Anxious Investors

Anxiety is something all investors feel at one point or another. Investing is a mix of greed and fear. When things aren’t going great, anxiety sets in.

In public equity when you get nervous about a stock, you can usually sell the position and move on.

In private equity, you are stuck with the investment. So anxiety sets in.

Entrepreneurs might mis-diagnose anxiety as something else. If your investors are all of a sudden meddling in the business, you might be seeing anxiety. If your investors are asking for endless amounts of data, you might be seeing anxiety. If your board meetings have become tense and difficult, you might be seeing anxiety.

You can’t just suggest they take a pill and chill out. Though I’ve seen entrepreneurs do that before.

Here are a few suggestions for managing anxious investors

1) Increase the frequency and duration of the communication. There is nothing that amplifies anxiety like a lack of communication. So do the opposite. Overcommunicate.

2) Have a frank and candid conversation with your investors about the source of their anxiety.  Getting them to articulate what they are worried about will help a lot. Then you can address the issues directly.

3) Get more face time with the rest of an investor’s firm. Often the anxiety comes from the investor’s relationship with and place inside of their firm. This is particularly true of junior partners or associates. Offer to come talk at the weekly team meeting. Or suggest that an investor bring one of their colleagues to a meeting. This one can backfire because if things are truly messed up you might amplify and multiply the anxiety inside the firm. But if you believe the anxiety is misplaced, this approach can be helpful.

4) Get some independent directors on your board. If your board is full of investors and you don’t have any independents, you are setting yourself for an anxious board. Get investors on your board who are less susceptible to get anxious when things go wrong and the dynamic of your entire board will improve.

5) Fix the problems in your business. Nothing helps to reduce the anxiety level in an investor than strong performance.

I am an anxious investor myself. I was worse when I was younger and everything was riding on my performance. I’ve eased up over the years. But I still wake up in the middle of the night anxious about a particular company/investment. It’s how I’m wired up. And I think its part of what makes me a good investor. It is also what makes me potentially a problem. I try to be self aware of the anxiety and manage it so it doesn’t impact our portfolio companies. But I know it can and it does.

Entrepreneurs need to learn how to manage anxious investors. It’s an important skill that will come in handy many times.

#entrepreneurship#VC & Technology

Comments (Archived):

  1. Jan Schultink

    I am Dutch, but worked for 7 years in London and had to get used to indirect anglo saxon business communication. People say things to you, but – and you find this out later – mean something different. “Ah is that why you are nervous”.Here in Tel Aviv, it is back to “in your face”.

    1. avifreedman

      In your face (“you are full of shit, this will never work, let’s figure out something that will”) is so honest, and by far my preferred style, but if you think anglo saxon is passive aggressive, try India or Japan…

  2. awaldstein

    Some advice for investors and entrepreneurs both from an anxious human being who plays both sides of this equation.The anxiety of investors is surpassed by the anxiety of the entrepreneur.Investors manage a portfolio. Entrepreneurs give their whole being to one 24/7 activity that defines them.Communicate often from both sides is great advice as everyone needs support. And the more the equation puts the investor at the center the more anxious I think the process becomes.

  3. PhilipSugar

    Having had anxious investors, this post really resonated.You are right that younger investors before they have had success are the most anxious.Its easy to say fix the problems in your business, if they are internal I agree, but if they are external then this is what causes the most friction.When you are struggling with external factors: the market is not developing as fast as you expected, there are a ton of competitors, etc, having anxious investors compounds the problem.

    1. awaldstein

      Nicely said.Investing and building are both really stressful activities. Patience is hard but a necessary part of this process.I still fight anxiety honestly after doing this for a long time.

    2. Liban

      They are afraid of falling of the cliff. If an associate strikes out twice , probably gone from industry.Survival of the fittest, ruthless.

    3. Donna Brewington White

      But if fixing the problems was really that simple would they exist to begin with?

      1. William Mougayar

        that’s a very good question Donna.But sometimes, the answer is ambiguous, or the entrepreneur isn’t admitting to the problem (or seeing it), and you’re hoping that they would eventually.

