By the time this is published the third quarter will have one day left in it.
I want to make a case for something small that I think most founders of small ventures skip, and that I skipped for longer than I should have. It is a letter. One page. Sent to the people who put money, credit or trust into the venture, four times a year, whether or not they asked for it. Almost none of them will have asked.
The lesson underneath it took me years to learn, in the ventures where I am not the only person with something at stake. The people who backed you would rather hear bad news on a schedule than good news by accident.
Silence is read as bad news
A shareholder who hears nothing does not assume things are fine. They assume the worst, quietly, and adjust their view of you accordingly. A lender who hears nothing starts to wonder. A partner who hears nothing begins to build a version of events out of whatever fragments reach them, and the version is never generous.
Then, when you do finally write, it is because you need something. Another cheque. A covenant waived. Patience. And the letter arrives carrying the full weight of eight months of silence, so that even a reasonable request reads as a rescue.
The quarterly letter fixes this by existing. Its content matters less than its regularity. It tells the reader that they will hear from you at a known interval regardless of what has happened, and that alone changes the relationship from one of anxiety to one of information.
What goes on the page
Same structure every time. The reader should be able to lay four letters side by side and see the year.
Four numbers, against the same quarter last year and the previous quarter. Whatever your four are. I have written elsewhere about which four I track weekly; the quarterly letter is where those numbers go to be seen by somebody other than you.
One thing that went wrong, and what you did about it. Not a list. One, and the one that actually mattered rather than the one that is easiest to admit. The reader learns more about your judgment from how you describe a failure than from anything else on the page.
One decision you are facing. Not asking for input, necessarily. Simply showing that you know what the next hard call is.
What you need from them. Usually nothing. Say so. The letters that say nothing is needed are what make the one that asks for something credible.
Four hundred words. If it is longer, you are explaining rather than reporting.
Why this is governance, not communication
It is tempting to file this under investor relations, a nicety for founders with time. It is not that.
Writing the letter forces you to know the numbers on a date you did not choose. It creates a written record of what you believed and when, which will be useful to you later and uncomfortable in ways that are also useful. It is, in effect, what a board would extract from you at a quarterly meeting, delivered without the board.
And when you next raise, or borrow, or bring in a partner, you hand over eight letters and most of the diligence is done. You have shown two years of a founder who knew what was happening and said so. There is no document an investor in this market values more, because there is almost none they see less often.
Who receives it
Anyone whose trust is a form of capital.
Shareholders, obviously, however few and however small. The lender, if you have one; they will be startled and then grateful. Your partner, if you have one, even though they already know most of it, because the discipline of writing it down for them is different from the discipline of talking about it.
A version goes to the team. Shorter, some numbers removed, the same honesty. A team that hears what went wrong from the founder, in writing, on a schedule, stops building its own version.
The honest cost
The quarter you least want to write the letter is the one where it matters.
You will sit down to describe a quarter where the numbers fell, a hire failed, and the decision you are facing is one you would rather not name, and you will have to write it anyway, to people who will keep the document. You will write “I was wrong” in a place where it stays written.
That is the cost, and it is also the entire point. A founder who can only report good quarters is not reporting. They are advertising. The letter earns its value in the quarter it hurts to send, and the people who receive that one will remember it far longer than the ones that were easy.
