How To Write A Killer Deck & Get Funded.

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This article was originally published here on Vator.tv.

I have advised a number of Web companies on their way to raise money. I am often mentally ‘face-palming’ as they stagger through their initial pitch. Helping entrepreneurs is something I am passionate about. Knowing how to comfortably raise funding removes the distracting worry of money. Not having to worry about money allows entrepreneurs to focus on the important things, like creating a multi-billion dollar company.

The key preparation material that most people create for pitching potential investors is a presentation deck. This is normally a PowerPoint/Keynote presentation that highlights key parts of your pitch and something you talk along-side when pitching. To help you write your deck I have complied the most common advice I give to most start ups.

The two most important aspects of pitching are: 1) being confident and 2) conveying a consistent powerful story.

Confidence

You must firmly know that you are doing a great thing for the potential investors. You're not asking for money. Rather, you're making them money. And, making them a lot of money at that. This may seem like a bold statement but if you do not believe in your product with such conviction the investors will not believe in you either. The deck/pitch is you conveying the vision of your idea.

Story

It is vitally important to weave a story through your deck. The story should be of who you are and how your idea is going to change the world. Every slide in your deck is part of that story. Stories anchor ideas, help familiarize new concepts and create a smooth flow from start to end of your deck.

Structure

Presentation decks should generally be no more then 6-to-10 slides, with three to five bullet points per page with lots of images and a few graphs. The deck itself should be simple and you should be verbally padding-out the slides with conversational floods of information.

Iteration

Creating the deck should take one or two days. Do not get trapped in creating the perfect deck on version one. There will be a few versions. Heyzap had six versions before we even spoke to investors. Once the first draft is complete, pitch it to other entrepreneurs to get feedback. Give them the whole experience from start to end. Pitching to your friends will help you feel relaxed and their response should tell you if your idea is ready for the Shark Tank. You should not blindly follow all the feedback you receive. Instead you will need to look for common problems in the pitch and ways of improving them.

Once you are pitching investors you will also get continuous feedback and you will still need to iterate your deck, answering common criticisms and providing more information. Sometimes the feedback you receive may be contradictory but if one point is raised consistently then iterate your deck. It is also good practice to have an appendix section for questions that are commonly asked or questions you anticipate being raised.

Memorize your pitch

Before you arrange to speak to any investors you should have the flow of your presentation memorised and be able to take questions in your stride. Remember whenever a question is raised to return back to the relevant slide with ease and weave everyone back to the story you are telling.

Topics you must include

Here is a deck, of a deck, containing all the key points to cover so that your story flows seamlessly.

Hopefully this should help you get less 'face-palms' and more 'high-fives'. If you have any questions about presenting a deck or want general startup advice, shoot me an email.

Immad(at)heyzap(dot)com.

Special thanks to Fatema Yasmine for help with editing this article.

2014: Facebook makes Credits mandatory for all FB Connected sites

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Facebook will soon have 600 million users and already consumes 25% of all US Internet traffic; Facebook is becoming more powerful everyday.

“With Great power comes great responsibility"

- Uncle Ben, Spiderman

As Facebook becomes the corner stone of all things social on the Internet, what will that mean for the rest of us?

The title of this blog post could very well be the future of the web where Facebook abuses its control over the Internet and the world we surf in becomes a scary place. I am a big believer in Facebook and I think in general they are changing the Internet for the better. Facebook Connect or Facebook for Websites as it is now called is probably the most Interesting and powerful aspect of Facebook. With 1-click (or zero in the case of Instant Personalization) a website can go from knowing nothing about a user to providing a fully social experience.

Every new experience created on the Internet is highly socially connected and even the Google is trying to build in social into all its services. However if 50%+ of the Internet relies on Facebook this could cause some major problems

Single Points of Failure

By using IP routing and DNS the Internet ensures that there is no single point of failure. All Internet traffic does not go through one source and if any node goes down there are many others ready to take over.

If Facebook Connect becomes prolific it would make Facebook a single point of failure. If Facebook goes down or its security is compromised it would pose a serious problem to the whole Internet

Censorship and Control

Facebook will have unprecedented powers to censor and control people. This could be used to suppress certain views or destroy competitors.