        1. Donna Brewington White

          Got it. Thanks William.I imagine that the answer is sometimes ambiguous to the investor as well. But, then, this is why they call it “venture.”

      2. PhilipSugar

        My point is this. Yes there are some problems that you must fix. Charlie was so much more eloquent than I was.There are some you can’t. That is being an entrepreneur

        1. Donna Brewington White

          Charlie is so much more eloquent than most of us, Phil. But you get your point across.There are some problems that you must fix. There are some you can’t. That is being an entrepreneur.This is a keeper.

        2. LE

          Charlie was so much more eloquent than I was.I always wonder how many people don’t make comments on AVC because they feel they need to be eloquent and they can’t be honest and just say what they want for fear of getting negative comment feedback. This is actually the root of all of that politically correct “corporations run for cover” bullshit which I hate so much.

    4. LE

      Question. Do the investors have any “stick” (other than not giving you further money down the road) and is the anxiety similar to your parents “hocking” you about something? Used in that sense “hocking” is giving someone grief and being annoying without any true power other than with words (which create the anxieity) but not being able to take any real action. So it’s more the “evil eye” that is causing the anxiety.

  4. Dana Hoffer

    It is a fine skill to develop to strike the right balance of over-communicating versus under-communicating. Both as a professional and personally. Obviously this is about the professional side of the equation.Communication can simply be about how to make things better and how, if relevant, investors can contribute to this. Seldom is it money. Usually it is about sales/revenues/profits. Sometimes it is about direction/pivot.My experience is that anxiety is mitigated when help is sought. I believe most investors want to help solve the equation. In asking for help the right way the entrepreneur wins twice… a) he/she may get the help, and b) anxiety is turned into positive, constructive energy.Good topic.

  5. Liban

    Fred;I like take a pill and chill commentI wonder what pill can help anxious investorMaybe Aderall, or ProzacAnyone has a pharmacological suggestion for cooling an anxious investor breathing over your neck?Very good observation , human frailty and feelings are always there .

    1. pointsnfigures

      Bike ride, yoga…..

      1. Erin


    2. Richard

      probability * knowledge

  6. Tom Labus

    Door #5, please. After that you’re rolling the dice

  7. William Mougayar

    If things aren’t going well, communications is like anesthetic. It’s keeping the patient on the table longer, and gives you time to study the situation, but #5 is the key. At some point, you got to operate, and fix the problem.OK to communicate, but you got to operate.

    1. awaldstein

      This is presuming that investors know the answer to fixing the problem.Most startups fail. Most problems are more clear than the answer. And most answers are counterintuitive to the circumstance.The longer I build companies the more I relish my relationships with investors and the more I realize the the focus as the investor as the center, as the source of wisdom as well as capital while true in some cases, in not invariably the answer.

      1. William Mougayar

        I’m assuming a reasonably astute investor that knows something about your business, a case of a more mature startup, and relatively known problems/issues. (which is what I read between the lines of Fred’s post)In early stages, and if the investors aren’t involved, of course all bets are off, and the entrepreneur needs to keep grinding. But even with Board members, they can grow anxious if they really care about your company.

      2. LE

        Many if not most “startups” (as we would typically define in a discussion like this) fail because they are stupid ideas that don’t even come close to hitting the low hanging fruit of opportunity. They often defy common sense and common business logic. Fine for investors, bad for entrepreneurs.The opposite of a “stupid idea” would be something like opening a traditional business (either retail or not) in a market where there are business buyers or retail customers and you just have to execute better than the others out there and grab a piece of the market. In that opposite case it would be quite possible to fix the problems. Not definitely but you would stand a chance.Examples might be your or (Charlie’s Bread Company) Real ideas and real opportunity.This is all a scale of 0 to 100 of course. Nothing is absolute and many startups ideas are not 0’s to start and traditional ideas are not close to 100 and so on. [1]USV has a good amount of “startup” investments that are actually above the “50” mark in terms of standing a good chance of providing value in the traditional sense.[1] As an example if you opened Eataly in the wrong location you are not going to move it to the right location after signing a 20 year lease with extensions. However if you opened Eataly in a good location and it didn’t work you might be able to fix it and make it work.

