Knee-jerk Reactions Make for Terrible Decisions

I joined my first startup at 21.  I worked hard writing lots of code, but never passed up the opportunity to talk to folks who were on the front lines raising capital for the company.  I definitely took the ears open approach, which included keeping my mouth shut.  I learned a lot, at that startup and more at follow on startups.  One of the most important lessons I learned was, despite their sophistication, investors get spooked.  Getting $10 a share when others in our market were soaring to IPOs over $200 a share solidifies these lessons in your mind.  Even at the tender age of 23.

14 years and half a dozen startups later I’ve seen several repeats of this behavior resulting in everything from massive layoffs, upheaval of executive teams, to complete shuttering.  It’s seldom pretty when things reach that boiling point.

Now far be it from me to judge each circumstance as though I had all the information.  Frankly, I never had much information beyond what I could gather in hallway conversations and lunch time chats with trusted friends who would share insights and perspectives about the inner on-goings.  It was always tempting to side with those folks seemingly in conflict with the investors.  I never knew the other side.  That is until now.

While Protoven’s investments aren’t considered an “Angel” round, or a “Series X” round, they do include hard money, and plenty of internally funded sweat equity.  Dave and I, as the partners, hear pitches, scrutinize deals, and occasionally  accept terms and get to work as technology founding partners in some exciting projects.

With dreams of fame and fortune we’ve pooled our resources and created some great technology.  But not everything happens in timeframes that we’d like.  There is a plan, but it takes time to execute on this plan.  Both Dave and I have felt those pangs of knee-jerkiness.  The want to control the direction a bit more.  I called a meeting with the executive team of one of our projects with the intention of voicing concerns and laying down the law.  They said they had some ideas they wanted to run past me as well.  We found a conference room and sat down.  I looked around, and then began to listen.

Within seconds of hearing out the team, I realized we were on the same page.  They had their own concerns about deliverables, roadmap, paths to profitability.  They were asking themselves the hard questions I was looking for answers to.  We had a constructive meeting, planning and strategizing our next moves.  I realized that my fears and concerns were self-inflicted.  I had not taken the proper steps to communicate with the team.  Had I run off at the mouth at the beginning, it would have been destructive, putting all of us on the defensive.  Instead we were able to freely share ideas, which turned into also sharing concerns, all of which contributed to decisions, solutions and renewed efforts.  It also created some additional accountability, which put the investor in me at ease.

I actually apologized to the team afterward.  I let them know that I’d planned on voicing concerns.  I also let them know that we, Protoven, would communicate better as well.  That was what I needed as an investor to renew my belief in this idea… in this team.

Transparency is key to communication.  I run all the systems for this project so “the books” are wide open to me.  They’re going to work harder at sharing the marketing and biz dev efforts as well to increase that transparency and foster even more communication.  I’ll still have to remind myself that there’s a roadmap and we all need time to execute, but I owe it to all of us to rise to the next level of investor maturity and communicate concerns first.