Monday, January 23, 2006

Practicing the Art of Pitchcraft


Commenting on an earlier post of mine, Sridharan suggested that my four year old son’s simple and clear presentation of his thoughts is “a management lesson…Stick to the point and say it in a single sentence.”

I know it sounds a little crazy, but indeed I’ve come to agree that a clear, compelling elevator pitch is essential to growing a business. (And I’ve paid dearly for the evidence.) So after attending a board meeting yesterday in which the management team struggled to succinctly describe their business, I resolved to blog my agreement with Sridharan. Just in time, too, because Nivi’s been bugging me to answer the question: What makes for a good elevator pitch?


The elevator pitch forms everyone’s first impression of your venture. It needn’t be a single sentence, but the delivery ought to be measured in seconds, not minutes--like any good TV or radio commercial. In fact, other rules of advertising apply…

1. Show Some Leg Right Away


The primary goal of an elevator pitch is to intrigue someone to learn more. Like that novel you buy on impulse at the airport, the first sentence has to grab you. One way to do that is to highlight the enormity of the problem you are tackling….

  • With healthcare costs rising 24% per year, fewer and fewer US employers offer comprehensive health benefits…
  • In the last 18 months, the internet grew by over 100 million consumers in China who have no credit mechanism for buying online…
  • Thanks in large part to Tivo, the $70 billion market for TV commercials is about to implode…
  • 21% of the patients who take prescription medicine for the first time are genetically pre-disposed to have no benefit from that molecule, but still suffer the side effects…

If you get stuck on this step because the problem you’re tackling isn’t impressively large and obvious, you have a more severe issue to worry about than your elevator pitch.


2. Don’t Make Them Think Too Hard


Though it’s okay to start with the problem, never indulge in more than a sentence to describe it, no matter how juicy it is. Rather, tell the audience up front what your company sells (even a simplistic description), so the rest of the pitch will make sense. For example:

  • Healthia offers an online comparison-shopping portal for all kinds of healthcare purchases like doctor visits and insurance.

Without going into the cause of the pathology, let me just describe the common symptom I see that inspired this rule: 5 minutes into the presentation (whether it’s delivered in person, by email, or sky-writing), the audience still doesn’t know what the company does—we understand that it’s somehow related, say, to real estate transaction technology. But is the startup a listings site for owners? A comparison shopping portal for title insurance? A resource for mortgage lenders or their brokers? The suspense is killing the message.


Don’t write your story as a mystery novel, in which the reader must guess what your company does. Instead, make it an edge-of-the-seat action flick.


3. Science Not Allowed In The Elevator


If the startup is in a competitive market, it may be necessary to describe the company’s salient advantages. But make the effort to distill the differentiation down to one, easy-to-comprehend sentence. (Mark Twain once wrote, I would have written you a shorter letter but I didn’t have the time.)


Here’s the pattern that I have learned (the hard way) to avoid: Some very smart people invent a unique, defensible technology based on a super clever approach to solving a problem. In an effort to recruit employees, raise capital, and, most importantly, sell their product, they present their cleverness with confidence and justified pride. To really expose the genius, the pitch includes a good 10-20 minute tutorial.


Who Has Time For This? Not VC’s, and certainly not prospective buyers. Besides, if the technology is too clever, it will confuse even those who stick around for the credits. Most importantly, these startups tend to focus on their technology rather than a market problem to solve.


[This would be a really great place in the post for a recent example. Regrettably, discretion stymies me. So I must reach back in time to confess my own sins…]


When Jim Bidzos first explained to me Ron Rivest’s idea for selling public key certificates (Rivest is the R in RSA), it took a while for the math to sink in. But as I came to understand how public key cryptography facilitates encryption, authentication and (theoretically) non-repudiation, I reveled in the cleverness. Like so many spectators of greatness, I congratulated myself for comprehending this wonderful meme. So when Jim and I launched Digital Certificates, Inc (later renamed Verisign), I proudly (and thoroughly) explained public key crypto to whomever I was recruiting as a partner, employee or co-investor. “You see, people encrypt messages today using a numeric key that they must first share with each other…blah blah… Now using one-way functions like multiplication of large prime numbers…blah blah… So if the public key decrypts the message, then that must mean…blah blah…” Surely the brilliance of the idea must compel them!


Compel? More like confuse, bore and repel. I don’t think anyone (including me) really understood what our little startup needed to do until we hired our CEO Stratton Sclavos. Stratton dispensed with the math, as well as the notion that people feel the need to buy obscenely large integers with incomprehensible mathematical properties. Instead, Stratton announced that we are bringing Trust to cyberspace, and our first product is a Driver’s License for the Internet. (One of these Driver’s Licenses evolved into SSL certificates.)


