Recently, someone asked me about my principles for engaging with my portfolio entrepreneurs. The question was a good trigger to think about what drives my interactions with entrepreneurs and how my relationships have evolved over time.
Three guiding principles provide the foundation for all my communications and engagement with entrepreneurs:
1. Listen and ask questions (because I don’t have all of the answers)
Like many investors, I came to VC after being an entrepreneur. Having the operational experience of launching and running a business is often very helpful as I can share my own experiences and help entrepreneurs avoid some common pitfalls.
But, at the same time, experience can lead one to think that he or she has all the answers. The truth is that every situation is unique – and the experiences and lessons from my former company won’t necessarily apply to every start-up and entrepreneur. And sometimes, the journey is just as important: people need to reach their own answers instead of being fed the outcome from the start. This is something I had to learn over the years as an investor.
2. Give honest and direct feedback
I’ve seen some investors say the most positive things to their entrepreneurs, only to complain about them and the company in private to their partners or fellow board members and investors.
As investors, we need to be both cheerleader and critic. It’s easy to say the good things, but we can’t hold back on the tough feedback when it’s necessary. I often decide on the best way to deliver the feedback (1:1 versus board meetings), but I try to never withhold that feedback. Investors need to be honest and empathetic!
3. Remember who is running the company
Last but not least, I must remember who runs the company. The ultimate decision always needs to be with the entrepreneur. As investors, we can help him or her reach that decision…but we should never be the one making it.
I’ll be the first to admit that it’s easier to give advice than to live by these rules on a day to day basis. There are times when I should have asked more questions or been more direct. However, I do keep these three rules in mind each day and am continually measuring myself against them as I grow.