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11 words and phrases to cut from your VC pitch deck
You have just 170 seconds. Weeks or even months of working on your pitch deck could come down to the 170 seconds (on average) that investors spend looking at it.
“Investors see a lot of pitches,” VC and LinkedIn co-founder Reid Hoffman noted. “In a single year, the classic general partner in a venture firm is exposed to around 5,000 pitches … and ends up doing between zero and two deals.”
With all that pressure to make an impact quickly, founders spend an incredible amount of time on the design of their slides. Less consideration, however, is usually spent on the words on the slide. That’s a mistake, especially when you only have 170 seconds.
Founders spend an incredible amount of time on the design of their slides. Less consideration, however, is usually spent on the words on the slide. That’s a mistake.
When not used intentionally, the words in your deck can be distracting or downright off-putting. We used what we know about language and healthy communication from the millions of documents we’ve processed at Writer to come up with 11 words and phrases to remove from your VC pitch deck.
Negative associations
1. “runway”
Pitching VCs is a balancing act: You want to position your idea in the best light, but also show that you’ve thought things through. However, volunteering certain types of information can have the opposite effect. Don’t write: I’m seeking $X in funding to provide Y months of runway. You certainly need to show how you’re going to use the funding you’re asking for, but you don’t want to frame things in terms of runway in a pitch deck. The word is associated with a looming cash-out date, which can put an investor in a negative state of mind.
This HappySignal slide is a solid example of keeping your messaging positive and using uplifting language.
2. “exit strategy”
Don’t write: Our exit strategy is … . Yes, thinking through your business means knowing how you’ll handle worst-case and best-case scenarios. But putting exit strategy in your deck can only get investors thinking about the inherent risks. You want them focused on the opportunity. You need to know what to say when the topic comes up — just don’t volunteer the information on a slide.
Clichés
3. “just X percent”
A pitch deck is a tool to show VCs why your idea merits investment. Using clichés can work against that goal. Don’t write: If we could capture X percent of the market … . It’s not only a cliché, it’s wishful thinking — not a plan. Keep the text on your slides grounded in relevant facts and figures. Other clichés to cut include: the Amazon of X, imagine a future and moving Y to blockchain.
Absolutes
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6 tips for SaaS founders who don’t want VC money
Over the past decade, venture capital has become synonymous with entrepreneurship. Founders from around the world arrive in Silicon Valley with visions of record-setting A rounds and billion-dollar valuations. But what if you don’t have unicorn dreams — or you don’t want to pursue VC money?
Bootstrapping a SaaS company is not only possible — I believe it’s a saner, more sustainable way to build and scale a business. To be clear, bootstrapping isn’t always easy. It requires patience and focus, but the freedom to create a meaningful product, on your terms, is worth more than even the biggest VC check.
The freedom to create a meaningful product, on your terms, is worth more than even the biggest VC check.
I started my company, JotForm, in 2006. We’ve grown steadily from a simple web tool into a product that serves more than 8 million users — without taking a dime in outside funding. We’re profitable in an industry with big-name competitors like Google.
Most importantly, I still love this company and its mission, and I want the same for my fellow entrepreneurs. If you’re a SaaS founder who’s wary of VC funding, here are my best bootstrapping tips.
Keep your day job
Success stories from founders who leap blindly into business without resources or relevant experience are compelling, but they’re the exception, not the rule. Working inside another organization can build your skills, your network and even inspire great product ideas.
After finishing college with a computer science degree, I worked as a developer for a New York media company. The editors always needed custom web forms, which were tedious and time consuming to build. I kept thinking, “There has to be a better way.”
That daily frustration led me to start JotForm — but I didn’t leave my job right away. I stayed with the media firm for five years and worked on my product on the side. By the time I was ready to go all in, I had the confidence, experience and savings I needed.
