Stephan Tual

While working with AngelList, accelerators and startups, I've seen hundreds of pitch decks and been pitched to many times. A weak pitch is boring and awkward. A great story is electrifying. Here's how to build a great story into a pitch deck.

"Investors invest in stories, not businesses"
- Babak Nivi, Venture Hacks/AngelList

"Where the four winners separated themselves for me was by presenting a narrative that fit the data they had spent the weekend creating."
- Phineas Barnes, FRC

Storyboarding your deck helps to develop this narrative.

It starts with the story investors need to hear, not the parts you have. It keeps the crap out. And it lets people collaborate in building that story.

Let's do it.


1)  Set up.

Find a room where people can collaborate, with a large whiteboard. A 4' by 8' board should work.


2) Get the right people in the room.

Storyboarding is a collaborative activity. Get 2-4 people who will be pitching, who know the startup, and who can tell a good story. A supportive but critical outsider injects perspective.


3) Draw boxes and note space.

Draw out 10-12 boxes on the whiteboard. They should be at least a foot square each, with room for a few notes in and around each one. These boxes are the first draft for your deck. On the margin, leave space for notes.

Your whiteboard will look like this: 



4) Brain dump your notes.

Get your notes down first. I'd suggest 4 areas: 

Core story: What do you want your whole pitch story to be? For example:

"We're young, but we move fast, on almost no capital. Our customers and hot shot investors back that up."

"This is a very difficult technical challenge. That has prevented entry, though the prize is there. We've cracked the tech, and built a defensible business."

Highlights: the 3 - 4 strongest selling points about your startup. These may be your team background, progress to date, opportunity, committed investors, etc. For example:

"We're backed by Ron Conway, Big Bird and the entire NY Mets. Donald Trump was an advisor too, until we fired him."

"Our background: Google, MIT, and 3 startups (2/3 succeeded and the failure taught us more than the successes)."

"Early enterprise sales are killing it, and there's that contract with IBM that we just landed."

Hesitations: the 3 or 4 hangups investors might have. These can cloud the whole pitch if you don't address them. For example:

"The numbers are based on wild assumptions; they're not believable."

"This space never makes money."

"Sales cycles here are deadly slow."

"This concept was fashionable two years ago. There's little left here."

Raw Notes: everything else.


5) Here's how the boxes work.

There are 4 moving parts. They work in harmony. 



a) Core story. This is the overarching story you want to tell in the deck.

b) Slide message. This is what you want the investor to take away from each slide, whether directly stated in the content or not. 

c) Slide content. This delivers each slide's message. Use words, photos, diagrams, charts, etc., but don't get stuck to any specific content.

d) Flow between slides. This is the glue. It affects the order of the slides, and adjacent slide messages.

Okay, with that in mind, let's storyboard.


6) Draft your slide order

Title the top of each box. You'll probably start with common slides: basic description, customer pain point, product, opportunity, team, etc. Have a quick look at Guy Kawasaki's classic post for inspiration: http://blog.guykawasaki.com/2005.... (To be clear: I don't think those are the slides or order that is right for you, but it's a start point.)

Move the order around to suit your core story and strengths, add missing pieces, and kill anything that doesn't fit.


7) Draft each slide's message.

Add the main slide messages under each box. Frame it as an investor thought. For example:

(Product) "These guys have built tons in 3 months with no cash! I wonder what they can do in a year with my money!"

(Financial) "They know that consumer web projections are guesses, but they've used the model to understand the levers."

(Team and social proof) - "Wow, Jim is an investor? Jim was in Googlebook. Is this the next Googlebook? I can't miss that!"

(Customer) "I can believe that pain point. There's real customer understanding here."

After adding all the slide messages, step back and see if they work together. If not, change the messages or move them around.


8) Add each slide's rough content

Don't add high definition content yet, only rough points and diagrams for content type. Consider what best delivers your slide story. Kill anything that doesn't.

Now consider the flow between adjacent slides. For example:

"(from competition slide)...'that was the opportunity that the competitors are missing. We've built a product to exploit these areas, with an emphasis on the real user needs we saw earlier. Let's check it out'...(to live demo or screenshots)"

Does it work? If not, should you alter the slide message or move them around?


