Justworks Series B Pitch Deck: A Masterclass in Simplicity

Early Confidence in Justworks

It can be difficult to recall a time when Justworks wasn't widely recognized. Despite consistent monthly revenue increases, the company hadn't yet surpassed $100,000 in revenue. Even at this early stage, Matt Harris from Bain Capital Ventures was convinced of the startup’s potential.

Harris emphasizes that investment decisions, especially in early-stage companies, largely depend on the quality of the team, and crucially, the founder’s capabilities.

Isaac Oates' Approach

“Isaac operates as a dedicated long-term strategist, yet maintains a focused, short-term vision,” Harris explained. “The most fitting descriptor is ‘structured.’ When presented with a challenge, he meticulously analyzes it and provides a response built upon a solid foundation of four key principles.”

Oates doesn’t just answer the immediate question; he develops a framework applicable to similar future issues. This demonstrates his ability as a systems thinker.

Growth and Partnership

In 2015, Justworks successfully completed its $13 million Series B funding round, with Bain Capital Ventures leading the investment. Harris subsequently joined the company’s board of directors.

Since then, Harris and Oates have collaborated closely, guiding Justworks to its current position as a major industry player.

Evaluating Investors

However, this relationship is reciprocal. Oates highlights the importance of assessing an investor’s behavior during challenging times as a key factor in his decision-making process.

“Individuals react differently under pressure,” Oates stated. “Their values and integrity become apparent in such situations. Essentially, I want to know: will this person support me when I need it most?”

Oates believes Harris would readily offer assistance if needed, even without being asked.

Discussion on Extra Crunch Live

Harris and Justworks CEO Isaac Oates recently participated in an episode of Extra Crunch Live. They discussed their methods for resolving disagreements.

They also explored why Oates chose to retain a remarkably simple pitch deck and offered insights into how founders should approach product pricing.

Furthermore, they provided constructive criticism on pitch decks submitted by audience members during the Pitch Deck Teardown segment. (Founders interested in having their decks reviewed on a future episode can submit them using this form.)

Extra Crunch Live Schedule

Extra Crunch Live is recorded every Wednesday at 12 p.m. PST/3 p.m. EST/8 p.m. GMT.

Recordings of past episodes are available here, and the schedule for March can be found here.

Key Discussion Points

This session covers several crucial aspects of startup growth and fundraising. The conversation delves into navigating internal conflicts and analyzing a successful pitch deck.

Addressing Disagreements

A significant portion of the discussion, beginning at the 11:30 mark, focuses on effectively resolving disagreements within a team. Constructive conflict resolution is presented as vital for progress.

The Justworks Series B Deck Analysis

The Justworks Series B pitch deck is examined in detail, starting at 15:00. This analysis provides valuable insights into what investors look for in a funding proposal.

Product Pricing Strategies

At the 25:00 timestamp, the conversation shifts to the complexities of product pricing. Different approaches and considerations for setting optimal prices are explored.

Pitch Deck Deconstruction

A comprehensive pitch deck teardown commences at 33:00. This segment offers a critical evaluation of deck structure, content, and delivery.

Time-Stamped Segments

• Internal Conflict Resolution: 11:30
• Justworks Series B Deck Review: 15:00
• Optimal Product Pricing: 25:00
• Detailed Pitch Deck Analysis: 33:00

Navigating Disagreements Between Founders and Investors

Although initial comments highlighted mutual respect, the founder and investor discussed instances where their perspectives diverged. They presented a valuable approach for founders and venture capitalists to effectively address disagreements concerning the business.

A 2017 Example: Dual-Class Stock

Oates recounted a situation from 2017 involving the consideration of a dual-class stock structure, creating weighted voting rights. He explained his interest stemmed from observing vulnerabilities in publicly traded companies, specifically regarding activist shareholders and external pressures that could hinder long-term strategic thinking.