Recently Facebook showed its power by killing Lamebook.com. Facebook said that this was unintentional and a mistake, but this is evidence of the power it can yield. Facebook will be in a position to kill websites by 1) not directing users to them and 2) killing most of their social functionality.

Extract Monopolistic Profit

Such control will give Facebook a lot of power to extract value and margins from the Internet. This is what the headline refers to with Facebook Credits becoming mandatory across the Internet. Facebook Credits are slowly becoming mandatory across Facebook apps so it is not such a far-fetched suggestion.

Facebook Credits is just one way that Facebook can extract Monopolistic profits. Additionally it could use its millions of users and data it has on these users to create a socially targeted Ad network. This would have no serious competitor.

Such use of power would have several dangers:

1. As the Internet becomes less profitable the incentive to innovate would decrease. This would also make previously profitable markets non-profitable.

2. Facebook could easily copy competitors as it has done with Twitter and Foursquare. This behaviour would also lead to decreased innovation.

The Future

I think there are 4 possible conclusions:

1. Facebook becomes a benevolent dictator and doesn’t abuse its power over the web.

2. Facebook does not become that powerful: Other websites make parallel Social Graphs. The proliferation of Facebook Connect does not go much further than it already has.

3. Facebook abuses its power as a monopoly over the social graph and no one controls it.

4. Government intervention: Facebook abuses its power as a monopoly, but the US and EU governments step in and force it into position 1.

All of these are interesting futures to think about. In fact this is a repeat of the situation with Microsoft Windows. In the case of Windows the solution turned out to be government intervention. They crossed the line with Netscape, killed a big company but were held accountable and now on the whole they don’t make such moves. Similar thing just happened with Apple when it suddenly eased its hold on the App Store under pressure.

Overall I am pretty optimistic about the Internets and Facebook's future. It should be interesting to see how the next few years unfold.

How can there only be 7 + or - 2 websites people use regularly?

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Reid Hoffman gave an awesome talk at this years Startup School, if you haven't already I highly recommend watching the video: http://www.justin.tv/startupschool/b/272179996

One of the interesting things he said is that most people go to around seven sites +/- 2 on a regular basis.

As an Internet entrepreneur this idea is disconcerting for two reasons:

1. Will I be able to make my website be one of those 7?
2. How does innovation really happen on the Internet if people are only thinking of 7 websites!

Obviously most entrepreneurs noticed number 1 early on otherwise they would be screwed :). This line of thought leads to a contradiction.

The Contradiction

There is a contradiction between these two things:

1. People will only go to 7 sites regularly
2. There are many many orders of magnitude more than 7 sites in terms of creativity/concepts/content on the Internet.

Built on the Shoulders of People

The answer to this contradiction is simple. The websites that thrive in the most important 7 are the ones that lead you to other peoples creativity. Here is a list of the top 10 US sites according to Alexa (http://www.alexa.com/topsites/countries/US):

1. Google - Leads you to other peoples websites based on keyword
2. Facebook - Leads you to other peoples social sharing. Sites and other content
3. Yahoo - similar to Google
4. Youtube - Leads you to other peoples videos
5. Amazon - Leads you to other peoples goods
6. Wikipedia - Leads you to other peoples knowledge of the world
7. Twitter - Leads you to other peoples thoughts and links
8. eBay - Same as amazon
9. Blogger - Same as twitter but long form
10. Craigslist - Same as eBay and Amazon

It is pretty indicative that all the top 10 sites are nothing without the content/creativity they have on them. It is all about what they lead to and how they harness and organise other peoples ideas/items.

Build on the Shoulders of Platforms

Internet platforms are so powerful that entire industries are built on them. SEO/SEM in the case of Google. Facebook Apps in the case of Facebook. If you want to be one of the 7 websites and be the centre of the Internet you should be giving an avenue for other peoples creativity. Helping them organise it in a way never done before, exposing an important medium/data that was previously unexposed.

