I had a conversation with an entrepreneur recently and he was trying to parse investor, advisors, when one can become the other, and how to manage it all.

I sent him the following input via email. This is my opinion for sure but thought worth sharing broadly and he agreed.

Investors:

You receive money and give up rights – ownership, control, decision making. Each dollar has a “cost” to the entrepreneur. The goal is to balance amounts and expectations with what you give up by taking external capital. A true “cost of capital”

Investors can be helpful, provide advice/guidance, etc. but rarely perform operational tasks assigned by the CEO. At the Board level this can formalize a bit more with specific asks/requests by the CEO of certain board members.

Advisors:

Uncompensated ones are fans but should not be expected to perform operational tasks. Compensated advisors should have operational accountability of some sort – that aligns with the CEOs current priorities. If equity compensation, they should vest like the rest of the employees (4yrs, 1 yr cliff) or 2 years in some cases for a very high value advisor. The vesting allows you to not incur unnecessary cost/dilution should it not work out and the value exchange happens over time.

If you feel you need to fill operational gaps with compensated advisors then consider your budget (equity or cash) and treat it like a hiring process. If there is a match between offered skills and operational needs then you can make the “hiring decision.”

Can someone be both?

Yes, an advisor can become an investor and an investor can become an advisor.

If the investor is doing more than being supportive and helpful and has a unique skill set that fills an operational need, then structure a separate and defined advisor role.

If the advisor wants to invest, then treat that process like all fundraising respecting minimums and adhering to current fundraising terms.

Should they be linked in some way?

A current advisor wants to invest

Generally a good thing as long as the CEO has not made the continued advisory role dependent on the investment.

Someone will only invest if you compensate them as an advisor. 

Generally no, unless they have a skill that maps to a current operational need/gap as defined by the CEO. In other words, they should be asked vs. this being a condition of investment.

A current advisor will only invest if you increase or extend the current advisor agreement. 

No. In this case the advisory role is now linked to the funding event and is a condition of investment.

Bottom line – treat them as separate and combine them intentionally and at the CEOs discretion.

So maybe I am joining a growing chorus around the negative impact that social media has brought to our existence including Sean Parker of Facebook fame talking about how it exploits human psychology,Chamath Palihapitiya also formerly of Facebook describing how it is ripping our social fabric apart, Jeff Nolan with “End Social Media Co-Dependency.” Mark Suster with “One Small Change I Made that Improved My Mental State” and Brad Feld with “Did Tech Companies Ever Have Our Best Interests at Heart.“

People much smarter than me but all feeling the same thing…

I have a unique relationship with social media having extended my blogging efforts to it early on then working with a company (Gist) that was focused on bringing social media into the lives of business professionals as a sort of multi-dimensional CRM. The more connections the better across as many platforms as possible. Connect and change the world was our rallying cry. Gist got acquired by BlackBerry and was assimilated into obscurity but social media marched on.

My first blog was titled Reply to All circa 2005 and I named it that because I thought of posting on the Internet as the ultimate reply to all action for all the world to see. I enjoyed writing for several years but other distractions and priorities took hold and I stopped – a common outcome for well-intentioned blogging efforts.

What has continued is my social activity so in a way I continued replying to all…just in shorter form with tweets, Facebook updates, Linkedin shares and more recently Instagram images.   I treated Twitter as two separate streams – personal and business with two handles to support that approach. Reply to All and RobertCPease.

The personal handle is dormant and my Facebook updates have mostly ceased favoring Instagram to share meaningful snapshots of life with a smaller group but still publicly posted, RobertCPease for business and college football (Georgia Bulldogs!) content supported by a continued professional presence on LinkedIn. I’ve tried and failed at SnapChat and still do try to tinker with anything new especially around the inbox and professional connectivity.

Long a fan of “lifecasting” as us old timers call it, social media has taken a decidedly dark and negative turn. Maybe it is where it is in the adoption cycle that brings out such things. No one shares the bad things, we’ve become addicted to self-reinforcing social gestures and the underlying platforms DO NOT have the users best interests as a priority. They shouldn’t because users don’t pay. Companies, causes, governments, etc. do and are accessing and leveraging these social platforms for good and bad.

