Evelation pitch — from your mother to a future VC
Draft (see bottom private update) essay article done after reading Founder Institute post. Wanted to elaborate more and to dive into this. Please help mgalli at mgalli dot com. Enjoy.
In this article, my goal is to help (myself and) founders to understand that startup communication is matching game: you have to fit somewhere. Therefore, the performance of your pitch is tied to the stage of learning of your startup. This model led me to index the a collection of pitch situations against possible audiences, their expectations and what you can get from them.
Pitching to learn
First, we need to recognition how founders start. The very situation, that may sometimes cause entrepreneurs to write to investors, could well be that they are alone and they want a bit of validation.
We take all our founders camping once a year, and people just hang out and they talk about how things are going. And they have peers: they have like other people…it’s very lonely to be a founder so when you have other people you can talk about like — man, it’s real hard. “ (Sam Altman, 2015, 7:24)
This happened a lot to me. I found myself, probably a thousand times, writing to folks which I met that somehow were involved in the industry of technology. These were people at local accelerators, at local incubators, folks that I worked in the past, friends, family, and more. Therefore, and because we are mostly alone when we start our ideas, we use pitching as a form of learning.
Early pitching is learning
Pitching at the early stage can work greatly if you can reflect and learn. Pitching should contribute not only to improve future pitches but also to the improvement of the idea, the product, and the business.
When you pitch for various audiences, keep in mind that you will need to index your pitches against them. In other words, to recognize that if your initial audience is not precise, you need to know who are they so to reflect later about the values you get from them: were they entrepreneurs? were they projected future customers?
The whole idea, at this stage, is to judge less and take more advantage. As an example, pitching for a non-customer can be valuable as you are expecting them to not understand your product.
Therefore, you have to do a lot of effort into reflecting what values each pitch event is giving you:
- was that an input about your communication style?
- was that an input from a potential customer?
- was that an input about the competitors?
- was that an input about a saboteur?
Was that an input from one that knows about the industry? The idea is to pitch first then to reflect and learn later.
Pitching as an iterative process
Each pitch is a small unity of interaction and an opportunity for learning: the more you pitch the more you will help your startup future.
If you see yourself not pivoting your pitch, while you learn, then you have a problem. Consider the time you spend pitching and look at them as a powerful communication opportunities to help you improve the idea. Release yourself from the necessity of acquiring direct gains, such as a customer.
Take a bad pitch event, for example. It should let you rethink another variation of it, later. If you look at pitches, in time, then you will certainly keep track of them and start learning with them. Take the case of Brian Chesky, from Airbnb, pitching at his parents home:
And they said, “Well, what are you entrepreneuring?” And I’m like, ’cause it wasn’t really a common word there, and I said, “Well I got this thing, Air Bed and Breakfast.”
They’re like, “Air Bed and what?” And we just started to get used to pitching it. We’re like, “Maybe we should actually do this.” (Brian Chesky @ Greylock, 2015, 7:49)
Back to the investor’ side
As you start to reach investors, however, a new protocol starts to show: they won’t be there promptly to listen and give input or advise to your cause. This is not because investors are not compassionate but mainly because:
- They are busy;
- They understand that know-how in the industry is an advantage, therefore a matching rule;
- They understand about the stages of growth for companies.
This translates as saying that your current stage, and therefore your communication, will emanate signals showing them exactly the stage you are. As you will see, in the next sections, there’s just no way to bypass stages. With that said, beware the next item (false-positives) and watch out for not falling into the bad investor’s trap.
The successful pitch to the bad investor
A bad investor won’t come with a label saying “I am a bad investor.” So, you have to understand how startup growth happens and the whole arc-story for launching a startup: idea to product, meeting cofounders, struggles amidst discovering customers, validating customers and markets, ways for productizing for segments, growing and acquisition of new segments, and so on. Also don’t forget about good and bad cultures plus integrity and other values are value. The sad reality is that it’s impossible to move up without an understanding of the rules of the game from various sides: idea, product, market, investment-acceleration proxies, and so on.