Many of the world’s biggest companies began as side projects, including Twitter, Craigslist, Slack, Instagram, Trello, and a little venture called Apple. If your day job doesn’t pay enough to fund the early stages of your business, consider a side gig or consulting work. There are so many ways to set yourself up for success without the pressure of VC cash or selling a chunk of your business.
Know you’re not alone
The exact numbers shift every year, but data compiled by Fundable show that only 0.05% of U.S. startups are backed by VCs. Another 0.91% are funded by angel investors. The vast majority, at 57%, are funded by credit and personal loans, while 38% get funding from friends and family.
It may feel like most founders raise multimillion-dollar rounds, but that’s simply not the case. It’s also good to remember that securing VC money is complicated and time consuming. You can spend months taking meetings and presenting the perfect deck — and still leave empty handed. Be patient and stick to your own path.
Measure profits, not popularity
SaaS founders often emphasize vanity metrics, like user acquisitions and total downloads. These numbers can measure short-term popularity, but they don’t reveal how users and customers feel about your product — or your long-term potential.
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RIBS: The messaging framework for every company and product
Over more than two decades of advising founders, I’ve heard all kinds of stories — good, bad and everything in between. While everyone is different, I’ve noticed that the very best stories have something in common: They pass the RIBS test. I’ve talked a lot about this over the years, and it’s stood the test of time and trends.
The test is designed to tell you if your story is memorable (will it “stick to your ribs?”) so you can turn it into a compelling message. It looks something like this:
- Relevant
- Inevitable
- Believable
- Simple
Relevant
Before you can come up with a good story, you need to think about the audience. Who are you trying to reach? Are you solving a problem they care about? What matters to them about that problem? Why does your solution deserve attention?
The test is designed to tell you if your story is memorable (will it “stick to your ribs?”) so you can turn it into a compelling message.
Marc Benioff could have launched Salesforce by describing it as an online way for companies to manage relationships with their customers. It’s true and it would have been interesting, at least to some people. But instead, Marc went bigger: He ran a campaign that described Salesforce as the “end of software.”
At the time, software was everywhere and it was creating all kinds of problems: It was massively expensive, time consuming and prone to failure. By taking on those issues, Marc made the company instantly more relevant to a bigger market and audience. The conversation went from a discussion of feature checklists, contacts and leads, to how an entire industry would change. Marc looked like a visionary — and Salesforce seemed revolutionary.
Inevitable
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Winning enterprise sales teams know how to persuade the Chief Objection Officer
Many enterprise software startups at some point have faced the invisible wall. For months, your sales team has done everything right. They’ve met with a prospect several times, provided them with demos, free trials, documentation and references, and perhaps even signed a provisional contract.
The stars are all aligned and then, suddenly, the deal falls apart. Someone has put the kibosh on the entire project. Who is this deal-blocker and what can software companies do to identify, support and convince this person to move forward with a contract?
I call this person the Chief Objection Officer.
Who is this deal-blocker and what can software companies do to identify, support and convince this person to move forward with a contract?
Most software companies spend a lot of time and effort identifying their potential buyers and champions within an organization. They build personas and do targeted marketing to these individuals and then fine-tune their products to meet their needs. These targets may be VPs of engineering, data leaders, CTOs, CISOs, CMOs or anyone else with decision-making authority. But what most software companies neglect to do during this exploratory phase is to identify the person who may block the entire deal.
This person is the anti-champion with the power to scuttle a potential partnership. Like your potential deal-makers, these deal-breakers can have any title with decision-making power. Chief Objection Officers aren’t simply potential buyers who end up deciding your product is not the right fit, but are instead blockers-in-chief who can make departmentwide or companywide decisions. Thus, it’s critical for software companies to identify the Chief Objection Officers that might block deals and, then, address their concerns.
So how do you identify the Chief Objection Officer? The trick is to figure out the main pain points that arise for companies when considering deploying your solution, and then walk backward to figure out which person these challenges impact the most. Here are some common pain points that your potential customers may face when considering your product.
