca on Coming Out of Retirement To Unf**k The Planet with Lowercarbon, How Chris Evaluates His Relationship To Money Today, Why We Have Bred a Generation of Ass**** Kids, Do VCs Provide Any Real Value and The True Unfiltered Opinion on Faceb

Harry Stebbings · Jan 16, 2023

One of venture's biggest problems is that investors, especially those who were never operators, are too nervous to tell founders hard truths for fear of a bad reputation or NPS, when they have a fiduciary duty to say what is not working

Investors have a fiduciary duty and a responsibility to their team and shareholders that outweighs how it looks

6:52 20VC: a16z's Jeff Jordan on The Ultimate Guide to Investing in Marketplaces, Two Core Features to Look for in All Marketplace Investments, Why Fragmented Supply is so Important & Lessons from Airbnb, Pinterest and Instacart on What Makes the Best Cohorts

Harry Stebbings · Feb 27, 2023

VCs avoid doing the hard work of intervening with struggling companies because they fear damaging their NPS with founders

54:04 20VC: How Multi-Stage Funds Changed The Game For Seed Rounds, Why Signalling Risk is BS, The Three Most Important Variables for Founders When Raising Rounds & A Debate on Portfolio Construction: Does Ownership Matter with David Tisch

Jason Lemkin · Aug 23, 2023

Investors still avoid raising hard burn-rate conversations with founders for fear of damaging the relationship, and companies suffer for it

He personally had to convene the conversation as the number three investor on a company burning like it's 2021, because the lead investor said they didn't know how to address it without impacting the relationship; a year later everyone will wish the conversation had happened six to eight months earlier

Scope: based on a specific recent portfolio example

14:02 20VC: NEW FORMAT: Mega Funds Will Come Back, Why Markups Have Corrupted VC, Why RIFs Should Always Be An Embarrassment To SaaS Founders and Why Pitching is BS and Fake with Jason Lemkin and Rick Zullo

Harry Stebbings · Jan 22, 2024 · hedged

Investors today often fail to perform their duties rigorously because they are too focused on maintaining a great founder NPS

Scope: framed as an observation offered for pushback

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Harry Stebbings · Apr 28, 2025

Founders acting as investors are far more direct and less empathetic with founders than VCs are, because VCs tiptoe around founders to protect their NPS.

He observes this uniformly among the founders he brings in to co-invest, who bluntly tell founders they aren't hitting the bar.

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Harry Stebbings · Nov 10, 2025

The bigger problem today is the opposite of firing founders: boards deliberately obfuscate their fiduciary responsibility to preserve founder NPS

He sits on a company where the board is not looking after the cap table purely because they do not want to upset the CEO or have him say something bad about them

Scope: drawn from one company he is invested in

44:28 20VC: Benchmark's Newest General Partner Ev Randle on Why Margins Matter Less in AI | Why Mega Funds Will Not Produce Good Returns | OpenAI vs Anthropic: What Happens and Who Wins Coding | Investing Lessons from Peter Thiel and Mamoon Hamid

Rick Zullo · Aug 23, 2023

The investor-founder relationship has become too deferential over the last five to ten years and needs to return to productive friction

Incentives to sell founders, chase NPS scores and secure founder references for fundraising every 12 months made investors avoid pushing back; the best relationships are ones where you can fight and return to the table because there is trust

11:44 20VC: NEW FORMAT: Mega Funds Will Come Back, Why Markups Have Corrupted VC, Why RIFs Should Always Be An Embarrassment To SaaS Founders and Why Pitching is BS and Fake with Jason Lemkin and Rick Zullo

Thomas Plantenga · Feb 12, 2024

High-friction board disagreements produce better decisions

In 2021 the board pushed back hard on a budget with a massive burn; the rework meant Vinted entered the macro downturn financially sustainable instead of in its biggest-ever burn, and the same pattern repeated on the US, shipping and luxury

Scope: credits some luck in the 2021 case

65:15 20VC: The Ultimate Guide to Scaling Marketplaces, Why Rule of 40 and EBITDA Optimisation is BS, How Founders & VCs Should Approach Market Sizing and Outcome Scenario Planning and Why Europe is Failing with Vinted CEO, Thomas Plantenga & Alex Taussig

Chris Dixon · Mar 27, 2024

There is an important distinction between being a founder's friend and being their partner: a good partner gives honest, sometimes unfriendly feedback and practices real governance, including recommending a CEO change when that is best for the company

A VC is also a custodian of the careers of employees and other investors, so those interests must be balanced; the bad pattern is saying yes to everything and then refusing when the founder needs money

14:45 20VC: a16z's Chris Dixon on Who Will Win the Next Generation of Venture, The Two Ways to Make Great Venture Investments and Find the Best Entrepreneurs & Why AI Will Strengthen the Position of the Incumbents Moving Forward

Reid Hoffman · Jun 10, 2024

Sam Altman deserves more credit than he gets for deliberately building an OpenAI board with genuinely independent governance, unlike most founders who treat boards as rubber stamps.