Additionally the ideas that do well have to get the users off the existing sites that people are using, at least initially if not forever. Here are some examples that did this or are still doing it

• Youtube - Initially built traffic on Myspace
• Groupon - Most of their users come to them from email clients
• Paypal - Inititially built traffic on eBay
• Google - Initially built traffic on Yahoo
• Facebook - A slight contradiction since they build traffic on the real world School campuses rather than off other websites.
• Zynga - Built traffic on Facebook

Be a Platform

This is in essence the idea of being a platform and why platforms make some of the most powerful businesses online. You can harness a collective power and build in powerful network effects. I could do another blog post that talks about the attributes that make a platform successful but one of the key takeaways is the broader your platform is the more successful it can be.

Picture: http://techcrunch.com/2010/10/16/reid-hoffman-startup-school/


Heyzap is hiring

We are always looking for talented engineers and entrepreneurs to help us grow: Check out http://www.heyzap.com/jobs and email us jobs@heyzap.com!

Presentation and Pitching skills for Entrepreneurs

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One of the more undocumented benefits of Y Combinator is that Paul Graham is very good at advising YC companies on how to present and pitch their companies. I have watched YC companies transition their pitch from awful to awe inspiration.

As an entrepreneur you are always ‘selling’ your idea. Half of your sell is obviously how good the business opportunity is. However the pitch and how it is delivered can change everything.

I am on a fund raising panel in Y Combinator today and Jude and I had the pleasure of giving a talk at Seedcamp a couple of weeks ago. An important topic that I talk about is presentation skills. Here are some notes I made:

Be Confident

Confidence is probably more important than anything else. You should:

1. Talk loudly and clearly
2. Look straight at the audience, not at the slides or down
3. Be calm and relaxed, but at the same time convey your enthusiasm and excitement
4. Make a joke or two

A lack of confidence can really undermine a whole pitch. Entrepreneurs have to sell their business to clients, employees, acquirers, themselves etc. If there is a noticeable lack of confidence in the pitch it is assumed that would also carry through to other attributes of the business.

Practice a Lot

Practice goes hand in hand with confidence. By the time you get to an important presentation you should have every single line memorized. You should be able to deliver the presentation without looking at the slides or q-cards.
Steps to practice.

1. Practice to yourself at least 10 times and write down every single point you plan to convey
2. Pitch in front of your co-founders/friends
3. Pitch in front of people you respect, like other entrepreneurs and get their feedback
4. Constantly iterate your slides, pitch based on feedback

Know and Convey your Market

How big is the market opportunity? Sometimes the answer to that question is obvious. Most of the time in early startups the market opportunity is not obvious. You should know what your market is and have at least one slide which clearly states your market opportunity/size with some justification.

Do a Good Demo

It is particularly annoying to me when someone goes up on stage and says they are building “a new way to discover and share content” or “a new enterprise productivity tool” and fail to give an actual product demo. There is nothing that can explain a web app better than the app itself. You should fire it up and step through a few screens showing your most exciting and differentiated features. Demos go a long way to showing that you can actually execute on your vision.

Don’t say Anything Negative!

Statements that should not be in your pitch

1. We are young and inexperienced
2. The market size is small
3. The product is still buggy
4. We are having a hard time raising any money.
5. A lot of people have failed in this space
6. We are going to give this idea 3 months to see if it sticks

Pitching is not the time to talk about negative things. If there is a big elephant in the room then talk directly about how you are going to solve it, or have it resolved before pitching. The pitch is not the place to be negative.

Address the Core points

Venture Hacks has a good post about what should be talked about in a pitch: http://venturehacks.com/articles/deck. In a more public pitch you probably want to change the contents slightly, but don’t miss the core, obvious points. Make sure you cover your team, market, traction, technology and financing.

Explicitly Talk About your Current Status

Often after a presentation I have no idea whether the product has been launched or when it is going to launch. Sometimes the fact that the product is launched is mentioned very late into the pitch. Talking about your status early on puts the whole pitch in context. If your second sentence in your presentation is

We launched last month and are already serving 20k people a month and growing 20% every week

Then you already sound awesome and you haven’t even started your presentation.

Show Graphs of Traction.

If you have launched show graphs of some real numbers. People often have absolute numbers with no graphs, which always seems strange to me.

Only One Person Should Speak

The audience develops a relationship with the presenter and the presenter controls the story. Sometimes people switch the presenters half way through or even worse throughout the talk. This is hardly ever a good idea.