Change is hard. Never underestimate the power of the status quo. Does implementing your product in one part of an organization, such as IT, force another department, such as HR, to change how they do their daily jobs?
Think about which leaders will be most reluctant to make changes; these Chief Objection Officers will likely not be your buyers, but instead the heads of departments most impacted by the implementation of your software. For example, a marketing team may love the ad targeting platform they use and thus a CMO will balk at new database software that would limit or change the way customer segment data is collected. Or field sales would object to new security infrastructure software that makes it harder for them to access the company network from their phones. The head of the department that will bear the brunt of change will often be a Chief Objection Officer.
Is someone’s job on the line?
Another common pain point when deploying a new software solution is that one or more jobs may become obsolete once it’s up and running. Perhaps your software streamlines and outsources most of a company’s accounts payable processes. Maybe your SaaS solution will replace an on-premise homegrown one that a team of developers has built and nurtured for years.
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Why do SaaS companies with usage-based pricing grow faster?
Today we know of HubSpot — the maker of marketing, sales and service software products — as a preeminent public company with a market cap above $17 billion. But HubSpot wasn’t always on the IPO trajectory.
For its first five years in business, HubSpot offered three subscription packages ranging in price from $3,000 to $18,000 per year. The company struggled with poor churn and anemic expansion revenue. Net revenue retention was near 70%, a far cry from the 100%+ that most SaaS companies aim to achieve.
Something needed to change. So in 2011, they introduced usage-based pricing. As customers used the software to generate more leads, they would proportionally increase their spend with HubSpot. This pricing change allowed HubSpot to share in the success of its customers.
In a usage-based model, expansion “just happens” as customers are successful.
By the time HubSpot went public in 2014, net revenue retention had jumped to nearly 100% — all without hurting the company’s ability to acquire new customers.
HubSpot isn’t an outlier. Public SaaS companies that have adopted usage-based pricing grow faster because they’re better at landing new customers, growing with them and keeping them as customers.
Image Credits: Kyle Poyar
Widen the top of the funnel
In a usage-based model, a company doesn’t get paid until after the customer has adopted the product. From the customer’s perspective, this means that there’s no risk to try before they buy. Products like Snowflake and Google Cloud Platform take this a step further and even offer $300+ in free usage credits for new developers to test drive their products.
Many of these free users won’t become profitable — and that’s okay. Like a VC firm, usage-based companies are making a portfolio of bets. Some of those will pay off spectacularly — and the company will directly share in that success.
Top-performing companies open up the top of the funnel by making it free to sign up for their products. They invest in a frictionless customer onboarding experience and high-quality support so that new users get hooked on the platform. As more new users become active, there’s a stronger foundation for future customer growth.
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4 strategies for deep tech startups recruiting top growth marketers
In an earlier article, I wrote about how and when to build go-to-market teams at deep tech companies. There, I noted that it is more important for growth hires at deep tech companies to have functional expertise than industry expertise.
But how do deep tech companies connect and cultivate strong relationships with talented nontechnical growth people outside of their industry? In this article, I answer this question, articulating exactly how to:
- Write role descriptions that entice talented growth people.
- Create company marketing materials that brands your startup well to talent.
- Craft thoughtful end-to-end candidate experiences for growth talent.
- Close top growth candidates.
Incredible growth people are independent and creative and are drawn to environments that explicitly value these traits.
Write a job description that explains how you operate
Underscore the autonomy. Incredible growth people are independent and creative and are drawn to environments that explicitly value these traits. Growth talent wants to know that they have room to experiment, fail and iterate with the support and trust of their company. Highlight the creative agency you give to your growth team. Paint the role as one of managing a subset of the startup and its initiatives.
