A GOOD PITCH DECK... | METASTARTUP #26

so the good CEOs in the world are storytellers right their job is to tell a story make or build a team around that story go out and raise capital for that story and then make that story real that's a typical CEO's job now when you hear the word story you're probably thinking about a spoken word story or a written story but stories come in any form it could be a book I'm looking at you pajama Propet it could be you know music you know I play the Ocarina once in a while it could be you know a blog post it could be a YouTube video just like this one it really doesn't matter my job is to tell stories the tools that I use to tell stories can range from Photoshop if I'm making a graphic image or premium Pro video to actually just word if I'm writing text now I choose the storytelling tool or the device depending on who's listening so I choose the device based on the audience right and the best storytelling tool especially when you're going to a sales meeting or your audience is a VC is a pitch Teck you know before we get to the actual meat of making a pitch deck let's look at one pitch deck that I really like um so let me just open it up here give me a second oops that's the wrong deck uh let's get to the actual one righto so I haven't personally used this company software it's called front but I really love their deck and every time I meet an entrepreneur or you know some our own Investments when they're making pitch decks for future rounds I always tell them to follow fronts format this is front's series a deck right and I love this deck because it's got the right mix of data and storytelling so in a VC perspective everything is there and this deck is complete and yet it's very short it's short enough for a VC to just burn through it in like 5 10 minutes and just get what the company does right also what you'll notice is throughout the deck front tells a story and then as it's telling the story it adds confidence in its own story right so let's begin so the first slide is obviously you know the name of the company and its tagline which is all your company's external Communications in one collaborative invox um so essentially what front does and for those of you who aren't familiar they're like a shared Gmail right so if you use an email inbox and then you know five other of your colleagues used an inbox um and if somebody sent you a mail you'd have to forward that mail to different people but front allows you to make collaborative inboxes so for if you have an inbox that is support at Avalon labs. you can use something like front so that multiple people can receive that email and you know reply from that email and internally you can see who replied and you know it it's generally helpful uh we don't use it but I would see how other companies would now moving on the first

slide is the problem slide right and I always suggest people to have a problem slide as their first slide they talk about email is the most important business Communications channel right they just talk about gross volume which is 2. 5 billion email sent per day which is kind of giving the uh VC an idea of the target market or the size of the market 54% of business emails and 7% year onye growth on the number of emails sent that's the current state or the premise of this situation but then in just below this they say but email is a tool designed for personal use it's not collaborative it's got terrible productivity and it's eror prone right so you see those three X's there they're very specific about these are three problems that we're trying to solve the next slide is the solution

they come straight to the solution without wasting time they know that most VCS have very few seconds before they lose interest in the deck so in the solution um they just say look we're rebuilding email but for business this time right it's going to be collaborative which is it's got to have companies teams and users um permissions sharing all that stuff integrated which means it integrates with third party stuff and apis and unified which means you can access this through many different channels right and it's obviously built for teams so their pitch is we are a multi- channel email client where every conversation Finds Its way to the right people and is accounted for in the right system now essentially what they're saying is we're going to make email a collaborative option if you notice this slide there's nothing fancy about it right even the previous slide which is this one there's nothing fancy about it it's simple colors and simple icons to keep the focus of the investor on the deck the next slide and this is a very

important slide and I always suggest this to be the third slide which is the comparative landscape in the landscape of things where do we lie now you might say you know I don't know exactly where I lie you know what should be on the x- axis y axis it really doesn't matter as long as you give the investor a differentiation between you and the most similar company to what you guys are doing so uh in this case front says that look if you want a bad messaging experience you can use things like twilio or AWS if you want good messaging experience then these are the companies you can use but the problem with that is they they're all consumer focused if you want business focused you've got tools like Hood Suite Salesforce zendesk which are which have bad messaging experience they're ticket ticketing products whereas if you want good messaging experience they are the top right so whenever you make a deck and you make this four coant system you have to make sure that you take up one extreme of the system so whenever you make a four quadrant like this you have to specify very clearly where you lie on the system even though in my opinion there's no comparison between what front does and what twilio does um they've put in twilio to show you a comparison between how different front is from twio because a lot of investors because they don't have too much time they're like oh you do something very similar to XYZ company and this space this distance between twio and front differentiates or distances is front from twio itself the next slide which is their competitive

