A Tale of Two Pitches

Posted on Sep 9, 2009 | 35 comments


Confident boss in a seminar

This is part of my ongoing series, “Pitching a VC.”

I recently wrote a blog post here in which I argued that the best VC meetings are discussions and not sales pitches.  Many people agreed and added that even the best sales meetings are also discussions and not pitches.

A few weeks ago I sat through two very contrasting presentations and wrote this blog post right afterward.  I’m just getting around to posting now.  Both presenters are anonymized.  I hope that when you’re presenting to a VC this will give you some sense of what might be going on in our minds.

A Tale of Two Pitches

Last week I had two very contrasting presentations from entrepreneurs that gave me the idea for this post.

Pitch 1:

I had an awesome young entrepreneur come in this week to talk about his seed stage business.  It was a 1-on-1 meeting between the two of us.  He wasn’t really ready to raise VC but wanted to meet me early in his process and wanted some help thinking through potential angel or seed stage investors.  He was introduced by a senior technology executive that I really respect in the LA area and a close friend of mine told me separately that he would like to invest if they did a friends & family round.  Needless to say I was positively predisposed to this individual before the meeting started.

I highly recommend to all entrepreneurs to take the time to find the best sources of an introduction because it really does make a difference.  It is worth any amount of extra effort if you are really interested in the VC you are approaching.  If you haven’t already read the post on how to approach a VC it’s here.

How you got to the VC is important, but once you’re in the meeting it’s obviously up to you to make the most of it.  We started by talking about this person’s background.  He had spent many years at Yahoo! during the better days and we had lots of discussions / debates about Yahoo!’s strategy and missteps.  But we talked much more broadly about Google, Twitter and Facebook.  We talked about browsers, desktop widgets and interactive television.  We talked about measurable marketing.  We talked about online video and the need to build & track audiences online.

I found myself so engaged in the discussion that after 90 minutes I realized we hadn’t even broken out his PowerPoint presentation and I had a hard stop.  So we scheduled our second meeting for next week where he could actually tell me more about his company.  In the meantime I signed up for his product and began playing around with it to get a sense myself for how it works before our next encounter.

Importantly he did have a presentation ready to go.  On any given day I could have been really pressed for time and asked to get straight to the presentation – you can never predict how the meeting will go so you must be prepared to show a deck, do a demo or just have a conversation.

This meeting was a 10/10 for me.  Who knows whether I will find his company interesting when I see the details at our next meeting.  But so much of my decision on investing is based on the individual(s) that getting a chance for a true connection with somebody where you understand how they think about life, technology, management, etc. is important.

Pitch 2:

This entrepreneur had a full house.  He was from out-of-town so even though he hadn’t been properly vetted by an individual partner before the meeting, we had all of our available investment staff sit in on the meeting.  He was introduced to one of my partners by a very trusted source so we were ready for big things.

He started by showing a 5-minute video describing why the market that he was in was such a great opportunity.  It had the graphics of a highly produced Hollywood-like video with the voice-over of the cheesiest television commercial presenter you could imagine.  Let me state me bias – there is NEVER a scenario where you should lead with a 5-minute video.  Even worse when all it is doing is explaining your high-level market concept.

I kept thinking 2 things during the video: 1) this is cheesy and painful and 2) why is he giving up the opportunity to build rapport with us by telling us this stuff directly?

After 2 minutes of torture I suggested that we stop the video.  He seemed uncomfortable doing that so he let it keep running.  After 4 minutes I instructed him to stop it.  He reluctantly did.  We asked the individual to tell us what he actually did.  The video was so high level and was explaining how advertising was all becoming measurable (duh) but we had no sense what his company’s role in this process was.  We all know that television broadcast commercials are not targeted.  We all know that many companies have tried to deliver targeted advertising on the web.  Sir, what do you actually do???

What struck me is that he was never able to get into a discussion about the past of targeted advertising technologies –  what had worked and what hadn’t.  We weren’t able to have a discussion about who his target customer base was, why they would use his products and why advertisers would pay for that.  We didn’t get a chance to adequately discuss the chicken-and-egg problem of getting users signed up and advertisers signed up simultaneously for which his business was dependent on.

Basically, the fundamental problem that I saw with the whole painful hour was that he was in “sales mode” the entire time.  He was so concerned with getting across his points that he failed to have a dialogue and engage us.  A VC is never looking for you to have all of the right answers and the best VC’s know that we don’t either.  We just want to hear how you think about your business, your industry, your competitors.  We want to hear that you’ve thought about the risks.  We want to hear your mental flexibility on issues and how you debate them.