Sam asked Reid in front of the whole company whether he'd fire him if he kept not doing his job — the only time Reid has been asked that on any board — reflecting a real commitment to independent governance.

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Harry Stebbings · Jun 19, 2024

The best founders appreciate an investor's directness rather than being put off by it

In his experience the best founders take it or leave it and move on

45:39 20VC: Foundation Models are the Fastest Depreciating Asset in History, Lina Kahn is a Threat to American Capitalism, PE is Not Coming to Save the M&A Market & How China Could Overtake the US in the AI Race with Michael Eisenberg

Miles Dieffenbach · Aug 4, 2025

Hard coaching of founders is better for companies than being maximally founder friendly

No founder is perfect; investors close to the business who address weak spots from a place of care can bend a company's trajectory, and tough conversations aren't bad things

Scope: assumes the criticism comes from someone who wants the founder to succeed

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Everett Randle · Nov 10, 2025

The best founders do not want sycophantic boards; they want adults who will push and spar with them because it makes the company better

45:05 20VC: Benchmark's Newest General Partner Ev Randle on Why Margins Matter Less in AI | Why Mega Funds Will Not Produce Good Returns | OpenAI vs Anthropic: What Happens and Who Wins Coding | Investing Lessons from Peter Thiel and Mamoon Hamid

Delian Asparouhov · Jul 29, 2024 · hedged

Travis Kalanick committed no crime, and the way Bill Gurley engineered his ouster from Uber was morally depraved and deserves more public discussion

He was cornered in a hotel room two days after his mother died and convinced to sign papers he shouldn't have signed

0:00 20VC: Twitter's Most Controversial VC Delian Asparouhov on Inside the Walls of Founders Fund: What the World Does Not See | Why Western Europe Will Be Like the Third World | Why SaaS as an Industry Might Be Dead

Delian Asparouhov · Jul 29, 2024 · hedged

Founders Fund's founding mantra of being founder-friendly and not firing founders remains at least somewhat contrarian today

Tier-one firms including Benchmark, a16z and Sequoia all have examples of ousting founders within the past decade

Scope: acknowledges the stance has become somewhat consensus, but not entirely

40:24 20VC: Twitter's Most Controversial VC Delian Asparouhov on Inside the Walls of Founders Fund: What the World Does Not See | Why Western Europe Will Be Like the Third World | Why SaaS as an Industry Might Be Dead

Delian Asparouhov · Jul 29, 2024 · speculative

Benchmark's LPs might have made even more money had Travis Kalanick stayed CEO of Uber, with self-driving cars living inside Uber rather than Google and Uber potentially becoming a trillion-dollar company in the 2020s

Founder-led companies take the risks that produce the largest outcomes, even though the Dara transition did deliver an IPO and cash-flow profitability

Scope: acknowledges Benchmark LPs did make a lot of money under Dara

41:09 20VC: Twitter's Most Controversial VC Delian Asparouhov on Inside the Walls of Founders Fund: What the World Does Not See | Why Western Europe Will Be Like the Third World | Why SaaS as an Industry Might Be Dead

Delian Asparouhov · Jul 29, 2024

Travis Kalanick's ouster was illegitimate: he committed no crime and his investors lacked the legal control to remove him

They cornered him in a hotel room two days after his mother had passed away and convinced him to sign papers he should not have signed

42:24 20VC: Twitter's Most Controversial VC Delian Asparouhov on Inside the Walls of Founders Fund: What the World Does Not See | Why Western Europe Will Be Like the Third World | Why SaaS as an Industry Might Be Dead

Delian Asparouhov · Jul 29, 2024

Even if he himself underperformed as a founder, investors should not be able to remove him, because generational returns require the founder at the helm

The moment you install a professional CEO, that person lacks the moral authority and capability to take the risks required to generate generational outcomes

42:49 20VC: Twitter's Most Controversial VC Delian Asparouhov on Inside the Walls of Founders Fund: What the World Does Not See | Why Western Europe Will Be Like the Third World | Why SaaS as an Industry Might Be Dead

Everett Randle · Nov 10, 2025

The board-founder relationship has changed dramatically and for the better since the era when investors would fund a company and immediately go recruit a professional CEO

In the 1990s and early 2000s it was the absolute norm — Kleiner and Sequoia did the Google investment and immediately started searching for a professional CEO — whereas 2025 is immensely different from 2000, 2010, even 2015

