When I first started work as a management consultant (yes, I have a sordid past), I was taught how to give good presentations.
One very important rule they hammered home was the importance of making sure that the first few slides in your presentation were completely factual statements that nobody could disagree with.
For instance, you wouldn’t say “Client is 50% underweight in the big box retailer market”. You would instead phrase that as “16% of client’s sales go to big box retailers, while the industry average is 32%”.
People can argue with whether the client is really ‘underweight’. Maybe everyone else is overweight.
They can’t argue with the raw facts, that the client sells a certain percentage and the industry sells a different percentage. They have to say yes and agree with that. Management consultants have learned that this initial agreement is very important.
The same rule is important in investor presentations. You need to make sure that you lead them into your presentation with a series of statements that the investor can’t possibly disagree with.
There is some deep psychology behind this approach.
The Psychology of Agreement
Once people start to agree with you, they are more likely to continue in that state. If they say yes, either verbally or subconsciously, they are more likely to continue to say yes. This is sometimes referred to as the ‘Yes Ladder’. Start people with a yes, and you can try to escalate a series of yeses to a successful request for money.
There are different explanations for why this works. Some people say that initial agreement builds rapport, and it easier for people to agree to a request when they have rapport with you. Maybe it just takes energy to switch our thinking from one automatic response to another track, and the brain naturally wants to conserve energy. Whatever the reason, it definitely works, as the studies show.
You may think that walking someone up the ‘yes ladder’ is very tricky with a large ask like money, and you almost certainly can’t ‘fool’ them into parting with $100,000 using psychological trick. This may be true.
However, what you start your presentation with is still very important. If your presentation starts with something the listener (or reader) says ‘no’ to, then you start a chain of noes that make it very hard to get a yes later. The negative chain is as powerful as the positive chain.
It is not always obvious to you as the entrepreneur that the statements you make are controversial. You know your space very well, and you have some firmly held beliefs and a point of view that cause you to launch your business in the first place.
The investor doesn’t have the same background, and they can react negatively to statements that you think are perfectly simple and obvious. Make sure you test your presentation with people who don’t know you, don’t know the space, and will be completely honest with you about their reactions.
I ran into this negative reaction last night with an entrepreneur who was trying to explain their business to a mentor. The entrepreneur was saying that their retail software system was special because it integrated a POS system and inventory management system together for small retailers. The mentor kept saying ‘but what is the benefit’.
This is one reason that people suggest the ‘problem – solution’ framing as a way to present your business. Sure, you want to tell people the problem so they know it and can see the benefit. You also want to get the investor saying ‘yes, I can see this is a real problem’. And then ‘yes, I see that this is a solution’.
And problem-solution isn’t always the right framing to use in your presentation (e.g., if you have a cure for cancer, your audience may be insulted and/or bored when you start by telling them what a problem cancer is).
What is always right, whatever framing you use, is to start with non-controversial statements, so that people start the presentation by agreeing with you.
Breaking the Rule
Like all rules, this rule can be broken and you can still succeed, if you are a real master. I heard a company pitch a month ago in the education space. The founder started off with a claim about how his classroom discussion platform could help cause world peace. Clearly that is a controversial statement, and it got me to be an automatic ‘no’.
However, he was such a masterful presenter, and built up such a convincing story, culminating in a demonstration of how his system could create joint conversations between students in Turkey and the US, that he actually won me back, and got me to be a ‘yes’ – and perhaps an even stronger one than if I had not been an initial ‘no’.
He was able to pull this off because he was presenting in a fixed format, where he had the time to win us back, without being interrupted by objections and challenges after the first slide. As a management consultant presenting to a client who can interrupt at any time, this would have been too dangerous.
So you can dig your way out of a hole if you are a super-presenter, and are given enough time without interruptions. It may even be a good advanced strategy to use, selectively.
If you are an ordinary mortal like most of us, follow the rule. Be non-controversial, and give us things to say yes to. Keep us agreeing with you, all the way to the bank.