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Good tips for a pitch deck

The pitch deck guide below is one of the best I’ve seen. Thanks to my friend @alexhoye for sharing.

It’s a great guideline for content – both everything that should be in a deck and a slide by slide guide – that’s hugely valuable, but the other thing that’s important is to sell a story. One simple and highly recommended way to do that is to cultivate a sense of inevitability, another is to make it exciting by following standard story telling arcs – e.g. crisis, struggle, resolution or the hero’s journey. These latter techniques reside more in the voice over than the pitch, but they should be reflected in the deck.

Slide 8 shows an overview of what should be in deck. If you only have 30s go straight there.

Imagining a brighter future

It’s a pretty common for futurists to lament that public perceptions of the future are generally dystopian. Hollywood often gets much of the blame for providing us with Terminator, The Matrix and many other nightmare visions of the future, but our evolutionary history is perhaps more responsible. Simply put, we are built to be pessimistic. The best way to stay safe on the African savannah was to be super sensitive to anything that might represent a threat, so our brains evolved to be good at predicting danger to the extent that we are drawn to bad news and scary movies. Maybe Hollywood is just giving us what we want…

Either way, it isn’t helpful to society for us all to have a negative perception of the future. The next generation of scientists and entrepreneurs need to be inspired by something, just as many of the current generation were inspired by Star Trek which, particularly in the Next Generation Series’, presents a very positive view of where we might be headed.

I’m writing about this today because Kevin Kelly has done something about this problem. For those who don’t know Kelly or his work I would describe him as ‘the futurist’s futurist’. He doesn’t have the public profile of a Ray Kurzweil or Chris Anderson, but he has done an amazing amount of great thinking and writing about technology and where we are headed, for which he is hugely respected, particularly by those with an interest in the field. And he was the founding editor of Wired Magazine.

The thing Kelly did was send out a request to the internets asking for “100 word descriptions of a plausible future 100 years from now that he would like to live in”. He said he would give $100 to the best one he received.

First off, notice the way he constructed the request – the key words are “plausible”, “100 years” and “would like to live in”. The answers needed to be realistic, looking an awfully long way out (take a second to picture the world as it was in 1914), and positive. As he notes, wrapping that into 100 words is tough.

He wrote up the results here. In summary, he received 23 replies which contained three broad themes:

  • we will have abundant clean energy from solar or fusion
  • the physical and digital will be further merged into a ‘holistic internet of everything’
  • artificial intelligence and robotics will have transformed our economy into one of plentitude and creative work/play

Kelly lists all the replies in the summary, but cited this one from John Hanacek as his favourite:

Physical and virtual realities are meshed together with no distinction. Ideas are given sovereignty with their creators rewarded fairly and directly. The world itself does the drudgery of assembling itself across all sectors that information science has been applied, which is limited only by the quantum information underpinnings of the universe. Humans have taken up their primary purpose of creativity and now work with other intelligences of any kind to ask questions and achieve answers, with an eye toward more questions. “Human” has taken on flourishing new meanings. Imagination has been unleashed upon the world in a literal sense.

And this was what Kelly came up with himself:

2121: Population 4 billion; 85% urban. Cities boom, empty suburbs struggle. Agriculture acreage reduced with GMOs. Nature monitored quantitatively; green lands expand with genetic engineering. Solar, fusion, mini nukes generate cheap power. Climate change adapted. Creative middle class the new majority, globally mobile. Computer pilots make travel common internationally. Eco and heritage tourism primary income for poorest. Robots takeover remaining blue-collar jobs in Asia and Africa. Internet of everything physical continued. Universal library, and universal lifelong education for free. All humans always on the net anywhere. Brain interface, wearables. Co-veillent tracking ubiquitous. Quantified self for personalized medicine. Techno-literacy (managing) skills mandatory.

These are both inspiring visions of the future. For me the best bit is that cheap energy coupled with artificial intelligence and robotics will have freed us to focus on creative work. Also important is that we have cracked the science behind food production sufficiently well to feed the world, which I expect to still have a much greater population than 4bn (we are at 7bn today).

There’s plenty there for young scientists and entrepreneurs to aim at.

