Are business plans back?


Screen Shot 2019-04-12 at 10.24.13 AM.pngI was very pleased to see business plans die out, replaced by pitch decks. IMHO no one reads, and even fewer people actually read business plans! By the time these plans were completed they were obsolete. They tended to be more fact than fiction and were usually accompanied by voluminous Excel spreadsheets showing the classical hockey curve of revenue growth.  A giant waste of time for all involved!

But the Business Insider article by This serial founder thinks pitch decks are passé. Here’s what his startup used instead to raise $45 million in new funding argues that pitch decks are so over, replaced by a “pitch memo.” The pitch memo sounds exactly the wordy business plan of yore. But Parker Conrad, who founded three venture-backed startups — SigFigZenefits, and, most recently, Rippling, argues that a pitch memo is far more effective than the typical pitch deck. He clearly understands that pitch decks are meant to be presented, not read and thus must leave out a lot of detail that is provided on the fly by the presenter. So yes, pitch decks rarely standalone, in fact they shouldn’t. As I’ve written previously, founders need two versions of their decks: one to enhance their standup presentation, they other meant for sit down reading by an investor. I encourage founders to start with the highly detailed version, then edit it down for presentation usage.

There are two advantages to the written narrative, one is obvious, it can contain a lot more detail; the second is much less obvious and relies on a deep understanding of how VC firms work, which obviously Parker Conrad possesses. Investment decisions are made at weekly partners meetings – usually on Mondays – where the partners who are seeking an investment by the firm need to convince their colleagues it’s a good investment for the fund. By providing a “pitch memo” the founder can make it very easy for the partner championing their cause to write the memo to their partners for the firm’s investment decision meeting.

Riplings’ pitch memo is included in the article. It’s only 11 pages long and basically covers the same topics as a pitch deck, just in much more depth. In other words it looks just like the “business plans” that were de rigeur in the VC game back when I was raising money in the last century.

But while Parker Conrad has had great success raising money with his pitch memos, I’m not convinced pitch memos will replace pitch decks for two reasons: one, it’s so much easier to get feedback from friends and mentors on a pitch deck than on an 11 page memo, and two, people don’t read! The safer play is just to send a more detailed pitch deck that can be read by your target investor instead of taking the risk that 11 pages of dense text will not only get read, but not get passed around the firm either.

So I’m not convinced by the Business Insider article that founders should take the time to do both a pitch deck and pitch memo. These things change often and trying to keep both of them in sync is not easy – simpler to keep two different version of a deck in sync.

But that doesn’t means founders can skimp on detail – they need to foresee all the questions an investor may ask in the detailed version of the deck they email to them.

To recap my recommendations made previously here’s what you need in your search for capital:

  • A short executive summary of your business plan – one page or less with one eye popping graphic
  • A great subject line for the email you send to prospective investors
  • A body of text for the email that is so compelling that the recipient will open the attached file – which is your one page business plan
  • A pitch deck designed to be used as part of a presentation
  • A very detailed version of the deck to be emailed to prospective investors

With these documents in hand you can contact are large number of investors. But keep in mind the goal is not to give a presentation but to engage an investor in a conversation. Pitch decks and pitch memos are a means to an end, not an end in of themselves.




It’s pitch scrub season!


Every year MIT’s  Venture Mentoring Services selects a number of its ventures to present at Demo Day. A number of us mentors help the presenters by doing a two part pitch scrub for them in preparation for Demo Day. On day one of the pitch scrub they present their decks and we give them feedback, on every slide. They then take a day to revise their decks and present to the same group of mentors again. The changes are always amazing, as they far exceed our expectations. If you can say one thing about MIT affiliated entrepreneurs they learn and learn fast. And they can apply that learning superbly.

But it never hurts to get some tips, especially from Carmine Gallo, who is an expert on presentations and the author of several books on presentations that I highly recommend, including The Presentation Secrets of Steve Jobs.

Lyft’s anticipated IPO roadshow kicked off this week. Carmine extracts five communication strategies from Lyft’s 24 minute presentation.

1. Start with the inspiration behind the product.

Origin stories as they are known, are powerful  ways to open a presentation. They quickly answer the “Why should I be interested in this presentation” question. “Why does this product exist?” Co-founder John Zimmer studied hotel management where he learned about occupancy rates, a key metric in the hotel business.

“Cars are occupied only 5 percent of the time. The other 95 percent of the time they’re just sitting there. If you have a hotel with a 5 percent occupancy rate, you have a failing business.”

