Mari Smith and I are going to have a rocking time explaining the seven hottest social-media business trends in a FREE webinar. Sign up here:
See you on March 28th!
Mari Smith and I are going to have a rocking time explaining the seven hottest social-media business trends in a FREE webinar. Sign up here:
See you on March 28th!
In 1983 I saw a Macintosh for the first time and fell in love. I loved Macintosh so much that I wrote a book about it. In 2011 I saw Google+ for the first time and fell in love again. And now for the second time in my career, I’ve written a book about a product: What the Plus! Google+ for the Rest of Us.
I wrote What the Plus! to help people understand and master Google+. I cover the essential Google+ skills: creating your profile, circling people, commenting, posting, responding to posts, hanging out, and sharing photos. Here’s what some experts had to say about the book:
“We didn’t expect over 100,000,000 people to join Google+ so quickly. If we had, we might have written a tutorial like this one. Lucky for us, Guy has written this wonderful introduction to Google+. Highly recommended!” Vic Gundotra, Senior Vice-President, Social, Google
“What The Plus is the G+ motherlode! Guy’s book will make you fall madly in love with Google+ and never look back!” Mari Smith, author of The New Relationship Marketing and coauthor of Facebook Marketing: An Hour A Day
“People ask me why I like Google+ better. I struggle to find the words, but Guy Kawasaki not only figured it out but shows you how to get the most out of this new social network.” Robert Scoble, Rackspace videoblogger
You can get more information, read the reviews, and order a copy here.
Over the past two weeks via my partnership with Microsoft and Office Web Apps, I’ve provided templates of models for you to create enchanting PowerPoint pitches, Word business plans, and Excel financial models. They are all available for you to download from my SkyDrive account. I hope these documents and blog posts help you save a boatload of time and increase the quality of your efforts.
I leave you with two sets of top ten lies: one of entrepreneurs and one of investors so that you know what not to say and what not to believe.
Top Ten Lies of Entrepreneurs
“Our projections are conservative.”
“Jupiter says our market will be $50 billion in ten years.”
“Several Fortune 500 companies are set to do business with us.”
“No one else can do what we’re doing.”
“Hurry up because other investors are about to do our deal.”
“Our product will go viral.”
“The large companies in our market are too big, dumb, and slow to compete with us.”
“Our management team is proven.”
“We filed patents so our intellectual property is protected.”
“All we have to do is get 1% of the market.”
The average number of these ten lies that I hear in most pitches is ten. At the very least, tell investors new lies.
Top Ten Lies of Investors
“I liked your company, but my partners didn’t.”
“We are patient investors who want to help you build a great company.”
“If you get a lead, we’ll invest too.”
“There are no companies in our portfolio that conflict with what you’re doing.”
“Show us some traction, and we’ll invest.”
“We love to co-invest with other firms.”
“We’re investing in your team.”
“We have lots of bandwith to dedicate to your company.”
“This is a plain, vanilla termsheet.”
“We will get other companies in our portfolio to work with you.”
Do you know what the difference is between the lies of entrepreneurs and the lies of investors? The investors have money.
It’s not all bad news. Think of everything that an entrepreneur needs (tech ones, anyway), and you’ll see that most things are free or cheap.
Marketing: use blogs and social media to promote your products.
Tools: most tools are Open Source and free. Microsoft offers free versions of applications like Word, Excel and PowerPoint in the cloud!
Infrastructure: More cloud goodness—you don’t have to buy servers anymore.
People: callous for me to say, but in a recession, people are free or cheap.
Office space: what office space? You can work out of your garage (like David Hewlett and Bill Packard) or just form a virtual team.
The bottom line is this is one of the cheapest times to be an entrepreneur, so go into your garage and start prototyping. Then when you need to create enchanting documents to raise money using PowerPoint, Word, and Excel, we’re all set to help with Office Web Apps, SkyDrive, and my templates.
Promotional consideration paid by Microsoft.
