Later this year, the Mandalorian returns to the small screen for Season 2 of one of the hottest reasons everyone has flocked to Disney+
While anxiously awaiting a show near the top of my Must See TV, my family and I spent the weekend binge watching Star Wars while I toiled away on a major update to MediaTech Ventures. With work, startups, and a galaxy far far away on my mind, Baby Yoda struck me as a lesson in reaching venture capitalists from afar.
How on Endor could Baby Yoda teach us about raising capital while we’re stuck at home?? Let’s see where the starship takes us.
Chapter 4: Sanctuary of Season 1, a show that everyone familiar with Star Wars should find familiar. The Mandalorian finds himself in a pub, of sorts, and sets a child of Yoda’s species in a chair before asking about a woman in the corner. The Mandalorian soon finds that the woman has left; he pays the pub owner to watch the child and follows.
Using infrared sensors he tracks her footprints. She ambushes him. The woman knocks him to the ground. The Mandalorian uses his flamethrower but she defend. Finally, both on the ground, the two hold each other at gunpoint: stalemate.
And then we see Baby Yoda, slurping on his bone broth.
The Mandalorian asks the woman if she wants some soup.
The trick to raising Venture Capital isn’t selling investors on what you have to offer, it’s creating something that people want.
And as Dune and The Mandalorian tussled, I thought of the internal struggle of The Mandalorian’s code to his people, and how he had to wrestle with his moral code to protect the child. Here, fighting with the talented and driven Rebel Alliance Shock Trooper in yet another struggle of great convictions.
And what happens? Baby Yoda watches. Patiently. For the struggle of these “co-founders” to find common ground and start providing more of what our investor in them wants.
I Find Your Lack of Pitch Disturbing
Jerry Neumann (Columbia University) captured a great story back in 2013, about the importance of Marketing in startups. The article he referenced has since had comments removed so I’ve enclosed a bit of his story, along with a link to the article today.
Fred Wilson in an article about Marketing, nearly now a decade old…
A very experienced and successful entrepreneur came into our office a week ago to pitch his latest company. At the end of his pitch he showed us some numbers. Normally for a raw startup we see almost all product and engineering expenses (headcount). But his plan had a monthly budget for customer acquisition. After he left, we talked about his plan and my partners focused on the customer acquisition number. It bugged us. It felt wrong.
“The first comment,” noted Neumann, “on the post was from Seth Godin, who said”
Marketing ? Advertising.
If you redo the post with Advertising throughout, I won’t argue much.
Marketing is the name we use to describe the promises a company makes, the story it tells, the authentic way it delivers on that promise.
Wilson had largely referred to this entrepreneur’s use of funds as “Marketing” and went on throughout the article to refer to “Marketing” but what Wilson is generally referring to in the article is actually advertising.
Being a student of Seth Godin, and ardent advocate of the same point he made in the comments, Neumann’s post stuck in the back of my head for eternity, and helped frame why today I’m such a stickler about founders properly distinguishing Marketing from promoting something.
Wilson is noting that startups shouldn’t need to raise money for advertising, nor spend much for that matter. And the distinction is critical because “Marketing” is what every startup must to foremost if they hope to have any success.
“Fred didn’t defend his assertion [about funding for acquisition], but he should have,” Neumann continued. “He made an important point that shouldn’t be swept aside: customer acquisition in an early-stage startup needs to cost minimal dollars. And that’s true whether customer acquisition is done through advertising or any other marketing method. Seth Godin is right, but Fred is not wrong. And how could Fred be wrong? He is interacting with companies in the real world, and a good number of them: his assertion is data-driven. The distinction here is primarily semantic.”
Neumann then continues by referring to one of my other favorites, Peter Drucker, and Management: Tasks, Responsibilities, Practices:
There will always, one can assume, be need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed then is to make the product or service available.
So what does any of that have to do with raising venture capital??