Harris voiced his opposition, presenting a comprehensive set of reasons – details of which were not shared during the episode. However, Oates emphasized the positive outcome of this disagreement: gaining insight into Harris’s decision-making process.

The Importance of Thorough Investigation

Harris proactively connected Oates with numerous experts in the field, facilitating meetings and further discussion on the topic. This ensured a well-informed evaluation of the proposed dual-class stock.

Ultimately, Oates proceeded with the implementation of the dual-class stock, but with a significantly enhanced understanding and confidence derived from the comprehensive information gathered.

“I gained valuable insight into Matt’s thought processes and his approach to decision-making,” Oates stated. “The methodology employed in reaching a decision is equally crucial as the decision itself. Increased familiarity allows us to address disagreements with a structured, intellectually sound process.”

Echoes of a Similar Approach

This scenario resonated with a previous conversation featuring Jason Boehmig, CEO of Ironclad, and Steve Loughlin of Accel. They described the substantial time and effort dedicated early in their partnership to exploring the rationale behind opinions, strategies, and decisions, and establishing a clear roadmap for the company’s future.

Loughlin articulated the importance of understanding the founder’s vision: “My goal is to understand your desired future state for the company, enabling me to challenge you and foster productive discussions regarding the plan.”

He further explained, “This context prevents situations where I receive inquiries, such as whether to hire a head of customer success, without a clear understanding of the overarching objectives.”

Justworks’ Series B Funding Pitch Deck Analysis

The pitch deck assembled by Oates for his Series B funding round comprised just seven slides, encompassing the title and team information. This presentation detailed the identified opportunity, the proposed solution, the company’s key differentiation – termed “The Power of Aggregation” – alongside a slide illustrating monthly revenue growth, the planned expansion strategy, and team details.

Notably, the deck featured only a single graphic, the revenue growth chart, maintaining an overall minimalist aesthetic. Despite its simplicity, the presentation utilized complete, straightforward sentences, devoid of industry jargon.

Reflecting Brand Identity

Harris emphasized that the deck’s appeal stemmed not merely from its simplicity, but from its accurate representation of Justworks’ core brand values. Justworks actively cultivates a reputation for openness, resilience, and, crucially, simplicity.

“The deck’s design is highly aligned with Justworks’ company culture,” Harris stated. “The organization prioritizes transparency and straightforwardness in its operations. Their decision to publicly release pricing information – a first for a PEO – exemplifies this approach. It conveys a message of authenticity: ‘We don’t require embellishment, we aren’t attempting to conceal anything, this is who we are,’ presented with clarity.”

He further explained that the deck’s success is rooted in its genuine reflection of the Justworks ethos, rather than being artificially streamlined.

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The Importance of Traction

Oates highlighted the significance of the traction slide within the deck, asserting that successful fundraising often hinges on opportune timing.

“The revenue graph’s trajectory isn’t always consistently upward, but it demonstrably was at the time of this pitch,” he noted.

Beyond the Deck: Access to Data

Interestingly, the deck itself wasn’t the decisive factor in Harris’s decision to invest. He first reviewed the presentation alongside the Bain partnership team after already committing to lead the Series B round.

He clarified that this is typical for a lead investor, emphasizing the greater importance of access to the same data – encompassing metrics, operational details, and other documentation – that the founder utilizes daily.

“I often advise founders to prioritize sharing their KPIs over crafting elaborate presentations,” Harris explained. “By examining the data you monitor, we gain a comprehensive understanding of your business. It reveals what truly matters to you as a founder, and that insight is invaluable.”

Building Trust Through Transparency

This level of transparency, extending beyond the pitch deck, fosters a rapid and substantial level of trust. Raw data, even if not consistently positive, can be highly effective in attracting venture capital, provided it demonstrates the startup’s potential.

Harris observed that a significant portion of his due diligence process involves uncovering information that management teams are hesitant to share.

