My name is Spencer Lazar. I am a venture capitalist at General Catalyst. I grew up with the internet, spend my life thinking about how it can make our lives better, and work with world-class entrepreneurs to affect that chanage. NYC is my home. This is my blog.


Presentation Matters: Pitchdeck UI

There are varying schools of thought as to what deliverables are required to attract the interest of an investor. Among them, the three most important ingredients are: the product demo, the financial model, and the pitch deck.

At the earliest stages of investing, many view the demo as a key reflection of a team's ability to articulate their vision.  Jason Calacanis famously said that he does not even look at business plans. In the growth or later stages of funding, a company's financial performance is viewed as a leading indicator of both the attractiveness of the underlying market opportunity and the ability of the team in question to execute on that basis.  Product is taken as a given here, and so demos lose relevance.

Having spent time investing at each stage of the venture lifecycle, I am a big believer that a company's pitch deck is the most important means of securing capital (either in working capital for expansion or liquidity for founders or early shareholders).  And while I am absolutely blown away by the quality of the entrepreneurs that I meet with and the products that they build, I continue to be underwhelmed by the quality of the materials used to present their vision.

Pitch decks are sales documents.  Think of them as a kin to the resume.  Anyone that has ever hired anyone (or for that matter interviewed for a job) knows that a CV is tool used to tell a story.  When that tool is not sharp (irrelevant content, poor formatting, lack of attention to the specifications of the job), the tool itself can get in the way of accomplishing the task for which it is used, and job applications wind up in the waste bin before even getting a substantive chance.  A company's (and more specifically a CEO's) ability to sell is one of the most important proxies for its success.  Sales are crucial to hiring (convincing overqualified people to take a career risk and join your venture), strategic partnerships (persuading large companies to take a chance on the little guy), future financings (key to most venture deals), and ultimate liquidity (getting buy-in from either acquirers or the public on an intrinsic strategic premium).

Presentations are a tool used to excite and inform.  Informing is a relatively well understood process in pitch deck creation, but excitement is an absolute rarity. Founders have the unfortunate challenge of dealing with often cynical fund managers who are constantly overwhelmed with the shear volume of opportunities that they see.  While founders live and breathe the thrill of building their dream product or solving a central problem to their lives, it is safe to assume that the people you speak with in the venture community (tuned in as they may or may not be) do not have your company's sense of urgency coursing through their veins.  And it is likely that your prospective customers, partners, and employees don't either.  People of all types require selling.

The great thing about the presentation is that it is a free form document.  In many ways, it even subsumes other parts of the evaluation process such as the financial model and the product demo, as each can be expressed either directly or referentially within a linear page turn.  But, while PowerPoint has to be one of the most important productivity tools of all time, its standard settings have created a near monotony in tones of discourse and vehicles of persuasion.  I would love to see an embrace of a new pitch deck UI.

If you are someone that looks at presentations often, you know a good pitch deck UI when you see it.  Reading them, your heart can literally skip a beat.  One of the original pitch deck UI pioneers of the internet era was a mentor of mine, Josh Koppel.  Josh wrote a book in 2000 called Good Grief that changed my life. While an Internet entrepreneur by trade, Josh introduced his format to the world as an autobiography.  It reads like an adult picture book: few words on each page.  Their interaction with deeply relevant imagery on each page teases the reader between the fascination of looking deeper and the excitement of the page turn.  While Josh's book was physical in form, it translated magically into the digital realm.  The mouse click became his page turn. The content turned professional.  Used to pitch everything from TV pilots to new mobile apps to even his own company when need be, Josh showed me how exciting the story of a product or company can be - even if put together with conventional presentation creation tools (spoiler: Apple Keynote is his layout tool).  While I have learned from a number of others, no one has been more impactful in the development of my own style and appreciation for what is possible.