Now this is a fun project. I’m helping Sam Adams “tap” the knowledge of beer drinkers and crowd source its next brew. Join the party by getting the app and designing your beer:
The final brew will be released in Austin in the first week of March.
This is the third post in my Microsoft partnership, and it’s all about numbers. The topic is crafting your financial forecast to include in your pitch. Bill Reichert, my partner at Garage Technology Ventures, created an Excel model and wrote this blog post. There’s a lesson in this too: Get the best person for the job. His grasp of financial models and how to present them exceeds mine by two orders of magnitude.
The Purpose of Financial Projections
When it comes to financial projections, there are two types of entrepreneurs: first, the “visionary entrepreneur” who considers financial projections silly, so she makes up numbers that look good to investors; second, the “intense entrepreneur” who develops an 10,000 cell spreadsheet that includes the number of licenses of Microsoft Office that he needs to buy in year five.
If you are the first type of entrepreneur, you run the risk that the investor won’t trust you with his or her money. This type of entrepreneur often alienates investors because of his cavalier attitude. If you are the second type of entrepreneur, you run the risk that the investor will think that you actually believe your projections.
When it comes to financial projections, however, there is only one type of investor: people who don’t believe your financial projections, whatever they are.
So what’s the right balance of vision versus detail? The point of financial projections is to tell a story with numbers—a story about opportunity, resource requirements, market forces, growth, milestone achievements, and profits. Your job is to create a numerical framework that complements and reinforces the vision you’ve painted with words.
The investor isn’t interested in the precision of the numbers, but he or she is interested in what the numbers say about the economics of your business, and what they say about your understanding of your business. The goal is to tell a credible, as well as exciting, story about what your business could become.
To be credible, your numbers have to make sense on the first review. If you are suggesting that your company will grow faster or be more profitable than any company in history, you will lose credibility. Your numbers must survive simple questioning:
Do the capital requirements shown in your projections match the funding you are asking for?
Do you know how many customers you have to land to generate the revenues you are projecting?
Do you know how long it takes and how much it costs to acquire a customer?
Do you know what resources will be required to support customers?
Do you know how much you will have to spend to stay ahead of the competition with your product or service offering?
How to Use the Template
With that introduction, here is an Excel template to help you present your financials to investors. There are two main sections to the model: one for presenting your five-year financial projections and one for presenting your twelve-month operating plan.
The reason to develop a financial model of your business for five years going forward is to make explicit the driving factors behind your revenues and expenses as you pass through several stages of product development, market penetration, and organization growth. As they say, if you don’t know where you’re going, any road will get you there.
The point of the templates is not to suggest a rigid structure that you should force your financials into but rather to show the level of detail you should have in your summary. Your driving metrics are going to be specific to your business. It should be clear how they drive revenues and expenses.
Most important, you need to show investors how you will grow your company from the bottom up—sale by sale, employee by employee—rather than building a model from the top down. No one believes that a model built on getting “only one percent of the target market” is a credible plan.
You won’t be presenting your operating plan to investors in your first few meetings, but you’d better understand how you are going to run the business once you raise capital. A well thought-out operating plan will reflect your ability to allocate resources—people and money—to the highest priority objectives.
Building from the Bottom Up
The problem with financial accounting, however, is that it forces you to present your numbers using big company functional categories, such as sales, marketing, engineering, general, and administrative. But startup companies really operate as projects, with most projects running across functions.
You need to run your company as a startup, but present your financials using the standard framework of accounting. That means that the details of your operating plan will reside in a model built around the activities required to achieve your critical milestones.
That way, when an investor drills into why you are planning to spend money the way you are, you can frame your answer in terms of business priorities and deliverable milestones, rather than saying something like, “Most companies spend 25% on sales.”
Still, building your operating plan from the bottom up based on projects you need to execute is challenging. We all over-estimate how much we can accomplish in a month. Make sure your projections are tempered by real world experience. You want to over-deliver during those early years, not under-deliver. You don’t want to have to ask for more money before you’ve proven what you promised to prove.