I have no idea who did what in this past election but I do know that anyone with a budget and a message can target at a level unheard of 10 years ago along not just traditional demographic segmentation criteria but the data mined from the behavior on the platforms. That survey you took? Part of your profile and can be used to target. That post you liked, that cause you support, that emotional reaction you had? All part of the data and all for sale. How to prepare and educate my children about this environment is constantly on my mind. Great to stay connected but how to defend against sinister motivations?

Look, I’m not part of the tin hat crowd and do believe that transparency in living isn’t all bad. But the artificial lives we broadcast, the emotional toll that takes on others on these platforms, and the checks being cashed to take advantage of us all give me pause at this point.

Social media infancy was amazing in terms of new ways to connect with anyone anywhere. More information, more connectivity, more perspectives.

We seem to have entered social media adolescence. A bit rebellious, pushing the envelope, not always making the right decisions that can end up hurting others.   People hide behind keyboards or screen names and say things to people that no one would or should say in real life. The current political climate in the United States is an example of this. Holy smokes people. Maybe this will mature us…or maybe not.

What will social media adulthood look like and will we have the ability to actually mature to that point? I don’t have that answer.

I do know that at the Defrag conference last November at its 10^th and final gathering, API evangelist Kin Lane gave a talk on his life and what had happened negatively with too many inputs, too much to consume, too much to react to and the physical and emotional toll. He spoke of a boundary or force field that he now uses to protect himself and filter inputs. Like a lot of things I’ve learned at Defrag and from founder/organizer Eric Norlin, this crowd is ahead of trends. We’ve gone from a room full of laptops with TweetDeck on them in 2008 to protection and self-preservation eight years later. A fast and vicious transformation.

Like Mark Suster, I have deleted Facebook from my phone, am working to wean myself off my Twitter feed including removing negative or emotional inputs and focusing more on connected lives for a budgeted amount of time daily. I even aspire to write more for me and this post is part of that.

If you like it, great. If you want to share it, great. If you want to talk to me about it in real life even better.  I will continue to share things important to me in the spirit of “Reply to All” but with a more guarded and intentional approach.

Connect with meaningful people and organizations, appreciate what they share, keep in touch and even strengthen relationships that could have waned due to changing locations, jobs, or lives.

Real life is the best life even though it can be hard, messy, exhilarating, rewarding and full of joy all in the course of a day or week. Those who care about you will appreciate the journey and those are the people who matter most. Relish face-to-face conversations that challenge your opinions and biases or even just voice to voice interactions. Don’t hide behind a keyboard, a false or incomplete narrative, or self-reinforcing network of “friends, fans, and followers.”

Did that get your attention?

I don’t know where I heard this the first time so apologies to its creator as well as a big thank you. I do use it frequently when talking about customer acquisition and how to get prioritized as a “must have” vs. a “nice to have.”

This is a more dramatic version of the vitamin vs. painkiller comparison but they both get at the point around priority, urgency, and commitment to action.

It goes as follows….

If you wake up tomorrow and see a rat in your house, how quickly do you want to do something about it? Do you really care what it costs as long as the rats are gone?

If you wake up tomorrow and see a new dent in your car door, you will be frustrated and mad (if you are me) but the car still runs, gets me to where I am going and, if on the passenger side, not something I see or think about much – until a friend teases me about the dent in my door.

Get where I am going here?

If you are selling (or doing marketing to support selling), what is the “rat” problem you solve that will cause someone to immediately listen to you, commit to the path you suggest, and become your customer in the near-term?

If you truly are in the “dents” business, how do you become the go to for “dents” providing fast, painless, quality service that removes that nuisance and increases the value of your car for that next trade in?

I don’t like rats or dents but have found this an effective way to take a hard look at messaging especially that is used to engage and convert prospects.

It’s rarely a good place to be when no one disagrees with you about the problem you solve but is in no hurry to address it – the car still drives.

What are the rat problems your customers have?

Cross posted from the Heinz Marketing blog.

Over the last several years, I have spent a bit of time on the investor side of the table vs. the operator side.  I have more recently been directly involved in the deal review process as part of the Cascade Angels Fund and spend a fair amount of time talking to entrepreneurs as well as being a point of contact for them both before and after their presentations to our investors.