Try this on for size:
There will always, one can assume, be need for some pitching. But the aim of marketing is to make pitching superfluous. The aim of marketing is to know and understand the customer AND investors so well that the startup fits him and sells itself. Ideally, marketing should result in an investor who is ready to invest. All that should be needed then is to make the terms available.
Marketing is not only NOT synonymous with advertising, we too quickly think marketing is only about customers and creating value for them.
Marketing is the work of the market and all that that entails. Including, making sure a venture is known to investors.
This is the way
Will VCs stop investing in our down economy with entrepreneurs at home?
“Definitely not!” says Ophelia Brown, a partner at venture capital firm Blossom Capital. “We just signed last week and expect the next one is imminent.”I won’t belabor this article with the extensive list of firms investing nor why it’s a down economy in which venture capital gets more involved.
The point is that they are. And the question pertinent that we’ll learn under the circumstances. How do we reach them? How do we pitch over Zoom??
Learned through a demo event, in an incubator, or merely through experience at happy hours and the renown Elevator Pitch, you have a minute, at most, to grab attention and now more than ever, hopefully you appreciate that that’s true.
- The Force Awakens
- Everyone’s private driver
- Think Different.
- Shave Time. Shave Money.
- Belong Anywhere.
- Can You Hear Me Now?
We’re drawn to such headlines; we know what they promote and what it means to us as consumers investing our time in the brands related to them. We’re drawn to them. They’re simple and clear.
This isn’t just what you say. In today’s economy, this brevity and clarity is what’s needed in your email, your social media posts, your calendar invite, and introduction to our conversation.
Chris Westfall, author of The New Elevator Pitch, offers a great guide to get there.
- Start with a story. Don’t launch into your company spiel. Instead, start with something you expect to hear in a conversation: humor, a story, referring to recent news. Choose something that highlights a problem you help customers solve.
- Add an emotional benefit statement. Say “That’s what I do.” Then summarize the RESULTS you achieve for customers. It should be an emotional benefit.
- Quantify your success. Add the proof of your benefit statement, using numbers if possible.
- Use the “velvet rope close.” The velvet rope close suggests your offer is only accessible to certain types. In your elevator pitch, the key phrase to use is “I’m not sure if I can help you, but…”
“All VCs respond to a good story. If you can weave a tale, VCs will respond. Someone you know is more likely to introduce you to someone they know if you have a compelling story.
A good story is why a startup is able to raise new capital year over year in exponential amounts. A good story is why Uber and Lyft and Airbnb had an average of 136 investors each.
It is a smart business person who recognizes their story does not resonate. Be willing to accept defeat and move on to your next idea. Trust me when I say, the world loves a good story.”– Joseph Aaron, Founder Third Round Capital Analytics and Economic Futurist
This is our way. Let me know if we can help.
I believe authentic storytelling builds a better brand. It’s challenging doing it in a pitch with limited time.
Great piece, Paul O’Brien, especially the point on: “The trick to raising Venture Capital isn’t selling investors on what you have to offer, it’s creating something that people want.”
Agree with the point on story telling being critical. Unfortunately, a lot of companies run afoul of this by telling a compelling hook then transitioning—to your point—into selling on what they have to offer, rather than creating something people want. This sometimes feels like (generally unintentional) sleight of hand and makes for a less coherent and less credible pitch. Glad there are folks like you out there to help founders navigate these topics.
Reinforcing this, “Unfortunately, a lot of companies run afoul of this by telling a compelling hook then transitioning—to your point—into selling on what they have to offer, rather than creating something people want. ”
It’s a too easy focus for founders. “I have a need, you have the resources; let me sell you on why this is where you should put that capital.” The challenge I’ve seen work most often is that the founders focus on what delivers value. That is, not the “solution” (to use the traditional startup pitch reference), but rather the market share, impact, and ROI of the work.
Certainly, VERY hard to do when it’s easy to fall into the sales pitch, “I have what you want, pay me.”
Thought of you