When I started investing, I would frequently share articles covering what other companies in the same sector as a company we’re invested in were doing. With tens of new articles emerging every day, there’s no shortage of content to share.
However, as time passed, I realized that there was little informational value in the majority of the articles I was sharing. The articles tended to fall in two categories. They were either highlighting a financing event for a competitor, or talking about a specific product development that a competitor had made.
Sharing news about financing events produced two results. First, they would highlight the size of the opportunity in the sector. However, since the entrepreneurs decided to build a company in that sector, and since we decided to back the company, we shouldn’t have any doubts about the opportunity. We wouldn’t be in the sector if we didn’t believe in the opportunity.
Second, they would make the founders feel like they were behind. No one publicizes the smaller financing events so the ones you read about in the press are the big ones. This makes founders question why they haven’t been able to raise as much money and this often creates unnecessary stress. How much money you raise isn’t necessarily a proxy for how successful your company is, and even when it is, founders need to focus on building their product, not worrying about how much money a competitor has raised, in order to catch up.
Sharing news about product developments also rarely serves a purpose. There are two types of product developments. The first category are the ones that a company doesn’t share in public because they represent a unique insight that they don’t want competitors to copy. These are a minority and since they’re non-obvious, you won’t read about them in the press.
The second category, which are shared in the press, are those obvious features that everyone agrees on the value of. A personalized product recommendation engine for an e-commerce site, or a signup campaign to build up interest prior to launching in a new geography, are good examples. Everyone agrees that they’re useful, but they’re also obvious. Knowing that a competitor built these features isn’t that valuable. What matters is actually building them yourself, and ensuring that they work better than those offered by competitors. A founder’s time is better spent sweating the details of the execution of these obvious product developments than reading about the obvious developments that others are making.
I’ve outlined the types of articles that I don’t think create value when an investor shares them with a founder. This doesn’t mean that there aren’t articles that contain valuable information. For example, the global market leader in your sector may have just bought a competitor in another geography, and this may be a signal that they’re looking for similar acquisition opportunities in other geographies. However, such valuable articles are the minority, not the majority.
I therefore no longer share the majority of the articles that I read about a sector with our founders operating in that sector. Only in the rare case that an article contains a non-obvious and meaningful insight is it worth sharing.