August 2006, rev. April 2007, September 2010In a few days it will be Demo Day, when the startups we fundedthis summer present to investors. Y Combinator funds startups twicea year, in January and June. Ten weeks later we invite all theinvestors we know to hear them present what they've built so far.Ten weeks is not much time. The average startup probably doesn'thave much to show for itself after ten weeks. But the averagestartup fails. When you look at the ones that went on to do greatthings, you find a lot that began with someone pounding out aprototype in a week or two of nonstop work. Startups are acounterexample to the rule that haste makes waste.(Too much money seems to be as bad for startups as too much time,so we don't give them much money either.)A week before Demo Day, we have a dress rehearsal called Rehearsal Day.At other Y Combinator events we allow outside guests, but not atRehearsal Day. No one except the other founders gets to see the rehearsals.The presentations on Rehearsal Day are often pretty rough. But this isto be expected. We try to pick founders who are good at buildingthings, not ones who are slick presenters. Some of the foundersare just out of college, or even still in it, and have never spokento a group of people they didn't already know.So we concentrate on the basics. On Demo Day each startup willonly get ten minutes, so we encourage them to focus on just twogoals: (a) explain what you're doing, and (b) explain why userswill want it.That might sound easy, but it's not when the speakers have noexperience presenting, and they're explaining technical matters toan audience that's mostly non-technical.This situation is constantly repeated when startups present toinvestors: people who are bad at explaining, talking to people whoare bad at understanding. Practically every successful startup,including stars like Google, presented at some point to investorswho didn't get it and turned them down. Was it because the founderswere bad at presenting, or because the investors were obtuse? It'sprobably always some of both.At the most recent Rehearsal Day, we four Y Combinator partners foundourselves saying a lot of the same things we said at the last two.So at dinner afterward we collected all our tips about presentingto investors. Most startups face similar challenges, so we hopethese will be useful to a wider audience.1. Explain what you're doing.Investors' main question when judging a very early startup is whetheryou've made a compelling product. Before they can judge whetheryou've built a good x, they have to understand what kind of x you'vebuilt. They will get very frustrated if instead of telling themwhat you do, you make them sit through some kind of preamble.Say what you're doing as soon as possible, preferably in the firstsentence. "We're Jeff and Bob and we've built an easy to use web-baseddatabase. Now we'll show it to you and explain why people needthis."If you're a great public speaker you may be able to violate thisrule. Last year one founder spent the whole first half of his talkon a fascinating analysis of the limits of the conventional desktopmetaphor. He got away with it, but unless you're a captivatingspeaker, which most hackers aren't, it's better to play it safe.2. Get rapidly to demo.This section is now obsolete for YC founders presentingat Demo Day, because Demo Day presentations are now so shortthat they rarely include much if any demo. They seem to workjust as well without, however, which makes me think I waswrong to emphasize demos so much before.A demo explains what you've made more effectively than any verbaldescription. The only thing worth talking about first is the problemyou're trying to solve and why it's important. But don't spendmore than a tenth of your time on that. Then demo.When you demo, don't run through a catalog of features. Insteadstart with the problem you're solving, and then show how your productsolves it. Show features in an order driven by some kind of purpose,rather than the order in which they happen to appear on the screen.If you're demoing something web-based, assume that the networkconnection will mysteriously die 30 seconds into your presentation,and come prepared with a copy of the server software running onyour laptop.3. Better a narrow description than a vague one.One reason founders resist describing their projects concisely isthat, at this early stage, there are all kinds of possibilities.The most concise descriptions seem misleadingly narrow. So forexample a group that has built an easy web-based database mightresist calling their applicaton that, because it could be so muchmore. In fact, it could be anything...The problem is, as you approach (in the calculus sense) a descriptionof something that could be anything, the content of your descriptionapproaches zero. If you describe your web-based database as "asystem to allow people to collaboratively leverage the value ofinformation," it will go in one investor ear and out the other.They'll just discard that sentence as meaningless boilerplate, andhope, with increasing impatience, that in the next sentence you'llactually explain what you've made.Your primary goal is not to describe everything your system