Pitching in the US is one of the most difficult barrier for a French entrepreneur coming to the US. Bill Reichert, Big bang Factory’s Mentor and Co-founder @Garage Technology Ventures reveals below one of his much-needed tips for entrepreneurs willing to excel at the art of pitching.
The First Mistake Most Entrepreneurs Make When Pitching
Most pitches start with the problem. You should always start your pitch with the solution.
Almost every article, video, blog and book written on the topic recommends that entrepreneurs “Start with the Problem.” This is bad advice. It may seem counterintuitive, but you will be much more effective if you start with the solution.
Why start with the solution?
Because your audience cannot process any generic industry data you dump on them if they don’t know where you fit in the industry. If you start off your data analytics company pitch talking about how much data is created every day (“2.5 exabytes!!”), your listeners are not engaged; they are lost. On the other hand, if you start with the solution, you probably don’t need to talk about the problem at all. Think about the last 20 pitches you’ve heard. I’ll bet you that in 19 out of 20 of those pitches, if you knew the solution first, it would be obvious to you what problem the company is solving.
Do you really need to spend five minutes talking about traffic congestion and how much time cars sit idle and how many people need part-time work and how crappy taxis are? Thanks to bad advice on pitch construction, investors have to listen to entrepreneurs drone on and on about how hard it is to analyze all the data being created every day, or how hard it is to secure enterprise servers against cyberattacks, or how hard it is for retailers to compete against Amazon, or how hard it is to get dinner ready, or how hard it is for millennials to find a bar to go to tonight.
If there is a nuance to the industry you are targeting that needs explanation, then it makes much more sense to explain that nuance in the context of your solution. The big problem for Uber is not traffic. It’s trust. How do I know I’ll be safe? How do I know the car will show up? How do I know the rider will pay? But you couldn’t pitch Uber by starting with a discussion of trust.
Why do all pitch coaches tell entrepreneurs to start with the problem?
Because almost all pitch coaches are actually presentation coaches. They are coaching you in the tradition of how to make an effective presentation. If you are making a business presentation, it just seems logical to start by setting up the problem and then unveiling the solution. The assumption is that you have a captive audience and a fixed amount of time. So presentation coaches try to teach speakers how to tease an audience, how to impress an audience, and how to make their presentation memorable.
“My pitch coach told me that starting with the problem is a good way to set the hook.”
Really? Which grabs you more: “Cancer kills millions of people every year.” Or: “We cure cancer.” ??
Duh. In a world drowning in information overload, the reality is that you have 20 seconds to get someone engaged, or you might as well go home. You have 20 seconds to get their permission to use up the next few minutes of their lives. But if you blow it at the beginning, their minds will wander, they will look for an excuse to get away, or they will just start checking their iPhones under the table.
The other reason pitch coaches tell entrepreneurs to start with the problem is as a way to lead off by suggesting that the market opportunity is really big. So entrepreneurs frequently aren’t really talking about the problem on the slide titled, The Problem. Often they are talking about market size.
“Buildings use 40% of all the electricity consumed in the U.S., and up to half of that is wasted.”
Okay, that sounds like a big, bad problem/opportunity. But no one in venture capital is at all surprised by that statement. Instead, a red flag goes up in our heads: We know hyperbole is coming. Almost certainly, the entrepreneur is about to grossly exaggerate the impact he or she can have on this statistic.
The good news is that almost any digital product/market opportunity is big enough to build a worthwhile company around. We used to make fun of wacko entrepreneurs who wanted to sell dog food online, or sell software to shrimp farmers. Guess what? In today’s world, those are viable businesses! Thanks to the flattening and interconnection of our digital planet, it is hard to think of an opportunity that is too small to be interesting. That doesn’t necessarily mean that venture capital investors will be excited, but rarely do investors reject entrepreneurs because the opportunity is too small.
So my advice to all entrepreneurs is:
Please, start with the solution. Give us a clear, simple, understandable statement of what it is you are doing — what value you are creating, and for whom.
You should be able to do that in one or two clear, concise sentences. Really. If you can’t do it in one or two sentences, you’re screwed. Otherwise, what are you going to put on your website? How do you lead off your email introductions? What do you say to prospects on the floor of a trade show? You need to be clear, compelling, and credible in the first 20 seconds.
Let me close with a dirty little secret about the venture ecosystem: In spite of all the time we make entrepreneurs spend perfecting their elevator pitches, the reality is that the only place you can ever use your elevator pitch is at an elevator pitch competition, frequently known as a demo day. Yes, you need to have an elevator pitch, and maybe you can afford to waste some time talking about the problem when you are onstage. But for all the other times you are trying to convince someone to listen to you, start with the solution.
If you need help, just contact us for a free mentoring session on your story telling!