Pattern recognition is an important part of investing. History doesn’t repeat itself exactly, but it does rhyme. And identifying these rhymes can make you a better investor.
In startup investments, one of these rhymes is the correlation between a startup’s Powerpoint presentation and its product.
A bad Powerpoint presentation is correlated with a bad product. When a Powerpoint isn’t well structured, doesn’t have a storyline, and doesn’t contain well-reasoned arguments which are backed by data whenever possible, the startup behind the poor Powerpoint is also likely to produce a poor product. This isn’t surprising.
Similarly, a good Powerpoint is correlated with a good product. This isn’t surprising either.
What’s more surprising is that the correlation between a better Powerpoint and a better product eventually breaks down. After a certain point, a better Powerpoint doesn’t produce a better product but a worse one. The reason is that time spent developing a good Powerpoint into a great one is time not spent developing a good product into a great one. And startups succeed by building great products, not great Powerpoints.
A great Powerpoint signals that a startup isn’t spending its time on what matters.
Also published on Medium.