“It can be quite uncomfortable,” he admitted. “I recognize it’s a common tactic during the early stages of company building, and I don’t fault founders for it. However, this ‘hide-and-seek’ approach to due diligence actively undermines trust. It feels like an attempt to conceal information.”

Confidence and Authenticity in Pitching

Oates stressed that confidence in one’s pitch, coupled with a willingness to be truthful, is paramount.

“There’s a strong temptation – and I experienced it myself – to modify your pitch based on investor feedback, seeking a ‘yes’,” he said. “While refining your communication is beneficial, remember that investors likely possess no greater understanding of your business than you do.”

He cautioned against tailoring your message to appease potential investors, recalling instances where he was advised to pursue specific distribution channels, despite having no prior intention of doing so.

“I realized I was falling into a trap,” he recounted. “I questioned my own judgment, asking myself, ‘What am I doing? Why am I considering this? It’s a mistake.’ It’s crucial to remain steadfast in your vision.”

Determining Product Pricing

Pricing represents a crucial strategic element under a CEO’s control, capable of significantly altering a company’s growth path. Despite its importance, many entrepreneurs dedicate insufficient attention to this area, as noted by Harris.

Harris observes that a reluctance to address pricing stems from its inherent complexity. Balancing profitability with market access is a delicate act; setting prices too low jeopardizes the economic model, while excessively high prices can hinder expansion. He recounts numerous instances where executive teams prioritized facility plans over pricing strategies in board discussions.

Oates recounts that Justworks required four iterations to refine its pricing structure effectively.

Initially, the company positioned its offering as a simple payroll service, a sector characterized by lower costs and a distinct operational framework, Oates explained. Furthermore, including workers’ compensation insurance within the core product package led Justworks to undervalue its overall service.

The initial pricing for Justworks was established at $75 per month, per user, encompassing workers’ compensation coverage. Oates points out that customers unfamiliar with the legal requirements surrounding workers’ comp often underestimated its cost, perceiving it as a minor expense. However, the actual cost to Justworks was approximately $30 monthly.

An experiment conducted by Justworks involved removing workers’ comp insurance from the $75 monthly package; surprisingly, this change had no discernible impact on customer acquisition patterns.

“This revealed that we were essentially foregoing $25 per user, per month,” he stated.

Another key takeaway for Oates was the importance of price transparency. While acknowledging this as a personal preference, he expressed frustration with vendors who obscure pricing information.

“Requiring a phone number submission simply to discover the cost is unacceptable,” Oates emphasized.

Prior to publicly displaying pricing on their website, Oates harbored some reservations. No direct competitor in the market adopted this practice. The Justworks leadership team feared a potential decline in lead generation, anticipating that prospective customers might be deterred by the perceived expense without further investigation.

“In reality, the inbound lead team consistently reported that the primary inquiry from potential clients was regarding the cost of the service,” he clarified. “This ultimately led us to the decision to publish our pricing openly.”

Currently, both Oates and Harris express satisfaction with the Justworks pricing model. However, they recognize that pricing remains a dynamic consideration. Factors such as business growth objectives, cost structures, and the competitive environment are subject to change.

“Pricing isn’t a task that can be definitively completed,” Oates concluded. “A suitable pricing strategy can be established for a specific period, but it’s not a permanent solution.”

Analyzing Startup Pitch Decks

On a weekly basis, experts evaluate pitch decks submitted by readers of TechCrunch, providing constructive and broadly useful feedback. This analysis focuses on key takeaways from the most recent session.

Key Feedback Points

Several crucial areas were highlighted during the review process.

• When defining your Total Addressable Market (TAM), strive for a balance between aspiration and practicality.

• Direct competition with established industry leaders isn't necessarily detrimental.

However, it’s vital to articulate the critical weaknesses of these incumbents and demonstrate a clear path to challenge, or even surpass, them.

• A deep understanding of your target customer is paramount.

This understanding must be demonstrably evident within the deck itself.

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