Friday fun and Xmas cheer: The TGIF mistletoe drone

Check out this brilliant video from the TGIF restaurant in Manchester where they hung mistletoe from a drone to get their customers kissing. The ‘Kisscam’ at 0.55 is my favourite moment. That’s quite put me in the mood for Christmas, and it’s not even December yet :)

Company culture is increasingly important – to customers

It’s pretty well recognised now that a strong company culture helps bring success to a business, but what’s new is that a company’s culture is starting to matter to consumers. Moreover, whilst shareholders may judge a company’s culture on how much it contributes to good execution, customers judge it on ethical grounds.

Hence, for the second year running Amazon Anonymous are running a boycott Amazon campaign this Christmas which they claim has so far diverted £1.3m of spend (many of my north London neighbours will be pleased…) and a range of people are urging us to boycott Uber. I think we will see more and more of this sort of thing. People are increasingly concerned that the companies they shop with match their values. This plays out positively for companies with a strong ethical profile and negatively for those with unpopular practices.

Interestingly, some of the elements of company culture which have historically been great for shareholder value are the ones that are now undermining brands. Taking the examples above, Amazon’s famously frugal culture has landed them in trouble for low wages and Uber’s all out aggression has led them to many actions that most people view as unacceptable, most recently threatening journalists with smear campaigns.

I think we are heading towards a better world where unsavoury behaviour is tolerated less, but it is also a more complicated world for managers.

The “Scale up report” and job creation

Sherry Coutu’s much anticipated Scale Up Report has now been released with the clear argument that job creation comes from fast growing companies, or ‘scale-ups’ rather than all startups, and hence that’s where we should focus our policies. The report goes on to make a set of practical recommendations for government to help the UK’s scale-ups and hence improve job creation and GVA. The Scale Up Report’s recommendations are designed to produce better data so scale-ups and the effectiveness of scale-up policies can be tracked, to reallocate resources from start-ups generally to scale-ups specifically, and to make individuals, including a Minister, responsible for increasing the number of scale-ups we have in the UK.

I’m interested in the impact that a venture capital fund like Forward Partners can have on job creation and GVA. On page 106 of the report there’s a table showing the number of scale-ups by region. This year there are 8,923 scale-ups in the UK, with 2,264 of those based in London. Thames Valley Berkshire is the next biggest region with 562 scale-ups. (Scale-ups are defined as companies with 20% growth p.a. in turnover or employees for three years and with more than 10 employees at the start of the period.

Like many venture funds Forward Partners has a target portfolio of around 30 companies which we will invest in over a three year period. If all of our partner companies were to become scale-ups that would be 0.3% of the UK total and 1.3% of the London total. Research cited in the report predicts that scale-ups will create 238,000 new jobs over three years and contribute £38bn to GVA. If we have invested in 0.3% of the scale-ups then we will have had a hand in the creation of 714 jobs and £114m of GVA (which curiously enough isn’t far away from the amount we project our share of our partner companies will be worth).

That’s a nice target to aim at and a result that would make us proud.

Snapcash – the way to make P2P payments

Snapchat just launched their Snapcash service in the US which you to send money to friends by sending them a message (details here in Techcrunch). Many entrepreneurs have gone after the P2P payments market, but no-one has so far succeeded. I think Snapcash might be different for the following reasons:

  • It piggy-backs on a large existing network
  • It is simple to use – just start a message with a dollar sign
  • It’s free

The service is based on Square and requires the sender and receiver to enter their debit card info, which makes it a small step from here to being able to pay retailers as well as consumers. As well as increasing engagement with their users the benefit it Snapchat is that it will have real names for participating users, useful for ad targeting.

I wonder if Facebook will do something similar to Snapcash with Whatsapp.

Your seed round should last 12-18 months – data

median-days-seed-a-tech-2014

The ever excellent CBInsights just released new data on the time between rounds. As you can see from the chart above year to date in 2014 the median time between seed and Series A has been 349 days and that’s been reasonably consistent over the last couple of years. If the median time is just under a year then in the spirit of planning for the worst and hoping for the best this data suggests that reckoning on making your seed round last 12-18 months is the way to go.

Thinking about our portfolio and other companies I have seen recently in the UK I would estimate that over here the median time from Seed to Series A is slightly longer than this, maybe just over a year. That would make sense given that the volume of capital in the market is lower and the competition between investors is less intense. (The good news is that the a number of new funds have come to market recently, including Google Ventures and Mosaic Ventures.)

For UK companies then, I would advise reckoning on 12 months as a minimum. Some companies do better than that, but that takes luck and it isn’t wise to plan on being lucky.

All that said, within reason more runway is better and if you can get extra cash at an acceptable dilution it’s usually worth doing. Important caveat: if you do raise a large seed round don’t ramp the burn too much before you’ve found a repeatable business model.

