A topic that continues to vex my startup soul is that of honesty in presentation. Which is definitely not to say that startup pitches are dishonest as such (on the contrary, I’m pretty sure that almost all are done in very good faith); but rather that the tools we use to communicate and the cultural presumptions about business practice and presentations we share don’t really help us communicate transparently and clearly.
When it comes to pitching, we’re far too often building on sand, people.
Firstly, here’s what I think particularly sucks about the presentation tools we rely on so much.
Powerpoint itself is a lousy way to share complex information sharing, as it encourages unhelpful conceptual simplification, needlessly hierarchical presentation, visual compactness over clarity, and inappropriate layout tricks for capturing structure. Read Richard Feynman’s book “What Do You Care What Other People Think” on the bulletized flawed arguments (and engineer bullying) that contributed to the Challenger disaster, Edward Tufte on the Columbia disaster, let alone Peter Norvig’s hilarious Powerpoint re-presentation of the Gettysburg Address. Yet 95% of startup pitches use Powerpoint.
Excel, too, is a pretty lousy way of communicating complex data: is there any graph I could show an angel they’d honestly believe? I suspect the #1 reason angels look at cashflow forecasts is (a) to drill down the burn rate, and (b) to see how much the founders plan to pay themselves. Of course, the right reason for using spreadsheets is to model different growth paths based on different sets of assumptions: but all most angels would ever do is follow the curve for the most pessimistic models, which would rather defeat the object of modelling.
Secondly, here are some of the many faulty business presumptions we use when trying to construct pitches.
- Progressivist narratives. Both pitcher and pitchee(s) tacitly agree to marginalize the whole iterative, fail-several-times-but-keep-trying nature of startup life, preferring instead to pretend that product development and customer development will both run smoothly from start to finish (if perhaps a little late). Of course, life almost never runs in a straight line: the only constant in development is a need to persist against the odds, to drive over the world’s arbitrary speed humps. Whenever I’ve hired programmers, the key quality I’ve looked for is an ability to push through to the next milestone: when you take on difficult tasks, coding is less about beauty than about a mix of willpower and solid engineering. But have you ever seen a pitch that emphasizes this?
- Numbers never lie. Actually, anyone who has done any accounting knows that, sorry, they usually do. The only real issue is by how much they are off. As my MBA forecasting lecturer used to say, “forecasting is hard, particularly about the future“.
- Graphs never lie. See point #2 (and multiply it by ten).
As an exercise, I took my current startup presentation deck and did everything I could to make it as transparent and honestly communicative as possible. This involved taking out almost all of the Powerpoint structuring (which only got in the way), throwing away the eye-candy, adding in a diagram, and adding in customer videos. Here are my comments on each slide in turn (note that I also tried to upload it to Slideshare, but it got the header formatting completely wrong):-
Slide #1: nobody cares much about the startup’s name or logo (mainly because these very often change on the way to market), but contact information at the bottom is always going to be handy. Following the journalism rule (tell the whole story in a single sentence, then iteratively expand), I included what the company does, its USP, and a simple business diagram. I dramatized the USP and placed it centre stage:-
Slide #2: it’s probably true that investors invest more in people than in projects, so the second slide focuses on the team aspects. But (following Feynman) rather than bulletizing it, I turned all the points into sentences – much more readable and non-Powerpointy! I also alluded to our Lean Startup iteration / Customer Development ‘mojo’:-
Slide #3: this is a tricky one. Ultimately, the core problem with presentations is probably their inability to engage – you don’t want McLuhan-esque ‘cool media’, you want ‘hot media’ to excite your audience, and to raise their financial heartbeat. And your set of customers is one of those things talking about will always be rather unsatisfactory. Angel bloggers like to talk about ‘social proof‘, but probably nothing short of a slo-mo video of Ron Conway signing a cheque would beat seeing actual customers enthusing about your company’s products or services.
Slide #4: in my opinion, a startup pitch without discussing burn rate and your exit strategy would be a 100% non-pitch. In my particular industry (security), companies get acquired all the time, but I would be fairly surprised if many investors happened to know that. In this last slide, I’ve finally succumbed to Powerpoint’s wiles and used some hierarchical structuring, basically because it was a good fit to the actual structure:-
OK, nobody is ever going to fit everything relevant in four slides: but a pitch should never be complete anyway.
As an entrepreneur, the key issue here is whether your pitch uses Powerpoint, or whether it is a slave to Powerpoint. Edward Tufte advises us to think about the structure of the information we are trying to present, and to make sure that our desire to lay it out nicely does not lead us to compromise the message we are trying to give. How does your pitch presentation rate? Could it be more honest?
Funding Startups (& other impossibilities) 