It's about being clear, not convincing.
Several of our Crafting A Strategy (CAS) members are reaching a critical milestone in their growth – the need to ask for other people’s money (again). While the financial pro formas, your two years’ worth of taxes, profitability (if you are profitable), business plan, and business model will garner lots of attention; today I want to write about what may ultimately seal the deal – your investor presentation.
As President of CAS, as a brewery shareholder, as an outside director, as a professor, as a beer industry researcher, I make presentations for a living. Whether I am asking for money, asking for time, asking for students’ attention, I am always asking for something. I change my presentations all the time, but there are some key take-aways from my best presentations. For this blog I will deconstruct what, according to several audience members and advisors, was my best presentation to date. The 2016 Craft Beer Finance and Investment Conference in San Diego, CA. This was a presentation where everyone in the room knew more than I did about finance and investments. I was the outsider, asked to speak to a strong network of industry insiders, financial professionals, and people I look up to. Some of them were CAS members and some were key CAS partners – I was a little terrified.
I think many CAS members feel this same way when asking financial professionals to invest in their breweries. By retracing my steps in San Diego, I think I can help you do your best at raising money.
1. You Have About 30 Seconds to Inspire or Scare Them (You choose)
I was the last speaker in San Diego, usually a dreaded spot in the lineup because people are packing up their tradeshow booths, checking flights, and (especially at a good conference like this one) intellectually drained and tired. In my audience were people from Goldman Sachs, Private Equity, Bankers, Equipment Leasers, M&A Advisors, and a host of other people who could run circles around me when it comes to finance and investment. I knew I had to be memorable or lose half the audience in the first minute. Buoyed by experience and a little worried by what I was going to say next, I pushed forward: “Why would a crowd of finance and investment experts want to listen to a strategy guy? I think it’s because you are all lying to yourselves.”
Analogous opening lines in your investor presentation:
How many of you have an investment in your portfolios that you truly love?
At a dinner party with your closest friends, how many of you break out pictures of your stock portfolio and pass them around? Asking your friends to hold them up to the light, smell them, and talk about how being near your portfolio makes them feel?
2. Ask For Help, Be Vulnerable
Now that I had the attention of all these smart people, I had to keep them interested. I had to deliver. I find the best way to do this is to ask for help. In San Diego that morning, I began by being vulnerable. I admitted that I went home early from the conference gathering at Karl Strauss Brewery. I couldn’t figure out what I was going to say. I sat through every presentation the day before learning about the wins and losses for investors having the courage to enter the craft beer space. I then went to dinner with these professionals. After a few rounds, the narrative began to change. I learned the future wasn’t as clear as they made it seem publicly just a few hours before. I felt the pain and confusion in their voices; I knew my original talk would perpetuate more sameness. I knew my standard stump speech wouldn’t be memorable.
I reminded all of these finance professionals that I sat through every single presentation, that they painted a clear picture of the future, and set measurable and achievable financial metrics to achieve those goals. Then, over beers I learned the future was more uncertain than they let on. There was a lot of confusion, missed targets, and fear that the future won’t look anything like what their models predicted. That’s when I knew I had them. I study decision making under extreme uncertainty. Financial projections are based on certainty. My research studies actions managers can take when there is no good data to rely upon. Their everyday lives rely upon data from the past – data that represents an alternative reality to what they were experiencing in August 2016.
I told them the next 20 minutes would be completely foreign to what they may have expected. But, if they trusted me, they would have a new way to make decisions on Monday when their old decision models no longer applied. After being vulnerable, I offered a path forward.
Asking for help at a brewery investment presentation:
Running my craft brewery, everyday I open up my portfolio for the world to love, to hate, to criticize, and to talk about. And I don’t know how to measure that kind of value on a spreadsheet but maybe one of you does? Could you help me quantify the joy and happiness my business creates daily and where that fits in your portfolio?
If you want a soulless exponentially increasing ROI that returns value to investors first and to employees, the community, and the environment a distant second, then you are at the wrong presentation. But I need help, my top line is good but I am about to bite off another big piece. I know I can do better on expenses, but do any of you know how hard it is to make beer consistently and at scale? I need balance, experience, and your trust. I need patient money, not just your money.
3. Focus on Being Clear, Not on Being Right
Making good presentations is about communicating your expertise as simply and clearly as possible. The simplest way to communicate your expertise is to talk in your own language and not the audience’s. Scientists often do this, they use jargon and acronyms because it is how they speak with each other, but they leave the audience confused. A confused audience doesn't receive a clear message, thus the presentation isn't as effective.
No message will be effective unless it is clear. Clear messages give the audience a choice to opt in or opt out. Clear messages equal understanding. That is the goal for you as a presenter. Be convincing with your passion, be clear by using words that the audience understands, and give them the choice to ask for another meeting or simply thank you and move on. I really like the formula presented by Melissa Marshall in her Ted.com talk: Talk Nerdy To Me.
I finished my speech in San Diego by talking about decision making under uncertainty. This, finally, was something I did know more about than my audience because I had been studying it for a decade. I didn’t try to compete head to head with finance and investment professionals on topics they were better at. I didn’t try to convince them that I was smarter or that I had a better way of thinking. However, I did say that the science I study is just as rigorous as their decision models. I removed jargon and used pictures and quotes instead of bullet points (admittedly, I still had a few bullet points). I then asked them if I could show them my science. To conclude, I made my science relevant to their new reality. I didn’t try to convince them to change; I only wanted to understand that there are other ways to make hard choices.
Being clear at a brewery investment presentation:
Let me tell you about how my business improves the lives of my employees, my neighbors in the community, and how we bring happiness and joy to all that enter our tasting room. If that isn’t part of your ROI calculation, then this may not be the ideal investment for you.
Making an investment into my brewery will likely not yield the same financial ROI you are used to in your other investments. It may be higher, but it can likely be lower. However, I imagine your investment in our brewery may be the only investment you talk about at your dinner parties. It may be the only investment where your money stays locally here in the community where you live. If that doesn’t sound great to you, no problem... Enjoy the beers we provided and thanks for your time.