Show you are ready for a growth marketer. Do not expect your growth person to be a panacea for the company. Growth people work cross-functionally, but there are boundaries where the growth role starts and ends. Growth people cannot sell a product that is not ready. Growth people cannot fix product bugs. Growth people cannot replace excellent customer service. Ensure your role description is clear on what the growth person would do and what they would lean on other teams for. Demonstrate that you have a team structure in place where a growth marketer could fit in and thrive.
Articulate your talent needs. Growth is a broad category. Some growth marketers are more creative. Others are more quantitative. Some have more industry experience. Others have more functional experience. Be clear on what type of growth marketer you need and how this person’s talents would complement those of the existing team.
Use marketing to share your history and chart the future
Generate excitement and establish credibility. People can naturally be skeptical about new technologies and younger companies. Do anything you can to ameliorate these concerns. Link to relevant news articles from well-known publications and thought leaders in your industry. Incorporate customer testimonials that speak to the transformative impact your product creates. Name drop well-known advisors, investors and team members.
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Best practices for Zoom board meetings at early-stage startups
The world has spent most of 2020 adapting to ever-changing guidelines and restrictions (with no end in sight, even as the vaccines start to roll out). Board meetings are quickly increasing in their significance to foster consistent and vital interactions as an organization. It’s essential for companies to capitalize on the essential time together during these uncertain times.
While we might look like the Brady Bunch while sharing a Zoom window, are you actually communicating more like the family from “Succession?”
Are your meetings organized? Do people talk over one another? Do you usually run over time? Are you giving people time to digest information?
As we move into 2021 and Q1 meetings are being put onto calendars, take some time to modernize how you conduct your board meetings.
Board meetings are quickly increasing in their significance to foster consistent and vital interactions as an organization.
Having served on public company boards, growth-stage businesses and Series A startups, an observation I have made in boards that are later stage are more about financial analysis and governance. Whereas earlier-stage board discussions hinge more on product strategy, key partnerships, sharing best practices to help develop founders as executives and important hiring decisions.
Since the nature of the discussions is more, let’s call it … creative in earlier-stage businesses, where the focus is on where they’ve been particularly impacted by reduced bandwidth for collaboration while meeting remotely.
As said best by Mike Maples and paraphrased by Jeff Bonforte — there are only four things a board really needs to consider:
- Has the market changed since we last met? If so, did it affect us negatively or positively?
- Has the team changed? For better or worse?
- Has our position in the market changed?
- Can we do what we said we would?
Collecting data around those points is the job. In the meeting, the team can add color.
Remember the board works for you, so be sure to put them to work. Sharing materials with participants about three days ahead of time tends to be the best. Any later and they may not get enough time to digest, send earlier and the information might be out of date by the time you meet. It’s most common to format as a deck, but lately I’m seeing more written format and even magazine-style.
The number one request I get from early-stage companies is “help find me more customers.”
Other common requests are “help me find or land this type of talent, help me with industry benchmarks for this type of business deal or compensation structure, connect me to people that have experience with X so I can learn ways we could structure our process.” It’s helpful to put these asks in the materials you send ahead because sometimes board members might not be able to react quickly and now “homework” comes up spontaneously in the discussions.
Another purpose of these meetings is to build working relationships so when strategic decisions need to be made, board members are used to working together. Sometimes it is a forum for executives to gain exposure to board members and for board members to have the opportunity to evaluate and provide input on executives. For that reason execs are often invited to participate in certain discussions.
Like the product person who presents a roadmap or a market analysis, the head of sales should give color on pipeline and competitive deals, the marketing person may lead a discussion on ABM or channel marketing tactics, the engineering lead might ask for feedback on their metrics versus other companies, etc. Generally, CEOs also bring forth an interesting topic to have a discussion, such as channel strategy, market mapping/sizing, hiring plan and related issues.
Logistics
As far as logistics, we reserve two hours in calendars but we try to hit 90 minutes. I suggest something like this for a 90-minute session:
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4 strategies for deep tech founders who are fundraising
Fundraising is challenging, especially for deep tech founders who need to get investors excited about a complex technology, a complex sales cycle and a complex risk profile.