Not every presentation goes to the next step. Sharing that news is hard as I’ve been in that seat, felt the disappointment, and made the “they just don’t get it” argument often.  Mark Solon now of TechStars wrote Saying No Sucks in 2010 when he was with Highway 12 Ventures and I have found it super helpful to inform my approach.

The more I have done this and tried to provide direct, honest, and actionable feedback, I have begun to emphasize the point of this post.

When presenting to investors, build the investment case not the business case.

What I mean is, you spend day in and day out pitching the business to customers, prospects, press…anyone who will listen in an effort to make progress, get attention, get revenue.  That pitch is around the business and why doing business with you is the right thing.

You want them to buy from you.

The investment case, on the other hand, is similar in overall messaging but the specific points you need to communicate are a bit different.  You are working to convince the audience that it is an “investable business.” One that can scale, has good economics, is defensible/sustainable and is differentiated in some way.

You want them to buy into you.

There is no magic formula here as investors and entrepreneurs differ but I think this is an important point to think about how to make the most of the investor audiences that you work so hard to secure.

The inspiration for this post, like many I write, is an email I sent providing some feedback.  Here is what I shared:

It is sometimes tough to go from customer pitching to investor pitching (I learned this the hard way a while ago) where you are use to building the business case for a purchase with customers/prospects vs. the investment case for an investment from investors. Landscape is more important to investors than customers.  The overall message is similar but the core messaging points differ a bit – you are not trying to address/answer the question of “is it a business/why should you buy this product/service” you are working to build the case that it is an “investable business/you should buy in”

I have taken a bit of a hiatus from personal blogging over the last ~4 years.  I have done a fair amount of it via the Heinz Marketing blog and via Linkedin but have not had a dedicated and focused place to write and share.

Thus the creation of this blog and the start of “Venture Vice.”  My primary goal is to tell stories here hopefully through podcasts and copy.  I have worked with entrepreneurs for many years, been one myself, and continue to be blown away and intrigued by what it takes to start, grow, and scale a business.

Not the mechanics of spreadsheets and sales plans but the human side of the equation.  How did people, opportunity, and capital come together at a point in time to create something amazing.  What did it take to get there and how many times was it over…before it wasn’t?

Much more to come on all of that in the future.  I did decide to pull forward several years of personal blogging from my former Reply to All blog and have added those to the Venture Vice site.  I use writing and sharing as a way to learn and create and view it as a way to let my children (and their children) have a bit of insight and perspective into what was going on…and what I was thinking at various times in my life.

Onward!

Wow, the first quarter of 2012 has come to a close and I have not done a single post on this blog.  I think that is now officially the longest I have gone without one here. 

I am not sure why the absence occurred. I share via short updates on Twitter but that is no excuse to not do long form writing.  My Q2 goal is to do more so let's see how I do.

It has been a busy first three months of 2012 with several trips to Atlanta to work with the team at LoopFuse, a business trip to Rhode Island allowing me to mark that off the "states visited" list, a nice family visit with my Dad on St. Simons Island, GA, a mostly unispiring trip to the South by Southwest Interactive festival in Austin, TX, and lots of other adventures nearby our home in Kirkland, WA.

I also managed to run 2 half marathons (Jacksonville, FL and Mercer Island, WA) with Marel and am just shy of my 300 mile quarterly running distance goal sitting at 275 as I type this.

We have also continued to work on Nearstream and the first version of the social lead generation software is now available so if you are interested in learning more, email me.  It has been an exciting process to take an idea to working prototype to customer trials and now to commercial offering. Much more to share on this as we ramp up further.

I was also very flattered to be asked to be an advisor to Seattle-based Optify which provides inbound marketing, search, and social analytics software.

I am very convinced that marketing technology will be a huge growth area going forward as automation, instrumentation, and measurement are applied to the ever larger amounts of marketing spend being shifted to on-line channels from off-line predecessors like newspapers.  My work on marketing automation at LoopFuse, social lead generation at Nearstream, and now inbound marketing & analytics at Optify are all aligned with this trend.

So, staying busy and having some fun plus enjoying watching my girls grow up faster than I thought possible.

Here's to Q2!