Two Final Tips
First, don’t call your projections “conservative.” We refer to this as Entrepreneur Lie #1 (Guy will explain nineteen more lies in the next post in this series). Investors want to see a bold plan that is well thought-out and realistic, if everything goes reasonably well. They don’t want to see a delusional plan. Your job is to show that you have tapped a team with the experience and insight to justify your bold optimism.
Second, model your company on other real world successes. You don’t have to make up your business model. You should be able to model your financial projections on companies that have been successful before. Use the S-1 IPO filings of companies with business models similar to yours to get an idea of what is realistic. If your projections are wildly different than other highly successful companies, then your assumptions are probably off.
Your operating plan and your longer-term projections will evolve. You should be constantly engaged in testing your assumptions and adjusting your actions as you learn. The trick is making sure you are always using your precious resources—people and money—most effectively, for the highest return, rather than letting inertia perpetuate activities and expenditures that are not productive.
It’s obvious, but it’s true: The number one cause of failure is running out of money. And the number one cause of running out of money is the failure to grow revenues faster than you are growing expenses.
As much as your investors may tell you, “We back teams,” they expect you to make money. If you deliver on your numbers, you will become rich and successful. If you fall short, you won’t. So as much fun as it is to paint an exciting vision, at the end of each month, you will be measured on your ability to deliver what you promised.
Read Guy’s previous posts in this series: “How to Create an Enchanting Pitch” and “How to Create an Enchanting Business Plan.” You can also download the PowerPoint and Word templates directly from Guy’s SkyDrive account.
Promotional consideration paid by Microsoft.
Here is the second post in my series about planning, pitching, and launching a new business venture. In partnership with Microsoft and Office Web Apps, I’ve created a Word document that outlines a good business plan. It’s saved to my SkyDrive folder here. Feel free to download it and use it as inspiration. And if you’re working with a partner, you can use the free Word Web App to stay in sync.
I provided the PowerPoint document before the Word document because a good business plan is an elaboration of a good pitch as opposed to a good pitch being a distillation of good business plan. You should give your pitch a few times to see what works. Change the pitch to make it better and then write your plan.
Think of your pitch as an outline, and a business plan as the full text. (How many people write the full text and then write the outline?) The more you pitch, the better your outline and the better your outline, the better the plan. After you perfect your pitch, then start writing the business plan. At a high level, here are some tips for writing an enchanting business plan:
Write for all the right reasons. Most people write business plans to attract investors, but most venture capitalists have made a “gut level” go/no go decision during the PowerPoint pitch. Receiving (and possibly reading) the business plan is mostly a mechanical step in due diligence. The more important reason to write a business plan, whether you are raising money or not, is to force the management team to solidify its objectives (what), strategies (how), and tactics (when, where, who). Even if you have all the capital in the world, you should still write a business plan. Indeed, this may be especially true because too much money usually causes sloppy and lazy thinking.
Make it a solo effort. While creation of the business plan should be a group effort involving all the principal players in the company, the actual writing of the business plan–literally sitting down at a computer and pounding out the document–should be a solo effort. Ideally the CEO should do it because she will be pitching, defending, and implementing it.
Put in the right stuff. Here’s what a business plan should address: Executive Summary (Overview), Problem/Opportunity, Unfair Advantages, Sales and Marketing, Competition, Business Model, Forecast, Team, and Status and Milestones. In other words, this is the same list of topics as a PowerPoint pitch. If you were extremely articulate, you could theoretically transcribe your pitch, and you’d have your business plan.
Focus on the executive summary. True or false: The most important part of a business plan is the section about the team? The answer is False. The executive summary, all one page of it, is the most important part of a business plan. If it isn’t fantastic, eyeball-sucking, and pulse-altering, people won’t read beyond it. You should spend eighty percent of your effort on writing a great executive summary and twenty percent on the rest of the plan.
Keep it clean. The ideal length of a business plan is twenty pages or less, and this includes the appendix. Many people believe that the purpose of a business plan, like a PowerPoint pitch, is to create such shock and awe that investors are begging for wiring instructions. They are wrong. The purpose of a business plan is continued due diligence with activities such as checking personal and customer references. The tighter the thinking, the shorter the plan; the shorter the plan, the faster it will get read.
