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Comment by jedberg | Hacker News Reader

In my own experience, it seems like the ones that provide frequent investor updates on a regular schedule are the ones that are most successful. There's almost a direct correlation between how often I hear from a company and how successful they are. It's probably related to the fact that providing monthly investor updates forces a regular cadence of accountability.

There is also a significant time factor involved. The longer a startup has been alive, the more likely it is to have a bigger exit. Startups that go to zero tend to do so fairly quickly. And startups that end up 10x take quite a while to get there (YouTube would be a major exception to this, reaching 1.6 billion in just 1.5 years).

The harder to predict ones are the ones in the middle. The less than 1x returns could happen quickly or take a decade.

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> Startups that go to zero tend to do so fairly quickly.

I wish this were true. Far too many founders are willing to stick it out in hopes that if they just keep building, sales will come. Of course, it doesn't, so they waste a decade on what could have been two years.

I've seen this a few times, also. There's hope that the big sale is only another month or two out. More often than not, it never happens. Meanwhile, small sales happen, they trickle in, but nothing that moves the needle. Pretty soon you waste 5 to 10 years.

Those are the ones that usually have a less-than-1x-but-not-zero exit though. They make enough to stay alive and eventually throw in the towel.

Doesn't always happen that way of course, but from what I've seen, the zero exits are the ones that burned hard quickly and then couldn't get more funding but never found any PMF.

You switch cause and effect, all of that is the other way around.

Startups give frequent investor updates if things go well.

Startups are alive longer if things go well.

Things going well is the cause, not the other way around.

I don't think I have switched them. I get plenty of negative investor updates. But those updates also include solutions and asks for help.

Especially when it is a company that regularly sends an update on the same day every month. Those aren't always rosy.

You get negative but fixable investor updates.

When you have unfixable business problems (which are usually along the lines of "Nobody wants our product", "Our founding team doesn't care anymore", "There is no reason for our company to exist", or "We can't possibly make the economics work"), then those are the startups that tend to go dark.

But those, can be fixed if addressed early enough by a pivot, a shakeup in leadership, business model change, etc.

I think the only truly unfixable problem here is "Our founding team doesn't care anymore".

Plenty of companies have made successful pivots, even later stage. It gets harder and harder the larger you grow of course, but it's always possible. Most startup deaths come from a lack of motivation. Everything else is a side effect of that.

Well yes, if they are sending me investor updates once a month and then stop, that's bad. But usually before they stop, the updates at least have a list of problems, and if there is a fix we can work on it together I can help them find someone who can.

The point is, if you hold yourself accountable to your investors for an update once a month, you're also holding yourself accountable to yourself and your team to track those things and adjust.

I sold a startup for $1B in a few years and never sent an investor update. YMMV.

Firstly, I never said it was always true, and secondly, I have a really hard time believing you, because at least every VC I've ever worked with asks their startups for an update every three months.

I find it really hard to believe you got to a $1B valuation without ever having anyone ask you for an update.

I have five institutional investors and none of them have ever asked for updates. There isn't much point before Series B, since good early-stage investors are actively involved with the company anyway.

Back in our Seed days we sent out monthly updates to everyone, angels included, but now we don't. That's what board meetings are for.

Exactly. You sent regular updates and then had board meetings with regular updates.

They probably never asked because you were already providing it.

Only two of those institutional investors have board seats. The other three don't get formal updates and don't have information rights.

My point was that they didn't ask because they were good investors and actively involved with the business, so they already knew what was going on.

Right, and my point was that you had someone to be accountable to on a regular basis, so it helped keep you motivated and on track to produce results to report.

No, it didn't. It was a waste of time for the handful of months we sent them.

I never said I didn’t update my investors. I talked to them, hung out with them, and had board meetings. But I never sent formulaic investor updates.

So you’re saying you … provided them with regular updates?

I never said anything about formulaic investor updates.

Aren't investor updates easier to send out when things are going well?

I think a lot of people are missing the point. When the company first gets funded, things are always going well. Companies that establish a cadence of monthly investor updates at that time tend to do better because they know that in one month they need to have something to put in the update, so they work towards that.

What is the best format for an investor update that you’ve seen?

Or: what are the main KPIs you’d like to see?

Most of the good ones start with their most current blurb "we make X for Y", which helps me remember who they are and also makes sure I'm on message when I talk to others about them.

Then it has runway and burn rate (how long will they still be alive if nothing changes).

Then it has KPIs that matter to their business, usually the ones they are tracking for themselves. Monthly active users, change in daily actives, number of widgets produced, etc.

Then sometimes a hiring plan. If they tell me who they are looking for I can sometimes help.

Then highlights, lowlights, and asks.

Those are usually the best ones because it means they are tracking these things and it also means if there is a place where I can help I can get it from the investor update.

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