The 9 Types of CEOs That Are Just So Hard for VCs To Work With

Have a little bit fun today and talk about the nine types of CEOs that are really hard for VCs to work with. And who cares? Who cares to some extent what your VCs think. They seem so important on Twitter, but do they really matter? They play such a small role in some ways in the startup journey. An important role, but a relatively small one. But it matters. It matters. Especially today when things are tougher. We are in year two of the Venture downturn, folks. 2022 was brutal in Venture and 2023 is while not brutal, it's flat, it's down. Multiples are low multiples. In other words, the value of each dollar of ARR in the public markets are at 5 to 6 year lows. And that makes it hard for VCs to invest. It makes them hard to see their portfolio companies earn their valuation and it makes VCs just grouchier. More stress. And that makes your life harder. It makes your life harder to get the next check to do whatever you need to do with the VCs. So I wanted to highlight nine types of C CEOs that VCs find particularly hard to work with because maybe you'll see a little bit of yourself in these nines. I see a little bit of myself in them. And maybe you can course correct a little bit just so you get along better with your VCs in these more challenging times. So the number one type of CEO that is the hardest for VCs to get along with is the surprise Springer. The surprise Springer. Oh man, this is absolutely the worst. This is SaaS. You pretty much know what's going on. You have recurring revenue, your NRR might be 85, 95, 100, 100, 140. Whatever it is, it ain't zero. So you have a pretty good sense of where your revenue is going to be next month, next quarter even. You have a pretty good sense probably where it's going to be at the end of the year. So any big issues, any big dramas, they shouldn't come out of nowhere, they shouldn't go come out of the blue in sass. And nothing undermines confidence more than the surprise singer Springer. Hey, one more thing, one thing you didn't know, one thing that wasn't in the investor update boom. That just undermines confidence. Okay. The second type of SaaS CEO that it's really hard for VCs to work with are what I call the third checker. And what's the third checker? The third checker is the CEO that doesn't really listen and keeps assuming, no matter how high the burn rate is, no matter how low the growth rate is, that their existing investors will keep funding them. And be aware of this. It is harder than ever to get a second and especially a third check from VCs today. Recently, one of my fastest growing companies. There's nothing wrong with this company. It's tripling, it's growing at epic rates. It has great founders, it raised a big round, but a bunch of its large existing investors didn't put any more money in and I didn't get it. And I asked them why and they're like, we're just out. We are out. We have too many companies in triage, too many struggling founders competing for too few dollars. And so it's harder never to general to get an extra check, even if you're doing well, because VCs are just out of what we call reserves. And so in general, it's an issue. But it's even worse when the CEO ignores the issues. When the CEO sort of drives the car right off the cliff, assuming those VCs around the table that she or he has will write another check. And these days it's just harder than ever. That third checker that just has no idea where more money is coming from, but isn't cutting the burn. A number three type of CEO that's really hard to work with is that we'll make it up the last two weeks to the quarter CEO, these are the worst the they're not addressing the issues, they're not addressing the root causes, they're not addressing the fact that in SaaS it's really hard to make a rough quarter up the last week, the last month. Sometimes it happens. Absolutely. In more enterprise SaaS, we close a lot the end of the quarter, of course. But you can't be delusional here. VCs want to understand if you're going through a rough patch, you're not the first startup to have struggled for a week, a quarter, even a year, even to have had a year of hell. But delusionally believing you're going to make it up at the end of the year doesn't help anyone. It just undermines confidence. Okay, type number four the miss every single planner type CEO, this is one and you see it in a lot of struggling VPs of sales and it's tough to excuse there. But it's even worse with the CEO where they just missed the plan. The goal this year was to go from 5 to 10 and then they tell everyone it's going to be 8 and then they tell everyone's going to be 6 and then it's 5.5 or whatever it is. But they just keep missing every plan. They don't stick to anything. Look everyone, no one loves re forecasting down, but try to do it just once a year if you have to do it. And stick to a plan. Stick to a C60 plan. A plan you have at least a 60% confidence in making. If you have a C60 plan, you probably actually don't have to change it during the course of the year. You're not sure you'll make it. It's not excessively conservative. You have a 60% confidence, but it's not delusional like a 10% confidence plan. The C60 plan you should be able to keep two. And even if you come up a little short, well that's fine. I mean it's not great. But at least we're honest. We came up short. Let's talk about why. Let's talk about what we're going to do better, what we're going to improve. But constantly missing every single plan helps. Literally helps. No one pay five the type of CEO. Now listen, not everyone, every VC doesn't like the fifth co. I certainly don't. But eventually it wears itself thin which is the, the schmoozer upper. The seller. The one that is always back slapping, that's always joking and knows everyone's favor, favorite hobbies and where they like to kite, surf and and what type of watches they collect. Enough already, okay? Enough already. Listen, getting to know people is important. I'm a pretty bad schmoozer myself. Hopefully you can do better than me. But too much schmoozing is not your job as a founder CEO. Your job is to execute and be honest and you know, spending 5% of your time, your time related to your board, related to your investors and schmoozing is fine. But you