It you don’t have a good origin story that’s ok, but you will still need to quickly answer the “why” question. One good way to do this is to present a surprising statistic about your target market or customers. Such as, “Do you know that X% of bicyclists fall at least Y times in their first year of competitive cycling?” While personal stories forge the strongest connections with your audience, stories about your customers can also work well.

2. Frame the opportunity.

While  journalists call Lyft a “ride-hailing company,” the company does not position itself that way. I prefer the term “positioning” to “framing” as it tells the audience what you are and what you are not.  The two co-founders position Lyft as “On demand peer-to-peer ride sharing.”  Your positioning or framing basically answers the question, “What is it that your product does?”

This is also a good time to answer questions about your market opportunity: what’s its size? How fast is it growing? What are its dynamics?

Lyft does a great job of this:

“We have an opportunity ahead of us to deliver the largest shift to society since the invention of the car” and “Lyft addresses one of the largest market opportunities of our lifetime; a shift from car ownership to transportation as a service.”

3. Create simple lists.

People do love lists, as evidenced by the thousands of listicles begging us to click on them. Carmine Gallo notes how Lyft makes use of lists, by creating a list of why Lyft is a good investment. As I advise my mentors, Mr.Gallo advises you to keep your lists short, no longer than three to five points.

4. Focus on key metrics.

Investors need to see the numbers, and that’s never more true than at an IPO Roadshow. Lyft’s Chief Marketing Officer compares Lyft’s market, transportation to three other markets: healthcare, entertainment, and housing. Comparisons between the known and the unknown – your venture – are a powerful way to help the audience visualize the opportunity before them.

5. Make it simple.

This tip may be last but it is not least! At a pitch scrub yesterday with group of research scientists the words “you need to simplify your slides” were said to every presenter! I advise you to limit yourself to one point or message per slide. That can be conveyed in two parts, a text header and an illustrative graphic or even very short (15 – 30 second) video. Even more importantly, your product must be simple to use. If possible you should be able to demonstrate that ease of use and simplicity as part of your presentation.

It’s highly unlikely any readers of this blog will be presenting at an IPO road show any time soon. It usually takes years for a venture to go public. But these tips from Carmine Gallo will benefit any presenter. And do follow the links to watch the video of Lyft’s road show presentation. After all, if a picture is worth a thousand words, a video is worth a thousand pictures!

Sometimes advice columns don’t dish out the best advice!


businessMost of the ventures I mentor plan to raise capital at some point in their venture’s life, if they haven’t already. So being as I have been out of the capital raising game for the better part of a decade, I try to read as much as I can to keep up with current trends in startup investing. Thus I just had to read the article 4 Reasons Why Investors Won’t Invest In Your Business Model, sub-titled Approaching the private equity firms or investors and persuading them in [sic] the most daunting task for businessmen. A typo in the sub-title is not a good leading indicator, but I read on. And it’s repeated in the first paragraph! But this is from, usually a reliable source … So let’s look at their “four reasons.” But first, always look at the author. In this case it’s not a person, it’s “BusinessEx Staff” not a named individual. So credibility goes down a few notches.

1.    Fail To Foresee The Future

I have the feeling this was written by a non-native English speaker, as the title would typically be “Failure to…” or “Failing to…”  First of all private equity firms rarely “scrutinize new entrepreneurs” because they rarely invest in new entrepreneurs. Private equity firms invest in on-going businesses or even buy them outright, with the goal of re-engineering the business and thus being able to sell it or even take it public at a significantly higher value than they paid for it.  Yes, “buy low, sell high.” Remember that! The only way one can know for sure if an entrepreneur can successfully foresee the future is to wait for the future to arrive … which can take years. But I do have to agree with the statement that “… it is vital as to how a business owner executes the plan and mould [sic] an emerging, nascent company out of it.” As Bill Gates has said, “Ideas are cheap, success is 99% execution.”

And I also agree with the statement: “The entrepreneurs, who lose this vision or get diverged by the money factor, fail to build concrete foundations of the business.” While again the English is tortured, the point is that entrepreneurs do need a lodestone to focus their attention. Having no vision or losing site of the vision results in companies thrashing – constantly pivoting. So no one can foresee the future, but you can execute your plan well, or not. And you need to build a plan to achieve your vision.

2.    Improper Cash Flows

Yes, the saying “cash is king in startups” is true. The worse thing an entrepreneur can do is to run out of cash. So being able to present a cash flow statement based on strong assumptions and early performance is indeed important.

