Reminds me of Paul Graham saying that it was the founders he stopped hearing from (when he was running YC) that he started to worry about. The ones that stopped sharing were usually in trouble -- which is the time that has the most potential to be gained so investors can help.
I quite like the inclusion of the help needed section. I work for a publicly traded company so I don't know if it has much application for our size, but for a pre-IPO company it seems like a great opportunity to leverage the skills of their smaller investor base.
I also like the transparency of sharing it with ALL investors, and would add that it needs to be shared with all employees as well. Our publicly traded company is in the midst of an acquisition and a lot of detail has been shared with our investors. The issue is that most employees are not signed up to our investor alerts or monitoring SEC filings. It has resulted in some employees remarking that they felt left in the dark by leadership because they hear about acquisition details from the press (who pay attention to IR and SEC docs) instead of their own company leaders.
Some founders do actually share these updates with the employees! With some redactions of course. Wouldn’t want the employees to know about impending layoffs or what inspired them.
The virtue-signaling in this article is pretty intense. It's like somebody tested all the burritos in Silicon Valley and wanted to remind founders to wrap their burritos in foil and serve them warm. I mean, I'm sure there are founders who absent-mindedly deliver burrito bowls or the occasional tacos two days late. But near the end:
> Never miss a date. (bold) The rigor of this commitment will have an outsized effect on your ability to manage the business and engage your investors to help you.
> in his experience, founders who cc their entire investor list have proven to be more successful than those who don’t.
Translation: Please be prompt in generating high-quality reports, no matter if the news is good or bad. As an investor, I need to know as soon as possible if I'm going to need to sell for a loss, or if it's time to flip for a gain. I know what is best for my capital.
Also, whenever I tell you a story that has clear survivorship bias, I am reminding you that my favorite founders are those who listen and tell me thanks for the very constructive feedback.
What is high quality in these few lines? I found it quite clear to follow, and it has value not just for investors but for founders, too.
They are learning to summarize their month in a few clear lines. Isn't that the basics of communication?
It’s about investors hiding the consequences that are not visible to founders and/or whoever does not have access to these reports. Should all founders be capable of these reports? Yeah! I bet most non-founder employees could even write them too (and in fact do in most cases).
I've been experimenting with a few different formats.
Think the best updates don't take longer than a few hours to write because they should have been in the making for the whole time. It's like "closing the books".
Need to wrap our next update. Think I'll start with this format.
I really like Notion and use it for many scenario. However, I'd be very careful of not having your own format and/of the content that you should be able to walk out without much pain.
I have heard of some people who have moved bag and baggage to Notion to even replace the likes of Dropbox and Google Drive. I'd be extra careful of being so tied to something you can't switch easily or walk out to another platform/tool.
Please do keep in mind how Evernote went from a plan of a 100-year note-taking to "what went wrong with that company".
The ease with which data can be extracted is subject to change. It changed negatively with Evernote when they limited at 50 the number of notes that could be exported at once. This made it very hard to do for any reasonably-sized database. Fortunately there was a workaround which involved editing a config file but this was likely not something an average non-technical user would discover or be comfortable doing.
It’s a nice mixture of text editor, wiki and low code app builder.
Plus, it communicates to investors, candidates and other outsiders that “we’re smart but too busy doing the important things to optimize our docs system.”
Five years ago Notion wouldn’t have communicated that, but it’s easier to reach for now so doesn’t signal too much thought about which tool. If that makes any sense.
Just a guess, but I assume it's because of attractive UI/UX.
Notion templates, and general interface, guides people into presenting information in a fashion that doesn't follow the utilitarian manner and standard practices of business centric software like Microsoft Office.
Also, there's been a trend to "back to the basics" in information dissemination lately. Newsletters and static site generators have been making a comeback. In design, boutique firm architects I've spoken to have told me they've been moving away from fancy auto CAD renditions of projects to hand made watercolors and sketches. This unique approach has allowed them to bag contracts from under larger firms. In a way it mirrors the Arts and Crafts movement of the late 19th century as a reaction to industrialization.
Pretty good overview from the investor side. I find it's a helpful forcing function to be disciplined about retrospecting regularly – it's as much for the benefit of the investors, as you the CEO.
As a former sole founder, and engineer at start ups, i find the candidness, communication, and seeking of advice the most useful ingredients for success. Sharing the highs boats morale, sharing the lows shows humility and an interest in searching for alternatives.
Those founders who are so comfortable sharing their ups and downs and who desire discourse and advice across the cap table are clearly the ones who are in it to win it.
So comfortable? Maybe. A start up is about leaving your comfort zone, whether you want to or not.
Practical and smart? Absolutely. Aside from adding (experienced) voices to your talent pool, such "marketing" helps with any future needs for more money. Being less transparent and asking for more simply isn't a reasonable expectation.
As a side note, this format reminds me of the comms framework in the book "Smart Brevity."
read early amazon shareholder reports. contain none of these. the leaders that matter talk about the product 5-8 years from the time of writing. what differentiates a CEO from a leader
Survivorship bias is taking positive outcomes from existing sources without considering all the failures that went through similar processes but have nothing to show for it. Survivorship bias underscores exactly why imitating successful people/companies may not be in the best interest of the imitator.
Many startups likely downplay financials and instead focus on future innovation in their statements...that makes sense...but from an investor perspective if you are years into development and still not seeing financials that are consistent, that is a huge red flag.
But this has no actual learning. How do you know that founders who share updates with everyone on the cap table are more successful from getting investment reports ?
I guess you have to keep it ultra brief in order to not contribute towards over bureaucratization of everything. If investors don’t ”help you” after half a year of sending these monthly, you might as well stop sending them? Perhaps a quarterly meeting face-to-face would be more productive then…
Here is another good template - https://docs.google.com/document/d/1v6o_1QjEacnniHhPWWIPGuVy...
A good article on why "regular updates" - https://www.fastcompany.com/90812499/how-to-turn-investor-up...
Also, I really need robots that plant trees.