I am often asked by entrepreneurs what constitutes a really great startup pitch. I’ve literally seen thousands of pitches and given a fair share of my own. I’ve been convinced, amazed, bored to death and even moved to tears. I’ve given hundreds myself – to receptions ranging from standing ovation to heads-on-table.
Fundamentally, a good pitch is a good story. It’s not just facts and figures and analysis. In addition to understanding a business opportunity logically, investors need to feel a business opportunity emotionally. A good story (told by a compelling storyteller) does just that. It activates our gut and makes us viscerally excited by the business proposition. In discussing this post, my entrepreneur friend @danmartell reminded me of the venerable sales proverb: “people buy on emotion and justify with logic.”
Many entrepreneurs in our business have technical or analytical backgrounds and love to expound on the “what” and “how” of their technology solutions. That is all fine, but often what I really care about – and what I have come to see as a common thread in the best presentations – is “why”. Specifically, there are “3 Whys” that I want to see in every pitch:
1. WHY BIG?
Most entrepreneurs answer this question by simply including a market size chart in their presentation. Whether calculated through bottoms-up analysis (often bogus) or citing a market research firm (always bogus), this is a basic and necessary exercise. But what makes a good pitch into a great pitch is when entrepreneurs can articulate the scale of the opportunity in a way that I can feel in my gut and not just get in my head.
Social science has shown that people are far more moved by stories told in terms of actual individuals rather than in aggregate figures that can be too much for our simple brains to grasp. In the same way, the most effective entrepreneurs describe the problem they are solving in very personal terms. They talk about a specific customer or about their own experience with the pain they are trying to solve.
2. WHY NOW
This next point is one that entrepreneurs almost always miss and so it is one that I have come to feel is the most critical. So much of startup success is dictated by good timing.
A great startup pitch MUST answer the question “why now” – why market conditions, user behaviours, technology trends or other macro forces are combining in just the right way to smooth your path to success.
3. WHY YOU
Finally, if the market is big and happening now, investors need to understand why YOU and your product are the right ones to bet on. This is the jockey part of the famous horse vs. jockey debate in venture investing. For every great market opportunity, we assume there are dozens of smart and potentially well-financed teams around the world going after it. What about your expertise and team give you a clear advantage – your domain experience, your tenacity, your coding skills? What about your product makes it clearly superior to others in technical approach or customer perception? Why will you have the “last mover advantage” and dominate the category in the long-run?
These three simple questions – why big, why now, why you – are at the heart of what distinguishes a great story from a merely good one. If you want your startup pitch to stand out, make sure you’ve nailed the answers.