As it fills up, it'll start to look like this:



9) Step back.

Step back. Look at your notes. Where is the core story being delivered? Is there  harmonious? Are the 3-4 highlights clear in the story? Are the investor hesitations covered? How does it feel? How does it flow?  Question yourselves. Find the weak points.


10) Iterate, test and rebuild.

Go through steps 7 to 9 again with increasing definition. Question. Fix the weak and amplify the strong.

As you build the real deck, get it in front of others. Ask them what they take away from it, and find their problems in the story. Integrate good feedback. The first investor pitches are always about dialling in your story.  


That's it. Good luck. 

B


Notes: 

1) I listen to signals. I'd begun this post when I caught Phineas Barnes' recent post on geekery and narrative (http://www.sneakerheadvc.com/201...), David Crow's post on pitches (http://startupnorth.ca/2011/05/2...), and Babak Nivi's Stanford presentation on pitching (http://slidesha.re/lMsgew). I agree with all of them.  

2) There are other media that may work to stage - cards, post-it notes... I've used pure whiteboard.

3) I still believe in building first and pitching second. Evidence trumps potential, every time. See http://slidesha.re/mGiQL2.

4) There's rarely a 4.

In the last year I've seen thousands of startup pitches while working with the AngelList crew, coached 100+ founders on how to communicate their product, traction and team, and worked with startups in fine institutions like 500 Startups, AngelPad and Bootup. I've also dissected 500+ emails from a recent seed round fundraising to map investor response. Here's what I've learned.


Through thousands of pitches, I've found that fewer that 5% tell a great traction story.

Here are 10 tips that can help.

But first, let's get one thing straight - this is the only thing that matters to investors:


Venture investors invest in momentum. Traction is your story of momentum. It's told through quantified evidence of market demand for your product.

(Here I'll bring in Alec Baldwin for a little help. Remember ABC in Glengarry Glen Ross? Watch this: http://www.youtube.com/watch?v=y.... Now think ASM: Always Show Momentum. That's what this is all about. ASM.)

Here we go.


1) Compress your X Axis

The X axis is how long you've been working. The shorter, the better. Consider two startups below, both at the same number of users:


As an investor, who would you bet on? Blue, of course, because they've moved faster. So as a startup, how can you show that you're moving fast? Set reference points to effectively shorten the period.

Consider these two messages, for the same consumer web product:

"We started in 2008, and have 5000 users."

Here, an investor's thinking: '5000 users/36 months = painfully slow growth.'

"We started to experiment in 2008. We built the alpha of our current product in late 2010, and just launched the beta in February. We already have 5000 users."

Here, she's likely to think 'they took awhile to find the right fit, but now they're moving fast - 5000 users in beta is pretty good!'

Same progress, different message. Psychologically, you're anchoring a better reference point in their minds. In the second example you're anchoring them around the beta launch, not the beginning of your startup.

More examples:

"We started experimenting with this in 2008, and took a year to understand the space. Last September we quit our jobs to build this full time. Since then, we've built the alpha and then launched a second beta version, now with 5000 users."

That's anchoring them around the point that the team fully committed.

"We started experimenting in 2008, and built a couple iterations of the product. We found product-market fit with this version in August, and are now in beta, with 5000 users."

That's anchoring around this product version.


2) Choose Your X Axis

If you're adventurous try another X axis. Sales cycles can work where there's a slow, well-known sales cycle, like education. For example:

"Adoption is doubling every four months."

That's pretty good, but this is better:

"Adoption is doubling every term."

That's better because there's probably only acquisition potential each new term, and you're doubling users at every opportunity.


With very early products you can use product iteration. It works best with engagement or conversion numbers:

"We're currently converting 1.2% to paid users."

That's okay, but I'd love to hear how that has changed:

"We were converting 0.3% to paid users in the first product iteration. We raised that to 0.6% with the second iteration, and our current version is converting at 1.2%."

Here your X axis is product versions. This creates a nice trend line, and shows an investor that you're learning and improving. I find this works well with accelerator startups, who are early but move quickly. It's not traction in the true form (market demand), and shouldn’t displace a core metric, but it does show that your team can learn and execute.


3) Lower Expectations

You may want to set expectations low, and then exceed them. The most obvious example is when you’re in beta - say it!