Make Jokes and be Light-Hearted

This goes along with the point about confidence. Have one or two lines lined up that are amusing, don’t take this too far but if you can say something funny to break up the presentation and be memorable then take the opportunity. If you seem friendly and funny people will know you are good to work with and confidant.

Finally...

Based on the situation how you pitch and what you say will change dramatically. There are specific bits of advice that I could talk about for sales pitches vs. 1-on-1 investor pitches. I might put those in a separate post or I am happy to answer questions on them.

Interview on Mixergy about Y Combinator

Tweet I had the pleasure today of doing an interview on Mixergy with Sachin (Posterous) and Howie (Etacts). Mixergy is awesome, Andrew does a great job of getting insightful entrepreneur interviews. Original interview is here.

I am still not used to the sound of my own voice! Enjoy:

Internet stocks Predictions for 2020 (GOOG, AMZN, maybe FCBK?)

Tweet One thing I would like to do more of is invest in Internet stocks. Since I live and breathe the Internet, I’m more adept to make better judgements of companies than the market. I thought it would be interesting to go through the top Internet (tech) stocks now and predict where the companies will be in 10 years time.

I am including companies like Apple and Microsoft, who are not all about the Internet, for now at least, but clearly will be shape it in the next 10 years. This won’t be a comprehensive list of tech companies, as I like to make informed predictions.

Factors to be considered for a 10 year prediction

I was analysing companies for the following attributes:

• Foremost is innovation, in 10 years the Internet will be a different place and the only companies that will grow are those that innovate daily.
• Strong technology and network affects. Both of these factors lead to long term stability on the Internet.
• In large markets that have lots of room to grow.
• Either already sufficient diversified or have the positioning to be diversified in the future. Diversification goes hand in hand with innovation, all innovative companies would tend to become diversified in the long term.

Winners - Predictions of the rising stars:

Google (GOOG)

I am always in favor of the under dog and feel that the Internet is dynamic enough that most cash cows will die and other things will take over within 10 years. However Google never fails to impress me. They are vertically and horizontally integrating into every part of the Internet (YouTube, Google DNS, Google OS etc). Their constant innovation will ensure that they don’t become irrelevant. They clearly missed Social Networking, but they keep doing everything else right.

At the end of the day as long as Google controls search, the conduit to the Internet will still be theirs. Without a strong social network, they do lose the random “discovery” aspect of the Internet, but I think they can control the rest of how people get to data. Or conversely, if it becomes important, they could buy Facebook, Twitter or Digg. For now, their search deals with Facebook, Twitter, and Myspace, ensure they won’t be totally left behind as the social web expands.

Amazon (AMZN)

Amazon is a ridiculously smart company. They continue to innovate in areas that most people don’t realize; they control e-commerce and continue to extend themselves to be much more than an e-commerce site but a platform (through fulfilment and their market place etc). With One-click payments and Amazon Flexible Payments, they are also one of the easiest way to pay for things online. AWS make them the leader in cloud computing infrastructure.

The things Amazon does in-house are leading the technology world (AWS, Kindle), they also make great acquisitions (see Zappos, Alexa, IMDB). It is really hard to see how Amazon will not continue to own e-commerce online and extend themselves in to synergistic verticals/ horizontals.

Apple (AAPL)

There are enough fan boys out there that I don’t need to sell Apple too much. Their Achilles heel is that they are more closed than Microsoft and that might hurt them, but in terms of the ability to innovate and change hardware they are un-paralleled. Hardware and computer interfaces still have a long way to go, and Apple will probably be the one to push them for the foreseeable future. Their only weakness is their Web app ability (and their closed nature), which in some ways might kill them if hardware innovation becomes too commoditized, but I don’t think that is happening too soon.

Activision Blizzard (ATVI)

ATVI has a market cap of 14bn, but there’s still opportunity for them to expand. World of Warcraft is under-leveraged yet continues to reap large revenues. Diablo III will be a big hit. Guitar Hero is awesome. Almost everything they touch is high quality and does very well. If they do a reasonable job with launching on new platforms (Facebook + Mobile) and take advantage of Virtual Goods based models, they will continue to be successful.

Comscore (SCOR)

I didn’t realize ComScore was public until I was doing research for this blog post. The Internet is going to become even bigger in terms of Market Share and usage, on top of that, analysing the Internet has yet to be perfected. I think there will be more innovation in this space and ComScore will push/ buy a lot of it. It also seems very undervalued.

