Before launching into the heart of this entry, I wanted to give a shout out to Caribou Honig, a fellow Partner at QED Investors who happens to have a passion for data-driven marketing. My last entry attempted to make a point about the woes of undifferentiated marketing channels (i.e. – fishing in the open waters of the internet) and while Caribou was in agreement with the points made in the post, he was also kind enough to write a post that provides a counter-perspective that’s worth internalizing. His logic is very sound and he includes great examples that prove the points he makes in the post. For those who are interested, his post can be found here:
With that said, it’s time to move on to “Part II” of the Jolly Fun Mistakes theme. Hope you enjoy!
Mistake #2 – Inability to Clearly Explain Your Business
Have you ever started to read a book and realized that you were 50 pages in and had no idea what was going on? Believe it or not, there are pitches that feel the same way. For instance, I was on a sixty minute call this week that literally played out like this:
10:00–10:05am – Formalities and Background on QED/myself.
10:06–10:20am – Background of the Founder’s previous jobs and what led him to his current business idea.
10:21-10:40am – A walk-through of the first 3 pages of a 20 page investor deck. Confusion ensues. Multiple times I ask: “Can you explain a typical use case? What problem is your business solving?” Multiple times the Founder tries to answer my questions to no avail.
10:41-10:42am – I finally connect the dots and understand what the business is designed to accomplish. In 90 seconds I spit back a very cleanly articulated description of the problem being addressed by the business and how his business is attacking it. In 30 seconds I posit a theoretical example that demonstrates how his business works. Founder confirms that I “get it” and is thrilled. He proclaims that we’re the first VC firm to understand his business and that we’re the experts he’s been looking for.
10:43-10:59am – Additional questions asked of the Founder that demonstrate my understanding of what he’s trying to build and confirm his lack of the necessary communication skills to be a true leader.
11:00am – Call ends. Deep breath. Relief.
What’s interesting is that the Founder came away impressed by my ability to simplify his business and articulate it back to him while he should have realized that it was his responsibility to provide me with this view. It took far too much effort and mental gymnastics on my part to get to a basic understanding of the business which bodes poorly for so many critical deliverables/responsibilities of the Founder. These tasks include:
- Painting a razor sharp “True North” vision for his team
- Selling the dream to future hires
- Explaining the business to future investors
- Shaping the marketing message used to attract customers
- Creating the brand identity/promise of the company
The list goes on and on and on.
With this in mind, here are a few recommendations that if followed will go a long way to helping you avoid this obvious “Jolly Fun Mistake”:
- Think about your intro as having three parts: “About you”, “About the business” and “A typical use case”.
- Make sure that you have a 2 minute and a 5 minute version of the “About you” pitch. If you need more than 5 minutes to explain your background you need to sharpen your pencil. And always be prepared to deliver the 2 minute version when time is tight. Your background is important but the focus should be on your business, not on your past accomplishments.
- Develop a very clean description of a typical use case for the product/service you’re offering. Practice explaining the use case in story form assuming that the audience knows a minimal amount about the business you’re building and the problem you’re solving. Weave into the story the problem and the solution. Some businesses are more complex than others, but challenge yourself to be able to deliver the story in no more than 5 minutes with the mantra that shorter is better. You know you have it right when your audience could repeat your story back after hearing it once.
- Use the story you’ve developed to pull out the key pain points your business is solving and how it’s solving them. Once you’ve done this, you should be able to string the problem/solution key messages together in such a way that you can deliver a 2 minute “About the business” section.
- Practice stringing the sections together such that you can seamlessly move from start to finish in fewer than 10 minutes (you, business, use case). Expect interruptions/questions from your audience during your pitch (i.e. – don’t get thrown off your rhythm).
- Design the rest of your investor pitch around the next layer of detail. If you can absolutely nail the intro then you’ll have earned the opportunity to take the audience on any journey you’d like from there.
Practice. Refine. Crush it!