The purpose of your first slide

This originally appeared on the Rednod.com blog.

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I was talking with the CEO of a startup last week and we were going over funding slides.

There’s always an overview slide up front. According to common wisdom, this is supposed to “tell them what you’re going to tell them.” But I have a slightly different take on it.

Sure, you have to say what industry you’re in, how much you’ll make, how you’ll make it, and why you’re the one to make it happen. And do all that in a couple of sentences. But your first slide has a different, more important purpose.

The purpose of the first slide is to change their mindset from “I have to sit through this” to “I get to sit through this.”

That’s it. The audience, likely VCs, are short on attention and flooded with mails. They have probably already heard your idea, spun several ways, and figured out many reasons why it might not work. They’re already aware of competitors, or legislation, or technical issues, that can kill you fast.

They’re also social creatures. Deal flow is a social thing, the passing of ideas and sound-bites at golf clubs and whiskey bars. Sure, that’s a stereotype, and I know several investors who are quiet, contemplative people with tremendously open minds. But remember that whether they like it or not, VCs are paraded in front of their firm’s Limited Partners and have to be “in play” to get the juciest deals. So they’re hungry for things they can share and discuss. It’s their currency.

When you get in the room, they see your first slide and often wonder how quickly they can pull their blackberry out without being rude. The default assumption is that they “have to” sit through the presentation. At best, they’ll learn more about the industry or the team and it will be useful elsewhere.

If you use your first slide to change that to “I get to hear this,” you’ve won. Because now, they feel like they’re being let in on a secret. They’re going to find out about a new market, a new way of doing things, or something that changes the game. It will probably make them revise their mental model of your market. And give them something to talk about.

How do you do this? The good news is there are two simple ways. The bad news is that they’re hard to find.

  • The first way is to tell them you’ve found an unfair advantage. That could be an exclusive partnership, some defensible technology, access to a channel nobody else has, legislation, or something else. Whatever the case, it gives you an unfair advantage in an existing business. And unfair advantages mean unreasonably large exits.
  • The second (and often more exciting) way is to have discovered an inefficient market. Investors love inefficiencies, because the market rewards those who make things efficient with a share of the savings. Travelocity and Expedia did this for travel; Zillow and Hotpad are doing it for real estate. Software is eating the world one industry at a time, and it tastes delicious.

When you present, that first slide had better change their mindset. If they’re on the edge of their seat, thinking, “I get to hear about this market or discovery,” then they’re much more engaged, and much more likely to invest the mental energy in understanding your business.

If not, maybe now’s the time for them to check that mail about the cigar bar.