The Worst Part of Investing

So we’re at the time of the year where I experience the Worst Part of Investing, multiple times.

What’s that, you might ask?

  • Losing money?  No.  While not fun, it’s embedded into the business model of investing.  It happens.
  • A rough quarter or two at a key investment?  No.  While some never have a rough quarter, most do.  You expect a few.
  • Not being needed anymore?  No.  Some investments just outgrow you.  I can help a lot from $0.1m-$20m ARR.  Some founders still want help after that.  Others don’t.  Sometimes it hurts my feeling a tiny bit, but no big deal.  They grow up.

No, losing money, rough performance, and even leaving a board aren’t the worst part of investing.  They are just part of it.

No, the worst part is being the only person that will be honest about tougher times.  That the money may not last.  That a key hire was … a mishire.  That the plan is just too optimistic.  That something just isn’t working.

And most importantly — the worst part is being the only one that will tell founders they are going to run out of money.

Most VCs and board members Don’t Want to Be That Guy (no gender association intended).  They don’t want to deliver bad news, to create issues.  In the old days, VCs were constant critics.  Today, in the age of being “founder friendly” and on too many boards, VCs instead tend to say … nothing.  Even when they should.

And it’s the very last thing I want to do in life, to be the one that has to say, We Need to Fix This, And Soon.  I hate it.  I hate being the one to have to say, if you don’t make some changes, you just won’t get there.  But if you do, you just might.

But these days, it seems, everyone else would just rather quietly walk away.

Bad News — you gotta run to it, not from it.  That’s the only way to solve it, and address it, with the maximum amount of time and resources.

But as an investor, when you are the one that delivers it, many founders sort of don’t forgive you.

I hate that part. But in every case, the companies came out far, far stronger because of it.

This advice from Olivier Pommel, the CEO of Datadog, from SaaStr Europa I just love.  It’s about customers, but it applies to any bad or tough news.  Run toward it.  Run Toward the Bad News.

And embrace those that help you see it.  If they care, don’t let it bother you (too much), or get under your skin.  They may be the only ones that actually care, the ones that give you the hard news.  And importantly —  they may have some good ideas about what to do about it.  They often do, in fact, have some of the best ideas.

Published on November 6, 2022

Pin It on Pinterest

Share This