On a side note, in a bubble times between rounds usually drops, but we’re not seeing that in the chart above, or in times between later rounds.

Happiness – a growing trend

I’m at the excellent Hacking Happiness conference in London today and there it’s clearer to me now than ever that we are at the start of a trend towards an increased focus on happiness. So far that has mostly manifested itself in purpose driven companies that are fulfilling places to work. I think that’s amazing, and that we will see more of it, but I wonder if we will also start to see an explicit focus on happiness – for individuals, but especially at companies, and maybe even for whole countries (here’s a good Ted talk on that subject).

To that end we have just started measuring happiness at Forward Partners using a tool called Moodmap.

If you read around different writers say that different things make people happy, but the things that come up most are:

  • strong relationships – friends and family
  • meaningful work
  • positive thinking
  • being thankful

I will be thinking and writing more about this topic. There may even be some investment opportunities.

Cultivate the calmness that comes from knowing you will succeed

Reading this tweet from Paul Graham I immediately thought that this is great advice for multiple situations, not just YC interviews. Job interviews are one such other situation. Negotiations are another – knowing you will succeed whatever the outcome gives you the power to walk away.

Knowing you will succeed takes a special kind of confidence. That starts with self belief, which an entrepreneur needs in spades. I wrote a while back about the cognitive biases that an entrepreneur need, and personal exceptionalism is top of the list, you should believe that you are the top of your cohort and that your work is snowflake special. You know you will succeed because you know you are good enough to find a way. I’m not sure if you can cultivate this kind of confidence.

But self-confidence isn’t enough on its own. You also need a good plan. It might not be possible to do anything about your levels of self confidence, but you can make sure you have a good plan. The first thing you need is a good idea. That isn’t the same as the best idea you’ve had so far. It should be something that you have a great feeling about. Then you need to test it thoroughly. Look at it from every angle. One way we help entrepreneurs do that is to list out all the assumptions that are made and then examine each for reasonableness. Another good way is to talk to as many people as possible and listen carefully to any criticisms they have. Listen, process, and then figure out whether they are right. Don’t fall into the habit of dismissing a commonly heard objection. If you hear it a lot, think about it a lot.

By way of an example, here at Forward Partners the most common criticism of our business is that our returns won’t be good (enough) because we spend much more money than conventional VCs supporting our partner companies. The argument runs that we would be better off using that money to invest in a larger number of companies. Our belief is that the tools and services we offer make it a little easier for companies to achieve success which brings two important advantages. Firstly it gives us an edge in winning deals and secondly that our partner companies will do better as a result. We take the critique seriously and have modelled out how much that edge in winning deals needs to be worth and how much more success our companies need to achieve. The assumptions look reasonable and we continue to test them against reality as we do more deals and gather more data points.

Combining a good plan which has been thoroughly stress tested with a high level of self confidence puts you in a good place, but there’s one final ingredient you need before you know you will succeed, and that’s a back up plan. If you are founding a company there will be huge unknowns and associated risks. If you’ve done your planning well you will have confidence that they are all manageable, but you need to know that you will prevail even if you get unlucky. In our case we ran the analysis to see what happens if the extra money we spend supporting our partner companies makes no difference, and the conclusion is that the returns to investors will still be ok. Not where we hope to end up, but still ok.

Designing for experiences

I love this tweet! It sums up the opportunity for new product and service development beautifully. Here at Forward Partners we often talk about backing companies building amazing products and brands that people will love, and when we’re talking with companies we always ask how they know customers will think their products are amazing. Good answers show an understanding of how people will use their products and how they think about the alternatives. In particular they show an understanding of the emotions surrounding their product category. A product is amazing when it evokes emotion.

The example above says that it’s better to ‘design a better way for people to enjoy flowers in the home’ than to ‘design a new vase’. Firstly I like the tightness of the definition – it’s not just a vase, it’s a vase for flowers, in the home. It’s better to start with an amazing product in a smaller market and then grow the market than start with an average product for a huge market and try to improve the product. Secondly, the purpose is clear – it’s to increase enjoyment. When you frame the problem in this way the importance of understanding how people currently enjoy flowers in the home become clear. If the challenge is described as ‘design a new vase’ then it’s too easy to focus on aesthetics and ignore the use cases. Too many product designers make this mistake, which is why our homes are filled with products we don’t use. It doesn’t have to be that way.