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"Daria Shualy is Don Draper/product marketer at daPulse.\r\n\r\n\r\n\r\n\u201CAre you f***ing kidding me?\u201D I shouted\u00A0into my phone in the backyard of my favorite bistro. I was outraged, and screaming at my investor.\r\n\r\nYou should never shout at your investor (or anyone, for that matter). But at this point, it really didn't matter anymore. I had already lost my own startup and now we were just dotting the i\u2019s and crossing the t\u2019s on our ugly divorce papers. The love was gone.\r\n\r\nFrom the many mistakes I made as a first-time founder and CEO, the worst was how I ill-managed my relationship with my investors. On the entrepreneurs\u2019 side, there are endless advice about how to raise funds; on the investors\u2019 side, there are countless posts about how to invest. But both parties seldom talk about how to\u00A0manage this precious, delicate relationship.\r\n\r\nI had two wonderful, helpful investors on my side at the now-defunct\u00A0Sense of Fashion (background: we raised $3.5M, had 20 employees and 200K uniques a month)\u00A0Yaniv Golan and\u00A0Jeff Pulver. I had also investors that simply weren't the right fit\u200A\u2014\u200Afor me as first time entrepreneur, or for the business as a social e-commerce platform for fashion.\r\n\r\nIn both cases, the flawed way in which I handled matters, made things bad for both the company and myself.\r\nThe Don\u2019ts of your investors\u2019 relationship (a.k.a What I learned the hard way)\r\n\r\n\r\n1. Don\u2019t let anything but you be the reason for an investment\r\n\r\nThe reason for this is that you and your investors must be united. So many things need to happen for a startup to succeed, it\u2019s almost a miracle some actually do.\r\n\r\nAt Sense of Fashion, my first three investors came because of me: my energy, ability to get others to follow and vision. But my fourth investor, the VC, didn't come because of me.\u00A0He came mostly because of one of my investors.\r\n\r\nHe'd wanted to be in business with him before, but it didn't work out. Now he had a chance, and our impressive team made his decision easier. This made him push for my investor to become the CEO, to which I agreed thinking I should put my ego aside and do what\u2019s best for my company.\r\n\r\nI did this\u00A0despite my co-founders telling me they thought this was a poor choice\u00A0for the company. Not only was this\u00A0the beginning of my long and painful way out of my own company, it was also the very moment the company started its decline. Not because my investor-turned-CEO was incompetent, but because I was the only person with the full complete vision of the company in her head.\r\n\r\nThe minute I stepped down from being CEO the company started zigzagging like a drunk in a darkened parking lot. SoF completely lost focus, execution ability and its unique value proposition, and began bleeding money and users to the grave (and on the way, had lost my two co-founders too).\r\n\r\n2. Don\u2019t let anyone else be the CEO\u200A\r\n\r\n... \u200Aat least not in the first three\u00A0years of the company\u2019s life. So many investors will ask if you'd\u00A0be willing to step down from the role of CEO \u201Cif it\u2019s in the company\u2019s best interest.\u201D Your answer should be a definite, non-negotiable NO.\r\n\r\nThere are two very good reasons for this. The first and most important is that for the beginning of its life, the company really only exists in your head, in your vision as a founder. That\u2019s the only place where there exists a comprehensive view of the company\u2019s potential.\r\n\r\nThe second reason is, as the owner of that vision, no matter how many people share it with you, you are the only one who will have the stamina to endure all the ups and downs.\u00A0You are the only one with enough fire in your eyes to recruit employees, users, investors and advocates even at the worst of times. Jason Goldberg of Fab is my favorite example of this.\r\n\r\nGet your company's focus aligned then think about letting someone else take over for the benefit of growth.\r\n\r\n3. Don\u2019t overshare\r\n\r\n\r\n\r\nThis does not mean hide things from your investors. It means you shouldn't bore them with every feature and thought that comes to mind, and certainly not with every concern - even if they are nice, friendly, patient and helpful.\r\n\r\nYou\u2019re the founder and CEO, it is YOUR job to lose sleep. Oversharing gets the investors too deep into your decision-making process and worse\u200A\u2014\u200Ait gets them concerned, worried even. You do not want worried investors.\r\n\r\n4. Don\u2019t keep them guessing\r\n\r\nThe flipside of not oversharing is not keeping your investors in the dark. When investors don\u2019t know what\u2019s going on (assuming they still believe in you and give a damn) they get nervous and start sharing their anxiety and doubts with each other. This can result in over involvement and loss of trust in your leadership.