False Positives, False Negatives, and Reading Decks in Advance

As a VC, I take the majority of my meetings without seeing a presentation or “deck” in advance. And when I do get slides, I tend not to study them closely in advance. I’ve never explained why and wanted to do so.

I had an interaction recently with an entrepreneur where I think I both hurt said entrepreneur’s feelings and was perceived as lazy because I hadn’t read the deck in detail in advance. About two years ago I made a conscious decision not to read or require decks prior to meeting. To be clear, I rarely ask for a deck as a condition of taking a meeting. Nonetheless, I get them sent to me prior to meetings. Keep in mind that at SoftTech we invest primarily in seed stage companies – we are investing in the team and the opportunity, not just what’s in the presentation. The following thoughts might be less relevant for people presenting to later stage firms.

False Positives vs False Negatives

In my job as a venture investor, there are two risks when it comes to deciding which meetings to take. There is the risk of false negatives, which I define as declining meetings you should in fact take. The alternative, false positives, are meetings that you feel like you want to take but end up being less valuable or interesting than you anticipated going into the meeting.

I will get into more detail later, but I find that reading decks in advance creates more false negatives than it saves false positives. Let’s think about why VCs ask for decks in advance.

By and large, I think the reason to ask for a deck in advance is to figure out whether a given company makes sense for our firm. My default orientation is to meet with people, particularly at the seed stage. So why would I say no?

  • Portfolio company conflict – If, after learning a bit about the company, I have the sense that there’s a conflict with an existing portfolio company I’ll just ask. It’s simple to point out that we have a investment in a related company and ask the entrepreneur if he or she sees a conflict.
  • Poorly conceived idea – I find that a simple paragraph gives me enough context to figure out whether the basic market opportunity and company idea sounds interesting. If the paragraph is well-written and compelling, I find the deck tends to be so as well. When I struggle to get the big idea from the intro paragraph, I’ll usually just sent a follow-up email to ask more. Still beats looking at slides.
  • Disagreement about the market opportunity – Sometimes I just see the market and market opportunity differently than the entrepreneur. I find this only comes from meeting people and hearing their story live.

In most cases, I’ve found that I can assess the questions above without a deck. A simple paragraph describing the idea will generally suffice to get the point across.

Downsides of Reading Decks in Advance

I’ll jump right into what I think of as the downsides of reading decks in advance. I know that I, in particular, am vulnerable to the things below. Others may have different thoughts.

  • Decks do not communicate personal connection and energy – I find that even the most well-crafted deck or presentation does not tell me anything about how I’ll feel when the entrepreneur or team comes in to present. I value the opportunity to get a sense for the energy and personality of the team when they present live.
  • With a deck, all questions are asked and answered – The best thing about a live presentation is that I get to ask questions in real-time. If I have a question, I can get the team’s feedback on the issue before I have time to reach my own conclusion. One of the hard things about decks is that every question I have in reading a deck either goes unanswered or I have to answer it myself. And I know that I bring that baggage and set of questions into pitch meetings with me.
  • Not all of the secret sauce is in a deck – I’ve met many entrepreneurs who rightly fear that their decks will be shared. So they do not put all of the “secret” sauce of their ideas in the deck. Generally speaking, that information comes out in a pitch meeting but is not always included in the deck. It’s unfair to penalize people who hold that info back out of an abundance of caution.
  • Some people are good at describing and poor at deck creation – Simply put, some people have great businesses and have lots of compelling reasons why they will succeed but are not good at VC presentations. This is not surprising – presenting to investors is very different from closing customers or growing your business.

I am sensitive to wasting people’s time, but I’ve learned that I do a better job paying attention to pitches and giving people a fair shake when I come in unbiased.

As always, I love to get feedback on blog posts. Comments are open below and you can also reach out to me on Twitter @chudson.

  • Patrick Hunt

    For similar reasons, I try to speak to investors in person, rather than over the phone. It’s harder to know how to respond to people without being in the room with them.

