Communication

A lot of VCs and angels have written about communication.  I think it is a good idea for a CEO of a company to build in a nice cadence of communication with investors.  It doesn’t have to read like an annual report or a 10-K filing with the SEC.  It should talk in relative terms about sales, new hires, potential and at the end, I always like the CEO to have an ask for investors.

This helps when times are good, but it especially helps when times are bad.  Investors are more likely to be helpful when times are bad if they have a stream of historical communication that keeps their relationship with the firm current.  Bad times won’t be as shocking or surprising.

If you are a seasoned investor, you know not everything is seashells and balloons all the time.  You expect bad news.  However, I see a lot of CEO’s that are happy talk all the time.  After a while when things don’t happen, it torpedoes the CEO’s credibility.

Once a quarter is a good cadence in my opinion.  A one-pager.  This is especially important at seed when you have a syndicate of micro funds and angels on your cap table.  In later stages, those investors should be kept in the loop, but it is the larger institutional funds that are driving the bus.  The larger institutions should be meeting weekly on your company and will know what they need to know.  They will talk to their LPs.  It’s the initial investors that got you going that are owed a touch.

I caution CEO’s that they should assume all information in the email becomes public knowledge.  Instead of saying, “We hit our sales target of $500.000 last quarter”, you might say, “Sales were up 40% last quarter.”  Or, “We increased year over year sales by 50%”.  Or, “Sales were flat year over year.”

A bit of explanation helps.  “We signed a big new customer.”  Or, “We saw a change in the market that impacted the way we go to market which caused us to lose customers.  We are recalibrating our sales process to better fit with new market conditions.”  Or, “We had a bug in our UX and didn’t fix it in time which impacted sales.”

I also think that it’s great to call out individual employees in the company by name when they have done a good job.  Recognition for a job well done never hurts, is good for the team, and can help build culture and loyalty.  Good employees are hard to find and it’s important to hang onto them.

If the company does something new, rolls out new features, learns something it didn’t know about the market, share it with your investors.  They might be able to help you take advantage of it.

At the end, have an ask.  It might be as simple as what’s a good restaurant in a certain town you are traveling to.  Or, it might be, “I’d really like to be introduced to …..a future funder, a customer of a certain type, a potential employee of a certain type.”  Use your network of investors to work for you.