#succesfactor

When you are young and bold, building a startup may seem like the dream of a lifetime. But, becoming the next Elon Musk just doesn’t come with a push of a button. There are a lot of factors that i’ve seen mentioned on blogs as ingredients for succes, but one that is not often among them is “optimal communication to users AND investors”. This piece will focus on investor communication.

Making sure you take all people involved along on your journey doesn’t always seem the obvious “tool” to make your fresh company successful (focus is almost always on product, product, ship, ship). But to me it can be one of THE means that determine a successful startup with longevity and maybe even a true corporation in the making. 

Inspiration for this came from two sides. On the one hand i am following the startup efforts of my good friend Steven van Wel ever since he got me my (the) first iPhone from the States (exhibit A). And the second part is a piece i read that was linked to by another successful Dutch entrepreneur  Vincent Hoogsteder (exhibit B). 

Exhibit A) What makes a difference in the communication that Steven orchestrates within Karma is the transparency and frequency in which the communication is done. Karma is a super startup that is doing wel in the US market. A hotspot wifi on the go that provides acces to you and your friends but also the crowd surrounding your presence can benefit (think dropbox exchange of return of favour). Since the beginning of Karma communicating with their investors is done by a weekly email. Just one. But it is ALWAYS there and always on the same time of the week. Non-intrusive, transparant and regular. It doesn’t only focus on what they want to tell you about the day to day business of the past week but also what is coming AND what you can do today to make them more successful. Yes, you as an investor feel you can contribute more than with money and so it should be with a good investor in my opinion. The difference is, how many times have you asked your investor to really help you becoming successful and thus increasing the potential return on their investment?  

Photo courtesy of FD

Part of the same communication tactics of Karma is their dashboarding. ALL data that can possibly be gathered and shared is done in a basic but great dashboard. ANYtime you want, you see the metrics of the company and this makes you part of the performance. You can see trends and changes before the official communication is done in a formal communication. 

Exhibit B) 

Financial dashboarding is very important in a startup. The way you report on your economic status tells your stakeholders how you are doing, where you are investing their money in and how much TTL (nerdy abbreviation for “time to live”) there is left. You can do this in various ways but this piece on mattermark gives a good idea and pointers.

“So Mattermark gets to spend $400K a month, right? WRONG.

If we collect $1M in cash this month, we can spend $1.4M this month and we’ll have a net burn rate of $400K. If we collect $200K in cash this month, we can spend $600K and have a net burn rate of $400K. While spending $1.4M a month might sound irresponsible if you’ve been reading the news about startup burn rates, in the $1.4M scenario the company is covering 71% of expenses with cash from operations. In the $600K expense scenario, the company is covering only 33%.

As long as revenues are growing, burning $400K a month becomes less and less risky over time.”

The message here is that you could report the burnrate differently but that would not give the right message to investors and would not optimise your spending towards a successful enterprise. Knowing how to combine (big) data with the right communication skills increases transparency and (once again) makes sure your investors (and other parties involved) are on the same page as your mission is. 

Ingredients for success overview: Timing, continuity, transparency, pro-active engagement requests, big data dash-boarding.

It sounds so simple but if you ask yourself this question: “Have you ticked all these boxes to their full function?” can you honestly say yes? 

Innovating the world with your startup starts with doing a lot of things in the right way. Communication should rank high on that agenda.