        1. awaldstein

          Actually the largest game changers of our times defied common sense when they started. AirBnB, Uber, even ZipCar were either to whacked out or too mired in insolvable logistics for truly believe they would become what they have.Judging the future by today’s standard is a mistake. Judging the future by future standards is what the most successful people do.

    2. LE

      I kind of agree with that analogy. The communications is treating the symptoms (anxiety) and not any problem. It makes you feel as if the situation “is being handled”. That might be fine if the situation is being handled or not if it’s just a way to hold off any action and make people more comfortable.

  8. LIAD

    I’ve always found cradling anxious investors in my arms whilst stroking them gently and whispering ‘unicorn, unicorn’ does wonders.what! just me??

    1. Donna Brewington White

      Ha! No matter how it’s packaged, there are times when we all need to hear someone calmly saying “There, there…”

  9. Donna Brewington White

    I am able to gain so much insight into my relationship with clients from what you describe about the VC/entrepreneur relationship. I used to think that all the client needed to see was the results. The rest seemed like the engine room to be kept out of public view. No more. It’s all about transparency and allowing the client a front row seat in viewing the process. This takes the sense of partnership to a new level and eases the tension and anxiety.Having said this, even though communication and making the process transparent may give a greater sense of control, the only thing that really alleviates the stress is results. And all the work in communicating and reporting does take away from the time spent doing the work and producing results. But it’s the cost of doing business and good client relationships. And making more space for the client to speak into the process can actually bring some great insight.I guess this is true with the entrepreneur/investor relationship as well from what you are describing. But I do feel for the founder who has this to contend with this on top of everything else. I understand why the chill pill could seem like a good idea. Yet, this post is getting at the root of the problem instead of merely placating the symptoms. In the process everyone grows up a bit.

  10. Val Tsanev

    I think founders have to manage not just anxious investors but also anxious employees, clients, co-founders, partners, etc. It is the job of the founder to make the ship sail smoothly even in the midst of a storm…

  11. Semil Shah

    This is a very clever way to write about a complex topic. No idea how you continue to do it. Well done.

    1. amber klauder

      i have no idea what you are talking about semil shah

  12. William Mougayar

    In your experience, how does the anxiety dissipate?