Advantage they call it we have a head start and essentially they're saying this is our Traction in one shot we have all of these accounts like hello help operations billing finance these are number of accounts we have on as clients so there might be companies like hello at Avalon labs. go or hello at some other company. co or whatever and they're saying that look front is used by these companies and this is the break down of the inboxes that are used then they go

straight to who their Maki customers are now the word Maki means these are the customers who are big uh who provide validation if you watch my last video uh the funny skit uh about VC's looking for validation Well everybody's looking for validation so when you sell to a company they're like oh who else is using this software when you're raising money from a VC he's going to say okay which big company has bought the software for VC if a big company has invested in a software or product and by invested I mean actually bought software a product um it gives the VC a little more confidence in saying okay these guys probably know what they're doing because a company like MailChimp or general assembly has actually paid for front right so front must be a good software and I don't need to get into the integrities of whether the software even works um then they go straight to the testimonials again now they're painting a picture for you right they're saying look front has great user experience it's extremely efficient reliable and easy to navigate we didn't say that bellhops said it and why does bellhops have the right to say it because they bought 100 seats from us right if you look at the bottom it says I'm in love with front or you can see another one of these quotes which is a wonderfully useful tool that has saved us time and energy and this is MailChimp four different teams so if you gloat about yourself it really doesn't matter but if other people gloat about you especially people who bought seats or who paid money to you that gives a VC confidence your goal through this slide deck remember I told you a slide deck is a way to tell a story as you are telling the story you are helping the VC build confidence in your product and your company then they go straight to the

growth and you know I see a lot of pregrowth stage startups try to raise capital and while it is possible it becomes too story heavy when you have actual growth and we are saying look you know this is how we've been growing over the last one year that becomes a growth story and all venture capitalists want to jump on a growth story think about from an analogy perspective think about this say there is a train at a station and the train hasn't moved right and say you want to take this train from Bangalore all the way to Delhi now if you've not seen this train move or if you've very slowly uh you're probably not going to take it but if you see a bullet train that's only gone from Bangalore to Mumbai but it's going extremely fast you want to jump on board because you're like hey if I get on this train and they're saying that they're going to go to Delhi I'll probably go to Delhi quickly now an even faster way to do this is to take an aeroplane and the reason you take an aeroplane the primary advantage is that it's faster than a train front is very clear about how they do this right they say look we started at $0 in 2014 and in 2016 we've grown to have 1,000 customers and 120k in monthly recurring Revenue the term mrr means monthly recurring Revenue this is a customer who would pay in January and then go on to pay in February all the way till the end of the year right so monthly recurring revenue is one very important key SAS metric software is a service metric and the consumer space obviously the metrics could be a little different it could be uh repeat customers it could be annual revenue it could be gross monthly volume it doesn't matter right but in this deck for SAS it's monthly recurring Revenue then they talk about churn now

we'll obviously have another episode where we go through all of these key metrics that are important for a startup but churn is the number of customers that use your product and then stop using it right so basically what these guys are saying what front is saying is that look we had some very heavy churn in 2014 we made some product fixes and you can see this red line here that shows this High churn right and then it says that look then we got stable with our churn right and over time the churn has become even more stable and low which is every month we lose less than 5% of our customers right which is a very good story in the SAS space 5% yearly churn is fantastic and from a net Mr CH 5% is fair very fair too now they move on to what their focus is

right they say that look we are our first users that means they use their own product um most of the payroll goes into engineering they don't have any support agents they are practically saying that they're a product company and they're saying look we don't have any complex product lines they just sell licenses to use our only product the next thing that they talk about is how

they actually acquire customers and it seems like these guys acquire customers in three different ways the first one is organic growth which is you know most of their leads come in inbound which is Word of Mouth um they're considered the leader on shared inbox which is great it's building confidence as a VC for a VC uh the next thing is they say from a sales perspective every month they're doing 40 qualified demos per month per SDR now SDR is an abbreviation for sales development rep these are people who actually go and do background research on potential customers and then reach out to these potential customers after prospecting them if you need to know what all of this means go look at my video on cold calling and you'll get a better idea the next thing is that they say that once they give a qualified demo to a customer then they have a 28% post demo conversion right and then they're saying that every month they add $36,000 in annual recording Revenue these are yearly contracts presumably per month per account executive now the words AE here mean account executive and I'll quickly tell you what this means even though I don't want to jump into the sales bit right now but most companies in the world have a combination pairing of an SDR and an account executive so every sales team has many different roles now what happens is usually there's an SDR team and there's an account executive team now what generally happens is one SDR is paired with an account executive right in some companies it's that ratio is 1 is to two what happens is the SDR brings in these leads he you know obviously contacts them tries to get them to be interested and then once they're interested the account executive goes in and gives that demo and closes that lead and actually takes out the money so one person doing research which is called the SDR who's actually contacting the companies as well and then there's the account executive who actually closes uh that deal now you might ask why is it that one person doesn't do the entire thing why don't you just do research reach out to that person and close the deal well in general following up with the deal um trying to get money is a very different Focus aspect from actually going and looking for New Leads because those two things are fundamentally different from a context switch perspective um usually most companies will separate the two roles and have one guy just getting new leads and another guy just following up and closing old leads so these guys are saying they do content Playbook they do a co-marketing Playbook and then obviously they have some paid acquisition unit economics which means that they're spending on Advertising it's a funky way to say advertising they say we've identified repeatable strategies to acquire new customers we will iterate on those and double down on the winners now these guys need have put this in the deck um because it's obvious by now that these guys know what they're doing um but they added it in anyway the next

