This is part of my ongoing series on Startup Advice.
This was one of the first posts I wrote last year when I started BSOTT. Since I published it before having a large following and since it’s such and important topic to me I thought I send it out again via Twitter. Oh, the power of social networks to resurface interesting back catalog content. Hope that’s OK. The comments are closed and I don’t know how to fix that, BUT I started a Facebook Fan Page for BothSidesofTheTable and have been getting comments over there so feel free to visit and comment there. I promise to respond.
I was asked to speak on Fox Business network and help new entrepreneurs develop their elevator pitch. So I thought I’d give it some thought before I turn up. The elevator pitch is vital to an entrepreneur’s repertoire and so often they are poorly delivered. For starters, I think the term “elevator pitch” should be changed to “cocktail pitch” because it is a more realistic scenario. You’re an entrepreneur and you bump into a VC, customer, partner, potential employee, journalist – whatever – at a cocktail party, conference, airport lounge. How do you get your points across effectively in a way that leads us to want invest, partner, join you, write about you. [all data below totally made up].
My 2 cents:
- Be brief: Tell me what you do in 2-3 sentences – Let’s say that I just finished doing a presentation at a conference. I have 20 people politely waiting to introduce themselves to me. You’re next in line. Be ready to pitch it to me quickly. You’d be surprised how many people run on-and-on and never get to the point. Remember, you’re not trying to close the deal here – you’re just trying to make a positive impression and follow up later. The best people at pitching know when to gracefully say goodbye and let others speak rather than linger. Oh … and follow up! You’d be surprised how few people actually do contact me after telling me they’re going to.
- Define the problem – The most important thing you need to do is to convince me that somebody has a problem. It might be that people’s cell phone bills are too high, there is no good way for singles to find out what music is playing in town, website publishers can’t make enough money with existing banner advertising – whatever. But if I can’t visualize the problem – I can’t make the connection that somehow your product or service is likely to get mass adoption.
- How do you solve the problem? – So you produce a new brand of coffree and I now realize the problem: 23 million US consumers have acid reflux and can’t drink coffee. Tell me about your patent-pending method developed over the past 18 months to press the coffee in a way that reduces acid and allows all these people to now consume a product that they previously couldn’t enjoy. Tell me how you’re going to bring your product to market and why people will love it. But do it briefly, please.
- What is your target market? - Which consumers or business are you targeting? Don’t tell me that the market for services in the US is $2.3 trillion dollars. Otherwise I know that you’re not realistic and I’ve already started thinking other thoughts in my head and started tuning you out. Make it real. An example would be, “we’ve created a solution for people to search and find high quality janitorial services in the small-to-mid sized business market. SMB’s currently spend $4 billion / year on janitorial services alone.” OK, I know who you’re targeting!
- What progress have you made to date? – If you want to quick establish credibility with me tell me what you’ve already achieved. If you’re purely in the idea stage my advice is to approach me later when you’re further developed. There is nothing worse than a poorly researched Cocktail Party Pitch. But assuming that you’ve gotten started, the pitch goes somethign like this: “We’ve designed our iPhone application to help find speed cameras in your area. We launched 3 months ago and have signed up 800 test users. We’re trying to raise $250k to market the product more broadly.”
- Why are you uniquely qualified at this idea to be successful – 80% of my investment decision is the team. I know that not every VC agrees but I personally believe in A+ teams more than I believe in A+ ideas or A+ markets. I think great teams are better at finding the right idea and market over time and most good ideas / companies morph frequently. I prefer that you have some experience in what you’re doing. VC’s call this “domain knowledge” so that you’re not learning about a new market on my nickel. There is likely someone out there who knows the industry dynamics better than you do and will eventually compete with you. So if you spent the last 4 years doing digital marketing for consumer Internet sites think carefully about launching your next product as the mobile PayPal killer. It’s a bit of a stretch.
- Show energy & enthusiasm – Passion sells. Show energy and excitement. Get your game face on. Make an impression. This is your shot and you have my attention. Don’t waste it on low energy, mumbling, limp handshakes or lack of assuredness. I’m not saying go “over the top” in your excitement, but enthusiasm for your idea is contagious. If you’re shy or introverted I don’t expect you to be something you’re not – it will come across as insincere. But at least practice your pitch enough so that you can say it with gusto.
- Be human (no jargon, give me examples) – Most people who pitch me use jargon. I have a simple philosophy. If you can’t explain to me what you do in simple terms I assume that you don’t know what you’re talking about and you’re hiding behind terminology to sound more intelligent. The most difficult of topics can be explained in human terms. I like people to use real world examples. When I talk about my recent investment in RingRevenue I like to talk about the problem that affiliate networks have selling high value products. I call it the “treadmill problem”. If I want to buy a treadmill I won’t click and order over the Internet when a treadmill costs $3,000 or more. I want to speak with a sales rep to understand the 8 different models and which I should buy. With RingRvenue affiliate networks can track calls like Interet sites track clicks. Explaining this in “treadmill” terms I believe puts a human face on the issue.
- Use numbers - Numbers speak. And they help convince people that you know what you’re talking about. In the RingRevneue example the pitch goes something like this: ”The highest that a product costs in an affiliate network is $200 because above that price people prefer to call a sales rep rather than buy online. Affiliate marketing is a large market already: $10 billion of goods sold through this channel of which the networks make fees of $2 billion. We think we can increase goods sold through this channel by 10x making it a $100 billion channel.”
- Tell me what you want from me – In marketing or sales terminology we call this a “call to action” and I’m surprised at how few people incorporate this into their pitch. What is your goal in telling me about the virtual reality game you built that targets teens? Do you want me to meet you at some point in the near future? Do you want to approach me in 6 months but just want to be on my radar screen? Do you want to follow up with me via email to find out who invests in $250k deals in Southern California? Close by telling me what the next steps are or how I can help. Please don’t always make it a meeting for next week if you aren’t immediately fund raising. It can be as simple as, “I just want to say hello and tell you what we do so that I can speak with you next year when we’re raising money. Do you mind if I drop you a quick email with my contact details?”
- Be prepared for the deep dive discussion if I engage – If you’re pitching me the Cocktail Party Pitch you had better be prepared for a deep dive. I might have just been thinking about investing in a self-service retail kiosk company so the fact that you have a product like this is great. I can cover the “Deep Dive” another time, but one bit of advice now … don’t do all the talking. I remember a friend from Australia had a saying that always stuck in my mind. He said, “that chap is a crocodile. All mouth an no ears.” Selling is about listening, asking questions and peppering in commentary. The Elevator Pitch is as much about selling as it is about pitching. So if you get beyond first base (the first 1-2 minutes) get ready for two-way dialog.