  13. sigmaalgebra

    For a worrier, it’s easy for the worry to cost more than the failure being worried about. Moreover, such worry can be the main cause of the failure being worried about. Worry can easily be a grand extraction of miserable defeat from the jaws of magnificent victory. A lot of worry is just incapacitation which nearly guarantees failure.In a case of too much worry, just conclude and accept that the whole investment is dead, a wash, a zero, so that any change has to be an improvement and good news!Like when I passed my Ph.D. oral defense of my dissertation research: My advisor said, “I guess your wife will have a nice dinner for you at home tonight!”. I said, “No, she doesn’t know. I didn’t tell her. I figured I could control my nerves. I didn’t think I could control hers.”.Lesson: Don’t tell the investors. If they really are nervous investors, then give them the mushroom treatment — keep them in the dark and feed them BS.The real story is not for the Nervous Nellies. Investor: How long will it take to finish the code?Entrepreneur: I don’t know. Actually, I’ve written a lot of significant code, some very quickly, but I’ve never known with much accuracy when the code would be done.But just for you, once I get it done, then I can give you a good estimate for how long it would take to do it again. Generally, any serious entrepreneur should have zip, zilch, and zero patience with Nervous Nellie investors — that’s one really biggie reason to remain a bootstrapped, 100% founder owned, Sub-Chapter S or LLC and not a C-corp with a BoD. A biggie reason.Just don’t have any room for Nervous Nellies on the bridge of a ship, or anywhere on a ship going in harm’s way.Also realize that an investor has a varied portfolio while likely the entrepreneur has just that one business. So, the investor should tell himself that if the entrepreneur can put up with the worries, then any investor should be able to much more easily also.Remember, things are rarely as bad as the worst case or fears.Remember, fast driving in a light truck down a rarely traveled road promises to be bumpy — buckle up, keep your arms inside the truck, and hold on to your hat, butt, whatever.Watch the Winds of War episode where Captain Henry rides along in a B-17 on a British night time raid over Germany.Watch the famous movie Patton where the guy is totally fearless and is able to get a silly Colonel going across a canal while German shells are exploding all around.Look at…with three really calm guys, taking it easy, all nicely relaxed, but, in fact, being by a very wide margin the most effective warriors in all of history — they were saving 1 million US casualties. Nice and calm.Want to see how the competent guys do it? Watch…where General Schwartzkopf showed how to beat Saddam’s seven million man army while having fewer injuries from enemy action than from recreational softball behind the lines — literally.All that extra information back from the entrepreneur can easily just bring the work to a dead stop for a month or two and then for another month or two for the entrepreneur to clean up the backlog from investor hysteria days then another month or two while the entrepreneur cuts back to half time to recover, save his marriage, get his car inspected, etc. Bummer.For an investor to get involved is like him (her) trying to get a big place on the team, and that’s a good way for the team to want to push him out the window, on the 90th floor.If the investor really wants to get involved, then let him get a computer, sit in the corner, and write some really good code. Speak up when have some really good code and not before.For an investor to get involved is like stirring a pot of rice to try to make it cook faster. Nope, just get a pot of goo. Instead, just cook the rice the usual, best way: Bring by volume 1 part rice and two parts water to a simmer, put on a lid, turn the heat to low, and wait 20 minutes. Done. Anything else makes a mess.It’s like the TV ad: “I simmered it and stirred it, and still it came out all gooey.” Of course it did.In music, by far the easiest note to play is the rest, but beginning musicians still have trouble with it.No guts, no blue chips.In a case of real danger, only a Nervous Nellie screams out, breaks ranks, and runs and, thus, creates disaster. Really Mother Nature wants a lot of Nervous Nellies because their uncontrollable nerves do create disasters and, thus, dependency which has reproductive advantage. Besides, she’s not supposed to be out of the house or away from the stove, laundry, or babies anyway.Have to be like a Marine on Guadalcanal — in a foxhole with Japanese bullets going one foot overhead, mortar shells exploding, hopefully at least 20 yards away, some 12″ rounds going off from some Japanese ships in Iron Bottom Sound. Have a good shot at dying.Might live if just keep still and quiet and keep head down; might get a victory if find a way to make an end run, flanking attack, at night, picking off some of the enemy quietly one by one; maybe killing a lot of the enemy with a well placed explosion. But if scream out or put head up, then certain death.Remember: The US got settled quickly enough west of the Hudson River, heavily by just solo trappers with just a few tools and meager supplies while each trapper was at risk of death, slow or sudden. A lot of trappers died, but a lot of good ones made good money, and on average the US West got settled very quickly.Want to know about risk and worry in the US? Sure, watch the Paul Harvey piece about a US farmer:…That’s not really wrong: My father in law was much like that. The US farmers were so good at it that in just a few decades they worked themselves down from 90+% of the population to 2% or so. Risky? Yes. Easy? No. Successful? Yes.Remember: Make a list of all the biggie changes in the US in the last 200 years. Well, that’s 10, maybe just eight, generations. So, allocate all the changes to just 8-10 buckets. So, at least one bucket has a lot of changes. Actually, with only 8-10 buckets, each bucket can have a lot of changes. So, for 200 years, very rapid changes did happen, right along, with very high reliability, nearly all with at most meager help from investors.Nervous Nellies should go to the kitchen and bake some really good cookies for the people getting the real work done. I’ve seen some of the horrendous harm that Nervous Nellies can do; it’s really bad stuff, and there’s no place for it in a startup.Look, the worst it can be is just death. So, what’s the big stink about?Or, it’s not new stuff: A coward dies a thousand times before his death, but the valiant taste of death but once.