So when you are preparing your next pitch deck, what some of the things you should consider?  (1) Every design decision, like in your product, is just that, a choice. Use colors, graphs, fonts, and spacing carefully; (2) considering using imagery - pictures really catch people off guard if editorial instincts are strong, and they very much can be worth 1000 words; (3) consider non-linear formats - such as Prezi, if appropriate - although know that most investors would side with the utility of the print-out over the flash & intrigue of an innovative non-linear narrative experience; (4) challenge yourself to keep it short (Fred Wilson suggests six slides - although I'm comfortable with the looser definition of "leaving your audience wanting more"); (5) make sure that you show it to a few low risk people outside the venture community with little relevant experience to ensure the headline themes are clear; and (6) begin your investor conversations also with low risk audiences - either friends or those that are low on your wish list - for real-time debugging of UI.  AB testing works here just as well as in software development.

Happy to field questions or provide examples if folks are interested.


Passing on People

In the venture business, most of the opportunities we see, we pass on.   As a general rule of thumb, for every 1000 investment leads, you want to meet 100.  For every 100 you meet, 10 turn into deal-oriented conversation.  For every 10 that get that far, 1 turns into a deal.  There is nothing magical about the funnel, things just seem to work out that way.

There are tons of good reasons for passing (market size; defensibility of IP; absence of operating excellence - to name a few).  But there is one legitimate justification that you will rarely see or hear explicitly from an investor - passing due to a lack of faith in the people behind the given project.  

This predicament is not unique to venture.  In dating, the phenomenon is commonly expressed as "its not you, its me." In hiring, every once in a while, you will hear prospective employers say that things did not work out because there wasn't "a good fit." But, most of the time in venture, you do not even get that much. Why?

Entrepreneurs are one of the most impressive groups of people in the world.  I would not do what I do if it weren't for the fact that I get to interact with so many of them so frequently.  What makes them particularly special is their passion for what they are doing.  Instead of working in traditional settings with benefits, job security, and a tried-and-true career trajectory, entrepreneurs go their own way to solve perceived problems with the way to world works.  They will stop at nothing to see them fixed. Deal or no deal, a part of me always leaves meetings in awe.  

When someone is reaching for their proverbial dreams, it feels almost cruel to tell them that the reason you believe they will not succeed is intrinsic to them.  Instead, one typically hears camouflaged rationales steeped in common pitfalls (back to things like market, IP...).  When businesses have meaningful operating history, sometimes we fall back on a lack of comfort with imperfect business metrics.  At least then, the investor preserves optionality down the road, in the event that the entrepreneur someday matures into a marked success.  

I try to be as transparent with people as possible.  As passing on people will forever be a challenge in my life, I would be curious to know how you (entreprenuer, investor, or otherwise), handle this predicament.  

Just like in dating, a pass from one person is not a reflection of the market.  It is reflection of that person's indeosyncricies, standards, and outcome expectations.  If you are as passionate as most of the entrepreneurs that I meet, you will find funding from someone, sooner or later. 


Data Portability & The Limits to Geo-Shrinkage 

People talk about how small the world is.  And, as communication & information technologies have evolved, there is no question that if considered against the backdrop of the declining costs of interacting with those physically located at great distances, things certainly feel that way.  With the reigns of broadcast media now in the hands of individuals (Twitter, Youtube, Quora...) and the formalization of social networks online (Facebook, LinkedIn, Foursquare), establishing and maintaining a ubiquitous digital presence has never been more scalable.  But in the physical world, how 'small' things can get?

Small is the experience of ownership and command of relationships in a given geography. Without living and breathing the same air as someone, how proximate can we be?  Over the course of the past year, I moved from New York City to London (my 4th city in the past 7 years) - knowing hardly a soul on the other side of The Pond. In getting myself settled, I have come across a few structural constraints that in my mind limit this geo-shrinkage.

The first is physics.  Our bodies can still only be a one geographic place at one time.  By being in London, I am necessarily not in New York.  While it is possible for me to pick up anecdotes from friends on the ground and in the media, there is a rumble to the sidewalk, a warmth to a hug, and scent of urban jungle that I miss while here.  Although the most recent Apple ads attempt to prove otherwise, moments of technology-enabled sympathy are not a substitute for the empathy made possible by geo-presence.  