The more you learn, about these other sides, the more you will be able to detect and evaluate your other peers. For example, if you meet an investor in the food business, and if he does offer to invest on your new online social app, chances are that you are talking with the wrong person and wasting your time. Of course, there may be exceptions; but don’t count on the chance that the exception will reveal itself eventually. If you want the smart money, make sure you are always smart and don’t fall in the romantic trap of receiving investment.
Understand the reverse signal-noise logic (be on your the investor’ shoes)
When the busy investor inbox is full
Jason, as a founder, uses an autoresponder on approach, and he reads all messages: “so, the autoresponder is a way to just first level filter, and make the people who are easily dissuaded become dissuaded, because if am email that says ‘I get too many emails to read everyone’ dissuades you, you put yourself in the bucket of too weird to take my money. “ (Jason 26:43)
Jason’s elaborated examples:
- Link, video, data chart — direct information to something great;
- Direct information to your customer success case/example/data;
- Do not ones: coffee, to talk, to chat.
The pitch needs to show how your network will unfold to acquire, sustain and grow into markets
A person from an audience asks Jason about the best approaches and ideas that founders can use to differentiate their pitches. For Jason, this is about putting yourself in a whole different bucket: “the way I look at it: being an entrepreneur, you are in a room with all these other founders. It is a zero-sum game.”
He adds that if it was 5 years ago, it would be design, a beautiful product, etc. But people got tired of it. Now, a case that he puts is a bit towards the following notion:
- Show Engagement, in your product;
- Show Passion, of your early user set;
- Show a Chart, of some key piece of data are critical.
Such last element was much elaborated but the basic idea is that you need to show that you not only understand your product but how to build the company, yet telling this with the data. My attempt to elaborate on this is:
- It’s important to communicate that you understand how the status, condition, and current situation that you have, through data that you are presenting, properly shows that you are aware of the product but also how the business opportunity unfolds.
- The whole goal is to demonstrate, through your pitch, that you are not only aware of the pain/conditions of opportunities, but that you have evidence, insights and a theory that explains how the current and larger market will unfold.
For investors, the formal presentation is yet another test
I think the formal presentation is another test . . . As a founder, if you are not good enough at your job as a CEO, to get up and present, to institutional investors, for 60 minutes, and sell them on your thing . . .
We love when somebody walks in and has a compelling pitch so we can give them a check . . . that is a successful day for us.
In contrast, every other pitch you ever gonna make is going to somebody that is going to be much worse than us … Customers, they are going to be like — no, I am not going to give you any money — like their default position right? Engineers — you going to try to recruit engineers, and they got 20 other job offers, so why does your pitch is going to be much better than the other 20 startups? (Marc Andreessen at Startup School SV 2016, Y Combinator, 2016, 11:49)
Accelerators and incubators may position you in
Warm referrals will get you in
The great something will eventually get there
Sam Altman @ Greylock. (Sep 30, 2015.) Blitzscaling 02: Sam Altman on Y Combinator and What Makes The Best Founders [video]. Retrieved from https://www.youtube.com/watch?v=CxKXJWf-WMg
Brian Chesky @ Greylock. (Nov 30, 2015.) Blitzscaling 18: Brian Chesky on Launching Airbnb and the Challenges of Scales [video]. Retrieved from https://www.youtube.com/watch?v=W608u6sBFpo
Jason Calacanis @ This Week In Startups. April 28th 2017. E728: “Angel” Sneak Peek+Startup Tune-up: First-look & lessons from Jason’s book + pitches. Retrieved from https://www.youtube.com/watch?v=Krgz7b9oKLA
Marc Andreessen @ Y Combinator. (2016, October 25). Marc Andreessen at Startup School SV 2016[video]. Retrieved from https://www.youtube.com/watch?v=NEOR0AJsziE