mightone day become, but simply to convince investors you're worth talkingto further. So approach this like an algorithm that gets the rightanswer by successive approximations. Begin with a descriptionthat's gripping but perhaps overly narrow, then flesh it out to theextent you can. It's the same principle as incremental development:start with a simple prototype, then add features, but at every pointhave working code. In this case, "working code" means a workingdescription in the investor's head.4. Don't talk and drive.Have one person talk while another uses the computer. If the sameperson does both, they'll inevitably mumble downwards at the computerscreen instead of talking clearly at the audience.As long as you're standing near the audience and looking at them,politeness (and habit) compel them to pay attention to you. Onceyou stop looking at them to fuss with something on your computer,their minds drift off to the errands they have to run later.5. Don't talk about secondary matters at length.If you only have a few minutes, spend them explaining what yourproduct does and why it's great. Second order issues like competitorsor resumes should be single slides you go through quickly at theend. If you have impressive resumes, just flash them on the screenfor 15 seconds and say a few words. For competitors, list the top3 and explain in one sentence each what they lackthat you have. And put this kind of thing at the end, after you'vemade it clear what you've built.6. Don't get too deeply into business models.It's good to talk about how you plan to make money, but mainlybecause it shows you care about that and have thought about it.Don't go into detail about your business model, because (a) that'snot what smart investors care about in a brief presentation, and(b) any business model you have at this point is probably wronganyway.Recently a VC who came to speak at Y Combinator talked about acompany he just invested in. He said their business model was wrongand would probably change three times before they got it right.The founders were experienced guys who'd done startups before andwho'd just succeeded in getting millions from one of the top VCfirms, and even their business model was crap. (And yet he investedanyway, because he expected it to be crap at this stage.)If you're solving an important problem, you're going to sound a lotsmarter talking about that than the business model. The businessmodel is just a bunch of guesses, and guesses about stuff that'sprobably not your area of expertise. So don't spend your preciousfew minutes talking about crap when you could be talking aboutsolid, interesting things you know a lot about: the problem you'resolving and what you've built so far.As well as being a bad use of time, if your business model seemsspectacularly wrong, that will push the stuff you want investorsto remember out of their heads. They'll just remember you as thecompany with the boneheaded plan for making money, rather than thecompany that solved that important problem.7. Talk slowly and clearly at the audience.Everyone at Rehearsal Day could see the difference between the peoplewho'd been out in the world for a while and had presented to groups,and those who hadn't.You need to use a completely different voice and manner talking toa roomful of people than you would in conversation. Everyday lifegives you no practice in this. If you can't already do it, thebest solution is to treat it as a consciously artificial trick,like juggling.However, that doesn't mean you should talk like some kind ofannouncer. Audiences tune that out. What you need to do is talkin this artificial way, and yet make it seem conversational. (Writingis the same. Good writing is an elaborate effort to seem spontaneous.)If you want to write out your whole presentation beforehand andmemorize it, that's ok. That has worked for some groups in thepast. But make sure to write something that sounds like spontaneous,informal speech, and deliver it that way too.Err on the side of speaking slowly. At Rehearsal Day, one of the foundersmentioned a rule actors use: if you feel you're speaking too slowly,you're speaking at about the right speed.8. Have one person talk.Startups often want to show that all the founders are equal partners.This is a good instinct; investors dislike unbalanced teams. Buttrying to show it by partitioning the presentation is going toofar. It's distracting. You can demonstrate your respectfor one another in more subtle ways. For example, when one of thegroups presented at Demo Day, the more extroverted of the twofounders did most of the talking, but he described his co-founderas the best hacker he'd ever met, and you could tell he meant it.Pick the one or at most two best speakers, and have them do mostof the talking.Exception: If one of the founders is an expert in some specifictechnical field, it can be good for them to talk about that for aminute or so. This kind of "expert witness" can add credibility,even if the audience doesn't understand all the details. If Jobsand Wozniak had 10 minutes to present the Apple II, it might be a good planto have Jobs speak for 9 minutes and have Woz speak for a minutein the middle about some of the