thing is this is called a cohort screen right in this you say I had somebody paying me X rupees and then 12 months later how much of those people have I kept with me so this is a cohort sheet you can Google it I'm not going to jump into the uh specifics of this maybe I'll cover it in a later um episode now what this essentially signifies is how much of the original Revenue have I continued to retain a few years later or a few months later after a customer has started working with me now they also talk about how they've

been Capital efficient we see is l a story where you're not burning too much Capital so they said that look we raised $1. 8 million or we have $1. 8 million left from their last seed round we spent $1. 3 million and we have $1. 4 million in annual recurring Revenue so they're saying we just became profitable then they're saying that look every month we burn $90,000 to you know run the company run ads etc this is called the monthly burn and they're going to be profitable in 5 months now that they've built a story of confidence they're saying look we're raising $10 million in series a to accelerate growth we have found what is called Product Market fit which is we know these customers will pay we just need to reach out to more customers and keep making them pay because on unit economics perspective which is I put in 5 rupees and I'm getting in six rupees I've kind of proved that I can be profitable I just need to reach out to more customers now then they quickly touch up on the team

now from a credentials perspective this isn't a very fantastic team and the only key things which is uh this guy which who's the head of sales who was first sales at box and Dropbox and this other guy who was head of customer success at upsells and Dropbox it's not a fantastic team but in general the small things that they can use that at first sales at box and Dropbox they made it very evident so they're saying look we have the experience we have the uh access to a good pool of excellent French Engineers so they're saying look we got our product shops right and most likely a VC would have when they're doing due diligence would have come visited some of these key employees uh because that happens when you're raising Capital then they talk about the product

road map I'm not going to dive deep into this is obviously you know they plan something for Q2 Q3 these are all quarters in the year and they're saying that look you know over the next X number of years these are the things that we're going to bring on or the next X number of months these are the things that we're going to bring on so some V's will need this especially if you're a tech VC they'll be like okay what else are you building if you're you know somebody who comes from the business side this is not as important and

they're saying that look at an annual recording revenue of $3 million um they would have a head count of$ 39 and at an annual recurring revenue of $10 million they' have a head count of 53 right so they're saying hey we're going to get a little more Capital efficient over time they're saying that in their seed round they had raised $3. 1 million in September from a decent set of VCS and early Angel Investors uh and now they're raising a series a and they're saying that look these two investors have already invested or have already committed to invest and remember I told you that bit about um validation so this is that bit where they're showing validation and they're saying hey these are the two investors that might be interested or have already committed to kind of put money in this round they're saying that slack has

proved that businesses are ready to buy good communication tools now most VCS know that slack is a billion dollar company right and everybody would have wanted a piece of slack in the early days they're saying that slack was doing internal Communications and they these guys front are going after the bigger opportunity which is the external communication space right so that's the deck and you know one thing you should notice about this deck is nothing was extremely fancy there weren't awesome pictures or you know videos or it was a very simple deck that got straight to the point and that's what I mean right the more data you have the more evidence you have um that your startup is working or that you can actually make money the better this deck comes out so the hard work for the deck is not made during the deck it's made before the deck on the ground on actually get getting those new customers and regardless of what you put in that deck nothing shines as brightly as having a few customers or a few early VCS or Angel Investors who've already committed right it's about validation this deck is about you collecting evidence right you're a Storyteller and every story needs to be credible believable and to make that believable deck you actually need some real traction so that's it for this video in the next video I'm going to teach you how to actually make a deck right we're going to open up Google Slides I'm going to show you how to put in these pictures do the icons and next time we'll also look at a more consumer oriented product where I can show you from scratch how you actually make a deck that works all right this is me calling it to day bye-bye