The Case Against the Pitch Deck

... and for Amazon-style memos instead.

This is a call to action for investors. Let's abolish an unnecessary time-waster.

Startups need glitzy, McKinsey-grade pitch decks (PD), otherwise, investors treat them like second-class citizens. That’s just the unfortunate reality.

But maybe PDs just fuel our myopia?

I had a conversation with some other investors recently and someone said that the true purpose of pitch decks is to show "you have done your homework", and let the investors be able to say they've done their "due diligence."

This rings true to me. PDs seem to me like a wasteful attire.

Of course, investors need information to assess a company. I’m not saying to abolish that. I’m comparing PDs with a specific alternative: Amazon-style memos with 4-6 pages written narrative in a document, and a 20-minute “silent reading” meeting.

Keeping that in mind - here are my problems with PDs:

1. PDs establish the wrong hierarchy between customer and provider.

2. PDs are a bad time investment for the founder

3. PDs fail to create alignment for investors

4. PDs invite bias

My reasoning in detail.

1. PDs establish the wrong hierarchy between customer and provider.

When I was in management consulting, we did these slide decks for clients. And we got paid a lot for it!

In VC, the client is not the investor - the client is the founder! VCs provide a service to them - not the other way around.

The founder is the one doing the work to increase the value of the company.

VCs should be at the doorstep of great founders and have a conversation how they can help, not the other way around - what’s scarce is not capital, but talent.

(I think the problem is the VC business model, more on that another day.)

2. PDs are a bad time investment for the founder

The time investment into PDs is 10% into substance, and 90% into looks. (This changes with software like Canva or Pitch but it's still like that for the most part.)

Compare that with writing a clear 4-6 page memo with full sentences.

That is still a big-time investment.

But the investment is 90% into substance, and 10% into looks.

This is more helpful for the founder because looks are only for the investors - substance is helping founders clarify their own thinking.

3. PDs fail to create alignment for investors

We hope to nail it with this one simple sentence ... that one nice graphic. We hope to reduce the confusion resulting from the lack of insight into a complex system.

Yet that's not what PDs do.

Compare that with a 20-minute "silent reading" session of a memo. While you read it, you make comments. Afterward, you do a thorough Q&A.

Same time investment.

Investors may think they’re too “time-pressed” to go into such detail.

But how much time do you spend on investment committee decisions, answering questions by other partners, sourcing data back-and-forth with the founder, etc.?

You may save time on the initial deck, but not on the process for the investment decision as a whole.

Memos can frontload your time investment, and reduce the total. You can have all partners in the meeting and decide right after.

4. PDs invite bias

Investors want founders to pitch in person early in the process.

We know from other fields that appearance creates a powerful bias ("halo effect"). Many founders aren’t as good with investors as they are with their customers.

Yes, you should have a good sales founder on the team and be able to fundraise. Yes, you should develop a good personal relationship. Appearance is not 0% important.

But remember a16z founder Ben Horowitz’ investment mantra? “We invest in the magnitude of the strength of the idea and the team, not in their lack of weaknesses.”

Memos give you an insight into the ability of the founder to think clearly.

Clarity of thought is indispensable. Confused founders don’t execute well.

Good looks, glitzy slides, and charisma are dispensable.

So what's the solution?

1. A-grade email with a high-level summary of the opportunity for investors to decide if they want to take the meeting

2. The first touchpoint is a conversational pitch without visuals. Based on that, you decide if you want to proceed.

3. Investor meeting with memo: use the Y-Combinator application as a template.

4. 20-minute “silent reading” session in the meeting, with hard Q&A afterward.

5. Decision.

Any objections I didn’t handle? Please comment below.