Write deliberate, act emergent. I borrowed this from my buddy Clayton Christensen. When you write your plan, act as if you know exactly what you’re going to do—in other words, act deliberate. You’re probably wrong but take your best shot. However, writing deliberate doesn’t mean adhering to the plan in the face of new information and new opportunities. As you execute the plan, you act emergent—that is, you are flexible and fast moving and change things as you learn more about the market. The plan should not take on a life of its own.
Again, here is my template for an enchanting business plan. You’ll see that the template is very similar to the tips in the PowerPoint document because, again, your business plan should be a derivative of your PowerPoint pitch. I appended tips for each section in the Word document, so that you can write an enchanting one.
Promotional consideration paid by Microsoft.
Welcome to the first in a series of blog posts I’ll be doing as part of a partnership with Microsoft and Office Web Apps. Over the next two weeks, I’ll cover everything a budding entrepreneur needs to turn an idea into an enchanting investment opportunity—from the perfect pitch to a killer business plan to financial forecasts.
I’m going to start with a little dissertation on creating effective PowerPoint pitches for your company. I embedded the sample deck for you to click through by using the PowerPoint Web App. When you’re ready to get started, you can download the deck from my public SkyDrive folder and use it as the starting point for your own perfect pitch. Enjoy!
To cut to the chase, there are two extremes in online dating: eHarmony and Hot Or Not. When you use the former, you provide the data along twenty-nine dimensions to find your soul mate. When you use the latter, you look at a picture and decide if the person is “hot or not” in a few seconds.
When it comes to PowerPoint pitches for your company, think Hot Or Not, not eHarmony.
End. Of. Discussion.
This post and PowerPoint outline will enable you to succeed in the real world of presentations to potential investors. Mind you, very few investors will tell you what you’re about to read—that’s because it’s much easier to smile and say, “That’s interesting” than to tell you the truth. First, some background information for you:
You do not present in a vacuum. There were pitches before you. There will be pitches after you. (Just like there are pictures of people looking for dates before and after you.) You need to look hot in a river of bright, shiny objects.
The scintillating adjectives that you think apply to your business are tired and worn out—”patent-pending,” “revolutionary,” “innovative,” “scalable.” Been there, heard that. Four times. Today. Just like people who describe themselves as “bright,” “outgoing,” and “warm” on dating sites.
Think of two airplanes: 747 and F18. A 747 lumbers down the runway and takes one to two miles to get off the ground. A F18 catapults off an aircraft carrier and reaches 165 mph in two seconds on a 270-foot deck—or falls into the ocean. Guess which plane you’re in when you are making a pitch.
The best-case outcome of pitch is not a request for wiring instructions. There is a much more modest goal: rising above the noise and avoiding elimination. You want to “live another day” and get to the next stage: due diligence.
Download the full PowerPoint here.
Slide #1: Title page. This slide should be visible as people walk into the room. Its purpose is to orient people so that they know who you are. From the start, you need to look more professional than you are, so spend a few bucks on a decent logo. Include your contact information on this slide—God forbid that an investor is interested in your company and has to search for how to get in touch.
Slide #2. Overview. This slide is the so-called “elevator pitch”—thirty seconds to explain what you do in a clear, if not “wow,” manner. For example, “Manufacture solar panels that are 2 x as efficient at 1/10th the cost.” In many pitches, fifteen minutes goes by, and I still don’t know what the company does. But I have heard that you are a proven team with a proven technology in a proven market.
Here’s a power tip for wowing people: Tell your audience (if it’s true) that you’re already doing $100,000/month, you’re adding 1,000 users a day, or you’re in beta tests with five Fortune 500 companies. In other words, you have proof that the dogs are eating the food. The longer you can bootstrap without raising money, the more powerful your pitch.