    1. LE

      Like when I passed my Ph.D. oral defense of my dissertation research: My advisor said, “I guess your wife will have a nice dinner for you at home tonight!”. I said, “No, she doesn’t know. I didn’t tell her. I figured I could control my nerves. I didn’t think I could control hers.”.Women fall into precisely [1] two categories. They are either your mother where any little problem is blown out of proportion and they care to much and you end up feeling worse [2] or the wife who only cares if you slay the animal and bring it home for dinner. Doesn’t want to hear that her friend’s husband got to it first. Not interested in any details, only performance counts and you are only as good as your last roast pig.[1] That’s right only two categories no in between. (I am joking..)[2] That’s my mother so I don’t tell her anything at all. “Did you have that stomach problem looked into? Have you made a Doctor’s appointment yet????”

      1. Donna Brewington White

        Sometimes LE I just don’t know what to say. I just sit with my mouth open for a few seconds. Your footnote [1] did help a little.

        1. LE

          I could have dispensed with the footnote and just put the word “generally” instead of “precisely” or added “at least any of the women that I have dated or married” however I wanted to create the proper initial negative feeling, contrasted with a footnote that removed at least some, if not all, of that reaction. Then temper that a bit with some more words that indicated I was somewhat joking.I do this many times when writing emails and negotiation playing with words in the same way.

          1. Donna Brewington White

            Ah, so you’re messing with us. ;)And “at least any of the women that I have dated or married” would have been the best qualifier. We create our own reality in some instances. Your perceptions are formed by what you attract.

      2. sigmaalgebra

        Nice. Very nice. A little simplistic but not really wrong. Quite valuable. A keeper. The guy who first wrote that formulated a simple explanation for a really messy situation and is no dummy.Politically correct? Very much the opposite!