Facebook (not public yet)

I was going to put Facebook in the next category (unstable), but actually I think most tech people underestimate Facebook. Even though they are not yet the biggest website in the world, they have, by far, the most information about their registered users. Facebook has really changed the Internet, and they are collecting together smart people to continue innovating. The thing that might destroy them is similar to what might destroy Apple, they are a walled garden. The Internet and entrepreneurs don’t like being imprisoned in walls and so will fight it. If they open up or become more infrastructural then they might stop the anti-wall tide. So far, it seems that that is their goal with Facebook Platform.

Facebook could at some point switch on a revenue stream that would surprise us all. That might be in Facebook payments or it might be in something else, but as long as they are experimenting, I am sure they will find it and when they do they will be very formidable. As they have leverage with their userbase and don’t have to solve the “chicken or the egg” problem.

Zynga (not public yet)

Perhaps I am slightly biased (Union Square Ventures invested in Heyzap and Zynga), but Zynga has grown ridiculously fast, and I am sure they will have a long way to go before they peak. They define a whole new era of gaming and execute tenaciously on their goals. I imagine they will continue to do bigger and bigger hits across many more platforms.

Skype (not public yet)

I love Skype. They have a massive and growing user base. They control Internet telephony and even before they were spun off they were making great moves in Video Chat and offline phones. I can imagine in 10 years, every mobile/ land-line will be Skype enabled. I am sure if they do more innovation for a couple of years and re-list it will be much higher than their spin-off price.


Unstable - Predictions of the ones that will go either very high or fall very low

Paypal (EBAY)

Paypal is in a great place as they could effectively be the “Bank of the Internet.” On a personal level, I have been locked out of my Paypal multiple times, and their recovery procedures can be a real pain so that bit I don’t like about them. Also I don’t really see that much innovation coming from them. Overall I really don’t know what will happen with Paypal, options are:

• A disruptive startup comes along and takes their market. Something like Square, Facebook or a better Internet bank
• They keep their share and nothing much happens
• They innovate more and start taking on other banks more directly

Twitter (not public yet)

Really undecided on whether Twitter will be around in 10 years. They still have some time to go before they are really mature and have a scalable business model. They do provide a lot of value and have a good network effect of users so that’s something that they could leverage to continue to grow.

Microsoft (MSFT)

As much as Microsoft missed the Internet, they are still around and still making a ton of profit. No one is really making a dent on their enterprise foot hold of the OS and Office, though many are making valiant efforts (Google Docs). They are also finally doing something right with Bing. Also they are owning the traditional console market with Xbox 360. Given their cash reserves and overall impetus, I wouldn’t be surprised if they come up with other cash cows and preserve their existing ones. Alternatively, they may just continue to miss the boat and Windows+Office could become completely irrelevant as everything moves to the web. That’s why I put them in the unstable section.

Yahoo! (YHOO)

They are so low that the only way is up. They have really made some awful strategic moves with giving away search to Bing, but I do think that they could come up with something. Yahoo has a lot of users with their portal, mail, IM and Flickr, so if they could just do something right then they could galvanise those users in to making money. Also Yahoo Finance is still way better than Google finance hence the links below, (still nothing beats Bloomberg, why not?).


Boring - Predictions of the neutral

I won’t comment on these companies. Mostly they have some strong sites/ domains in their portfolio and are likely to survive and continue to acquire other good companies. I wouldn’t expect much actual innovation though.


Expedia (EXPE)


Flowers.com (FLWS)


Netflix (NFLX)

Note on Netflix: I think the whole market is shrinking, prices of on-demand Movies are going to go down and people are going to either pay very little at home or lots in the cinema. Maybe 3d movies and other technology could save them.

Fail - Predictions of the fallen

Myspace (part of Newscorp)

Myspace is quickly becoming irrelevant, and that is FIM’s biggest site.They are currently under-leveraged, but alas don’t think it’s going to happen.

Ebay (EBAY)

Ebay seems to have forsaken its auctions business, the consumer experience has not improved for 5 years and everything is about power sellers. I think Amazon is going to beat them at the power sellers business, and someone else may come along with a dedicated consumer auctions business and take that market.