should not be spending all your time on the golf course hobnobbing. Spend your time either putting points on the board or asking for help to get points on the board. Number six and this one's just, just tough but we because I have a little bit of this problem myself but you just don't want to see it too much as an investor. Which is number six. The thin skinner. Okay, the thin skinner. The one is that they take everything personally and look, it's hard. I take a lot of things personally myself. I care a lot. I care a lot about our community saster. I care about my investments. I care about my team. I care frankly, I think more than 95% of folks. But a flip side of that is, yeah, if I get too much criticism or if I get mean criticism or erroneous criticism, sometimes it does break through my thin skin a little bit. But goodness, if as a CEO you act like this too much, you can't have an honest conversation with your investors, with your board, with anybody and everyone just becomes paralyzed. They don't want to say anything. I hate this myself. I see this more and more common where literally you'll have a group of great investors and board and no one will say anything. They don't want to. They don't want. They're worried about the thin skinned CEO. And I gotta tell you, nine times out of ten it's only me that says something. And it's brutal. It's not fun. It's not fun to create fiction. I am personally conflict diverse. I don't like it. But you need the CEO to be thick skinned. It comes with the job. You're going to make mistakes. You're going to make mishires. You're going to make horrible mistakes. I've made quite a few myself. But if you take it all personally, you'll never build a unicorn. You'll never build something real. Okay, type seven. Okay, maybe this one's the worst. I don't know. They're all pretty bad. Type 7 is the blame someone elser. Oh my gosh. I remember I was at a, at a board meeting where a leader just kept blaming. I think it was someone named Nick on the sales team. They had like 40 reps and they kept blaming Nick for missing the quarter. Who was Nick? Nick had been there for four weeks or four months or something, who knows. Or blame or blaming your marketer for not getting any leads. Or blaming the new sales leader you hired for not closing anything. No, like a root cause analysis is one thing. Everyone, everyone is inspired and gains confidence from a CEO. And founders that can do a root cause analysis. Here are the five things that we're not doing well enough and here are the four things we're going to do about it. But blaming someone else, man, even if it's true, especially if it's true, you hired them. You hired that VP of Engine or VP of Product or VP of cs. Don't blame them. Address it. Backfill them. Make them better or replace them. But do not blame them. At least not much more than a tiny smidge. Identify the issue. You can say that Jason or Bill or Lorraine is weak. She or he is the weak person on my team, so be it. But that's very, very different than blaming them. Nothing is a sign of a weaker leader than blaming their team for underperforming. Okay, Number eight of the type of CEO that just undermines confidence in venture is the never hear from anyone elser. And a lot of first time CEOs make this mistake inadvertently in the early days and it's okay, like it's not the end of the world, just course correct. But the job of a CO is not to talk 100% of the time to board members, to investors. It's to set the stage. It's to set the stage so that you can hear from your VP of Sales and your VP of Marketing and your VP of Product and your VP of Engineering and your VP of Finance on what's working, what isn't. So that they each have their own goals. That sales has its own goals, marketing has its own goals, product has its own goals. And here why they made them and why they miss them. And if nothing else, if you have board meetings or investor meetings and you as a CEO are talking more than 50% of the time, you're doing it wrong. They should be talking more. Let them talk, hold your tongue. Let them make mistakes, even let. Don't let them say something that's just completely wrong. That will happen. Then kindly say, hey, Jason, good point, but actually we didn't actually close that much revenue last month. It's okay, like if they say something truly wrong, gently correct them, but otherwise let them go. Even give them rope. Let them happen. Everyone's trying to learn from your team what's going on at the company. It's true at company meetings, it's true at board meetings. So at least try to talk less than half the time at board and company meetings and last 1.9. But boy, this one really undermines confidence. These days it's when the board meetings are always late, incomplete, or the board meetings are just never scheduled. Scheduled, there's never a date. Look, sometimes this isn't the end of the world. Sometimes startups are so tiny in the early days and raw and growing so quickly they don't have the discipline to have organized materials and board meetings, sometimes that's okay, but certainly as you scale, it's not okay. And when the board materials never come before the board meeting, when they come an hour before, when they're missing lots of slides, when they're incomplete, when you never actually know when the next board meeting is, it just undermines confidence and, and gets stressed. So these are sort of nine co Personas out there that boy VCs and investors just get uncomfortable and there's hints of truth in all of this. Surprise Springer no excuse. The third checker don't let that be you. Make it up the last couple weeks of the quarter the miss every single planner. These are just tough ones. Don't let any of these be you. And if you hear it just make two or three changes from this. Make two or three changes in how you deal with your investors and board. You will get along better with them. And yes, VCs are not everything. VCs are an important part of your cap table, a large part of how you raise funding. But they're not that important operationally day to day. But make it easier. Don't make them enemies or don't make them. At least make sure that they are allies, that they are helping you in every way possible. You might as well because you're probably stuck with them for the next ten years or so.