You Can't Fire a VC From Your Board: Common Stock Never Gets the Vote
An investor's board seat is elected only by its own class of stock, and the common shares founders hold carry no vote to replace it; the only realistic paths are talking them into stepping aside privately, or waiting for them to volunteer to drop down to board observer.
The video won't play here. Listen to the audio instead:
The argument · tap a timestamp to hear it
Picking a director is picking who co-signs every future big decision
Becky starts by pinning down what a board is actually for: it sets the company's strategic vision and delegates day-to-day operations to management. But every significant act has to go through the board — issuing securities (even a single share), options, any financing at all (SAFE, convertible note, preferred round, bank debt), M&A, major contracts, and hiring or firing the CEO. So choosing who joins the board is really choosing the co-signers on every major decision still to come.
— BeckyYour first board should hold only the founders and the lawyer
Jason's rule: before product-market fit you probably don't need a board; by Series A you must have one; for the window in between, judge by the numbers — once money raised plus revenue passes two or three million dollars, you can stand up a small board consisting of just the founders and the lawyer. It doesn't have to meet; resolutions can be passed by written consent, but every director has to sign. Becky adds one crucial warning: don't stuff five directors in on day one to make the company look impressive, because you will lose control of your company immediately.
— Jason、BeckyOn a balanced board, the independent director casts the deciding vote
Investors typically ask for a board seat when they come in on a preferred round, not at the SAFE stage; Jason's observation is that they only speak up once they hold 10%–20%. Becky lays out how the structure evolves: at Series A the founders usually still hold the majority; at Series B it becomes the balanced board of 2 common directors + 2 preferred directors + 1 independent director, and when the vote ties, the independent is often the one who breaks it.
— BeckyThe director an investor calls most independent is often the least
The independent seat is usually filled by one side nominating and the other holding a veto: founders can propose and investors can veto, and the same in reverse. Jason names the catch in that seat — the director an investor calls "the most independent" may be from the same fraternity, out of the same Bain, and have vacationed with them seven years running. Becky's advice is to pick for the gap in the business: Airbnb needed a hotel-industry expert, and Paris Hilton is the candidate no board member could say no to. Compensation at an early-stage company is almost entirely equity, roughly "a little more than you'd give an advisor," vesting monthly over two to four years; at Apple's level, cash plus stock plus audit-committee pay comes to about $400,000.
— Jason、BeckyObservers owe no duty of confidentiality but hear the same secrets
Directors have a vote and a fiduciary duty; observers have neither — an observer is a guest invited to the board meeting. Becky stresses that although observers can't vote, they receive the full board package and can speak up and shape how the real directors lean, which is why they have to sign a separate confidentiality provision. Being a director carries a duty of confidentiality automatically; an observer carries none while hearing equally sensitive information, and that gap is a hole many early-stage companies overlook.
— BeckyA small fund gets more out of observer rights than a board seat
Jason's current preference is for small funds to skip the directorship, step down to observer, and send an analyst to record two things: how the business is doing, and when the next financing or major corporate action is coming. The reason is that Jason has seen too many "you have 24 hours to sign" squeezes — the company sends over Series A documents overnight that issue 50% more shares, casting you as the last person standing in the way of the company's success. Rather than be held hostage by that game, keep the information rights as an observer; you still learn on Slack the moment the company is short of cash or making money.
— JasonEven 100 votes per common share cannot unseat the investor's director
Becky takes the legal structure all the way down: at a VC-backed company, different seats are elected separately by different classes of stock, and common and the appointed preferred seat are two separate voting pools — even if your common stock carries 100 votes per share, those votes cannot reach the investor's seat. The lead investor usually also takes designation rights in the investment documents: as long as they still hold 25%–50% of the round, the voting agreement obliges everyone to vote for whoever they designate. Which is where the marriage analogy for board members breaks down: in a marriage you can file for divorce unilaterally, but a preferred director leaves only when they are willing to.
— BeckyWalks and lunches are the only way to ease a director out
There is no legal answer here, only a relationship one. Becky's advice is concrete: walk the Embarcadero with your director, have them fly in a day early for lunch, take the extra twenty minutes on the drive to the airport — weave the relationship well, so that when you need them to step off, a little sugar helps the medicine go down. Jason takes the mirror-image stance: an investor who is no longer the person that seat needs should step down to observer voluntarily — "if people don't want me at the party, I don't go to the party." Founders toward investors and investors toward founders can both run on this logic.
— Becky、JasonIn their own words · checked verbatim
So the board sets the strategic vision for the company. So think at the highest level. It manages the affairs of the company.
Becky2:23
if that number is greater than two or three million, maybe a board
Jason3:35
In fact, if you do that, you've just lost control of your own company
Becky4:47
A director also has fiduciary duties that it owes to the company.
Becky13:29
In a marriage you can say man, this is not working out. I'm out. I unilaterally can can can remove myself from the situation.
Becky20:00
That's not the case for preferred directors unless they are willing to go and they agree to go.
Becky20:00
Figures
| Typical Series B board structure | 2 common directors + 2 preferred directors + 1 independent director | 7:47 |
| Apple director annual stock award | $250,000 | 11:09 |
| Apple audit committee additional pay | about $50,000 | 11:09 |
| Apple director total compensation | about $400,000 | 11:09 |
| Minimum ownership for an investor to keep board designation rights (common negotiating range) | 25%–50% of the shares purchased in that round | 20:00 |
Glossary
- Board observer
- Someone who sits in on board meetings and receives the full board package, but has no vote and no fiduciary duty, and must sign a separate confidentiality agreement.
- Designation rights
- The lead investor's contractual right to name the preferred board seat for as long as their ownership stays above the agreed threshold.
- Voting agreement
- A contract requiring common and preferred holders to vote a specified way when electing directors, which is what makes designation rights enforceable.
- Written consent
- A board resolution passed without holding a meeting, valid only when every director signs it.
- Fiduciary duty
- A director's obligation to put the company and all its shareholders first, ahead of the interests of their own fund.
How to listen
Founders about to raise anywhere from seed to Series B, operators who have already taken money and now want to change their board structure, and angels who want to be clear on the difference between a director and an observer.
The first 3 minutes of basics and the last 1 minute on Pled/Pleaded are both skippable; the substance runs 7:47–23:00.