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Harry Stebbings · Jul 29, 2024

Committing never to remove a founder is moronic; no founder has a divine right to their position

It is like entering a marriage vowing never to divorce — the option must exist; just as an investor at Founders Fund who does not perform will not remain there

40:53 20VC: Twitter's Most Controversial VC Delian Asparouhov on Inside the Walls of Founders Fund: What the World Does Not See | Why Western Europe Will Be Like the Third World | Why SaaS as an Industry Might Be Dead

Harry Stebbings · Jul 29, 2024

Investors owe an obligation to a company's employees, so a founder who is lazy or lying has no divine right to remain in the role

The obligation runs to employees within the company, not only to the founder

Scope: agrees with Delian that founder-led companies generate the returns that matter

42:01 20VC: Twitter's Most Controversial VC Delian Asparouhov on Inside the Walls of Founders Fund: What the World Does Not See | Why Western Europe Will Be Like the Third World | Why SaaS as an Industry Might Be Dead

Harry Stebbings · Sep 18, 2024

A board member's fiduciary duty to shareholders can be in direct conflict with coaching the CEO

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Harry Stebbings · Apr 14, 2025

A board member's official fiduciary duty to shareholders is not always the same as maximizing a founder's ambition

The formal job of a board member is fiduciary duty to shareholders

Scope: states he otherwise agrees with Victor

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Victor Lazarte · Apr 14, 2025

A board member's fiduciary duty is discharged at the moment of writing the check — underwriting the founder — and after that the job is to enable whatever the founder wants to do, even in disagreement

Decisions judged in isolation may look shareholder-optimal, but in aggregate the winning policy is to pick the best founders and trust them

Scope: framed as an aggregate policy rather than a case-by-case rule

52:54 20VC: Benchmark's Victor Lazarte on Why Portfolio Construction is BS| Why SaaS Spreadsheet Investing is Dead | Why China is a Stabilising Force for the US | Three Traits All the Best Founders Have & The Lie All Big Tech Companies Have Been Telling

Eléonore Crespo · May 9, 2025

Rather than moving to a founder-controlled US governance model, founders should keep real governance and select board members who understand that the founder usually has the better read.

Good governance is valuable when the board members are right; the founder running the company sees more than the board does, so the board should give advice but leave the decisions.

Scope: conditional on having the right board members

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Michael Eisenberg · Dec 6, 2021

The enduring lessons of WeWork are to be wary of headline valuations, that big markets genuinely matter, not to fall in love with your own momentum, and that board oversight remains critical

WeWork attacked a big, untouched commercial real estate market, but momentum and weak oversight were the failure modes — as at other companies that reached similar valuations

44:20 Momentum and weak board oversight not headline valuation explain blowups like wework

Jeff Jordan · Jan 16, 2023

An investor owes it to the entrepreneur to raise a concern when they believe there is a high probability the founder is driving the company off a cliff, even if the investor turns out to be wrong

You have a responsibility to your entrepreneur, and discussing the meaningful things with them is a privilege of the job

7:17 Fiduciary duty requires flagging serious concerns even if investor turns out wrong

Dave Kellogg · Jan 31, 2024

Extreme founder-friendliness is wrong: no CEO, founder included, should feel invincible or unfireable

Any extreme is wrong; the industry was too quick to throw out founders before, but founders having an effective invisibility cloak — sometimes contractual, sometimes behavioural — isn't good, whereas non-founder CEOs like him watched their backs daily

59:43 Extreme founder protection is wrong no ceo should be unfireable

Dave Kellogg · Jan 31, 2024

The founder-friendliness pendulum has swung too far and is now swinging back to a reasonable middle ground where founders are replaced after enough mistakes

The 1990s and early 2000s were too quick to replace founders, but for the last fifteen years founders have had unlimited lives and could make as many mistakes as they wanted

60:51 Founder friendliness pendulum swung too far and is now correcting back

Jason Lemkin · Nov 3, 2023 · hedged

The reason 88% of IPO'd SaaS companies still have the founder as CEO at IPO is partly that VCs have gotten lazier as they have raised more money

He was contractually pressured by his VCs to bring in a replacement CEO as a first time founder even though all the candidates were worse than him; that discipline has faded

9:55 Vcs have gotten lazier explaining more founder ceos persisting to ipo

Victor Lazarte · Apr 14, 2025

The role of a board member has shifted from governance and oversight to catalyzing and amplifying the founder's ambition

Decades ago capital was scarce and big tech outcomes were rare, so investors focused on managing downside; today everyone knows tech investing works, and maximizing the upside matters more than managing losses

50:46 Board role shifted from downside governance to upside catalyzing