The second is the force of community.  No matter who you are, at some point you are likely to want to build or belong to one.  Whether in the digital or physical realm, building takes work and belonging takes acceptance.  Work requires time and energy, both of which are finite.  

Although some aspects of community can be established online (this blog is case in point), still most of what we build has a manifestation in person.  We build to see results.  Because we cannot be in multiple places at once (back to physics), most of us choose to build in a single place, such that the fruits of our labor can be enjoyed.  The consequence is that we are more provincial, and the shrinking of the world hits a limit.  

To belong, a community needs to cement trust among its constituents - which is not doled out easily. Perhaps the most important ingredient to trust is commitment.  If people think that you are a tourist (as recently referenced by Mike Moritz & Paul Kedrosky in reference to transient members of the venture capital community), they will rarely take you as seriously as a prospective member as someone who has long-term historical or prospective roots.   Trust is won through the perception of permanence.  By spreading ourselves geographically thin, we challenge our credibility and belonging becomes unlikely.  If you have built nothing and do not belong to anything, the experience of local ownership is unattainable and we are forced back to living provincial lives.

The physics problem is not one that we are likely to overcome, but technology can do more to facilitate geo-shrinkage.  The key is data portability.  There are a number of reasons for me to have a single local doctor, accountant, dentist, and send my kids to the same school - some personal, some social, and some practical.  But the most important reason is that when my 8 year-old needs his tonsils examined or my teenager requires remediation in pre-calculus, their respective doctors & teachers have their entire respective medical & pedagogical histories.   This anecdote extends to nearly all pockets of life.  We have traditionally been local beings living in provincial worlds because that is where we are known.  But as technology companies (e.g. Knewton in education, Facebook in social, and LinkedIn in professional) develop standards for allowing us to carry our lifetime of data with us, we become more feasibly mobile .  Each of us then requires less of an introduction.  Trust is easier to establish. Communities open up.  And, without permanently physically committing to a geography, we can shrink the world just a little bit further.


Finding Equilibrium in The Flow

It has many names.  The stream.  The pulse.  The loop.  I call it "the flow."  

The flow is not just a feed of information - akin to those hosted by Twitter, Facebook, Foursquare or even legacy RSS readers. It is a personalized constellation of news, narrative, gossip, and opinion surrounding the issues that interest us most.  All forms of available media have coefficient in the equation that defines it; email, television, newspapers, magazines, books, phone conversations, dinner table banter and water cooler chats. The momentum of the Flow builds because no matter one's professional, personal, or demographic disposition, there is always a benefit to sitting on the right side of asymmetric information.  Being "in the Flow" is being in the know.  

The Flow is a dynamic concept.  Its pace is determined by the amount of underlying change and corresponding coverage in world events.  Given the historical prohibitive costs of information production, distribution, and consumption - the Flow started off as a drip.  Today, other than by transporting oneself into an episode of Mad Men, it is hard to imagine a time when it was appropriate to digest media by the week - let alone hold our breath for the nightly news.  Staying in the flow used to be a thing of leisure.  But, with 2 billion more information producers (people alone) on the planet than existed just 20 years ago and the advances in technology affording new levels of interconnectedness, the Flow has reached the level of class 5 rapids. Keeping up takes work.

So what is the right balance?  How many people can we actively "follow"; "friends" can we have; subscriptions can we maintain; or channels can we watch?  How many tributaries can we allow to connect to the Flow before it becomes unmanageable?  How much time should we be spending curating, monitoring, and building such information architectures before the very energy required to hold our heads above water is not enough? How do you know when the benefits of information consumption no longer exceed its costs?  

