It has been very interesting building a startup in 2012 and learning some of the new ways that the world works. Many people who graduated business school 10+ years ago have a different way of seeing the world than those leaving business school now, or better yet, those running successful startups. Since neither Daina or I have an MBA our main source of knowledge is our advisors, other successful entrepreneurs, and VCs and Angels who have been kind enough to provide some advice along the way.
I think the biggest stumbling block we hit early on was the business plan. If you search online to better understand how to put together a business plan what you’ll end up with conflicting answers. You see, search engines like Google will often show some of the older high authority sites that will step you through a full scale business plan, you know that 20+ page masterpiece startups used to put together? Fast forward to 2012 and many business schools are even agreeing this is overkill.
It wasn’t until we started connecting with other startup founders, investors, and advisors that we learned how your average tech startup puts this together now. The new business plan has moved from Word to Power Point and is given as a presentation rather than a weekend reading project (which may have taken the entrepreneurs months to make). The structure is quite similar to the traditional business plan but the focus is much more on the entrepreneur telling their story and framing the opportunity vs. the document doing it all itself.
Closely related to the business plan is the pitch deck which has some striking similarities but covers a bit different ground. The pitch deck is important, it gives you a framework to discuss your business and the opportunity beyond the product demo. An article on Bryce.vc covered this today, and in this case Bryce, a VC made some great points about the importance of having a pitch deck to compliment a product demo:
“Of the 3-5 new pitch meetings a day I take, most founders can’t be bothered to put any type of framework around the conversation (PPT slides, Exec Summary, anything), many consider “demoing the product” to be pulling up a browser and clicking around aimlessly while trying to describe what they’ve built, when asked what they’re are looking for in a new investor, most respond “speed, so we can get back to building the product”. I block out 30 min for these meetings, most can wrap up in 10.” (The Sad State Of The Startup Pitch, Bryce.vc)
We’ve encountered this problem before when presenting the product, and in many cases even if we’re not giving a pitch, we still find ourselves going to our pitch deck to show some kind of data or keep a conversation on track. What’s interesting here is that both the format of the business plan and the process of delivering it has changed. There are two pieces to the puzzle, the business plan and the pitch deck, they’re both given as slides vs. book form. I think this makes the process much more personal and allows the founders to really show their passion, drive, and knowledge in person.
As I’ve learned with this blog, there is only so much you can get from the written word, and it’s not replacement for being there in person. With the evolution of the business plan comes the evolution of a process. Investors won’t be spending their weekends reading your business plan, studying your market and deciding if you got it right, you need to bring that to the table in person, on the phone, or via video chat. That 10, 20, or 30 minutes will most likely be all someone needs to evaluate if you have something meaningful (or something that could be meaningful). The location independence is a whole different topic but suffice it is say that technology has been a big factor in making this change since it is now easier than ever to meet virtually anywhere anytime.
Steve Blank has a great article that continues this discussion and talks about the actual evolution of your business plan itself and why there’s a very good chance your plan is going to change. Steve is one of the leaders of the Lean Startup movement and someone that we really look up to in the space. We’ve learned a lot from Steve’s blog, books, and in-person talks, his focus on customer development and iterating based on feedback is a core part of our company values.
The only thing certain in the startup process is change, we know there’s a lot that we don’t know so are spending our time listening and learning. The startup space has a great community of people that have been there before and are more than willing to share their experiences and advice. If you want to be around these kinds of people find a MeetUp group or CoWorking space in your area or attend a startup event like Lean Startup Machine or Angel Hack. The more people you meet that have gone through what you’re going through, the better prepared you will be for the steps you are going to take, but don’t take my advice yet, like many of you I’m still learning myself!