I guess there are some similarities with the infamous “case” interviews that strategy consultancies give.  It’s not always the actual answer we’re after but the quality of your thought process and how you arrived at the answer.  Through this discussion you establish rapport and we build a relationship.

It wasn’t going to happen with this individual.  He ended the meeting by telling us that he wasn’t really even raising money.  If he had been raising money he would have been prepared to discuss all of these issues.  He was defensive and seemed affronted that we wanted to discuss the complexities of building his business.  I believe in seeing VC’s before you’re ready to fund raise (see my post here), but if you’re not prepared to have a discussion or debate about your company or industry then don’t bother.

I am left wondering if he really had no interest in ever raising money from us – why was he there?  Why would he waste his time and ours?  Sheesh.

  • http://www.fundingpost.com FundingPost

    I agree with your point, though I think your 2 examples are a bit exaggerated. Pitch 1 didn't really come off as a pitch, just a discussion. Steve Barsh at DreamIt Ventures mentioned at one of my events: ” Ask for money and you get advice, ask for advice and you get money”. That kinda reminds me of Pitch #1.

    Pitch #2 completely sucked. I'm impressed that you let him stay for a whole hour. I always recommend to Skip the video, though some entrepreneurs really want it. (Ive only seen one pitch that had a video that I liked. It lasted around 30 seconds and it demoed the software. It was half way through the pitch and didn't have audio. The CEO talked over the pre-recorded mouse moves.)

    To your point – leave out the fanfare and flashy overproduced sales materials. Your goal as an entrepreneur is to show the VC who you are and demonstrate your ability to run a company (management is key!) AND to give the details about the company and opportunity. You do need to sell (you always have to sell) but do it without appearing salesy. :)

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  • David Smuts

    Pitch #1 was successful because the entreprenuer established a rapport, built some confidence and engaged you. This is the primary goal of a meeting with a VC; to establish dialogue, not to close a sale. The process is ongoing and now he'll have a strong base from which to present his business in more detail having established this basic level of trust and rapport. It will make his job much easier for him. Let's hope he can follow through with a skilled presentation which invokes further discussion.

    Pitch #2 was a complete failure. How can an entreprenuer go into such a meeting with prominent VCs at the table and proceed like this? What was he trying to achieve? This guy had the benefit of a trusted introduction. In which case, he should have presented to that individual first before going in to see you. No doubt his contact would have suggested an alternate approach which he then could have adapted before going in to see you. Lesson for entreprenuers: if you're going into a VC meeting through an introdoction, run your presentation to the introduction contact first for feedback!

    PS- Mark you asked for some feedback on Disqus. Well I can't seem to get bloody Tom Anderson off my disqus profile image after numerous attempts!!!! so I'm not too happy with it right now. I'll check out intense debate

  • http://www.gogopin.com/ Ray

    From an inexperienced start-up person's point of view, I am sure the guy from pitch #2 had a valueable lesson from the experience. We all gotta start from somewhere right? We just gotta make sure we don't repeat the same mistake. =)

  • Shane

    Ouch…#2 sounds like he was doing research on how to lose a VC in ten minutes…

  • http://www.fundingpost.com FundingPost

    I agree with your point, though I think your 2 examples are a bit exaggerated. Pitch 1 didn't really come off as a pitch, just a discussion. Steve Barsh at DreamIt Ventures mentioned at one of my events: ” Ask for money and you get advice, ask for advice and you get money”. That kinda reminds me of Pitch #1.

    Pitch #2 completely sucked. I'm impressed that you let him stay for a whole hour. I always recommend to Skip the video, though some entrepreneurs really want it. (Ive only seen one pitch that had a video that I liked. It lasted around 30 seconds and it demoed the software. It was half way through the pitch and didn't have audio. The CEO talked over the pre-recorded mouse moves.)

    To your point – leave out the fanfare and flashy overproduced sales materials. Your goal as an entrepreneur is to show the VC who you are and demonstrate your ability to run a company (management is key!) AND to give the details about the company and opportunity. You do need to sell (you always have to sell) but do it without appearing salesy. :)

  • http://twitter.com/davidsmuts David Smuts

    Pitch #1 was successful because the entreprenuer established a rapport, built some confidence and engaged you. This is the primary goal of a meeting with a VC; to establish dialogue, not to close a sale. The process is ongoing and now he'll have a strong base from which to present his business in more detail having established this basic level of trust and rapport. It will make his job much easier for him. Let's hope he can follow through with a skilled presentation which invokes further discussion.

