Startup CEOs providing regular updates to investors have a higher success rate

By Dirk Paessler, Founder/CEO of Carbon Drawdown Initiative

After 40 years around startups, there is one thing I still don’t understand: Why would anyone running an organization that actually wants to reach its goals not report regularly to their investors?

It is my observation that the inability of an early startup CEO to provide regular reporting to investors is an early indicator of future failure. It is debatable whether they fail because

1. They suffered from a lack of transparency of their progress (or lack of it)

2. A CEO who doesn’t respect investors enough to take time to compile such status reports is him/herself the problem

3. The investors had no chance of bringing their business knowledge and guidance into the project

I have been working in the startup environment all my life and have been on the executive side and on the oversight/board/investor side multiple times.

What I observed is this:

CEOs who provide regular status reports to all investors have a much higher success rate than the ones who take money from investors and didn’t bother much with telling them what happened.

The actual cycle (every 1 / 2 / 3 months) and depth (1–5 pages, with or without latest P&L) isn’t much of a differentiator.

But two things are important:

• The report should mostly be compiled by the CEO him/herself. It is the monthly chance to review his/her progress using KPIs and compare them to the plan.

• The report should go to every shareholder / investor / CLA holder. Not just within the board.

Only if these rules are followed can you reap the benefits.

Every first day of the month the CEO and management sit down, review the latest numbers and KPIs and get a sense of where they are on the journey and how much the plans are actually in sync with reality. Are we still on track for the plan or do we need to correct either approach or plan?

Every month investors also have a chance to look at the trajectory of the company and contribute their experience – often by making connections to companies that have faced similar challenges and sharing their personal experience/view.

In the 20 years I ran Paessler as CEO, I sat down every first of the month and collected the final data from the previous month — revenue, number of customers, trial downloads, ad-clicks, churn, maintenance prolongation and every other KPI that was involved in our success.

I looked at the data and wrote an internal blog post/email to all shareholders and even to all employees so everybody knew where we stood.

In the first year my reports came from a long Excel spreadsheet that I filled manually (!). Later I programmed my own “CEO reporting system”, and eventually a data lake/data warehouse from our IT team took over.

One thing never changed – the report was always my first job of the month, regardless of the weekday.

Because if a CEO cannot sit down once a month and explain to their investors exactly where the company stands, they probably don’t understand the business well enough themselves.