Jason Calcanis is one of the shrewdest tech investors around. He’s just published an insightful essay on why founders of start-ups need to keep their investors informed — really informed — about what’s going on. “Jason’s Rule of Startups” goes like this:
“If your startup isn’t sending you monthly updates it’s going out of business.”
How does he know this? Answer: Bitter experience
I know this because with two of my investments I found out that they were out of business because I emailed them over and over asking for an update. When the update finally came it was, “can we talk?”
When someone says “can we talk?” it’s over.
Today I keep a spreadsheet. The columns are the months of the year and the rows are the startups I’ve invested in. We check off the date in the month that we got the last update.
When we look at this spreadsheet — and we look weekly — we know instantly who is in trouble and who is rocking. If someone misses their second month I instantly call them on the phone — so I can help!
And that’s the big lesson for founders: if you’re not sending the report because you’re ashamed of how bad your startup is doing, you’re making a big mistake. I know, you want to clean things up a bit before sending your update — that’s reasonable.
I get it. I’ve done it. Don’t do it.
When you have problems, that’s when you should lean on your investors most. Nothing is more refreshing than getting an update from a founder that says:
- We lost our CTO to Google.
- The product is four weeks behind schedule.
- We have only nine months of runway left.
- I’m really frustrated at how slow this is going.
Awesome! Welcome to entrepreneurship … it’s really fucking hard! We know, we’ve been there and we know how to solve these problems. Let’s roll up our sleeves and get to work!
Great stuff. He’s right: I’ve been there, done that, got the tee-shirt.