    Pitch #2 was a complete failure. How can an entreprenuer go into such a meeting with prominent VCs at the table and proceed like this? What was he trying to achieve? This guy had the benefit of a trusted introduction. In which case, he should have presented to that individual first before going in to see you. No doubt his contact would have suggested an alternate approach which he then could have adapted before going in to see you. Lesson for entreprenuers: if you're going into a VC meeting through an introdoction, run your presentation to the introduction contact first for feedback!

    PS- Mark you asked for some feedback on Disqus. Well I can't seem to get bloody Tom Anderson off my disqus profile image after numerous attempts!!!! so I'm not too happy with it right now. I'll check out intense debate

  • http://bothsidesofthetable.com msuster

    Neither case was exaggerated. If anything I've downplayed it a bit. The first meeting was supposed to be my going through the gentleman's slides and helping a bit. The discussion was so good that we never got around to it.

    The second meeting was a train wreck. I tried to tone it down a bit in the post so I wouldn't seem like too much of an arse.

    re: selling – I agree but definitionally I think selling is more listening than talking.

  • http://bothsidesofthetable.com msuster

    Hey Tom, err, David.

    Pitch 1 was a combo of good intro (so the meeting started with me leaning in), good luck (some days I'm a better listener than others) and a very interesting person.

    Pitch 2, the intro came from a trusted source but not all trusted sources know the best way to present. Shame.

  • http://bothsidesofthetable.com msuster

    Ray, I agree, BUT … some people seek to understand what happened, others seek to blame. Unfortunately the body language in the meeting was that we were the “aggressive” VCs asking the tough questions. I think he walked out not liking us rather than questioning what went wrong. Thanks for your input.

  • http://www.fundingpost.com/ Joe Rubin

    :) Not that YOU exaggerated the stories, I meant that the difference in CEO presentations doesn't have to be that far to the left to still get a “no” from an investor. There are half way decent pitches…much better than the train wreck… that still get a No because they aren't giving you the info you need to hear.

  • http://www.fundingpost.com/ Joe Rubin

    and as for disqus – worked last time, but not this time!
    Joe Rubin
    FundingPost

  • http://www.gogopin.com/ Ray

    From an inexperienced start-up person's point of view, I am sure the guy from pitch #2 had a valueable lesson from the experience. We all gotta start from somewhere right? We just gotta make sure we don't repeat the same mistake. =)

  • Shane

    Ouch…#2 sounds like he was doing research on how to lose a VC in ten minutes…

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  • edwardshen

    I like it when you wrote, “A VC is never looking for you to have all of the right answers and the best VC’s know that we don’t either. ” It explains more to me why you'd take pitches as “discussions” rather than “sales”. As VC's and entrepreneurs get to know each other's personalities, theses, passion, etc, more deeply during such discussions, I suppose a big portion of successful exits originate from something like Pitch #1?

  • http://bothsidesofthetable.com msuster

    Neither case was exaggerated. If anything I've downplayed it a bit. The first meeting was supposed to be my going through the gentleman's slides and helping a bit. The discussion was so good that we never got around to it.

    The second meeting was a train wreck. I tried to tone it down a bit in the post so I wouldn't seem like too much of an arse.

    re: selling – I agree but definitionally I think selling is more listening than talking.

  • http://bothsidesofthetable.com msuster

    Hey Tom, err, David.

    Pitch 1 was a combo of good intro (so the meeting started with me leaning in), good luck (some days I'm a better listener than others) and a very interesting person.

    Pitch 2, the intro came from a trusted source but not all trusted sources know the best way to present. Shame.

  • http://bothsidesofthetable.com msuster

    Ray, I agree, BUT … some people seek to understand what happened, others seek to blame. Unfortunately the body language in the meeting was that we were the “aggressive” VCs asking the tough questions. I think he walked out not liking us rather than questioning what went wrong. Thanks for your input.

  • http://www.fundingpost.com/ Joe Rubin

    :) Not that YOU exaggerated the stories, I meant that the difference in CEO presentations doesn't have to be that far to the left to still get a “no” from an investor. There are half way decent pitches…much better than the train wreck… that still get a No because they aren't giving you the info you need to hear.

  • http://www.fundingpost.com/ Joe Rubin

    and as for disqus – worked last time, but not this time!
    Joe Rubin
    FundingPost

  • http://bothsidesofthetable.com msuster

    I can't say that a good portion of exits necessarily originate from Pitch #1 but certainly fundings.

