Get It in Writing.
I've worked with Ron Conway since 2007. Other than my Dad, he's been the biggest mentor and influence in my career. His style is “lead by example” - he's never sat me on his knee (I would pity his knee) to explain his best practices. I learned by osmosis and by observing how he handles certain situations. I thought I'd share one now and hope to share more in future posts.
This nugget will sound so trivial and mundane that it borders on useless. But I've found that it's one of the most powerful tools in moving things forward in almost any context.
Get it in writing. I don't know how many times we've seen founders ignore this advice and then that coming to bite them where it hurts. This can be particularly useful when a company goes through an “inflection point” process that can take weeks or even months.
A typical scenario is this: a founder pitches a VC and the meeting goes great (according to the founder). The founder tells me that in the meeting the VC said he was “definitely interested in investing [X] million on a [Y] valuation.” Another scenario is a startup in an M&A process. They speak to a product manager or corp dev exec at the acquirer who says verbally that the company's proposed price range is “definitely in the ballpark.” So the company is pumped because they have one prospective buyer.
I don't know how many times this has happened in the last few years. In each case, we advise companies to get the mutual understanding in writing - specifically a follow-up email. In that email, the money line is: “*I want to confirm that* [insert point]. Can you email to confirm that we're on the same page.”
This simple follow-up email does a couple of things. First, it clarifies any potential confusion. For example, in the M&A context one common point of confusion is what the acquirer pays for the company is often not what the shareholders (i.e., investors) get in return. This can be a huge point of confusion and a deal-breaker in some cases. By clarifying any confusion earlier rather than later, you save everyone a lot of time.
The second thing it does is it creates a quasi-moral obligation (i.e., a “gentleman's agreement”) if the recipient agrees in writing. These aren't legally enforceable. That's not the point. The point is that no one likes to back down on their word. That gets around. This isn't as tactically important as the earlier point above, but it can be important. One scenario I've seen is founders who complain about X investor or Y partner giving their word that a deal will be done and then that person backing out. We immediately ask if they have that in writing. If and when they say “No”, we tell them pretty plainly that they are SOL. The whole “she said/she said” is just a waste of everyone's time.
And even if you don't have anything to confirm in writing, I've learned that it's always good to re-cap key discussions with salient points with as much detail as you can. You may not even have to email it to the other side. But having an email audit trail of the different verbal conversations will help. People have leaky memories. And having a historical archive of the process and conversations can keep things on track by ensuring that there is a meeting of minds along the way.
So, get it in writing.