      3. sigmaalgebra

        Your analysis may be better than you are giving yourself credit for.Sure, when I was in K-12, the girls started to develop figures of women somewhere between the fourth and eighth grades. But, apparently it was a local social norm that the girls didn’t try to dress as young women instead of little girls until the seventh grade.So, suddenly in the seventh grade, presto, bingo, boom, the girls I’d known for six years dressed like young women. And a lot of them were just drop dead gorgeous.Well, there was one, Ann. In the seventh grade I tried to flirt with her but could get no interest. So, we didn’t talk before school, after school, before, in, or after class, at lunch, at all. It was strike out, zip, zilch, zero, a big goose egg.So, I give up and f’got about any chance with her.But, in the ninth grade — we’re talking speed of movement several times slower than the glaciers in the Alps here — she had a backyard party with two dozen or so people, and she invites me. At the end of the party, we sit, just the two of us, on the sofa in her living room and talk. She tells me about her family.Boys, when she tells you about herself and family, that’s fundamentally good news! When she stops telling you about herself, that’s fundamentally bad news! A major case of that is, “Honey, what’s wrong?” and she answers “Nothing.”, and that can cover anything including the end of the universe. Of course, there in the ninth grade, I knew none of that.She wore some unbelievable dress; I don’t know about girls’ dresses, but this was somehow some pretty dress. Maybe it was some shear, pastel, floral print over some satin dress all tied up with satin ribbons and bows. Drop dead gorgeous — and so was she. She and her mother may have shopped for days getting everything from the shoes up all put together. Maybe she worked on her hair for two hours. Gorgeous.Ask her to a movie? Didn’t want to risk rejection, at least not before we could talk in school. So, I waited a few school days: Nope, we still couldn’t talk in school. Declining to talk in school, that was, what, a “barrier to entry?”.So, the years went by. Did I mention a glacier?In the twelfth grade, sure, one semester I took trigonometry.Well, the high school was relatively good, deliberately by far the best in the city. Dad knew a lot about education and picked the school before he picked the location of our house.Since there was no Yeshiva in town, all the Jewish kids also went to that school. The year before me, three guys from that school went to Princeton and ran against each other for President of the freshman class. In my twelfth grade, MIT came recruiting.Well, in trig class, there was a relatively difficult exercise. I got it. Another guy, Arthur, a little Jewish kid (I was 6′ 4″), and soon voted “Most Intellectual”, sure, the best student in the twelfth grade, got a different result.So, in trig class, we had a shootout at the boards, Arthur in front and I on the side.Basically I won. What Arthur was doing is basically wrong but is essentially a common shortcut that usually works but risks being wrong from multiplying by zero when shouldn’t. I took the more pedestrian but careful approach and got the right result.The teacher wasn’t sure about the best way until I gave my solution and little explanation.Okay. No biggie.But, apparently some people in the class were surprised and word spread quickly in the halls.Then, already before the next class, in the five minutes between class periods, Ann walked up to me, stood close, looked up, smiled (DARNED pretty girl), and said: “I heard what you did in trigonometry class.”.Good grief! That was just a case of my bringing in a “roast pig” just as you described. She had waited 5+ years to be willing to speak to me, at all, in school and only when I had won a shootout at the board in trig class with the best student.Gads.Sure, I should have told her, “Tell you what: After school, meet me at the west portico and we’ll walk across the street to the drug store and share a chocolate soda, and I’ll tell you all about trig class. Then I’ll walk you home. Okay?”Nope. I didn’t understand: What the heck did trig class have to do with it?Besides, for 5+ years in school, I couldn’t get her even to say “Hi!”, so, gads: With her, I’d have to win a challenging competition everyday? I couldn’t do that. Maybe if she will work her way all the way up to a smile and “Hi!” three days in a row in school, then, okay, I’ll try for the drug store and a soda.But, sure, the answer is just what you explained: She was programmed by Mother Nature to go for the guy who got the “roast pig”. Otherwise, no response at all. Gads.But, that was the way it worked.

    2. Donna Brewington White

      There is a certain balance created by the investor-entrepreneur relationship. [1]By nature, each tends to be at a different place on the fearful-fearless continuum and needs the other for sake of something closer to reality. Although kids and a mortgage can help accomplish this as well.1. Investors with LPs probably more so. They can’t afford to be gamblers.

      1. sigmaalgebra

        So much worry, and there is too much, shows another issue I omitted:(1) Need to know what the heck is going on at least two levels deeper than the accounting data.By analogy, on the long, rough road trip, need to know the difference between a headlight that burned out, a rattle in the trunk, a dirty air filter, an engine too hot from low coolant in the radiator, a broken shock absorber, a flat tire, a worn out wheel bearing, a broken rear half axle, and a broken crankshaft.That is, that the car is stopped on the side of the road may mean just need to change a tire or need to have the car towed in, a part ordered to come in two days FedEx, and two days of repairs. The two cases are very different.But, as essentially a special case of (1) need(2) Some good plans.E.g., for Gulf War I, early on the ally effort encountered the worst rains in decades. That put progress on the time line of the plans back about two weeks. There were some additional military risks, but mostly it was just a two week time out for everyone.A two week delay from poor military planning would have been one thing. Two weeks from some really rare weather is quite different. People involved need to know the difference.The ally planning for Gulf War I was good, even solid, and the two weeks of really rare rains didn’t change that.It’s possible to plan some really amazing projects with astounding precision. E.g., apparently the Pluto mission.But, for small projects, say, startups, there is too little benefit from, say, the law of large numbers so that the variance of the results can be a much greater fraction of the expected results, even if nothing is really wrong with the planning, execution, or expected project results.

  14. andyswan

    The best cure for anxiety is to convince yourself you’re already dead.

    1. JamesHRH

      Jerry Seinfeld’s mantra – nothing any one does matters.

  15. pointsnfigures

    Even when an investment is going well, investors can get anxious.

