
Why You Don’t Want to Give Financial Information to All of Your Investors - sahara
http://www.bothsidesofthetable.com/2014/11/09/why-you-dont-want-to-give-financial-information-to-all-of-your-investors/
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EvanMiller
Why You Don't Want To Use The Panini Presses in the Downstairs Cafeteria
(bothsidesofthesandwich.com)

We all know the downstairs cafeteria is changing fast. Others have discussed
the new panini presses and greater variety of pizza recently added to the
cafeteria menu. Most of these developments have benefited diners, although
I've previously written about the darker side of things in these blog posts:

* Why I Don't Love Meat-Lovers Pizza

* Ham Is A Sandwich Best Served Cold

Now, you might think that the panini presses to the downstairs cafeteria are
an unmitigated good. They only increases the number of things you're able to
eat, right? Hot sandwiches in addition to cold?

Wrong.

Let me give you an example from just last week.

I was at the panini machine heating up the Mark Suster Special -- an culinary
invention whose ingredients, until recently, were known only to myself -- when
a classmate of mine asked if he could put his sandwich into the machine at the
same time. Normally I don't let other people use the panini machine at the
same time as me, since it takes longer to heat the sandwiches with two in
there instead of just one. But sometimes, their sandwich ingredients will
infuse the Mark Suster Special with extra aromatic zest, so this time I
agreed.

The sandwich turned out fine. Or so I thought at first. What I didn't know was
that this individual -- who I will not name, but who sits in the front row of
Mr. Boyd's 3rd period English class and the last row of Mr. Lowry's 7th period
chemistry class -- would later go around claiming that he invented the Mark
Suster Special and its near-perfect ratio of meat to cheese. In fact he
divulged this ratio to everyone sitting in the second row of Mr. Vining's 4th
period algebra class.

When I found out about this, I was flabbergasted. This classmate was trying to
get all his friends to try out a sandwich that wasn't really his -- a clear
violation of my intellunchual property rights. I only found out about it
because this unnamed individual was bragging about the sandwich while sitting
in the second row of Mrs. Roth's 2nd period history class, just to the left of
my friend Ken.

I don't know how this will play out, but I've already filed a complaint with
the appropriate authorities. The only reason I tell you this story is that
it's becoming more and more clear to me that you can get "burned" by panini
presses in more ways than one. If you absolutely must use the panini press,
it's best to wrap your sandwich in tin foil first, lest unnamed individuals --
who are co-captain of the JV lacrosse team -- try to claim your sandwich idea
as their own.

These days, it seems the thieves aren't just in the second-floor study area.
They're in the downstairs cafeteria as well.

~~~
omarkassim
Brilliance.

I'd suggest snagging Bothsidesofthesandwich.com and translating the rest of
Mark's content for consumption by the rest of the world. You clearly have a
knack for it.

------
johnvschmitt
I'm sorry to see evidence of a rare bad actor, but that doesn't warrant
holding back critical data from the many good actors who want to invest.

Simple P&L statement & balance sheet: Provide it to all investors who ask.
That's just basic common sense.

Would YOU invest in a company that wouldn't even tell you these basic
financial metrics? Would this author invest without it?

And, I've seen far too many "startups" who don't even know what simple
financial things are (balance sheet, P&L, cash-flow, margin), and that
illiteracy is NOT going to end well.

So, the pain may be real, but the advice given is not IMO correct.

~~~
DevX101
Agreed 100%. Suster is way off base here with his conclusions. Any investor
worth his/her salt will need to review basic financial info before putting
money down.

If you can't trust an accredited investor with your financial data then don't
take their money.

And if that investor inappropriately divulges confidential information, then
take it up with a lawyer as it seems the company in question is in the process
of doing right now.

~~~
nedwin
He's not arguing against disclosing financials during the course of raising
money. He's against giving minority shareholders _continued_ access to
financials. aka information rights.

Asking up front is one thing, being obligated to provide to a minority
shareholder ongoing is another entirely.

------
lpolovets
I think it really sucks that there are shady investors out there, but I think
the solution should be outing them, not punishing good investors. This blog
post by Derek Sivers comes to mind:
[http://sivers.org/punish](http://sivers.org/punish)

~~~
srcmap
"VC and angles don't sign NDA."

Is it only at the beginning? Would there be some kind confidential agreement
in place to guard against these kind of leak at some point?

------
softdev12
I'm of the opinion that it's perfectly fine for the author not to name names.
While there was a clear message that this VC would never want to work with the
"unnamed" name, there are countless examples of people being forced to work
together in the future, even after making such claims. Not naming names
provides a degree of wiggle room if such a case arises.

I may be offbase here, but I read all the details provided by the author as a
sort of trail to be used for an implicit identification. I'm guessing the
author is smart enough to know that these details could be used, given all the
work displayed for every Satoshi post on the board.

So, I read the post as the author not explicitly naming the investor, but at
the same time, providing enough information for someone motivated enough to
track them down. It's the mark of a clever investor, having it both ways.

------
kyro
Bringing on a VC is such a huge commitment and with capital becoming easier
and easier to come by, I'm often baffled by why there's currently no place
online to openly talk about investors and others' experiences with them.

It seems terribly one-sided that investors demand company financials, founder
profiles, go through the entire due diligence process, while the community is
relatively hush-hush about openly discussing bad experiences and shitty
investors.

~~~
jacques_chester
> _I 'm often baffled by why there's currently no place online to openly talk
> about investors and others' experiences with them._

Defamation laws are, depending on where you are, very powerful and very
expensive to defend.

------
ajhit406
The tacit identification in the post is an interesting strategy. Why not just
explicitly identify the individual? Are there legal implications here or is he
trying to manufacture more drama by getting the reader more involved?

~~~
elsewhen
i presume he doesn't want to be the one to out the guy, which might be viewed
negatively. instead, he gave just enough details to let someone else to do the
outing.

~~~
sahara
I surmise that the interest in this post (both the retweets that brought it to
my attention as well as the upvotes that propelled it to the top of the front
page almost immediately after I submitted it) is largely driven by an
expectation that the investor described in the article would be outed.

It's been noted by you and others elsewhere in the thread, but a reading
through that lens leaves the impression that the details provided were
intended to have exactly that effect.

------
elsewhen
although he didn't out the individual, i'm surprised that Suster made it so
easy to figure out who he is speaking about by disclosing so many details.

~~~
minimaxir
Note that the investment in this startup was made via Upfront Ventures and not
Suster himself ("We" vs. "I"). That makes the sample size more complicated:
[http://www.crunchbase.com/organization/upfront-
ventures/inve...](http://www.crunchbase.com/organization/upfront-
ventures/investments)

------
mathattack
Is it legal to not share 100% of the information with all investors at the
same time? Or is this just a requirement of public companies?

I respect the OP, so I assume it has to be legal for private companies, but it
would be good to get confirmation.

~~~
nroets
I am not a lawyer. The directors can share "inside" information with specific
investors and other parties. Those parties then become "insiders" themselves
and may not buy or sell shares.

~~~
mathattack
Ahhh - thanks! So it's a matter of not being able to trade on it. This makes
sense.

------
tbrooks
What does [flagkilled] mean?

~~~
dang
It means a story or comment was killed because enough users flagged it.

We added that recently, partly because people like transparency and partly
because I got tired of typing "This post was killed by user flags."

~~~
tbrooks
Cool, thx.

[edit] How is "enough" measured? Is there an absolute number? Or some ratio of
evaluating flagged comments/stories?