"We have 200 users."

That's weak.

"We're in closed beta, and have 200 users."

That's better. You've set the investor's expectations low with a closed beta, so 200 seems normal. Now for bonus points, slip in some evidence of greater demand:

"We're in closed beta with 200 users, but each user is inviting on average 4.5 new users, and our waiting list is over 1000."

Holy crap. The new message: there are only 200 users now, but they're going crazy, and once they open you up it'll explode!


Another example I like, with product discovery:

"Before we even built the back end, we put an embarrassingly simple site up, just to see if there was any interest. We were blown away by the response - 200 users in the first week!"

Lower their expectations on the product side, then exceed it with the user response. (Some of the coolest products began with faked back ends.) This hints at product-market fit before you even had a real product.


And finally, set expectations by characterizing your users. This works best for enterprise or B2B startups, where customers are more difficult to win and have more value than consumer web.

"We have 400 customers, all of which are SMBs and have a projected lifetime value of $1500."

If you're speaking to an investor more familiar with consumer internet, that will put it in perspective.


4) Choose Your Y Axis

Broadly, I find traction most convincing in the following order:
- Profitability
- Revenues
- Active users
- Registered users
- Engagement
- Partnerships/clients
- Traffic

But this changes depending on your product and market. Some examples that might work:

E-commerce: revenue growth, average sales or gross margins, customers, average return visits per customer, units moved, and some industry specific numbers.

Consumer internet: user numbers, engagement of those users (number of questions or answers, photo uploads, time on site, whatever is relevant), virality (average new invites per user, waiting lists, etc.) or partnerships (brands signed on, stores engaged, etc.).

SaaS for small businesses: revenues, conversion to paid customers, registered users, cost of customer acquisition + lifetime customer value, signed distribution partners, or some quantifiable evidence of value to customers.

Enterprise: revenues, number of enterprise customers/clients, average contract size (growing?), qualified sales pipeline. Try to find some downstream value add example, say that your product engages X of their staff or customers, or saves them Y % on marketing costs while improving results.

Pick the metrics that best tell the story of your momentum. There are many options - be imaginative.


5) Use Absolute and Growth Numbers

Growth is key. You always want to tell that momentum story. Consider the following:


Red is powerful. Blue is crap. So when you’re describing your traction, use absolute numbers and growth numbers to communicate momentum. Consider:

“We have 10K users.”

OK. That’s not bad, but there’s little context.

“We have 10K users, growing at 25% per month.”

That’s more exciting.

My sense is that for most metrics, less than 10-15% growth per month is uninteresting.


6) Tell a Story of a Customer

This technique works best for B2B or enterprise-related companies who are early in their progress.

“We first started a pilot with Superchain, in one of their branches and with 15 employees. We’ve now expanded to 5 branches and 200 employees, and added two additional services. Superchain has over 1000 branches across 5 states.”

This does two things: shows the value you’re providing to a customer, and hints at the opportunity.


7) Benchmark Against a Known Competitor

This technique is aggressive and should not be overused, but it can work. Two that I’ve seen:

“Our CTR is 3X that of Techcrunch.”

“Our stock turnover is nearly twice as fast as Amazon’s”

Use this technique sparingly and pick comps that are relevant to your business.


8) Annotate a Graph

This is a great way to tell a story concisely, and show how your inputs have resulted in improvements in growth.


It seems to work well for early startups, especially those in accelerators (they move fast).


9) Using Testimonials as Traction

Don’t.

Even shitty startups have glowing testimonials, so it doesn’t differentiate.


10) Using Press as Traction

Don’t.

Even shitty startups can get good press. Repeat after me: ‘Getting on Techcrunch doesn’t mean that people want our product.’ ‘Getting on Techc...’ OK, you get it.


Notes

1) This guide has nothing to do with how you build your product or company. That’s up to you. So please don’t confuse traction with the metrics you’d use to help guide your business. I know nothing about those!

2) Some traction metrics will be necessary, whether you want to use them or not. If a metric is core to your business, don’t try to hide it - you’ll only appear evasive.

3) This post is an extension of Brendan Baker's answer to How do you define 'traction' for a start-up?.

4) There is no 4.