  • http://www.affordit.com/ Wil Schroter

    It's the job, not the option, of a VC to prep every entrepreneur that comes through the door about what they expect out of a pitch meeting.

    A simple Web site link to what you expect to see would suffice.

    If the entrepreneur doesn't take the time to read it, that should be your first clue that they aren't prepared.

  • http://edwardshen.blogspot.com Edward Shen

    I like it when you wrote, “A VC is never looking for you to have all of the right answers and the best VC’s know that we don’t either. ” It explains more to me why you'd take pitches as “discussions” rather than “sales”. As VC's and entrepreneurs get to know each other's personalities, theses, passion, etc, more deeply during such discussions, I suppose a big portion of successful exits originate from something like Pitch #1?

  • http://bothsidesofthetable.com msuster

    I can't say that a good portion of exits necessarily originate from Pitch #1 but certainly fundings.

  • http://www.affordit.com/ Wil Schroter

    It's the job, not the option, of a VC to prep every entrepreneur that comes through the door about what they expect out of a pitch meeting.

    A simple Web site link to what you expect to see would suffice.

    If the entrepreneur doesn't take the time to read it, that should be your first clue that they aren't prepared.

  • anthony

    I don't agree that pitch #1 is preferred. In more cases than not, if you asked a VC to set up a meeting to discuss ideas, you would never get a meeting. Secondly, half the VCs of the world would look at you as not knowing what you are doing. If you don't know what the business plan is, the VC certainly doesn't have time to help you figure it out.

  • anthony

    I don't agree that pitch #1 is preferred. In more cases than not, if you asked a VC to set up a meeting to discuss ideas, you would never get a meeting. Secondly, half the VCs of the world would look at you as not knowing what you are doing. If you don't know what the business plan is, the VC certainly doesn't have time to help you figure it out.

  • http://www.brightscope.com/ Mike Alfred

    Another excellent post with actual examples of what do to and what not to do. 10/10. I hope when we came in to talk with you we were more like Example 1 than Example 2!

  • http://www.brightscope.com/ Mike Alfred

    Another excellent post with actual examples of what do to and what not to do. 10/10. I hope when we came in to talk with you we were more like Example 1 than Example 2!

  • http://bothsidesofthetable.com msuster

    To some extent I agree. I have already written a post on this topic but haven't edited and published yet. I think you need to be ready for a “triple play.” You need to have a PowerPoint deck ready to present. 8/10 times that's what the VC will guide you to do. Maybe 9/10. Second, you need to be prepared to demo you're product. 7/10 times you'll be asked for this. Last, you do need to be prepared to lead a discussion with no deck but still cover all of the salient points. That is what happened in meeting #1.

    Thanks for helping me to clarify. I'll publish soon.

  • http://bothsidesofthetable.com msuster

    Thanks, Mike. As you'll remember our meeting was highly interactive. We all walked away impressed. We hope you're on to something really big. Thanks for the feedback. Mark

  • http://bothsidesofthetable.com msuster

    To some extent I agree. I have already written a post on this topic but haven't edited and published yet. I think you need to be ready for a “triple play.” You need to have a PowerPoint deck ready to present. 8/10 times that's what the VC will guide you to do. Maybe 9/10. Second, you need to be prepared to demo you're product. 7/10 times you'll be asked for this. Last, you do need to be prepared to lead a discussion with no deck but still cover all of the salient points. That is what happened in meeting #1.

    Thanks for helping me to clarify. I'll publish soon.

  • http://bothsidesofthetable.com msuster

    Thanks, Mike. As you'll remember our meeting was highly interactive. We all walked away impressed. We hope you're on to something really big. Thanks for the feedback. Mark

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  • Mike

    Of course you used the most radical examples out of all your experience but the truth is that both of them are possible. Long story short, you should prepare in time for a pitch and you should not rely on technology so much, a live presentation ar a conversation with the pottential investor is more personal and impressive. Check out startup reviews here http://www.vcgate.com/Startup_Companies_Reviews

  • Mike

    Of course you used the most radical examples out of all your experience but the truth is that both of them are possible. Long story short, you should prepare in time for a pitch and you should not rely on technology so much, a live presentation ar a conversation with the pottential investor is more personal and impressive. Check out startup reviews here http://www.vcgate.com/Startup_Companies_Reviews

  • Mike

    Of course you used the most radical examples out of all your experience but the truth is that both of them are possible. Long story short, you should prepare in time for a pitch and you should not rely on technology so much, a live presentation ar a conversation with the pottential investor is more personal and impressive. Check out startup reviews here http://www.vcgate.com/Startup_Companies_Reviews