Metrics Before Updates

Shaan Puri shares his perspective on how startups should communicate with investors, emphasizing the importance of clear, metrics-first updates while criticizing common pitfalls in investor communications.

Key Points:

• Anatomy of an Effective Investor Update:

  • Start with a clear reminder of what your company does
  • State if last month was good or bad
  • Present core KPIs upfront:
    • Revenue
    • Active users/customers
    • Churn metrics
    • Net burn
    • Cash balance
  • Include month-over-month growth
  • Compare performance against stated goals

• Common Communication Mistakes:

  • Leading with non-essential updates (new hires, PR)
  • Omitting key metrics
  • Disappearing during tough times
  • Being vague about financial situation
  • Focusing on learning instead of returns

• Three Types of Poor Communication:

  • Know the situation but don't want to share (bad)
  • Don't know their own metrics (worse)
  • Intentionally withholding information (worst)

• Investor Perspective:

  • Investors want returns, not just learning experiences
  • They've put "food off their family's table" to invest
  • Hard work with failure is acceptable
  • Soft approaches and dishonesty are not

• Rare Exception:

  • Only 1% of cases warrant limited transparency
  • Usually involves extremely successful companies
  • Related to preventing information leaks
  • Legal implications (SEC rules, insider trading)

The core message is that startups should prioritize honest, metrics-focused communication with investors, treating them as business partners who deserve clear visibility into their investment's performance.