\r\n\r\n5. Don\u2019t make decisions at board meetings\r\n\r\nBoard meetings are not for big, crucial decisions. They\u2019re for updating. You have to manage board meetings in a way that will prevent them from spinning out of control.\r\n\r\nAt Sense of Fashion I had a very important matter suddenly come up at a board meeting and made a decision then and there. The outcome was disastrous. The fact that I wrote \u201Csuddenly\u201D is an indication of my poor management of this.\r\nThe Dos of your investors\u2019 relationship\u200A (a.k.a. What I learned the happy way)\r\n\r\n\r\n\r\nPeople say you can learn so much from failure. It is my experience that you learn even more from success.\r\n\r\nFailure can be attributed to so many things. When you do something right and see the results, it\u2019s easier to pinpoint what you did right and share it. Here\u2019s what I\u2019ve learned from a successful management of the relationship with our investors at daPulse.\r\n\r\n1. Remember that you know best\r\n\r\nNeil Patel once said \u201CSuccessful people don\u2019t always know what\u2019s best.\u201D The logic applies here, too.\r\n\r\nInvestors are successful people, with money and power that can be intimidating\u00A0especially when you\u2019re on the gratefully-receiving end. But you must remember that you know your company best. Not because you\u2019re smarter, but because you live it daily.\r\n\r\nYou know all aspects of your startup, from the bugs to the happy tweet by a user, to the coder who\u2019s getting married next week and is out of focus this week, to the vision mentioned before. The investors only know what you report.\r\n\r\nWhile you should listen to what they have to say and give it thought, the decision should always be yours. At daPulse, we have brilliant charismatic investors like Eden Shochat and CEO of Wix Avishai Abrahami. These two, for example, can be very persuasive. While we often take their advice, sometimes we don\u2019t. We stay focused on our roadmap the way we know it should be.\r\n\r\n2. Come through confident\r\n\r\nYour investors are here because of you.\u00A0Let them know they were right to put their hard-earned money on you.\r\n\r\nBack your confidence with real data and if needed with the opinions of experts. Know what you\u2019re talking about and make sure it comes through in a reassuring, not arrogant, way.\r\n\r\n3. Make someone else your confidant\r\n\r\n\r\n\r\nEvery founder and CEO has difficulties, thoughts and decisions to make. Don\u2019t make your investors your go-to people for these. That would be oversharing.\r\n\r\nFind someone you can trust who\u2019s both wise and discreet; someone who brings the best out of you\u200A. They don\u2019t need to tell you what to do, but to help you see clearly, think out loud and come to conclusions yourself. It\u2019s like having a go-to therapist.\r\n\r\n4. Communicate in push, not pull\r\n\r\nI got this great piece of advice from\u00A0Gil Hirsch. But what we do at daPulse is even better\u200A\u2014\u200Awe do both push and pull.\r\n\r\nHere's\u00A0how: We built a tool called an execution board with the goals we set and report it at the board meeting (for example, reach 250 paying customers in six months). We then give our investors full access to it.\r\n\r\nThis way, it\u2019s both push\u200A\u2014\u200Abecause we generate the data and put it live for them to see \u2014\u00A0and pull, because they can each check in at the frequency of their preference. It lets them stay completely updated about our progress, but we don\u2019t dive into every small detail with them.\r\n\r\nThis creates a very balanced involvement\u200A: investors receive\u00A0live numbers daily, and we\u00A0manage\u00A0data at\u00A0our preferred\u00A0level.\r\n\r\n5. Frame the conversation\r\n\r\nYou don\u2019t have to wait till you don\u2019t like what they\u2019re saying; frame the conversation from the get-go. This is especially relevant for board meetings.\r\n\r\nPrepare the deck with all relevant KPIs and data and send it along with the agenda for the meeting about a week ahead of time. This will leave time for questions and additions to the agenda, for which you can then prepare.\r\n\r\nDecks should be composed of two sections: One for reporting the same KPIs as the previous meetings, so progress can be tracked, and the other for focusing on what\u2019s most important at this moment in time.\r\n\r\nSo, for example, one board meeting can be about how you plan to acquire new customers. Three months later, if you've got this nailed, you can start focusing on improving conversion, or MRR, or TROI etc. Just make sure it\u2019s you calling the shots and that the discussion is framed and therefore productive.\r\n\r\nWhat other advice do you have for maintaining a successful relationship with your investors? I'd love to hear your thoughts."^^<http://www.w3.org/2001/XMLSchema#string>
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