Why should entrepreneurs take their elevator pitch serious?
As venture capitalists, we meet lots and lots of startup entrepreneurs, and some are clearly very good at articulating briefly and concisely what their business is all about.
But others aren’t. And lets face it; in some cases, we end up scratching our heads and asking each other: “Did you understand what they did?”
The purpose of the elevator pitch is to provide a simple explanation of what the company wants to achieve, which is articulated in such a short and simple way that it can be told to someone in an elevator from the ground floor to about 10th floor — depending on the elevator speed. Such an elevator pitch should last 20–60 seconds. Or less.
The pitch typically describes a market segment that the company wants to dominate, such as the combination of: 1) fulfilment of some needs, 2) a price-segment, 3) a customer-segment, 4) a service-level, 5) a product-segment, 6) an image, 7) a geographical area, 8) a special user benefits or features, 9) a demographic segment, or 10) a quality-level. For example, you can in the elevator pitch explain that you strive to become: “The very best supplier of X, to meet the need for Y, in the area of Z, by making Q.”
It shouldn’t be too complex. Companies who wants to do too much, are called “Swiss knifes” by professional venture investors, and that isn’t meant as a praise.
Sometimes, you will see corporate missions described as how much the company should earn, or how big market share it aims for. This may be relevant at the operational level, for a department or a sales person and for an investor, but it does not communicate the strategic message, since it does not mention anything about how you will achieve these attractive results. The sentence above actually did (in a very brief way), because it said that you would be the best supplier of a specific product within a specific area by doing something specific.
Perhaps the most important piece of advise is to focus on the value that you bring, since the way that you bring this value may change over time. Here is a generic template for how your value-focused pitch may sound:
“You are probably familiar with the problem A, right? In 20xx, I and some of my friends thought about this and decided to solve this problem — because it is a big problem, and it could be a really funny project. So we came up with a fantastic solution. We do it by B, which means that we achieve C. Now our aim is to become the very best supplier of X, to meet the need for Y, in the area of Z, by making Q.”
This is could be your 60-second pitch. But please do not take this template too literal; just note that it does tick some boxes: 1) what motivates you, 2) which problem you solve, and 3) how you solve it.
A final note: oftentimes, you see parts of the mission statement being too product-specific. Here, it is much better to think of the needs you solve for the customers in the relevant market segment instead. Keep in mind that the market segment, in which the company operates, may very well be served in new ways in the future.