Silence Isn’t Always Golden

When my kids never told me about school, I knew something was up.  If they were at college and I didn’t hear from them, I knew something was up.  That translates to other things.  If you are a boss, and you don’t hear from the people that report to you, something is probably up.  If you are a major investor in a company and you don’t get reports on progress something is probably up.

Notice I said “major”.  Minor investors deserve a quarterly written blurb that is one paragraph long on how the company is doing and how they can help.  Of course, most startup CEOs don’t take the time to do that, unfortunately.

Even when startups have moved past me, I like to keep lines of communication open.  It is not a discipline thing.  If I have done a good job before our initial investment establishing a relationship with the founders, and done a good job growing that relationship while we were on the board, why wouldn’t I keep that relationship going?

When founders go dark, usually you can expect that things aren’t going well.  I was on a Clubhouse the other day and Ben Horowitz was talking about this sort of thing.  He said, venture investors often know well before founders that things aren’t going well.  It’s due to experience and seeing lots of data points, but it is also due to the dispassionate part of investing.

Ben said it is time to roll up the company as soon as the founder is unwilling to eat glass to save it.  Sometimes you have to show them the way.

I have been involved in companies where it wasn’t working out and the founder was willing to eat too much glass.  It’s not good for them, their psyche, or their physical well-being.

Startup investors are not always right.  It may well be the right thing to put your head down, continue suffering, and try to figure it out.  I have seen businesses that I have totally written off blossom unpredictably in unpredictable ways.

I can only think of three businesses I have ever invested in that seemingly had smooth sailing.  Of course, I was a minor investor in those so I wasn’t privy to all the bumps and bruises they endured.  They surely happened.  But, the CEO made it seem like they weren’t happening.   They did it through steady, honest, and open communication.

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