3.    The Enormous Size Of C-Suite Executives

I’ve written before about the incredible growth in the size of the C-Suite. We now have Chief Design Officers, Chief Security Officers, Chief People Officers. You name it, there’s a Chief for it. Too many cooks do indeed spoil the dish. I am in violent agree with the message that startups should not have too many C-Suite executives. CEO and CTO should be enough for a raw startup. Having more CXXs is a red flag. Cliches prove true yet again: “Too many chiefs, not enough Indians.”

4.    Inability To Understand The Competitors

Back in the last century investors used to say in all my pitch meetings, “But what if Microsoft decides to copy what you are doing?” That got superseded by “What if Google decides to copy what you are doing?” I used to tell my mentees to ignore the “What if GiantCo enters your market?” question until I saw Instagram rip off the Stories feature from SnapChat, which fueled the growth of Instagram and hobbled SnapChat. So you better be sure that you aren’t hanging the entire fate of your company on one feature that isn’t difficult to clone – because success breeds many cloners, failures none.

Despite the inelegant English like “The business owners should further avoid these mistakes by planning strategized moves to entice funders and investors.” the advice is correct, but the idea the startups are going to be pitching private equity companies is just wrong. Where private equity does come in these days is in later rounds of companies growing rapidly that need a lot of capital, like Uber. The risk is much lower for these late round investors.  Let’s hope you are so successful that private equity comes knocking at your door! Until then execute, manage your cash tightly, keep the number of executives down to the bare minimum, and keep your eye out for competitors. Better yet build your company on a sound, sustainable competitive advantage.

A simple technique to improve your presentations


call out one

I learned a bit about publishing and the printed book while working at Addison-Wesley Publishing Company as General Manager of their Educational Software Division.  Back in those days of yore software actually shipped with user manuals, so I had to deal with layout, typesetting, printing, etc. How quaint!

But there’s one technique from print that I do recommend you borrow for your presentations, though this piece of advice is aimed at ventures who are far enough along to have a product to show, or at least a prototype.  The screenshot above was taken from an Apple presentation about a new version of the Apple TV.

While you may not have a giant screen behind you like this presenter (whose all black outfit merges with the image) you can still use the technique of call outs to help viewers understand your product. You can think of a call out as a special type of image caption. Instead of captioning the entire image a callout calls your attention to a specific part of the image, in the case above, to the numerous output on an Apple TV.

You can get really fancy and use the build function of PowerPoint or KeyNote to progressively add new captions to the same image.

call outs

With all due respect to Apple, kings of the keynote, I wouldn’t put a black product image on a black background, nor would I have the presenter dress all in black. Very funereal! Make sure your product or prototype image stands out against the slide background and that your callouts are big enough to read and clearly attached by fine lines to the features you are trying to highlight.

I gain an invaluable ally in my battle against PowerPoint!


When you have a Don Quixote complex like my battle against my archenemy PowerPoint and more specifically its enabling of text-only, bulleted presentations that are not only ugly, but boring and totally ineffectual you welcome any ally.

Bullet points, like anything are fine in moderation. Believe it or not I sometimes use them. Apple Mail and WordPress enable them – along with numbered lists. But as Shakespeare said, For as a surfeit of the sweetest things, The deepest loathing to the stomach brings. PowerPoint not just enables but defaults to lists of bullet points, enabling presenters to show slide after boring slide of bullet pointed deathly prose.

 John Queenan’s article in The Wall Street JournalMy Short List of Things That Need to Be ‘De-Invented’ sub-titled From PowerPoint to leaf blowers and singing waiters, there are mistakes waiting to be undone warmed the cold cockles of my heart. Not only does Joe hate PowerPoint, but my other pet peeve in life, leaf blowers, is also highlighted!

Joe Queenan has invented the concept of de-inventing. I quote Joe at length because he expresses my loathing for PowerPoint far better than I could:

I’m hoping my concept of de-inventing will become more popular. A couple of weeks ago I sat on a panel during which one of the participants induced mass spontaneous catatonia by launching into an electrifyingly inane PowerPoint presentation. A PowerPoint presentation for a seven-minute talk!

If anything ever needed to be de-invented, it is PowerPoint. Almost from the moment it reared its ugly head, it was recognized as a cruel weapon. PowerPoint made simple things complicated by turning even the most basic subject into a byzantine series of lists, that then generated other equally tortuous lists, which then gave birth to still other heart-rending, soul-destroying lists.