technical feats he'd pulled off inthe design. (Though of course if it were actually those two, Jobswould speak for the entire 10 minutes.)9. Seem confident.Between the brief time available and their lack of technicalbackground, many in the audience will have a hard time evaluatingwhat you're doing. Probably the single biggest piece of evidence,initially, will be your own confidence in it. You haveto show you're impressed with what you've made.And I mean show, not tell. Never say "we're passionate" or "ourproduct is great." People just ignore that—or worse, write youoff as bullshitters. Such messages must be implicit.What you must not do is seem nervous and apologetic. If you'vetruly made something good, you're doing investors a favor bytelling them about it. If you don't genuinely believe that, perhapsyou ought to change what your company is doing. If you don't believeyour startup has such promise that you'd be doing them a favor byletting them invest, why are you investing your time in it?10. Don't try to seem more than you are.Don't worry if your company is just a few months old and doesn'thave an office yet, or your founders are technical people with nobusiness experience. Google was like that once, and they turned outok. Smart investors can see past such superficial flaws. They'renot looking for finished, smooth presentations. They're lookingfor raw talent. All you need to convince them of is that you'resmart and that you're onto something good. If you try too hard toconceal your rawness—by trying to seem corporate, or pretendingto know about stuff you don't—you may just conceal your talent.You can afford to be candid about what you haven't figured out yet.Don't go out of your way to bring it up (e.g. by having a slideabout what might go wrong), but don't try to pretend either thatyou're further along than you are. If you're a hacker and you'representing to experienced investors, they're probably better atdetecting bullshit than you are at producing it.11. Don't put too many words on slides.When there are a lot of words on a slide, people just skip readingit. So look at your slides and ask of each word "could I crossthis out?" This includes gratuitous clip art. Try to get yourslides under 20 words if you can.Don't read your slides. They should be something in the backgroundas you face the audience and talk to them, not something you faceand read to an audience sitting behind you.Cluttered sites don't do well in demos, especially when they'reprojected onto a screen. At the very least, crank up the font sizebig enough to make all the text legible. But cluttered sites arebad anyway, so perhaps you should use this opportunity to make yourdesign simpler.12. Specific numbers are good.If you have any kind of data, however preliminary, tell the audience.Numbers stick in people's heads. If you can claim that the medianvisitor generates 12 page views, that's great.But don't give them more than four or five numbers, and only givethem numbers specific to you. You don't need to tell them the sizeof the market you're in. Who cares, really, if it's 500 millionor 5 billion a year? Talking about that is like an actor at thebeginning of his career telling his parents how much Tom Hanksmakes. Yeah, sure, but first you have to become Tom Hanks. Theimportant part is not whether he makes ten million a year or ahundred, but how you get there.13. Tell stories about users.The biggest fear of investors looking at early stage startups isthat you've built something based on your own a priori theories ofwhat the world needs, but that no one will actually want. So it'sgood if you can talk about problems specific users have and how yousolve them.Greg Mcadoo said one thing Sequoia looks for is the "proxy fordemand." What are people doing now, using inadequate tools, thatshows they need what you're making?Another sign of user need is when people pay a lot for something.It's easy to convince investors there will be demand fora cheaper alternative to something popular, if you preservethe qualities that made it popular.The best stories about user needs are about your own. A remarkablenumber of famous startups grew out of some need the founders had:Apple, Microsoft, Yahoo, Google. Experienced investors know that,so stories of this type will get their attention. The next bestthing is to talk about the needs of people you know personally,like your friends or siblings.14. Make a soundbite stick in their heads.Professional investors hear a lot of pitches. After a while theyall blur together. The first cut is simply to be one of thosethey remember. And the way to ensure that is to create a descriptivephrase about yourself that sticks in their heads.In Hollywood, these phrases seem to be of the form "x meets y."In the startup world, they're usually "the x of y" or "the x y."Viaweb's was "the Microsoft Word of ecommerce."Find one and launch it clearly (but apparently casually) in yourtalk, preferably near the beginning.It's a good exercise for you, too, to sit down and try to figureout how to describe your startup in one compelling phrase. If youcan't, your plans may not be sufficiently focused.Image: Casey Muller: Trevor Blackwell at Rehearsal Day, summer 2006
