your investors are in the boat. stop trying to impress them

A cofounder on a call kept telling me the growth plan was going to work. I said please don’t try to impress us. We already invested. So did your lead. Nobody’s going anywhere. Just tell us the real thing.

Imagine a boat. You’re captaining it. We’re in it. Your lead is in it. If something’s broken, tell the people in the boat. They can fix it or at least tell you where to steer. If they can’t see reality, their advice is worthless, and then you’re dead taking it.

I can convince anyone you’re the next Facebook. If your investor believes that and it isn’t true, you’ve just made your best advisor useless. Tell him the truth. Everything on your mind, not only the numbers. If you sprain your ankle before the match, you tell the coach first. He sends you to the doctor. You don’t hide it and play.

The stories you’ve read about founders fighting their investors are social media. Internally every one of those founders says “I fucked up today” to their board. That’s why the board believes them. If you’re never fucking up, I’d worry you’re not telling me the truth.

The inverse of this is also true. Once they’re in, use them. A founder who raised 3.5 million when his lead said take 3 was right to push. The founder pushes in all directions, and inside most of all. But after that, when the lead says hold more equity, hear why. He’s not giving you an out. A founder who’s raised 7 million with hype and 5 million users finds it very easy to leave when the legal case comes. A founder with 58 percent and a tight budget doesn’t. Your ass on fire is the point.

And give yourself hard constraints. If my dad hands me 10 dollars for ice cream I eat ice cream. If he hands me 10,000, I still eat the same ice cream, I just waste 9,990. Budgets expand to the money. Deadlines expand to the time. Ask for the number of darts you need, not the number of dollars.

the call where i said it best

Same team. I asked them to spend twelve hours and build one chart: money in and money out, by day, cumulative. They said it was complicated. I said it’s a few hours and it’s the only thing between you and knowing whether to raise 3 or 6. When a cofounder asked “will we be profitable in two months?” The honest answer was no, and the honest answer got them the right round.

do this this week

Write your lead investor one message that starts with “the thing I’ve been avoiding telling you is”. Send it.

the line to remember

imagine a sea and imagine a boat. you guys have a boat. we are in that boat. if something is broken, might as well tell him.