[Update removed Omniture as it was acquired by Adobe in 2009]

Priceline (PCLN)

Was tempted to put Priceline in neutral, but I still feel like in 10 years they won't be around. Not very impressed with my experience of them. Seems very gimmicky and slightly scammy (see CNET article).

Verisign (VRSN)

I don’t have a good feeling about Verisign. SSL and .com seem like their cash cows and those are not long-term businesses. A lot of other stuff they do seems to be more of giving an impression of security rather than true security. This part is not that well researched so take it with a grain of salt.

Conclusions

I am very optimistic about the Internet. I am certain that at least 100 other companies will be on this list in 10 years time and most likely even my favorites will disappear. The Internet is still in its infancy, and there is still room for tremendous growth. It certainly is an exciting time to be in the industry!


Notes:

Nasdaq Internet Index (QNET) - Was a useful source of info

Thanks to Dru Wynings and Jude Gomila for reviewing this post.

All views are mine, and don't make any investment decisions based on what I say :).


Heyzap is hiring

We are always looking for talented engineers and entrepreneurs to help us grow: Check out http://www.heyzap.com/jobs and email us jobs@heyzap.com!

Definition of Success

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I think people's views on business and personal success are too simple.

It is fairly routine for the tech community to criticize some companies and founders because their company is not yet profitable (especially 37signals). I think they are largely missing the point of what success is. Twitter has changed the way millions of people communicate and it is routinely used and talked about, even if it is not profitable it and the founders has achieved something rare and remarkable.

37signals recently put down the success of the Mint.com acquisition. I am sure the founders have had an amazing journey and in no way could you say they have not achieved personal success.

What is (Business) success?

Profit

On one level, profit is what every business should aim for. But pure profit does not necessarily maximize the long-term viability and success of a company so I would not consider a business successful purely based on that especially when it comes to relatively new innovative startups. Here are some other factors that may be equally or more important.

Employing Great, Highly Talented People

People are the backbone of any innovative tech company. If you lose talent or don’t employ the best you would quickly squander any profit.

Long term Viable Market Position

There are many things that can destroy a company.

• Insufficient R&D - falling behind its competitors
• Legal problems
• Unhappy customers
• Potential commoditization of product
• Squeezing on the supply/demand side

Disrupting Markets and Creating Innovative Products

If you don’t continually innovate than someone will come and take your market. The best companies like Google know this and invest a lot into new products, acquisitions and people.

Scalable business model

Some models such as consulting do not scale very well. In order to increase profit you have to increase staff, and it tends to be time consuming to build up scale like that. Other models such as on-line market places scale tremendously well, such that 40 people can run hundred-million dollar revenue companies.

Having High growth

When specific metrics that increase the companies “long term viable market position” are growing exponentially.

Large customer base

Corrolary to High growth is companies that have a large customer base. These can potentially up-sell very well and presumably already have some data and brand with their customers.

Powerful Market position

Market ecosystems are interesting to try to map out.

• Who are the players?
• Who are their suppliers?
• Which plays are in the most powerful position?
• What are their potential risks?
• What are their potential future plans?
• What are they in a great position to execute on?

Some market positions lead to minimized risk and maximized potential. Here are some attributes of a powerful position.

• Great data on customers – data can provide lock-in and understanding data can help you create better products
• Amazing brand and respect from customers
• Inextricably linked to a valuable point in the flow of money. For example a search engine.
• Fragmented demand-side and supply-side dynamics.

That is in no way an exhaustive list.

What is (personal) success?

Although I have no where near achieved what I want to, in many ways I consider myself successful. Here are some personal ongoing definitions of success I have:

• Learn new things
• Try to achieve as high as possible
• Work on something meaningful where I have a big impact
• Work with great people.
• Build a large network of friends/associate.
• Never work on anything I am not passionate about

Obviously money would aid some of these goals but it would not change everything.

When I evaluate a company’s success, I try to look at the above criteria for business success, which hopefully helps evaluate how successful I think it will be on an ongoing basis. Hope that helps and makes you think twice about what success is.

Heyzap is hiring

We are always looking for talented engineers and entrepreneurs to help us grow: Check out http://www.heyzap.com/jobs and email us jobs@heyzap.com!