I liked this piece by Bill Gurley ‘In Defence of the Deck’.
The great storytellers have an unfair competitive advantage. They are going to recruit better, they will be darlings in the press, they are going to raise money more easily and at higher prices, they are going to close amazing business developer partnerships, and they are going to have a strong and cohesive corporate culture.
A great presentation about a business is a brilliant thing and a huge amount of work goes into the best ones. Of course, a pitch is no use on its own — and nobody would (I hope!) invest based on a deck alone.
We’ve now had over 50 ventures pitch at BGV Launch Nights and we consistently get feedback from audiences that they’re some of the best presentations they’ve ever seen. We have a few founders who can carry off the ‘no slides’ style. Jamie from Talklife did it really well last year. But most use visuals and simple text to create an impact. I remember Miquel knocking it out of the park when he gave the Fairphone presentation back in 2012 — the format revealed a lot about the company. There have been many more that are memorable. In fact you can see them all here.
To be honest we don’t have a magic formula for helping teams create great pitches. We simply get them to pitch to each other on Friday afternoons over a few beers for the second half of the programme. They then give feedback (usually in the form of a ‘praise sandwich’) and do it again the next week. We tell them to think of investors as just one audience for their pitch — it should appeal to customers, future employees and their friends and families just as much as it does to people with cheque books.
Also worth noting that we’re not interested in decks when teams apply to BGV — we ask people not to use them at our interviews. While we would never fund anybody ‘pre-idea’ we do fund teams ‘pre-deck’. We think assessing a team based on a deck that they haven’t yet had a chance to really develop is a bit unfair.
There’s some great science fiction around at the moment. I’m not sure what’s going on but something about the present is inspiring great writing about the future. One of the best books I’ve read this year is Seveneves by Neal Stephenson — minor plot spoilers ahead so beware.
The novel starts with the Moon blowing up. It does so in a fairly matter of fact way — one minute it’s there and the next something (we never find out what) has caused it to disintegrate into many smaller parts. It takes a short while for scientists to realise that this is very bad for Earth dwellers and will eventually lead to so many pieces of rock entering the Earth’s atmosphere that the surface of the planet will become a firey mess and uninhabitable for thousands of years. The novel is the story of how human beings try to survive.
Weighing in at 880 pages, it’s hardly a short story and Stephenson manages to use that to give the most plausible version of life in space that I’ve read. There’s no warp speed or magic device for creating gravity. Food is scarce and death is random and frequent. The ‘Seven Eves’ of the title are the only survivors (down from seven billion) capable of reproduction five years after the surface of the Earth has become uninhabitable. Ingenuity is all that the human race has on its side. Robotics become one of the most invaluable technologies and in the end, other than physics, the thing that threatens humans more than anything is our inability to agree on anything.
It’s not perfect and some of the characters are a bit one-dimensional (the young Hillary Clinton like US President I found difficult to believe), but it’s an amazing piece of writing that draws you into a version of the future I think we do need to understand.
Every discussion about impact investment tends to includes somebody asking ‘what do you really mean by impact?’ or it focuses on the potential returns from impact investment compared to ‘conventional’ investment — the assumption being that there is a trade-off when you make social investments.
The first is a live issue for us at the moment because we’re designing something new at BGV and deciding who we should pitch it to and how. So I’ll be having lots of discussions about this in the coming months. I’ll come back to the other one in another post.
At one extreme, impact investment is providing capital to (usually) charities that have a proven track record of delivering social impact and when you put money in, you get social benefit out. The difference to a grant or donation is that you look for a model that means you also get money back, usually because there is some third party who is willing to pay for that social impact.
At the other extreme of the scale you tip into what you might call positive investment where you really just screen out ‘evil’ investments. Something like an SRI fund for example.
The distinction between impact and positive investment is whether you decide upfront what kind of social or environmental impact you are trying to achieve and then set out to measure it. Do you have a specific goal (or small number of goals) in mind? If you do, then that’s impact investment. If you don’t then it’s positive investment.
This matters because it determines who might provide the capital for your fund. There is a spectrum between the two but different investors will have different cut offs as to where they will invest.
For me this is the real debate about the future of impact investment. It’s got nothing to do with the legal form of the organisations you invest in (that’s a red herring) but is about the intention of the investors and the founders of the ventures and then how you measure and improve the realisation of that intention.
We were in Wakayama prefecture in Japan a couple of weeks ago but unfortunately didn’t get to see Tama the stationmaster of Kishi station who has sadly died. She has a full obituary in this week’s Economist.
She kept strict hours: 9am to 5pm on weekdays, with only Sundays off. In exchange she was given a stationmaster’s cap in her own size, always worn at a jaunty starlet angle; a stationmaster’s badge; as much tinned tuna as she could nibble at; and eventually her own office, with basket and litter-tray, in an old ticket booth. The work was not demanding; if it had been, she would have disdained to take the job. But by snoozing most of the day on the ticket barrier, or rubbing against the legs of passengers as they arrived, she increased traffic on the branch line by 10% in her first year. People would travel just to be greeted by her smooth and lucky purr.
Chinese stock markets are on a roller coaster ride at the moment. There’s been a huge rise in private middle-class investment pumping more money into stocks and plenty of alleged misinformation too. James Surowiecki has a great piece in the New Yorker about some of the billion dollar companies that don’t seem quite right.
I was in Beijing a couple of weeks ago for the first time in three years and you could tell that the economy and wealth had grown and at a local level business was booming. On the train into the city we also saw masses of solar power. The smog was bad but somehow not as bad as it used to be. It felt like a lot of old trucks and cars had been replaced by new models.
Whether the Chinese economy is stable at a macro level I don’t know, but compared to just a few years ago it felt like China was no longer emerging, it had emerged. There was far greater self confidence in the air, and a little less pollution. One thing I’m certain of is that what happens in China will have huge implications for us in the UK.
I’ve started to think that every good impact investment decision needs an optimist, a pessimist and a realist involved.
The optimist instinctively thinks what’s the best that could happen — often imagining the venture developing in ways that even the founders haven’t yet considered. At BGV, unless we can think of an optimist’s case for something becoming huge and having a large positive social impact, it’s not for us.
The pessimist thinks of all the things that could go wrong. If the pessimist’s case is so strong that we would be wasting our money then we won’t make the investment.
The realist immediately imagines what the team will need to do next — thinking of the practical steps. If the realist can’t see how we get from here to there, we have a problem too.
Once all those points of view are out in the open, we have the basis for a discussion about whether a venture is investable or not. This always leads to a bit of drama — or at least a constructive argument — which flushes out all the information and persectives we need to make a decision. Of course the optimist, the pessimist and the realist could all be different people or just one person thinking through each perspective — but I think if you’re pitching for impact investment, it’s worth making sure that you’re appealing to all three character types.
Catching up on podcasts the other day, I found Peter Day had one of his World of Business programmes where he interviews one person for the whole show. This time it was Charles Handy who is one of my favourite management thinkers.
Charles has seen more change in business than most. He started work at Shell back in the 1950s and has watched organisations change ever since, writing 17 books about it. One of the points he makes in the programme is that while we still organise everything (especially policy) around the idea that most people work in full-time jobs in large solid organisations, it’s no longer the reality for the majority of people, and where it is — people don’t like it much either.
I was lucky enough to spend some time with Charles when we were writing Disorganisation at Demos, ten years ago now. He had a very profound impact on me and, looking back, influenced what I do now which is to help people set up new types of organisation that fill the gap that is being left behind by the decline of ‘bureaucratic capitalism’.
His new book The Second Curve is out now. I’ll certainly have a read.