Over time, some of the answer will come from next generation aggregation & curation engines such as the HuffingtonPost and BuzzFeed.  Some of the answer will also come from technology.  We will all go by the way of the Wall Street trader, whose proprietary platforms make trades without the need for human intervention - actively and independently learning from its mistakes.  Put differently, technology will allow us to attain the benefits of the Flow without having to process each piece of data on our own (i.e. bill pay, home energy monitoring, health upkeep, and more).   But, as the optimal level of human information consumption is a deeply personal decision, some elements of equilibrium will for the foreseeable future be determined by the individual.  

I would be keen to understand how you manage your flow.

This post was deliberately focused on the notion of information consumption.  This conversation is complemented & complicated by the introduction of questions as to the appropriate amount of information production for the individual.  These are extremely important interaction variables, which I will attempt to address in a future post.


Publicity is Not Cheap 

Last week, John Battelle observed something a bit unsettling to me.  As one of the founders of Wired Magazine and CEO of web publishing & marketing juggernaut Federated Mediahe is somewhat of a force in the technology ecosystem. Artfully squeezed into 140 characters, Battelle observed:

"Very int. idea at #foocamp: we are in the first ever economy where privacy is dear, publicity is cheap. Large implications. Used to be the reverse." 

This is something of a summary of a broader argument that friend Sam Lessin has been making for a while now (see his post from 01/17/10).  While I cannot be sure that Sam is the ultimate source here, given that they were both at Foocamp and that Sam is a fantastic curator of ideas with "large implications" (go to his Y+30 events to learn more), I think that it is fair to lump their arguments together.  My working definition of publicity is the means by which an entity communicates with the broadest of audiences.

The publicity is cheap argument is based on the shifting microeconomics of content in the digital age.  If Christopher Columbus wanted to broadcast a message to the entire world, it would be a lot cheaper for him to use Twitter than to turn around the Nina, the Pinta, and the Santa Maria.  This much I agree with.  Once Columbus composes his tweet, the incremental cost of sharing that Tweet to a 2nd, 3rd, and 4th person is low enough, that Twitter does not even charge for pushing content through its pipes.  

Shifting relative marginal costs are one thing, but costs of mass distribution are another. Marginal cost math assumes that the piping is in place for me to push my content out into the world.  Britney Spears (5,226,390 Twitter followers) and Ashton Kutcher (5,192,937 followers) have deeply established brands that have spent millions on personal marketing.  The reason that the marginal cost economics have played out so well at scale for them is because their 'piping' is in place.  But what if they wanted to reach 150MM people (~2.0% of the "entire world" & 1.5x the number of registered Twitter users)? That would be a lot harder, and correspondingly significantly more costly.  

Now think about being an independent recording artist trying to get your latest album into the world.  You might turn to social media to begin to build your fan base, but after you have gotten your friends & family to tweet about it and whatever industry contacts you have are exhausted, then publicity starts to get tough. Publicity economics for any content producer only scale according to the size of their underlying distribution infrastructure.

Low relative marginal cost publicity economics are also inversely proportional to the amount of noise that is being simultaneously being pushed through the global system.  The more Britneys and Ashtons there are in the world, the harder it will be for even other highly public figures like Oprah (3,726,172 followers) to get their messages across - let along budding musician "Joe Stummer."  And, the amount of noise in the public domain only appears to be getting worse - think Vuvuzela. It feels like everyone has a message, and while attention spans are nimble, they are unlikely to be able to keep up.

Publicity is certainly relatively cheap compared to the days of Christopher Columbus - or even simply the pre-internet era.  My feeling, however, is that instead of thinking about the marginal costs to publicity asymptotically approaching zero, they will soon cease to fall further and may even increase over time. 

What we saw with the emergence of Twitter and Facebook was the complete breakdown of traditional one-to-one & one-to-many communication paradigms.  They were not the creation of a better emailing services or the launch of new cable news channels.  As such, there was a complete land-grab for would-be costly distribution rights at a time when very few people understood the mediums.  This was genius insight of brands like CNN and individuals like Ashton (even if implicit).  Until a new paradigm shifting/land-grab inducing media platform is launched - publicity is only going get more expensive.