As early-stage investors we spend a lot of time reading pitch decks. In fact, if you don’t like reading, you should probably consider a different line of work. What often strikes us: even though founders share tremendous amounts of data with us – from product data to TAMs, SAMs and SOMs to various KPIs – we often learn very little about the strategic narrative of their companies. In contrast only a few years ago it was still customary to find mission and vision statements in pitch decks, but lately this has become more the exception rather than the rule.
If startups claim to grow dynamically, disrupt markets or even create entirely new ones, they will need more than just an overview of product features, market size estimates and a well-constructed financial model to convince investors. They need a full story. Of course, the vision and mission statements we used to see in many pitch decks in the past did not per se guarantee better companies, but they were an attempt to answer some very simple but essential questions: What makes the company unique? What does the company aspire to become? What is the change it wishes to drive – essentially its ‘vision statement’ for the future? And what makes it so different from its competitors that it will actually succeed – essentially the company’s ‘mission statement’ of how it operates today?
Investors tend to fall in love at first sight
Providing clear answers to these very essential questions is vital for startups in many ways. Maybe the most obvious one is to help investors to truly connect to your business and understand its uniqueness, its purpose and its positioning. Always keep in mind that many investors tend to fall in love at first sight, meaning once investors have formed doubts about the prospects of a company, it is often quite hard to subsequently change their mind. (And quite frankly, we occasionally fall into this habit ourselves.) To frame your investor’s first impression, clearly position and differentiate your company at the very beginning of your pitch deck. It’s both an obvious but often forgotten methodology in a great pitch.
What is a strategic narrative?
How can you as a founder best tackle the task of coherently and holistically presenting your company? In our experience the task of sitting down and creating both a vision and mission statement can be quite challenging. These statements are ideally very short and crisp, but anyone who has every created one (including large corporates) knows that coming up with ‘just”’ two sentences is way harder than coming up with 200 sentences. This brings us to the concept of ‘strategic narratives’, which are a crucial component in our daily work at Cusp Capital. To define the term we fortunately don’t have to reinvent the hot-dog-on-a-stick. Instead we can simply quote the perfect definition in the Harvard Business Review article ‘How to build a strategic narrative’:
“A strategic narrative is a special kind of story. It says who you are as a company. Where you’ve been, where you are, and where you are going. How you believe value is created and what you value in relationships. It explains why you exist and what makes you unique. (…) People want to get a sense for your company as if it were a person.”
In other words, a true strategic narrative is a ‘short story’ of your company. It only encompasses a few sentences, and it will always show what your company actually does – not just what it claims to do.
How to create a strategic narrative?
While there are no short-cuts to generate a compelling strategic narrative, in our experience there are techniques which can guide you and your team in successfully writing your company’s ‘short story’. At Cusp Capital we love working with Marty Neumeier’s concept of the ‘onliness statement’. You could think of this ‘onliness statement’ as the nucleus from which you can then later develop your company’s strategic narrative as well as its vision and mission statements. The onliness statement (as introduced by Marty Neumeier in his book Zag) in our view is the most effective positioning statement, forcing you to concisely formulate the radical differentiation of your company vs. your competition. Simply put it answers the what, how, who, where, why and when of the radical difference at the core of your company.
To clarify this, let’s take a look at one of Marty Neumeier’s examples for a wine bar chain (which unfortunately lies outside our own investment scope). This wine bar’s onliness statement could look like this: “Our company is the only chain of wine bars that builds a community around education for men and women of drinking age in cities and progressive towns in the US who want to learn more about wine in an era of cultural awakening”. And zoomed in:
- WHAT: the only chain of wine bars
- HOW: that builds community around education
- WHO: for men and women of drinking age
- WHERE: in cities and progressive towns in the US
- WHY: who want to learn more about wine
- WHEN: in an era of cultural awakening
At Cusp Capital we love working with the ‘onliness statement’ because it forces companies and ourselves to be laser-focussed on radical differentiation and clarity. And only if you truly understand something (e.g. the uniqueness of your business) can you explain it in short and simple terms. Clarity on positioning and uniqueness is essential for any company. It not only serves as a reference point for future strategic decisions but also improves your pitches with investors and customers and helps create and communicate a place where the best talent will feel at home.
When working on your strategic narrative, it helps to let each member of your leadership team write a version of the narrative based on the results from your onliness statement. Compare these versions. Scrutinize for even the most minute differences in wording. Discuss and merge. Check whether the resulting strategic narrative is concise, easily understood and truly unique. Try inserting the names of your competitors into your draft. With the name changed, does the strategic narrative still hold? If yes, tweak it until it does not. Test your narrative with good friends, advisors, customers or existing investors.
Mix and match the above. Iterate. This is not a final story – it is a journey. A journey to give your company the strategic narrative it deserves. A journey to make your company truly unique.