Dear SaaStr: What Are Some Ways to Keep Investors From Firing You?
Founders tend to worry a bit too much about getting fired — and not enough about transparency.
Yes, it does happen. And sometimes, it’s very dramatic, see e.g., Travis Kalanik at Uber. But it's pretty rare, especially if you don't raise all that much capital.
In my 12+ years of venture investing at SaaStr Fund, I've only seen 1 founder CEO "fired". And it was because the burn rate was high, the growth low ... and they'd run out of money. So the lead VC felt they were forced up against a wall.
99%+ of VCs and investors absolutely do not want to fire founders.
Why not? Because:
It usually increases risk. It’s very hard to find anyone that knows the business as well as the founders
The vast majority of SaaS companies that IPO still have their founders as CEO. More on that here.
Most investors don’t have a better replacement at hand. If you are going to fire a founder, you sure better be able to source a better CEO. And ideally, have them on hand right now.
Most experienced VCs realize the company loses its spark when the founders leave. Almost always.
So generally, VCs only fire founders — assuming they have the legal / contractual rights to — when they are sort of forced to:
Stealing
Deep toxicity
Sexism and other related issues
Burning up all the cash with no ability to fundraise further
Lying on important things
How do you avoid the above? A few thoughts:
Have the board approve your salary and all key expenses. No surprises.
Send out monthly investor updates with full metrics. No surprises.
Share the Zero Cash Date and burn rate every month. No surprises.
Don’t run out of money. No surprises.
Don’t spend more than everyone agreed. And make sure everyone really agreed.
Mostly it boils down to … No surprises.
VCs are wired to take bad news, and even lose money from time to time. It’s repeated surprises that spook folks.
More here:
And we'll talk about this and a lot more at 2025 SaaStrAnnual.com! May 13-15 in SF Bay!
See you and the CEOs of Snowflake, HubSpot, Dropbox, Gitlab, Flock Safety, Own, Descript and so much more!!
