It's Joakim here. This is yet another brilliant piece from Kim Nordström, who wrote his previous piece in April on his advisor work in gaming. This time, an essential piece for anyone who is looking to pitch to investors.
Many successful founders start their game companies to accomplish something different or new. With a specific intention, an aim, an ambition to make a change, make something big, to create something new. They make a promise to do something great. This is where everyone starts - with promises that they will make an impact of some sort. And that's just it; it's all just promises initially. At the beginning of the journey of a new game company, everyone promises a great future, but few can prove that they will achieve what they promise. Their ability to deliver on their promises separates successful founders and leaders from failed ones.
I have been observing companies, especially in their early phases, for the past decade, evaluating more than 500+ pitches, and found a simple pattern that I call the proven & the promise. I have seen how much founders promise to people around them and what they promise to themselves. Most of the time, it's a false or an empty promise built up more on hope and belief that they can achieve what they promise - in reality, they often have no idea how to fulfill their promises. The most common pattern is that people promise more than they can prove. That is a problem, but not the most concerning problem, which is that few people even try to prove what they promise and leave it up to chance.
When Ben Brode, former Creative Director at Blizzard and creator of Hearthstone, together with his colleague Hamilton Chu, former VP & Exec Producer at Blizzard, set out to build their new studio, Second Dinner, they went to Marvel asking for a license. Not any type of license either. They wanted access to the whole portfolio of Marvel characters for their new game ranging from the big names Iron Man and Captain America down to the less famous such as Howard the Duck and the Silver Surfer. The reason Marvel would agree to do a licensing deal was that their promise and proven ability were in balance.
Jay Ong, EVP at Marvel Games, said:
It was a no-brainer; I knew the guys had the track record to back up their vision. They had proven previously that they could deliver.
Ben and Hamilton promised that they would create an amazing mobile game that Marvel fans would love, and they could back it up with a proven track record with their work on Hearthstone, which ultimately created minimal risk for Marvel and a potentially significant upside. Marvel Snap was released years later and became a huge success, and the guys delivered on their promise.
About 90% of the founders I have conversations with promise too much. They get the balance wrong. The dialog often skews too much on promising that the future "will be great" and that with the best people, great culture, and lots of capital, "we can do anything." In comparison, the reality is often that they don't know how to achieve the promise.
As Commander Tom said to Maverick in the first Top Gun movie, "Your Ego Is Writing Cheques Your Body Can't Cash." As much as there needs to be a north star, an ambition, and a BHAG* for the company to point towards, the most challenging part always is about figuring out HOW to get there. The founders' job in considering a startup is to identify all blockers and challenges immediately and find solutions to overcome them. A promise is often connected to a WHAT, while a proven outcome is often connected to a HOW.
Let's take classic pitch presentations as examples. For those that are reading this and are in the process of raising venture capital for a startup, open your presentation and go through page by page and label every one of them with the word PROMISE or PROVEN. Do this while being honest with yourself, and you will find that the majority, if not all slides, are labeled as a promise rather than showcasing what you have proven.
There are two basic structures to structure your pitch based on the proven and the promise concept.
- If you can already prove what you are about to promise, then showcase that immediately. If you have built a prototype showing what you want to achieve, you have proved something that already sets you apart from many others. Always aim to "show and don't tell" as much as possible throughout your pitch presentation and, perhaps more importantly, when you run your company.
- If you cannot prove what you promise, your whole deck needs to explain HOW you plan to prove your promises.
Let's go a bit deeper if you are in the second category. Here is how you should structure your presentation:
Slide 1: Logo and stuff.
Slide 2: Share your vision for the future, explain what you want to achieve, and explain your purpose as a company to exist. Please don't make it too fluffy; put numbers on it, and make it concrete. Point to a state in the future and, visualize it, explain what you want to achieve. Since this is the only slide where you can make promises, make them bold! My friend Hugo Obi at Maliyo in Nigeria wants to become the first successful mobile game studio making games for people in Africa by people in Africa. I love that in a promise.
Slide 3: Highlight the challenges your company faces. Explain how these challenges related to the goals and purpose you put into slide 2. These challenges need to be honest, tangible, and practical blockers on such a level that experienced people nodd to and agree with when they read them. If/when you solve them, it should put your company in a beneficial situation.
Slides 4-10: Spend almost the entire presentation proving HOW you will overcome these challenges listed on slide 3. There should be convincing solutions to the challenges you previously listed. If you want to create a game in an already crowded genre, explain HOW you will make a difference. If you have a technical challenge, explain in detail the steps you will take to overcome it. If the viewers of the presentation agree with your solutions, you are on a good path to prove that you can achieve your promises.
Slides 11-12: Make "the ask" and explain what help you are looking for. Make it clear what you want from this presentation and what type of help you need to achieve everything communicated on slides 4-10.
I have seen this misbalance between "the promise and the proven" for a long time, and it's painful to watch. Reviewing many pitch presentations, you will find that many companies structure their pitch deck oppositely. They spend the first 7-10 slides promising many things, including a great future, and rarely point to HOW they will achieve their goals or what they have already proven. This becomes confusing and weak. Instead, make a significant promise initially, then spend the whole deck trying to prove HOW you can achieve your goals. Or even better, highlight what you have already proven. You will find an easier time attracting investors and talented people, and the journey to becoming a successful gaming company will be less bumpy.
* Big Hairy Audacious Goal - often used by Jim Collins