  • http://www.startupmanagement.org/ William Mougayar

    I kept nodding in agreement throughout your post, and this is more or less how I’ve been operating.

    That said, what do you see as a good purpose for a deck?

  • http://captainkinnard.com/ Ben Kinnard

    Doesn’t a lot of this come down to your learning style?
    If you a read a deck in advance then later on this might bring up some questions to ask in the meeting that you would not have thought of immediately?
    Also, doesn’t point 3 have the opposite – people good at decks, but bad at presenting? (but appreciate for a foundup to succeed good presentation skills are more important than good deck skills)

  • Ilya Levtov

    great perspective Charles. i recently had that experience of feeling miffed an investor hadn’t read our deck, and this is a positive perspective.

    I only wonder if a deck can provide details/idiosyncrasies of the specific market which the investor may not be deep in the weeds on, allowing in-person time to be better spent, as you say, reading personal connection and energy.

    I think the deep insights driving good startups can evolve over many years (the idea maze). A 20 slide deck and a 60 minute meeting are BOTH woeful media to convey it, and the deck far worse than the meeting. I love the story of Patrick Collison’s pitch to Keith Rabois devolving into a multi-hour discussion about the future of web payments. Dream scenario surely? – VC clears calendar for rest of day to continue discussion…

    Bottom line – thanks for sharing this fluid, conversation-focused approach.

  • Andrew Kennedy

    Nice post.

  • http://www.charleshudson.net chudson

    Glad it was useful!

  • http://www.charleshudson.net chudson

    It most definitely depends on learning style. Some of my colleagues prefer to read decks in advance as that helps them formulate better questions. I try to separate the substance of the presentation from the quality / skill of the presenter. It’s not always easy to do.

  • http://www.charleshudson.net chudson

    I find them very useful once you’re in the meeting and as a follow-up to jog my memory after we’ve met.

  • http://www.charleshudson.net chudson

    I agree. And I prefer Skype / Hangouts to phone calls.

  • http://www.tourlandish.com Varun Khona

    This resonates with what I was discussing with my co-founder the other day. Sending a deck feels like the least passionate way of communicating what we are building. On a related note, how do you decide if you should meet a founder who has requested for a meeting? Especially if it is a cold email. Thanks for the post.

  • http://www.charleshudson.net chudson

    Varun,

    Good question. I usually just read whatever paragraph or blurb they send over. If the market sounds interesting and the team sounds compelling, I’ll usually want to learn more.

  • Saul_Lieberman

    The deck which is most effective in a meeting — a minimal deck which supports the presentation — is least effective before the presentation.

  • http://www.charleshudson.net chudson

    Saul, that’s it in a nutshell. Thanks!

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  • Alex

    Hi Charles. Think you were at Premoney? I understand your view, but I actually prefer to have a deck before meeting. I’m an early stage VC too.

    I have been debating this with a partner in response to the number and quality of meetings.

    It is worth caveating investment location is a factor, as is the source from which startups get in contact.

    Outside of the US (Read Valley), quality frequently reaches the end of the bell curve. Also, if you are getting high quality referrals rather than cold emails, then straight to meeting can make sense.

    I wrote a lengthy article around my views that I want a deck before a meeting (Not that I will read it in detail beforehand): http://alexanderjarvis.com/2014/07/17/why-i-want-a-deck-before-a-pitch/

  • http://www.charleshudson.net chudson

    Alex,

    Thanks for your notes. I didn’t make it to Premoney this year. I feel that I’m in the minority of folks who are not in favor of reading decks today.

  • CLeyerle

    Excellent perspective–people matter most. Also, as another commenter alludes below, my presentation decks don’t include everything and are more minimal because I don’t read my slides. Instead I add insight and detail verbally, using the deck more to engage and frame. Decks people want to read independently must be constructed very differently as a kind of visual executive summary. I’d rather send the summary.