Slide #3. Problem/Opportunity. The purpose of this slide is to cause your audience to salivate when they hear about either the pain that you relieve or the opportunity that you enable people to tap. Note: this is about your customer’s pain or opportunity, not yours. Your opportunity is a derivative of what you do for your customers.
Rookie entrepreneurs cite a bull shiitake study from a market-research firm that proves that the opportunity is big. Something along these lines: according to Jupiter Research, there are 300 million Americans, one in four owns a dog, therefore there are 75 million dogs, each dog eats two cans of dog food per day, therefore there is a 150 million can per day total addressable market—how hard can it be to sell 1% or 1.5 million cans per day?
Make this slide work by either addressing a problem/opportunity that is intuitively obvious (for example, “people who want to listen to music”) or, if the market size isn’t obvious, discussing a case study or scenario (for example, “the person who runs social media for Virgin America needs to monitor Twitter, Facebook, LinkedIn, and now Google Plus”). The goal is to enable the audience to fantasize about how great the market is, not for you to prove it using high-order mathematics.
Slide 4: Unfair Advantage. By now, the mouths of your audience should be watering because they understand what you do, they’re wowed by the potential, and now they need to start to believe that you can take advantage of this green and fertile pasture. They want to know, “Why you?” “What is your competitive advantage?” “Why is the field tilted in your direction?”
Stuff that won’t work: “We really believe in what we’re doing.” As opposed to the five other teams that the audience met today that don’t believe in what they’re doing? “We have a patent.” So you have years of time and millions of dollars to litigate? “We have the first mover advantage.” There are probably ten other teams as far along as you are, pitching just up the street. “We are smart and work hard.” Unlike that other five teams the audience met today? Get real: this isn’t elementary school where trying hard is enough to get by.
Stuff that will work: You were the vice president of sales for CNN, so you know all the buyers of the major brands. You ran industrial design for Apple. You have a PhD in materials science from Stanford. You implemented social media for Starbucks. Your audience wants to believe—just give them a rational reason to do so that is beyond “we’re hardworking folks who really believe in what we are doing.”
What if you didn’t work for Yahoo, Apple, or Starbucks, or you don’t have a PhD (or any degree) from Stanford? Then you do what all great entrepreneurs are good at: take your best and brief shot with competitive advantages, admit that you don’t have a “perfect, world-class team” to deflect objections, and move quickly to a demo that makes heads explode.
Slide 5: Demo. This really isn’t a slide. It’s where you dive into a demo that lasts approximately ten minutes. What if your product isn’t at a stage to do a demo? Then you are pitching too early, and you’re wasting people’s time. Of course some technologies are easier to demo than others. If you have a novel architecture for a nuclear reactor, you are probably going to be limited to compelling graphics.
There are three questions that you can answer in a demo: what, how, and why. Don’t waste time on “why.” You should have answered this already with your Overview and Problem/Opportunity slides.
You need to focus on “what” and “how.” Whether you emphasize “what” versus “how” depends on your product. Generally, if you do something that’s never (or seldom) been done before, then focus on “what.” If you do something that has been done before, but you do it much easier, faster, or cheaper, then focus on “how”
Slide 6: Sales and Marketing. Let’s say that people are salivating so much after your demo that they’re choking on their spit. Now you have to answer the question, “In a world of TVs, telephones, websites, blogs, social media, and smartphones, how are you going to roll out your product and ‘make a dent in the universe?’”
Again, investors want to believe—you just have to give them something believable. What’s not believable? “We’ll use viral marketing.” Viral marketing isn’t a strategy—it’s at best a goal, not a means to a goal. And the single greatest determinant of viral marketing is luck, so saying that your strategy is viral marketing is the equivalent of saying that your strategy is “to get lucky.”
What is believable? Your established contacts with the buyers of large companies—that is, circling back to the Unfair Advantages slide. Investors love it when they hear that you have already lined up brand name, referenceable customers or partners. Other believable means: an email database that your founders have compiled throughout their careers, a successful pitch to SXSW for a panel, 50,000 Twitter followers, and 50,000 Google Plus followers.
