Demo Days

I was reviewing Y Combinator’s Winter 2015 startups this morning. As I read about what the startups were doing and further researched a few that were interesting, I remembered the last Y Combinator Demo Day that I attended in 2013.

I had immediately discovered that Demo Days aren’t for me. The frantic pace of 2 minute presentations gives startups just enough time to explain what they’re doing and how they’re growing. You can discover the first by simply reading each startup’s elevator pitch written on paper, and the second can often be gamed in a single slide. For example, startups use tricks like showing cumulative figures rather than monthly figures, percentage growth rates which are always high from a low absolute base rather than the underlying traction metric, or metrics pertaining to only a subset of their power users, each of which can give the appearance of stronger growth.

The most valuable piece of information which comes across in the presentation isn’t what the company is doing or its growth slide. It’s how well the founder presents. Unfortunately, presentation skills give very little guidance on a startup’s eventual chance of success. Presentation skills can be learned much more easily than hard work and determination. So a founder with an introverted personality who doesn’t come across that strong in an initial presentation (compare this 2005 talk by Mark Zuckerberg to his current presentations) actually has a much better chance of being successful than a charismatic presenter who doesn’t follow through with hard work and determination on their startup after they’ve left the glory of the stage.

Since our brains are wired to respond positively to signals of social strength, even a viewer who is fully aware of their cognitive biases is at risk of being impressed by a startup simply because of the strong delivery of the founder’s presentation in a social setting.

Y Combinator is a role model for other accelerators around the world so its approach to Demo Day has been adopted by other accelerators. This includes Etohum, where we’re investors, whose Startup Turkey event last month featured 3 minute startup presentations.

Demo Days may be a good fit for some investors, but they’re not for me. I prefer to research a startup’s market and the differentiation inherent in their approach from my computer, try out their product and review those metrics which I feel are important, and have a lengthy chat with the founders to understand whether their minds prioritize and solve problems in a way that makes sense to me.