Reply to all
#CapitalAtRisk
Lead bullets
I aim to reply to every investor update1, and if the founder has cc’d all the investors then I love to ‘Reply all’2.
In each investor update there’ll likely be some challenges, ‘low lights’ or outright disasters. Let’s not skirt around the fact that starting, scaling and exiting a startup is brutally hard, so I reckon the more candid the problems are communicated the better — short, factual and clearly stating the implications of the problem and the decision the founder has taken.
So if you’re an investor in a startup, what should you say in reply to those problems? How can you be supportive and helpful without coming across critical or flippant?
There’s no magic wand — as Ben Horowitz says, founders look for silver bullets when actually what works are lead bullets. It’s remarkable what the question, “Can you find a way that works?” will do.
To try and help you be a helpful startup investor, it might be worth me sharing how I categorised founders’ problems.
Behind each challenge is the real (often unsaid) reason why something hasn’t worked. After hosting hundreds of meals with 9others since 2011 I’ve noticed that problems fall into three ‘buckets’. Founders will share what’s keeping them up at night and on the surface that’s a fine challenge, but dig a little deeper and it gets more interesting and one of the three below is usually what’s really causing sleepless nights.
And it turns out if founders focus on the third then that will help solve the problems in the first two…
Money In / Money Out
Challenges around money — investment, debt, revenue, unpaid invoices as well as cost control and capital allocation. This is the most common ‘bucket’ of challenge tabled at 9others.
For investment, is the founder hanging onto to a ‘long maybe’ rather than counting an investor out and moving on? If there’s an unpaid invoice, what’s stopping the founder picking up the phone and calling?
People In / People Out
Challenges around talent. Once they have money then the founder can hire people, but who? How can they find, attract and retain the right people and what’s the best way to get rid of the people who aren’t working out.
Why isn’t someone accepting the job offer? If the money is right then is it down to trust? Why might they not put their trust in the company? If someone’s not working out, are they in the right role? Perhaps the founder is expecting too much or is that colleague really not up to scratch?
How to communicate
The psychotherapist, and founder of the school of ‘individual psychology’, Alfred Adler said that, “All problems are interpersonal relationship problems”3. This is as true for investment, sales and chasing invoices as it is for hiring and firing.
Improving how to communicate with whom in the right way at the right time is the best way to solve those interpersonal relationship problems. Here are a few things that can help:
Subtract and simplify. Cut out words and sentences that the other person doesn’t need to know or that confuse the core message.
Write like you speak. New terms, technical words or acronyms are fine, just define them well and in normal language.
Who, what, when?! What do you actually want? Be clear about who is doing, or not doing, what4.
End with a question. Not, “Any problems let me know” but “Is that clear?”. Not, “I hope you can make it” but “Can you make it?”. Compel a response so you know that the message is received and understood.
If founders get this last one right then I think they have a better chance at solving the problems about getting the right money in and out, and the right people in and out.
What do you reckon?
In other news
Fresh from their recent fundraise, Black Bullion is hiring a Growth Marketing Manager, here, and a Senior Product Designer, here.
If you know someone good please hit reply, tell me more and/or cc them.
Thanks.
Important: None of these posts are investment advice. If you are thinking about investing you should seek the advice of a suitably qualified independent advisor.
#CapitalAtRisk
Often that’s just “Great work!” in order to be an Encourager.
Hardly any founders cc all their investors though — I think it’s a good idea, especially at the early stages — this and some investor events/dinners can foster and strengthen relationships and the founder can do their bit for the general startup investing ecosystem.