    1. Jess Bachman

      Indeed, some people are just anxious by nature… often it’s unfounded and sometimes infectious.

  16. Erin

    Hmm… If someone told you to take a chill pill, how would you take that?

    1. William Mougayar

      this comes to mind…

      1. Erin

        I see what you did there.

  17. venture backed entrepreneur

    Great fucking post; hits home.

  18. Jess Bachman

    Overcommunicating should have honestly and clarity as pre-requisite. I’ve been in situations where something was not going well and the downstream communication was incredibly obfuscated and guarded. Like… everyone knows theres a problem, can we get past this whole “how should I say this” dance and get to work fixing it.Particularly with engineers or others who are wired for solution finding, any communication that is laden with hedging words is just floating the anxiety down river. I imagine it would be the same for investors up river.

  19. Mario Cantin

    The transparency is compelling. It is not an aspect of the investor/founder dynamic that I’ve heard addressed before by a VC. Very, very good point to be mindful of, and therefore another classic post.

  20. panterosa,

    Anxiety and fear are two separate things. Fear is a conditioned response. Anxiety lives deep in the brain.Perhaps separate out what is fear from previous experience, and what is simply anxiety is a good place to start – for both sides.

  21. LE

    But I still wake up in the middle of the night anxious about a particular company/investment. It’s how I’m wired up. And I think its part of what makes me a good investor.Absolutely.I actually see that as a healthy sign similar to when someone aches after a good workout. You care and the outcome matters. Missing that edge is why companies become fat and lazy and miss opportunities, right?Not that it’s good that you wake up and have sleep problems, but the fact that you are still in the game to the point where what happens actually still matters to you. That provides the proper balance in life that makes day to day living fun. Winning all of the time (ask Michael Phelps) isn’t fun after the initial bump which wears off. That is also why you’d might be miserable if you ever stopped investing and having at least a good portion of the day to day life that you have now. <—- A point that I am always harping on as you know.

  22. Pranay Srinivasan

    I usually update once a quarter but as a seed stage founder I am more of a talker and I’ve found that the best kind of investor relationships are where I’m speaking to them on the phone quite regularly.I am also absolutely honest and forthcoming, and I try to explain what is happening in the business without complicating the jargon.99% of execution problems come from people issues and I’ve realized there is no quick fix to getting great people. I’m sure if every investor realizes that they’ll feel much better.But communicating 1X – 2X a week with the most involved investors and making them part of the thought process in making decisions helps them stay involved and decreases their anxiety IMHO.

  23. george

    Dealing with investor anxiety is heavy, and very stressful. I’ve experience some craziness in this area. Great pointers here, some added communication, more transparency, board balance and frequent interaction all could help but I’m a big advocate for suggestion 5 – strong performance; this creates the positive inertial and the most effective momentum shift.Cosmetic changes for the most part are short lived, pointing the arrows up and contributing to current returns is a universal calming value.

  24. William Mougayar

    The good thing about anxiety and worrying is this…

  25. Dara Albright

    Great advice! Here’s a good example of investor communications done right:

    1. William Mougayar

      Can you please check that link you shared. It’s not relevant to what you said. Pls edit it if you put the wrong one by mistake, because that one is promotional and not related. Thanks

      1. Dara Albright

        Thanks William. I thought the section nearthe end of the article – highlighting how one private company’s frequentcommunications with its investors enabled it to continuously buildshareholder support – corroborated the benefits of “over-communicating”.

  26. Richard Heitzmann

    I don’t know any good investor who sleeps well every night. I agree that the management of the anxiety and the anxiety around our partners’ tables are our management challenge not our CEOs / investments

  27. Twain Twain

    THIS.And just won a hackathon this w/e because of that creativity.

  28. Pete Griffiths

    Excellent. How could it be otherwise?

  29. pointsnfigures

    I am going to be anxious this morning. China off 8%. Ooof.

  30. Francois Royer Mireault

    I would love to read a follow up on this post with your advice to investors on how to manage anxiety. e.g. “Here are a few suggestions for managing your anxiety.”

