
Daria Shualy is Don Draper/product marketer at daPulse.
āAre you f***ing kidding me?ā I shouted into my phone in the backyard of my favorite bistro. I was outraged, and screaming at my investor.
You should never shout at your investor (or anyone, for that matter). But at this point, it really didnāt matter anymore. I had already lost my own startup and now we were just dotting the iās and crossing the tās on our ugly divorce papers. The love was gone.
From the many mistakes I made as a first-time founder and CEO, the worst was how I ill-managed my relationship with my investors. On the entrepreneursā side, there are endless advice about how to raise funds; on the investorsā side, there are countless posts about how to invest. But both parties seldom talk about how to manage this precious, delicate relationship.
I had two wonderful, helpful investors on my side at the now-defunct Sense of Fashion (background: we raised $3.5M, had 20 employees and 200K uniques a month) Yaniv Golan and Jeff Pulver. I had also investors that simply werenāt the right fitāāāfor me as first time entrepreneur, or for the business as a social e-commerce platform for fashion.
In both cases, the flawed way in which I handled matters, made things bad for both the company and myself.
The Donāts of your investorsā relationship (a.k.a What I learned the hard way)

1. Donāt let anything but you be the reason for an investment
The reason for this is that you and your investors must be united. So many things need to happen for a startup to succeed, itās almost a miracle some actually do.
At Sense of Fashion, my first three investors came because of me: my energy, ability to get others to follow and vision. But my fourth investor, the VC, didnāt come because of me. He came mostly because of one of my investors.
Heād wanted to be in business with him before, but it didnāt work out. Now he had a chance, and our impressive team made his decision easier. This made him push for my investor to become the CEO, to which I agreed thinking I should put my ego aside and do whatās best for my company.
I did this despite my co-founders telling me they thought this was a poor choice for the company. Not only was this the beginning of my long and painful way out of my own company, it was also the very moment the company started its decline. Not because my investor-turned-CEO was incompetent, but because I was the only person with the full complete vision of the company in her head.
The minute I stepped down from being CEO the company started zigzagging like a drunk in a darkened parking lot. SoF completely lost focus, execution ability and its unique value proposition, and began bleeding money and users to the grave (and on the way, had lost my two co-founders too).
2. Donāt let anyone else be the CEOā
ā¦ āat least not in the first three years of the companyās life. So many investors will ask if youād be willing to step down from the role of CEO āif itās in the companyās best interest.ā Your answer should be a definite, non-negotiable NO.
There are two very good reasons for this. The first and most important is that for the beginning of its life, the company really only exists in your head, in your vision as a founder. Thatās the only place where there exists a comprehensive view of the companyās potential.
The second reason is, as the owner of that vision, no matter how many people share it with you, you are the only one who will have the stamina to endure all the ups and downs. You are the only one with enough fire in your eyes to recruit employees, users, investors and advocates even at the worst of times. Jason Goldberg of Fab is my favorite example of this.
Get your companyās focus aligned then think about letting someone else take over for the benefit of growth.
3. Donāt overshare

This does not mean hide things from your investors. It means you shouldnāt bore them with every feature and thought that comes to mind, and certainly not with every concern ā even if they are nice, friendly, patient and helpful.
Youāre the founder and CEO, it is YOUR job to lose sleep. Oversharing gets the investors too deep into your decision-making process and worseāāāit gets them concerned, worried even. You do not want worried investors.
4. Donāt keep them guessing
The flipside of not oversharing is not keeping your investors in the dark. When investors donāt know whatās going on (assuming they still believe in you and give a damn) they get nervous and start sharing their anxiety and doubts with each other. This can result in over involvement and loss of trust in your leadership.
5. Donāt make decisions at board meetings
Board meetings are not for big, crucial decisions. Theyāre for updating. You have to manage board meetings in a way that will prevent them from spinning out of control.
At Sense of Fashion I had a very important matter suddenly come up at a board meeting and made a decision then and there. The outcome was disastrous. The fact that I wrote āsuddenlyā is an indication of my poor management of this.
The Dos of your investorsā relationshipā (a.k.a. What I learned the happy way)

People say you can learn so much from failure. It is my experience that you learn even more from success.
Failure can be attributed to so many things. When you do something right and see the results, itās easier to pinpoint what you did right and share it. Hereās what Iāve learned from a successful management of the relationship with our investors at daPulse.
1. Remember that you know best
Neil Patel once said āSuccessful people donāt always know whatās best.ā The logic applies here, too.
Investors are successful people, with money and power that can be intimidating especially when youāre on the gratefully-receiving end. But you must remember that you know your company best. Not because youāre smarter, but because you live it daily.
You know all aspects of your startup, from the bugs to the happy tweet by a user, to the coder whoās getting married next week and is out of focus this week, to the vision mentioned before. The investors only know what you report.
While you should listen to what they have to say and give it thought, the decision should always be yours. At daPulse, we have brilliant charismatic investors like Eden Shochat and CEO of Wix Avishai Abrahami. These two, for example, can be very persuasive. While we often take their advice, sometimes we donāt. We stay focused on our roadmap the way we know it should be.
2. Come through confident
Your investors are here because of you. Let them know they were right to put their hard-earned money on you.
Back your confidence with real data and if needed with the opinions of experts. Know what youāre talking about and make sure it comes through in a reassuring, not arrogant, way.
3. Make someone else your confidant

Every founder and CEO has difficulties, thoughts and decisions to make. Donāt make your investors your go-to people for these. That would be oversharing.
Find someone you can trust whoās both wise and discreet; someone who brings the best out of youā. They donāt need to tell you what to do, but to help you see clearly, think out loud and come to conclusions yourself. Itās like having a go-to therapist.
4. Communicate in push, not pull
I got this great piece of advice from Gil Hirsch. But what we do at daPulse is even betterāāāwe do both push and pull.
Hereās how: We built a tool called an execution board with the goals we set and report it at the board meeting (for example, reach 250 paying customers in six months). We then give our investors full access to it.
This way, itās both pushāāābecause we generate the data and put it live for them to see ā and pull, because they can each check in at the frequency of their preference. It lets them stay completely updated about our progress, but we donāt dive into every small detail with them.
This creates a very balanced involvementā: investors receive live numbers daily, and we manage data at our preferred level.
5. Frame the conversation
You donāt have to wait till you donāt like what theyāre saying; frame the conversation from the get-go. This is especially relevant for board meetings.
Prepare the deck with all relevant KPIs and data and send it along with the agenda for the meeting about a week ahead of time. This will leave time for questions and additions to the agenda, for which you can then prepare.
Decks should be composed of two sections: One for reporting the same KPIs as the previous meetings, so progress can be tracked, and the other for focusing on whatās most important at this moment in time.
So, for example, one board meeting can be about how you plan to acquire new customers. Three months later, if youāve got this nailed, you can start focusing on improving conversion, or MRR, or TROI etc. Just make sure itās you calling the shots and that the discussion is framed and therefore productive.
What other advice do you have for maintaining a successful relationship with your investors? Iād love to hear your thoughts.
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