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A founder ’s relationship with their investors should be about more than just financing . Investors bring expertness from their anterior careers as COOs , CFO , or other in operation roles . Also , multiple table rear give them insights into how well - of - strain companies scale . Tapping into this noesis lets one spot operational inefficiencies that might otherwise be missed , enabling profligate outgrowth for the company .
However , navigate conversations with investor in their areas of operational expertness is n’t always straight . It ’s not always clear where a board member ’s responsibilities should start and cease . Overlapping area of expertise can muddy up internal decision - making and confuse strategy . Egos also get in the fashion , keeping both slope from hear each other ’s honorable feedback . I keep the keep up rule in mind to avoid these booby trap and get the most out of investors ’ operational cognition and experience .
When it comes to tough feedback, put your ego aside
Too often , I ’ve seen founder countenance their egos prevent them from being able to obtain investors ’ critiques . Rather than thinking about how the feedback excogitate on you and your carrying out , focus on the unspecific goal of company success . You want your investor to poke hole in your Assumption of Mary because that ’s how you ’ll situate inefficiencies and proactively speech concern about scalability that will inevitably arise as your business matures .
For exercise , in the other day of Egnyte , my chief emergence officer and I were the de facto sales leaders , and we both thought we were fairly good at it . We judge sales success establish on quarterly revenue attainment and hit our goal one-fourth after quarter . Then , one of our investors asked us to dive profoundly . What would happen if we break down the percentage of our sales reps hit 50 % , 80 % , or even 100 % of their quota ?
While it ’s hard to find out someone pick apart the sale numbers I was so proud of , I knew he had help oneself dozens of SaaS startup musical scale . He knew the pitfalls to watch out for that we ’d never see come . So , I swallowed my pride and pulled out the data he request .
A handful of reps were bear the majority of the sales incumbrance for our squad , make 2x or even 3x their quota . Meanwhile , most of the other rep require their targets every tail . Our issue looked good on paper , but unless we could democratise sale success , our efforts would n’t descale . By changing the structure of the sale squad and civilise the underperformers on how to improve closemouthed rates , we were able to exit the opening . And now we include a slide with this rep - by - rep quota dislocation in every board presentation , named after the investor who asked about it .
Draw a clear line between advisers and operators
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Just like you should respect your investors ’ expertise , they should observe yours . They bring a blanket breadth of knowledge from serving on other startups ’ boards and might even have operational experience at other companies . But those skills are n’t necessarily negotiable . Only you know your peculiar niche and concenter full - time on your singular clientele . At the same time , you should always heed closely to your board ’s opinions on the operational decision you make the final call on .
That mean you must maintain a clear air division between consultant ( your control board ) and operators ( your squad ) . While your advisor can ( and should ) meet and interact with older member of your team , they are n’t your team ’s hirer . You are . The more founders and investors can clear limit their respective swim lane ( and stay in them ) , the more they ’ll keep a absolved perspective and keep a fruitful kinship .
In the former daytime of Egnyte , I was guilty of have this stock blur , especially in sales and marketing . That was until the daylight I take in a display panel penis brainstorming estimation directly with a marketing leader . I involve to set clear edge to clarify the chain of command and avoid confusion about who was lead the line . investor can advise and pass , but they should not be involved in day - to - day operations , no matter their expertness .
Make the final call, but share your rationale
When it come up to how your line operates , you have the net say — and that means you will sometimes go against your investor ’ advice . When you do , it ’s crucial to move forrader with full transparency so your board feels get word and is n’t left out of the loop on major decisions . common regard and open communication are key here .
For example , investors on the Egnyte board late made the pillowcase that we need to lease soon for a costly and specialised high - tier function . I see them out , listened seriously to their feedback , and made it clear that while I agreed with them in principle , the timing was n’t right-hand . Egnyte would look to rent for this purpose and or else pass the immediate payment on other , more pressing needs . My board may still disagree , but because I brought them into my decision - draw unconscious process , they ’ve abide by my call and have n’t brought the result up again .
Get the most out of your board
investor ’ operating expertise is an invaluable imagination , particularly in the early stages of your companionship . Effectively utilizing their help to spot inefficiencies in your business simulation early on prevents concern when you surmount later . However , you should never lose sight of the division of Labour Party between the board , the founder(s ) , and the leadership team . The more each of these grouping is clear on their role — and knows to stay within it — the more fruitful the relationship will be .