It’s not sufficient that PowerPoint gets purged, terminated, sidelined, discontinued. PowerPoint needs to be repudiated. It needs to get smacked in the face. It needs to be de-invented.

Careful readers will note that I’ve bolded three phrases, all containing the word lists. And it’s endless slides of bulleted lists that form the core of my hatred of PowerPoint. Heck, I use PowerPoint myself, but my goal is that no one in the audience would recognize it.  Photos, charts, graphs, diagrams, illustrations, animations, video – all can be delivered with PowerPoint. I confine my use of text, as I preach to my mentees, to a captioning tool. Yes, text in a presentation has its place: the title of a presentation or a slide title, for your contact information, and, of course, to caption visual images. I’d even go so far as to allow the use of text for quotes – unless you happen to have audio of that quote!

Joe Queenan is one of my favorite columnists and to have him call for de-inventing both PowerPoint and leaf blowers in one column made my day. I can’t do full justice to Joe’s humor in a blog post, so take a break from that PowerPoint you are working on and read Joe’s column. Maybe you won’t only be very amused you may even abandon those endless slides of bulleted text for something else, say something visual.

Now, about those leaf blowers, handheld infernal combustion engines that invade my neighborhood promptly at 7:30 a.m. each morning. Can all you landscaping guys go back to raking leaves, please, please, please! Elon Musk, how about inventing the Tesla electric powered leaf blower? I’m ready to PayPal you my deposit right now!



How to make your presentations concrete


Far too many founder pitches operate at a very high level of abstraction. To successfully engage investors, partners, job candidates, the media, and others you need a pitch that is down to earth, not up in the clouds. Here are some simple ways to help your audience understand the message you are trying to communicate by making your presentation concrete not abstract.

  1. Use examples: “We work with companies in the that burn coal for fuel, like Jenkins, Inc. in Kentucky, to help them reduce their carbon emissions – known to most of us call smog or dirty air.”
  2. Tell stories: “The reason I started this company is because my grandmother, who is 88 years old, lives in Louisville, Kentucky. I recently found out she suffers from asthma. After consulting with a number of asthma specialists I learned that there was little she could do rather than relocate. Well that might work for her, but what about the 616,260 other people who live in Louisville? That seemed like a big problem worth tackling.
  3. Don’t use business or technical jargon or hackneyed words like “innovative.” People who are not technologists or investors, like your parents or next door neighbors, need to be able to understand your pitch.
  4. Use proper nouns: names of people, companies, locations, and things. Better still, if you can use the names your customers, their locations, and the person you work most closely with.
  5. Don’t try to jam everything about your company, your product, and your team into your pitch. Slides jammed packed with multiple ideas will overwhelm your audience. Make one major point only per slide. Find or create a photo or diagram that illustrates that point. Text should be used as a caption for your image. Think of your pitch like a movie trailer. Movie trailers are designed to entice viewers to go see the movie and take only a minute or two to watch.  I call this problem FILO – Fear of Leaving Out. Don’t be a victim of FILO; be willing to leave your favorite slides on the cutting room floor if they don’t help tell your story.

More advice about pitching is on my blog

A one slide presentation on product positioning

Back in 1989 I co-founded a company called Course Technology, Inc. The idea was to extend the concept I had invented when employed as General Manager for the Educational Software division of Addison-Wesley Publishing Company. The invention there was a product that could meet the needs of college professors and students at a price that students could afford.

The business concept was simple: work with a college professor who had written successful textbooks and taught students the basic computer course to write a textbook on how to use Lotus 1-2-3.  We licensed a version of the IBM PC Lotus 1-2-3 spreadsheet – then the dominant software package for business professionals. The textbook and software were packaged together and sold not for the $495 for the professional version of 1-2-3 with its hundreds of pages of manuals written by the Lotus documentation department, but for $49.95, a price all students could afford. This product sold extremely well and led to an entire Student Edition product line generating millions of dollars for Addison-Wesley and to Lotus in licensing fees.

For some reason – perhaps seeing a lot of pitch decks recently – I recalled a one page slide I had created to illustrate how the Addison-Wesley Student Edition was positioned against the professional version and against a typical college textbook.



As you can see my graphics skills are no better and probably worse than they were 30 years ago, but the slide is illustrative. I may well have the tagline wrong – it  doesn’t sound quite right to me – but it will do for these purposes.

Can you create a slide that illustrates the positioning of your product?