A picture may be worth a thousand words, but a pictogram is worth so much more.
According to Wikipedia (the world's largest free encyclopedia, solely created through end user content, www.Wikipedia.com ), Pictography is a form of writing whereby ideas are transmitted through drawing. One of the oldest forms of pictography is hieroglyphics. Contemporary versions include what is colloquially referred to in investment circles, as "the back of the napkin diagram".
According to Investopedia , the term back of the napkin diagram (or for the purpose of this article "BoND") refers to:
the (pictorial) representation of thebasic components of a business modelexcluding any fine details. The BoND incorporates only the core ideas and success factors of the business. The name comes from the notion that a quick outline of a business can be easily sketched on the back of a napkinto sufficiently demonstrate its fundamental concepts.
In the late 1990s, during the first Internet wave, dot.com entrepreneurs would often draw a BoND for the potential investor, as a method of illustrating the ecosystem, value proposition and revenue model of their venture.
Just like the elevator pitch (discussed extensively in an earlier column ), the BoND conveys more than what the business does or how it will make money. A strong BoND also illustrates management's passion, focus and most importantly its ability to clearly and concisely communicate the underpinnings of the venture.
But during the early years of the millennium, BoND diagrams became obsolete. This was the case primarily because, VCs and Angel investors were moving upstream and focusing on later stages of investment where traction spoke louder than BoND diagrams. Now with the second wave of the Internet (dare I say Web 2.0) underway, BoNDs are making a comeback.
The true value of the BoND
Rick Segal, a Partner at J.L. Albright Venture Partners , states that "Having a great diagram allows the Entrepreneur to have one 'cheat sheet' that let's her tell the story with a compelling visual." Segal's statement was proven at a SpeedDating for Capital™ event that I hosted last fall, at which 11 Companies, met with 10 VCs for 9 minutes each.
Those that had BoNDs in hand were able to employ accuracy and celerity when answering questions posed by the VCs, such as:
What they were doing?
Why they were doing it?
Who benefited from it?
Who paid for it?
All questions you need to answer if you are pitching a VC for investment.
Rob Imrie, CEO of DemandCast , was at the SpeedDating for Capital(TM) event and was one of the entrepreneurs who pitched with a BoND firm in hand. He explains, "Our diagram helped us to focus the conversation and ensure that we were able to keep the attention of the potential investors. It also showed that we understood the big picture and were focused on end users and the value our technology platform brings to them." And Imrie should know. His venture later went on to be named "Best Seed Deal in Canada" at the 2006 Canadian Venture Forum. "Without a pictogram of our solution, everyone would easily see all the moving parts and value that our solution provides - at least not as readily."
But BoNDs are not just used to attract investors. A good BoND can also assist with employee recruitment, team alignment, sales and technology build outs. Segal comments, that "As the prospective client, employee, or VC engages, both parties can use the drawing as a central reference point. It's a very useful tool that is often overlooked in favour of mountains of text laden painful power point slides." In fact, BoNDs can be used throughout the business, according to the Grandfather of business visualizations, Dave Gray, Founder and CEO of Xplane (the business visualization company behind the powerful BoNDs you see in Business 2.0 magazine):
"Visual diagrams can serve as a powerful 'platform for conversations.' They help people focus their attention and understand new ideas better and faster. Better understanding leads to better decisions, which leads to better business results," said Gray.