What if you have none of these? That’s why they are called unfair advantages. Life’s tough—you just have to be willing to grind results out. If everyone had them, the field was level, and everyone was created equal, then they would be called fair advantages, which is an oxymoron.
Slide 7: Competition. Most entrepreneurs put up a slide that says that there is no competition or that the competition is feeble. The problem with the former is that that lack of competition indicates that you are either addressing a market that doesn’t exist or you don’t know how to search the internet.
The problem with the latter is that the competition probably isn’t feeble if you’re going after a meaningful market. And your competition’s competition slide probably says you’re feeble, but I digress.
You want competition. It shows, though it doesn’t necessarily “prove,” that the market is attractive. Your task with this slide is to show how and why you can beat the competition—that is, what you can do that it can’t. You also want to provide information about your weaknesses vis-à-vis the competitions. There are three reasons to do this.
First, it shows that you know how to use the internet, and you’ve done your research about the capabilities of the competition. Second, it shows that you’re intellectually honest—or at least not delusional. Third, if you tell people what you cannot do, they’ll believe you when you tell them what you can do.
Slide 8: Business Model. Investors are not your friends or your soul mates, so they want to know how you’ll make money—and therefore how you’ll make them money. The key to this slide is simplicity: show that you rely on simple, proven business models, not a new technique that has never been done before. These kinds of business models include sales, licensing, advertising, sponsorship, affiliate fees, digital bling, and upgrades to additional features and services.
Pick one or two and stick with them until you need to try another one or two. Many entrepreneurs throw up (in more ways than one) multiple models because they think several revenue streams will make investors believe that the company is more attractive. However, it’s far better to have one business model that prints money than several that don’t.
In fact, you could purposely exclude an obvious additional revenue stream. Then when an investor has an aha! moment and shows off his brilliant business strategy mind by mentioning it, you could flatter him by adding it to your plans and exclaim, “Wow, this is why we need a seasoned investor like you.” Then, theoretically, the brilliant investor has a psychic investment in your success.
Slide 9: Forecast. I hate this slide because everyone knows that you’ve made up numbers that are big enough to interest people but small enough to prevent them from laughing out loud. (I see a pitch a week that conservatively forecasts the fastest sales ramp up in the history of man.)
Alas, you need to include this slide to communicate the rationale behind your fabrications. My advice is that you make your first year sales $0 because your product will be a year late and make your fifth year sales $75-$100 million if you want to raise venture capital. (History has shown that your actual results will be 10% of your most conservative forecast.)
You should concentrate on the reasonableness of the assumptions behind your business model and forecast. Business models vary, but think along these lines: Are you going to do more business than Apple, Amazon, and Cisco achieved in their first five years? Because the likelihood of this is smaller than the odds that I’ll play in the NHL.
Do you need roughly the population of India to make your model work? Are you assuming advertising CPMs that are 20x typical advertising rates? Do you predict that more than .5% of the people who see your ads click on them? Do you require more than 1% conversion rate from free to paid use of your service?
The first two rows of the forecast are windows into the soul of your company because it reveals how many customers and employees you need. If you need an ungodly high number of customers to make your sales numbers, you’ll discourage investors. If you need an unrealistically low number of customers, investors will think you’re clueless.
Ditto for employees: if you need a lot, something is wrong—or maybe your business isn’t scalable. If you hardly need any, then investors, again, will think you’re clueless. It is a wicked web that you must weave to make investors truly believe.
Slide 10: Team. This the infamous team slide. You may wonder why it’s not earlier in the pitch. After all, you’ve heard and read that investors invest in teams, not simply products, services, or markets. The problem is that at the point of investment, it’s hard to truly “know” that a team is good. If this was possible, then investors would only back good teams, and every investment would pan out.
The fact is that your team isn’t proven or complete—this is why you’re raising money. If you were Steve Jobs, John Chambers, Steve Case, Larry Ellison, Howard Schultz, Jeff Bezos, or Bill Gates, you (a) wouldn’t need outside money and (b) you could simply make one or two phone calls to get it. You certainly wouldn’t be reading about how to make a good PowerPoint pitch.
