The importance of engagement
People love sharing good news but not surprising that they don’t love sharing the bad news. As a founder, you have to be able to share it all. You also have to learn how to be transparent and engaging with the investors around you that want to help.
When I make a commitment to a company as an investor, I am also giving my time. Each investment is different based on who else is involved in the company and the changes as the company grows. There are times when I get frustrated with founders who I feel as though I need to hunt and peck to get any information from them.
I have also seen when everything is “great”. There is no way that everything is “great”. Then you find out things are “bad” with little time to spare. It is frustrating for everyone on both sides of the fence.
I love the emails I get when a founder says “here is the good and here is the bad and here are the asks”. To start your company off that way creates transparency for everyone from the very onset. You end up hearing from the investors who want to be of help because those are the ones that response to those emails. You can then figure out who to engage.
Once you take capital there becomes other players in the mix. Opening up to the capital about what’s really going on is much better than holding those cards too tight. You would be surprised how many potholes you can avoid with some early stage investors.
Comments (Archived):
.In dealing with any oversight situation, one of the best things the overseer (venture capitalist) can do is to set out a schedule for regular communication. When I was a CEO of public and private companies (always with multi-state, multi-unit operations), I required a weekly report on Fridays at 2:00 PM.The report was in a specific configuration and was then consolidated at the HQ. By 3:00 PM, I knew enough to sleep well over the weekend. Even better, as the report became part of the companies’ culture, people would anticipate the questions I would ask and they would answer them BEFORE I asked them.By some point in time, that report almost ran the company. I had a weekly 7:00 AM GoRoundCheckIn meeting in which each operating unit got to talk for 3 minutes — three most important accomplishments, three most important challenges, what assistance do they need?The timing was brutal and that made people speak fast and stay focused. It worked like a charm and with the CFO and other HQ staff on the video call, I could make instant decisions.Any company should be able to make such a report — weekly frequency is likely overkill for the highest level stuff — and DropBox it regularly. Keep the old copies to measure progress.There are about 5 KPIs for any business organism which can give you a quick view of things which tell you whether you need to delve deeper. The company should spit these out — preferably graphically if they are graphable.These type of simplistic management and communication processes have only one big advantage — they work.JLMwww.themusingsofthebigredca…
These are both very useful posts. Excellent communication between CEOs and investors where, as they say in the military, “confidence is high” about the reliability of information- are the lifeblood of an organization. Executive Team meetings which involve the kind of GoRoundCheckIns that you describe JLM create the expectation of ongoing information flow which is key to organization life. We are imperfect humans. Things will always go wrong in the best of organizations. In my role as coach and trusted advisor to CEOs and others in organizations, I get to be fly on the wall and sometime participant with folks who are both high, medium and low in transparency with their Boards and Executive Teams. Unfortunately the CEOs who are less effective at being transparent create silos and cultures of rumor and innuendo, at best. Drama, both high and low is the result of the low feedback organization. Boards and Investors can also be incredibly useful, generous and generative or controlling and drama-inducing. I remember a Board Lead Investor who kept playing out the same family drama of his early life by firing CEO after CEO of the companies his firm invested in. And this was an Investor from a so-called Social Impact Investment Fund. In their book “Execution”, Bossity and Charan go into great detail to describe the need for folks in organizations to have “conversations of intense candor” to drive execution forward. Regular communication, clear expectations before hand about what should best be communicated about and a regular communication cadence even bordering on ritual, are good systems to put in place early on in all kinds of organizations. Even with these best of communication scenarios, there is no guarantee of success. The good news here, I would submit, is there is at least a fighting chance. Low communication and transparency organizations who succeed mostly do so because of luck or an incredible product or service. In many of these cases, that success does not prove to be sustainable. As Casey Stengel used to say, “You could go look it up.”
.You make an excellent point — much of “best practices” is the creation of ritual which supports the flow of information. Information is the fuel which drives commonality of purpose. If everyone has the same information, there is a dramatically higher probability people will all arrive at similar conclusions.If they don’t, the deviation is tighter and it is easier to adjust the differences. Big differences are always found when there is a constrained flow of info.A good CEO realizes you can’t remember everything and, thus, the power of ritual is to revisit the same data points regularly. As a CEO, I was often disciplining myself to ensure I went around the horn to know what I needed to know and to get a whiff of what I didn’t know.The things that kill you are the things you don’t know you don’t know. Ritual reduces this slushpile.As to the military, their reliance on SOPs — ritual — is the essence by which similar execution should arrive at better decisionmaking.I recall being at a Division HQ during several exercises on three different continents in which the Division C o S conducted meetings in an identical manner. [As a combat engineer company commander, I was there in support of the Brigade I was attached to. The Brigade Commander lost my DS (direct support) when the division engineers were consolidated to bridge rivers. I bridged both the Rhein and the Imjin in my day. For a Captain, this was a real eye opener.]In essence, the C & GS and the War College teach this kind of thinking — the reliance on ritual and SOPs to deliver the best practices. This is one reason veterans are a good add to a team.JLMwww.themusingsofthebigredca…
Totally agree, Joanne. Two things come to mind when reading this. 1) Openness is king. Making the ask in very clear terms of how investors can help is key–we aren’t mind readers. 2) I find that within my portfolio, of angel investments, my female founders are more likely to share the bad than the male founders. It’s a small sample, but material nonetheless. Do you see the same?
In general women tend to be more open about the good and the bad. Most of the men I have invested in are very similar to the women I have invested in. That’s probably why I liked them. ?