I have spent this entire week writing an investment report about one of our portfolio companies we are in the process of investing in. Obviously, I like writing because if I didn’t I wouldn’t be spending my Sunday afternoon writing about report writing.
Leisurely writing is different from writing an investment report that will eventually be distributed to an investment committee and subsequently to investors. These types of reports must clearly (and effectively) explain why an investment should be made. When writing leisurely you don’t have to worry about an outcome – you just write stuff whether it matters or not.
Probably the hardest part about writing investment reports on early-stage companies is there is no central place to go to get the information you need. With the vast quantities of information on the internet about anything and everything it can be hard to sift through it all to determine what’s good and what’s crap. This reminds of a topic I’m currently reading about in this book called The Money of Invention, called “information gaps.” The authors talk about Information Gaps as being one of the four uncertainties that exist with all early stage companies. The other three are Soft Assets, Market Conditions, and Uncertainty about the Future. It doesn’t matter how much you market analysis you do about a particular company there are still so many things you don’t know simply because the company hasn’t proven anything yet. It seems like an oxymoron to have so much free and available information on the internet, but still feel like you don’t have any good data. In a lot of ways, it seems like having too much information might actually work against because then you’re left with too many choices. That’s why I think it’s important to always analyze the source of information before accepting it as “good” (obviously).
I will say this though – if there’s something you’re eager to learn about, write a detailed report on it. Call me a nerd, but I’ve done this a number of times just out of curiosity about something. In fact, technical writing is a skill that I think most people should learn to develop, especially entrepreneurs. I had the fortunate experience to learn how to do this when I worked at the Federal Reserve. Without question, the Fed was the most “technical” place I have ever worked, and rightly so. The job we did was very important so things we said needed to be said in a specific way. Every word we wrote had meaning and purpose, and if there were any extraneous words in our reports there were swiftly removed. We learned in our writing how to say a lot by saying a little. It’s WAY harder to get your point across with fewer words than it is using several words. In fact, it was Mark Twain who said “I didn’t have time to write a short letter, so I wrote a long one instead.” This is hilarious to me, but there is so much truth to this.
I got an email from this CEO once who has made it a goal in his emails to keep all his written emails to five sentences or less. In his email signature he has a link to this website that is essentially just a landing page that says: “Email is takes too long to read or respond to. Keep it short” – or something like that. Apparently, you can go to this website and download the signature and put it in your email signature if you want. I haven’t put it in my email signature simply because long emails aren’t my problem – getting too many of them everyday is. I could write an entire blog post about useless emails and proper email etiquette, but there’s already a lot of good information on the internet on that topic.
As I stated earlier, writing investment reports (or any technical report for that matter) on startup companies is not only hard, but it’s very revealing (especially if the company’s not doing well). It can be like slowly descending the staircase of a dark abandoned basement with only a flashlight and the further you go down the scarier and messier it gets. And, the worst part is, it’s your job to go down there and clean things up. To some people this is terrifying, but for others it can be exhilarating. I’m certainly not afraid to descend into the abyss – it can be fun sometimes. I just don’t want to stay down there too long unless I feel like there’s a realistic way to get it functioning way I want it to. In these cases, I just want to go back up the stairs to get the hell out of there before something scary comes out of the shadows and starts nipping at my ankles. Yikes!
The good news is the investment report I am writing is coming along nicely and I’m probably 80% done with it. I would have finished it already, but I’ve been at a bit of a standstill because I’m waiting on a few pieces of information from other members of my team and from the company we are investing in.
If you find yourself in a situation where you need to do a bit of technical writing, I encourage you to embrace it and have fun with it. There are a lot of benefits of thoroughly researching something before you invest your money in it (primarily not “losing” all of your money). Always remember to take it one step at time, try not to leave out anything important, and please for the sake of everyone who has to read your report, keep it concise and to the point. Less is More. Cheers – KM.