The most likely case is that you can show that your backgrounds are relevant to the market that you’re serving and the technology that’s necessary to build. For example, it’s a stretch to think that a bunch of friends from Home Depot are going to find the cure for cancer. But it is believable that they could create a DIY advice site sponsored by Home Depot with ads from Orchard Supply with a freemium model that requires membership to receive answers to questions.
Don’t let this depress you. The people who founded the great tech successes—Apple, Microsoft, Facebook, Cisco, YouTube, and so on—were hardly proven entrepreneurs. In fact, you could make the case that these companies represent unproven teams in unproven markets with unproven technology. In other words, they were zero for three according to what “professional” investors say they are looking for.
This is why the Demo slide is earlier in the presentation than the Team slide. A mind-blowing demo makes up for a lot of shortcomings and objections. I’d rather see a great demo than a great presentation. Ideally, you’ll have both.
Slide 11: Status and Milestones. The purpose of this slide is to “tie a bow on the present.” You recap where you are in terms of delivery of your product or service, how customers are reacting to it and what the next major milestones are. A word about milestones: these are events that are so big that you’d call your spouse up to tell him/her that it occurred. For example, printed stationary isn’t a milestone. A milestone is an event such as shipping, first sale to a customer, website launch, or profitability.
What happens next? The best case is that the investors start due diligence—that is, checking your references, talking to the customers that you said loved what you’re doing, and investigating the current state of your market. All you want at this point is to get on the investor’s “short list” of deals he or she wants to follow up on.
However, believe it or not, it’s hard to tell when you are turned down. For this reason, I will translate investor speak for you. When the investor says, “Come back when you have a lead investor,” “Come back when you’ve built out your team,” or “Come back when you have some sales traction,” it means that she’s saying, “No.” When the investor says, “Let’s start due diligence,” it means “maybe.”
So now you have it: all you need to know to make an enchanting presentation to potential investors.
One last word: most companies have the same general challenges to overcome, and this guide is intended to cover those. But each company has its own unique combination of challenges that represent the critical priorities of that company. For an electronic medical records company the key issues are different than for a mobile game company.
Make sure that you put the emphasis on the most important issues for your company, rather than giving equal weight to everything. One of the most important assessments investors will make about you is whether or not you really understand your business and whether or not you know how to prioritize. You don’t want to look like someone who is just filling out a template.
With that in mind, download my PowerPoint presentation from SkyDrive to get started right away. Onward and upward!
Promotional consideration paid by Microsoft.
Many people have explained what one can learn from Steve Jobs. But few, if any, of these people have been inside the tent and experienced first hand what it was like to work with him. I don’t want any lessons to be lost or forgotten, so here is my list of the top twelve lessons that I learned from Steve Jobs.
Experts are clueless.
Experts—journalists, analysts, consultants, bankers, and gurus can’t “do” so they “advise.” They can tell you what is wrong with your product, but they cannot make a great one. They can tell you how to sell something, but they cannot sell it themselves. They can tell you how to create great teams, but they only manage a secretary. For example, the experts told us that the two biggest shortcomings of Macintosh in the mid 1980s was the lack of a daisy-wheel printer driver and Lotus 1-2-3; another advice gem from the experts was to buy Compaq. Hear what experts say, but don’t always listen to them.
Customers cannot tell you what they need.
“Apple market research” is an oxymoron. The Apple focus group was the right hemisphere of Steve’s brain talking to the left one. If you ask customers what they want, they will tell you, “Better, faster, and cheaper”—that is, better sameness, not revolutionary change. They can only describe their desires in terms of what they are already using—around the time of the introduction of Macintosh, all people said they wanted was better, faster, and cheaper MS-DOS machines. The richest vein for tech startups is creating the product that you want to use—that’s what Steve and Woz did.
Jump to the next curve.Big wins happen when you go beyond better sameness. The best daisy-wheel printer companies were introducing new fonts in more sizes. Apple introduced the next curve: laser printing. Think of ice harvesters, ice factories, and refrigerator companies. Ice 1.0, 2.0, and 3.0. Are you still harvesting ice during the winter from a frozen pond?
