Unease between entrepreneurs and investors is common enough, but lately those tensions have made headlines. Entrepreneurs often like to see themselves as artists and rule-breakers; if they’d wanted to color inside the lines, they’d have chosen a different career path. Investors, on the other hand, like predictability. They prefer to minimize risk by establishing a plan and following it.
These two approaches aren’t mutually exclusive, but reconciling them isn’t easy. Add to this challenge the fact that CEOs typically report to a board, which at many startups are comprised of investors, and you may have a recipe for dysfunction.
We know how ugly this can get firsthand; we’ve both started companies and raised money from investors. We’ve seen plenty of truly bad behavior and endured our share of unhealthy relationships. Sheryl is the former CEO of Clif Bar and now heads up the beverage company Rebbl, which Duane’s investment fund, BIGR, is helping to grow. These are a few of the ways we’ve learned together to build a more trusting and transparent partnership as a startup CEO and an investor.
We Set The Right Tone
When we first met, more than a year and a half ago, we talked about how the typical tension between investors and managers makes no sense–it’s stressful, counterproductive, and spoils a potentially rich collaboration. So we thought very intentionally about what we could do to avoid it.
To set the right tone, we adopted a few basic habits. First, we decided to express gratitude for relatively mundane acts of consideration. We also committed to asked each other “stupid” questions and to really listen to what we said to one another. Third, we shared stories from our personal lives, including details from our upbringings that led us to think the way we do, rather than just talking business. Each of these little things was a cue that a bigger thing–a different kind of relationship–was in the offing.
Before long, the expressions of gratitude became a little more effusive, the “stupid” questions became admissions of insecurity, and the stories about our personal lives became personal stories from our lives as they’re unfolding around us. Our bond now is based on a richer relationship than that of the typical investor and CEO–it’s more what you might expect between close friends, siblings, or partners. We make understanding the other’s position and feelings a priority, and we fight fairly.
Both of us have been married to our respective spouses for over two decades, and find there are remarkable similarities in what it takes to keep the relationship healthy.
We Commit To Being Vulnerable
The good intention we bring into our relationship looks a lot like vulnerability. Last year I, Sheryl, published a book, Killing It, about my struggles as an entrepreneur–including my personal battle with anorexia. While Duane knew I was writing a book, he didn’t know much else. When I told him about some of its rawer content, I worried he might be concerned whether I could handle my high-pressure job. And more generally, would the revelations in the book hurt Rebbl? But Duane wasn’t concerned. He told me that this vulnerability would create a stronger company, allowing the rest of the team to share their truths, too.
During one of our weekly calls, I, Duane, told Sheryl I was worried about whether I was doing everything I could as a board member, as Rebbl’s investor, and as a fiduciary for the capital of my firm’s investors. She met my insecurity with empathy and reassurance. That didn’t remove it–some of those anxieties remain today. But because I took a chance and mentioned my worries about the job I was doing, Sheryl was able to be there for me.
We’ve learned that if one person in a partnership shows up only as competent, fearless, and boundlessly secure, the other person never has the opportunity to sooth, comfort, or protect. That’s not a balanced or honest relationship–it falsely makes one party “stronger” than the other. In fact, shared fears are a strong bonding mechanism. During these conversations, we invite one another to play coach to the other, taking turns helping each other become better.
We also make clear that we can have one another’s backs even while looking out for the interests of our stakeholders. There’s no rule that says we can’t care about each other and the company at the same time.
We Share Bad News Right Away
While all this relationship talk may sound precious and sugary, it actually creates a strategic advantage in the marketplace. When a relationship between management and investors works like ours, both parties are far better able to leverage one another’s assets.
In previous startups, I, Sheryl, would usually wait to inform my board of bad news until I’d exhaustively researched my response and could come with a plan I thought was “perfect.” Now I share bad news with Duane immediately and in unvarnished form because I know it will be received with empathy, and we’ll solve issues collaboratively. In one instance, I brought up a manufacturing problem that had arisen, and Duane and the rest of the board immediately responded, “We’ve been there. We’ll get through this.”
That let me to lead the rest of the team with a steady hand, knowing I had support. I was more effective as CEO and so was the company overall because instead of infighting, blaming, or covering things up, there was a collective push toward problem-solving.
Ultimately, experiences like these have shown us how our closeness and mutual empathy as an investor-founder duo sets the tone for everyone else. It shows our organization that this type of relationship isn’t just possible, but championed. The same opportunity exists for any entrepreneur and investor. Just set the intention, as we did, to trash the old model. Then start anew, with raw honesty.