WWI/KKO—The way investors think and make decisions about investing
Many founders don’t fully understand how decisions are made inside an investor’s mind. To clarify and simplify this, I developed a simple framework called WWI/KKO.
It’s a ratio that can be represented as "Why we're investing", divided by "Known key objections", so said another way, "why we're passing". The ratio needs to be significantly greater than one for a person or a firm to make a decision to invest.
As a founder, you’re going to walk into a room, and you need to make sure that investors leave with 3 to 5 bullet points of WWI. This may not mean that you directly add this to your slides, but you definitely want to paraphrase and hope that they remember it. You might have to say them 3 or 4 times, in varied ways. Good examples of this might include an incredible founding team, strong customer traction, a very large and growing market, or a unique use of technology (need a good demo), among others. These should be specific to the company and memorable to the investors.
When you, as a founder, walk out of the room, what the other partners usually say is, “Hmm, that’s really great, but…what about X, Y, Z, A, B, C...” Those are the Known Key Objections (KKO) or at least should be "known" and anticipated by the founder. For example, excessive competition, a lack of a unique distribution strategy, and the absence of a technical co-founder, among others. This list can be long.
Your job as a founder is to understand the WWI and your KKO. Continue to strengthen the numerator (WWI) and soften the denominator (KKO) with specific details and information. If you’ve done this well, certain slides will be ready when the KKOs come, and other slides will be really strong on WWI.
As I build investor decks with founders, I often start at the beginning with a draft slide (remove before presenting), which is WWI/KKO. We add the bullets there, and as we review the slides, we’re trying to remind ourselves of where we’re hitting the strong points (WWI) and where we’re addressing the weak points (KKO), to achieve a good outcome with future investors.