You take the stage, perhaps at a demo event or perhaps even in a smaller sense, with an Angel cattle call, group of investors, or even with the press. You’ve been practicing in front of the mirror for weeks the pitch designed for you by the local incubator, crafted after Guy Kawasaki’s famous 10 slides, and rehearsed with advisors and mentors.
You take the stage and tell me there is a problem and you have the solution. Praise be!
Now, I realize some of you are masochists but here’s the thing. Though lauded as the epitome of communicating your startup aspirations, the Problem Solution Statement is riddled with countless holes, the least of which is that you’ve not yet done anything to convince me that you know what you’re doing and can credibly and capably address said problem. More than that though, the problem with a problem statement is that invariably, half your audience doesn’t think it’s a problem while the other half doesn’t care if it is.
What you need to convey is the opportunity. But before we get to that, let’s establish restart our pitch by establishing some credibility, no?
Good evening, my name is Paul O’Brien and I’m the CEO and Founder of MyStartup.com, we’re like Product Hunt for Startup Pitches.
PITCH SLAP. Hell, that’s a double slap
Tell us why we should listen to you. What have you done with regard to this space that you’re about to explore with us and why do you care about doing anything therein? In all likelihood, you’re not the CEO of much so don’t make the mistake of thinking that that’s the credibility that matters; being CEO doesn’t make you fundable. Besides, I, ignorant person in the audience, don’t know what Product Hunt is; such analogies only work when we’re familiar with the references.
The Startup Pitch Market is on track to be a $200 trillion dollar market by 2020 and no one is considering the convergence of blockchain with predictive analytics in crowdsourcing.
Can anyone share how seriously we’ve fracked up our pitch at this point?
- The size of the market is meaningless. I know, I know, someone told you that it matters but WHY that matters has nothing to do with the size, which is all most pitches convey, and has everything to do with helping establish that a) you know your market and b) you know how to get a piece of it. Not all of it! Tell us what YOUR respective slice of that market looks like and how you are going to achieve that share.
- Holy buzzwords Batman. Have you heard that conventional wisdom that your product needs to be so simple your grandmother understands it? If you haven’t, shelf your startup and go back to reading a How to Startup book. The reference doesn’t really mean your grandmother has to get it. It doesn’t really mean your UX has to be so intuitive that a monkey can figure it out. The point that phrase is trying to get across is that if we don’t get it, you don’t get it. Explain it to a two year old.
We have a patent for…
Let me just stop you right there and save you the slap. How do I put this eloquently? AH! There’s another saying that ideas are worthless and it’s all about execution. In fact, that’s a very popular saying for good reason. Aside from Pitch Slap of course, there is no new idea. At least not in practice. Everything is an iteration of something before it. Get it? Now though, you’re still certain you have a new idea and you need to protect it, fine. No one funds a patent. No one cares that you have one because… it’s all about execution. Investors aren’t patent trolls; the fact that you have one is a nice footnote in the appendix to convey that you have some equity and protection in an asset that may one day be worth something. Putting a patent foremost in our talk suggest to me you think your idea alone has value – and it does! Just not the value that merits investment.
Our customers prefer a freemium model through which we’re charging for premium features such as a bold listing and our business model accounts for $2MM in revenue next year from affiliate ticket sales and advertising with only 3,000 users.
Your business model is a tough one so good try. Here, have a mug as a consolation prize. Simply put, don’t write checks your startup can’t cash. Tell me about how such a thing makes money, what it takes for you to accomplish that, and validate it by giving me evidence that you can.
Next you get into your competitors and rather than the words you use, this piece always falls apart on the slide itself. I’ve discussed how to create the perfect competors slide here so rather than belabor the point, we can cut to the chase that any slide that shows everything you do and how your competitors fall short, with a note that you plan to be cheaper, fails. You don’t do everything cheaper, better, faster. Well, first appreciate that you aren’t alone in your market, the biggest mistake you can make is suggesting that you “don’t really have any competitors.” Comfortable with that premise and intimately familiar with ALL of your competitors, lay out for us how you compare, where you fall short and why, where you excel and how, etc. Your competitor slide should establish that you know how to compete with your competitors, not that you’re better than them.
We’ll be acquiring customers through SEO, Facebook ads, and targeted lead gen and email. We plan to acquire 1,000 of those 3,000 users with some of the investment and our first hire while the other 2,000 will come from content marketing and SEO.
- Famed economist Peter Drucker is known, well before today’s famed startup thought leaders, for saying that there are only two things in business that create value: the innovation and the marketing. And the marketing is the distinguishing characteristic of the two. Now, we’ll get to the reference that you’re looking to hire a marketing person next so for now, let’s focus on the rest.
- Know what you’re talking about. In our example, SEO is not a way to acquire customers, it the practice of optimizing your business for search engines.
- Investors aren’t investing for sales. Truly. I know it’s hard to make that leap when so many so-called investors are telling you you need customers and revenue but actual investors need a return on their investment and giving you a dollar so you can buy a customer does not a sustainable business make. If you need to buy customers, get a loan.
- Know your business metrics. Basic advertising channels are not difficult to test but you need not even spend money to test what it will cost you to acquire a customer because marketing advice is prolific! Turn to Quora and ask, seek out your local marketing meetup and inquire; CPAs (cost per acquisition metrics) are reasonably well established and known among experienced marketers so you have no excuse not to know roughly how many customers you’ll be able to acquire at a given cost.
How to Pitch a Startup
All of those insights though are predicated on marketing experience and that’s why Drucker reinforced the fact that you can’t just build it and hope it works. Marketing is not advertising but rather the work you do with regard to your market. It’s how you figure out how and why to seek funding! Begging the question whether or not you can do that or you have the team that can.
This is our team. I started the company a year ago and brought in John Doe as our CTO, he’s an iPhone developer which is why we’re raising money to get our Android app built. We have a team of developers that put in $50k and built our website, and we’d like to hire a CMO to manage our marketing intern and start acquiring customers.
Slap. See the holes? I’m not making up this pitch dialogue from scratch, this is how most of you raise money. You don’t have or treat your early Senior Executives as co-founders or at least partners but rather merely hires. You give Chief level titles to the early team merely because they’re early, not because they actually qualify for that role. You refer to your technology as the app and a website and then suggest that the investment in the business is to that end. You outsource development, under the guise of some development firm that offered to build you something in exchange for equity and deferred compensation. And you’re looking to hire a marketing person because you didn’t start from the get go with that skillset being paramount.
I wrote some time ago about the idea that your founding team really needs to consist of three people (or focuses as it were): The Butcher, The Baker, and the Candlestick maker. No one is going to invest in you and your hires when you don’t have the experience already directly investing in what you’re doing by baking the break, making the candlesticks, and bringing home the bacon. It’s a fun idea you can read more about here, the pertinent question is do you have 3 people in the tub? (trust me, it’s more fun that way).
Oh geez, we didn’t distinguish how to convey an Opportunity from a Problem Solution. Honestly, it’s the hardest thing in the world to do, wrap your problem together with your solution in a nice WHY bow covered with ROI sprinkles and there you go. The opportunity is that there is a problem with a solution that you have figured out enough of how to tackle that you can solve the pain of the audience, drive value worth money, and deliver a return to stakeholders who have to at this point invest in better developing that solution.
Like a great Mel Brooks scene from The History of The World, think about whether or not the audience for your pitch isn’t sitting there thinking *slap* *slap* *slap* as you try to get a word in edgewise. Crafting the perfect pitch is hard, but not impossible and believe me when I tell you know one wants to slap you, we’re here to help.