  31. Terry J Leach

    We have not taken on investors yet, but I believe in communicating and forecasting the upsides as well and the downsides BEFORE any problems occur. Not all problems can be forecast, establishing a track record of communicating and addressing problems builds trust. It always helps to put yourself in the future investor shoes, it’s no different than putting yourself in the customer’s shoes.

  32. r victoria

    Personally, I prefer a real time good news / bad news update than be handed some spoon fed BS. We disconnect with people for that kind of BS, an OLD maneuver that does nothing positive. If you’re an emplovee, vendor or just a liar? bye BYE!!

  33. Alejandro Cosentino

    Remember you as an anxious investor and board member but don’t blame you. I was also a anxious CEO and at that time, Starmedia/G1 were a combo of problematic companies to run in the middle of market chaos. Best regards.

    1. Alejandro Cosentino

      By the way, excellent post. Especially the part that you said: fix the problem 😀

  34. Raquel Miller

    The entrepreneur is always on the hook, all of the time to all of the investors. This makes for sweaty palms, palpitating hearts and all kinds of stomach problems. In sales, one learns to control the client. You provide enough information to shed light on questions, but too many questions from too many clients and too often are distracting, and you can spend whole days not getting any meaningful work done. The strength to be an entrepreneur requires the strength to fight, to lead. Be intimate with the vision, take good advice from people who know best, correct the path you are on if it isn’t working, but you gotta keep sailing the ship and you gotta be level. … and keep the investor level.

  35. awaldstein

    great comment from obviously someone who has been there.bottom line is everyone is happy when you win.

  36. Girish Mehta

    Know your numbers cold – I worked at a large org for many, many years where this was in the DNA of the org. External partners who worked with us with would invariably comment on this aspect of the business culture.The thing to be careful of is the expectation “Know What the Problem is”.The business world is messy. You can’t always figure out what the problem is.So, you have to simultaneously create a culture where its OK for the team to say – Here’s everything we tried, here was the rationale for why we did these things..but we still don’t know whats broken. You must ensure that this is not lazy thinking. And make no mistake, that’s a really bad place to be in…you cannot visit this neighbourhood too many times. But its also important to create a organizational culture where the reality is exposed quickly even when the reality is – We don’t know.If a solution is required every time – then a problem will be manufactured. Like a hero needs a villain, a solution needs a problem. Usually not at the first signs of trouble, but as a business starts to go into a downward spiral and the anxiety levels keep rising to find a solution…and you are the 3rd round of trying to “fix” it. Now, as you peel the layers of the narrative, you start to see that the problem has been “identified” AFTER the solution / action steps were constructed.I used this line sometimes with my team when I saw this situation developing 🙂 -“Lets Work the Problem, people. Lets not make things worse by guessing”Sage advice from the Ed Harris character in Apollo 13.This one is a real risk – things get worse when you start guessing, and you start guessing because you aren’t able to say that you don’t know whats broken.

  37. William Mougayar

    “Don’t lie, don’t pump it up, ever. Be hopeful and optimistic but don’t misrepresent.”True words, but it’s hard for entrepreneurs to give bad news. It takes some maturity, and some measure of self-awareness, which come with some experience. The natural instinct is to hide issues as long as you think you can solve them on your own.Part of this also rests on the type of ceo-vc relationship that exists. If they know you’re being judged on everything, they’ll hide stuff, but if you come across as co-operative and supporting no matter what, then they’ll tell you more. I’ve seen entrepreneurs being more open with some investors, and less open with others, on that basis. The ceo-vc relationship is a complex thing.

  38. PhilipSugar

    Edited. This is all time Great comment. They always love you when you win. But the key is what you do when you are losingAnd steady state mediocre…,,, is even better

  39. William Mougayar

    ok, but i’m not talking about that type of information. If one investor is an expert in advertising, you will talk to them more openly and get into details with them on that topic. No point in flooding others with everything. If another investor knows about marketing, then go deeper with them on that part.