As a former investor and current angel investor, I have met thousands of founders, many in the deep tech space.
Based on my experience, here’s how to avoid making the most common mistakes deep tech founders make when pitching investors:
Work on your storytelling
Highlight your big vision
Early-stage investors are in the business of funding dreams. They chose to be early-stage investors because they love hearing about new ideas and enthralling futures. They deliberately are not investment bankers or accountants because they do not want to constantly pour over endless spreadsheets or dive deep into financial models. Similarly, they are not operators because they do not want to spend time figuring out the intricacies of a supply chain or a marketing campaign or the configuration of a product component.
Make your pitch tailored to what excites venture capital investors and avoid what does not.
So make your pitch tailored to what excites venture capital investors and avoid what does not. Keep the financial model details and the warehouse system logistics information to your Appendix. You have it in case anyone wants to dive in deeper, but your core presentation should be focused on your biggest, most bullish hopes for the company seven to 10 years from now. Dedicate multiple slides to painting the picture of what society would look like should you meet all your intended milestones as a company.
Underscore the impact
As a deep tech company, your differentiation is in your intellectual property. However, investors care less about the “what” and much more about the “so what.” Investors are less interested in the intricacies of your technology and more interested in what impact it can create.
Formulate your slides to focus on answering questions like, “What can people or companies do as a result of your technology?” and “How will people save time, money and lives with your product?”
Put your presentation to the “grandma” test. Would your grandmother be able to understand and be excited about everything you share? Investor pitch meetings are not dissertation defenses. You are being evaluated on your potential for impact rather than the intricate details of your research. The best way to succeed in this evaluation framework is to ensure that everything you share is relevant and exciting to a diverse audience of even nontechnical folks.
Try to reach hearts and minds
Five million people are a statistic, but one person is a story. When people read data on massive populations of people, they conceptually understand the implications but only on a logical level, not an emotional one. When pitching, you want to reach the hearts of investors.
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Subscription-based pricing is dead: Smart SaaS companies are shifting to usage-based models
Software buying has evolved. The days of executives choosing software for their employees based on IT compatibility or KPIs are gone. Employees now tell their boss what to buy. This is why we’re seeing more and more SaaS companies — Datadog, Twilio, AWS, Snowflake and Stripe, to name a few — find success with a usage-based pricing model.
The usage-based model allows a customer to start at a low cost, while still preserving the ability to monetize a customer over time.
The usage-based model allows a customer to start at a low cost, minimizing friction to getting started while still preserving the ability to monetize a customer over time because the price is directly tied with the value a customer receives. Not limiting the number of users who can access the software, customers are able to find new use cases — which leads to more long-term success and higher lifetime value.
While we aren’t going 100% usage-based overnight, looking at some of the megatrends in software — automation, AI and APIs — the value of a product normally doesn’t scale with more logins. Usage-based pricing will be the key to successful monetization in the future. Here are four top tips to help companies scale to $100+ million ARR with this model.
1. Land-and-expand is real
Usage-based pricing is in all layers of the tech stack. Though it was pioneered in the infrastructure layer (think: AWS and Azure), it’s becoming increasingly popular for API-based products and application software — across infrastructure, middleware and applications.
Image Credits: Kyle Povar / OpenView
Some fear that investors will hate usage-based pricing because customers aren’t locked into a subscription. But, investors actually see it as a sign that customers are seeing value from a product and there’s no shelf-ware.
In fact, investors are increasingly rewarding usage-based companies in the market. Usage-based companies are trading at a 50% revenue multiple premium over their peers.
Investors especially love how the usage-based pricing model pairs with the land-and-expand business model. And of the IPOs over the last three years, seven of the nine that had the best net dollar retention all have a usage-based model. Snowflake in particular is off the charts with a 158% net dollar retention.
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