The biggest challenges beget best work.
I lived in fear that Steve would tell me that I, or my work, was crap. In public. This fear was a big challenge. Competing with IBM and then Microsoft was a big challenge. Changing the world was a big challenge. I, and Apple employees before me and after me, did their best work because we had to do our best work to meet the big challenges.
Steve drove people nuts with his design demands—some shades of black weren’t black enough. Mere mortals think that black is black, and that a trash can is a trash can. Steve was such a perfectionist—a perfectionist Beyond: Thunderdome—and lo and behold he was right: some people care about design and many people at least sense it. Maybe not everyone, but the important ones.
You can’t go wrong with big graphics and big fonts.
Take a look at Steve’s slides. The font is sixty points. There’s usually one big screenshot or graphic. Look at other tech speaker’s slides—even the ones who have seen Steve in action. The font is eight points, and there are no graphics. So many people say that Steve was the world’s greatest product introduction guy..don’t you wonder why more people don’t copy his style?
Changing your mind is a sign of intelligence.
When Apple first shipped the iPhone there was no such thing as apps. Apps, Steve decreed, were a bad thing because you never know what they could be doing to your phone. Safari web apps were the way to go until six months later when Steve decided, or someone convinced Steve, that apps were the way to go—but of course. Duh! Apple came a long way in a short time from Safari web apps to “there’s an app for that.”
“Value” is different from “price.”
Woe unto you if you decide everything based on price. Even more woe unto you if you compete solely on price. Price is not all that matters—what is important, at least to some people, is value. And value takes into account training, support, and the intrinsic joy of using the best tool that’s made. It’s pretty safe to say that no one buys Apple products because of their low price.
A players hire A+ players.
Actually, Steve believed that A players hire A players—that is people who are as good as they are. I refined this slightly—my theory is that A players hire people even better than themselves. It’s clear, though, that B players hire C players so they can feel superior to them, and C players hire D players. If you start hiring B players, expect what Steve called “the bozo explosion” to happen in your organization.
Real CEOs demo.
Steve Jobs could demo a pod, pad, phone, and Mac two to three times a year with millions of people watching, why is it that many CEOs call upon their vice-president of engineering to do a product demo? Maybe it’s to show that there’s a team effort in play. Maybe. It’s more likely that the CEO doesn’t understand what his/her company is making well enough to explain it. How pathetic is that?
Real CEOs ship.
For all his perfectionism, Steve could ship. Maybe the product wasn’t perfect every time, but it was almost always great enough to go. The lesson is that Steve wasn’t tinkering for the sake of tinkering—he had a goal: shipping and achieving worldwide domination of existing markets or creation of new markets. Apple is an engineering-centric company, not a research-centric one. Which would you rather be: Apple or Xerox PARC?
Marketing boils down to providing unique value. Think of a 2 x 2 matrix. The vertical axis measures how your product differs from the competition. The horizontal axis measures the value of your product. Bottom right: valuable but not unique—you’ll have to compete on price. Top left: unique but not valuable—you’ll own a market that doesn’t exist. Bottom left: not unique and not value—you’re a bozo. Top right: unique and valuable—this is where you make margin, money, and history. For example, the iPod was unique and valuable because it was the only way to legally, inexpensively, and easily download music from the six biggest record labels.
Bonus: Some things need to be believed to be seen. When you are jumping curves, defying/ignoring the experts, facing off against big challenges, obsessing about design, and focusing on unique value, you will need to convince people to believe in what you are doing in order to see your efforts come to fruition. People needed to believe in Macintosh to see it become real. Ditto for iPod, iPhone, and iPad. Not everyone will believe—that’s okay. But the starting point of changing the world is changing a few minds. This is the greatest lesson of all that I learned from Steve.
Just loving what I can do at Google+. My favorite features are:
If you haven’t taken a look at Google+, you really should. See you here.