Stratton’s simple message focused on the market problem, not the underlying technology. Rather than make the audience feel stupid, Stratton crafted a metaphor that anyone can understand on even a short elevator ride.


4. Establish Credibility. Name Dropping Allowed


As a proxy for lengthy tutorials, it’s more effective to establish credibility by sharing the pedigree of the entrepreneurs, customers, or (as a last resort) the investors. A glowing word from Walt Mossberg or a Gartner Group analyst warrants a sentence in your pitch. For example:


…Counterpane’s founder and CTO is Bruce Schneier, the cryptographer and author whom most folks regard as the world’s foremost expert on information security.



So I hope this blog post helps you with the difficult but critical task of distilling your message down to an easily digestible morsel. As an example of an elevator pitch that follows all the rules above, here’s one that I have found to work well in about 45 seconds…


Used to be If It Ain’t Broke Don’t Fix It, but worms and other hacks have raised the dreadful prospect that every important computer system in the world needs to be fixed on a weekly basis.


That’s why Determina has developed a memory firewall to protect software on computer servers and clients alike so that they no longer need security patches. Unlike other Intrusion Prevention Systems, Determina never generates a false-positive alert, and stops even new attacks without requiring data streams of new signatures, so Determina can scale to the largest networks without human supervision.


A world class compiler team at MIT developed the technology over 8 years--the MIT professor and his grad students moved to Silicon Valley on a leave of absence when they got funding from Bessemer, Mayfield and USVP.



When your pitch inspires a VC to learn more, be sure to read Boris' and my tips on presenting your plan.

31 comments:

  1. Thx! Glad to know my comments are being read :) Nice of you to provide a link to my profile hopefully increasing traffic to my blogs.

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  2. I have written a blog titled '10 tips for a perfect pitch' for entrepreneurs to prepare for a meeting with a potential investor. In a follow-up post I linked to this article and also a few other posts by VCs with even more tips. Might be interesting for you and your readers: http://www.fleck.com/blog/2006/01/10-tips-for-perfect-pitch.html

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  3. I am glad that you are a jewish atheist like myself. I think the world would be a better place if religion were replaced with science.

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  4. When read the elevator pitches sound a little like disclaimers on cosmetic products:

    21 out of 100 teenage boys have spots, our facial-security-rub helps 4.76% of them, and zits are about to erupt ...

    The difference that non-verbal signals make must be huge.

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  5. Great blog! You just saved me at least three years of time.
    Thanks!

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  6. You have inspired me to build an elevator pitch.

    This will be an upgrade of the draft from when I read your post earlier tonight.

    1) Modern Education is centered on getting a job. Bastiat Free University is student centered -- students lead their own discovery journey in preparation for the emerging network society.

    2) BFU students are looking toward the future where technology empowered individuals will need adaptability to succeed.

    3) Renaissance style education allows a student to rediscover the pleasures of self-directed learning. Our students realize 24/7/365 learning will be a key for successful individuals in the netcohort.

    4) Jim Rogers, the author of Adventure Capitalist, and Nassim Taleb author of Fooled by Randomness are two of the successful doers that have created courses for Bastiat Free University.

    BFuniv.org is available to students embracing the network society future rather than the diminishing industrial age.

    The future will belong to individuals pursuing their passions - doers that integrate knowledge, integrity, and adaptability with their networking skills.


    Now to hone and polish the pitch - and then to use it.

    Thanks Dave.

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  7. I think this is a good place to start thinking about elevator pitches. The key to distilling your entire business into 60 seconds or less is giving the investor only the titles of the critical chapters in your story and then letting them decide which they want to learn more about, which allows you to create a meaningful dialogue in 3-5 minutes total.

    I've started a blog post of my own on this subject where I intend to provide more specific advice on exactly what I believe should be included to construct a great elevator pitch.

    My first two posts are here:

    http://andrewbfife.blogspot.com/2006/01/great-elevator-pitches-intro.html

    and here:

    http://andrewbfife.blogspot.com/2006/01/great-elevator-pitches-3-key-lessons.html

    I'll try to provide more specific in my next couple of posts.

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  8. David,

    I think you should have added something about a direct comparison to the next best alternative. Without this, there is no reference point. Without the reference point, how can you know what you're doing is any better? Its in your example, but not one of your rules. To me, this is key.

    Right out of Crossing the Chasm.

    More here....

    http://tumblingduke.blogspot.com/2006/01/elevator-pitch.html

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  9. http://www.yourelevatorpitch.com - if you are looking for a place to get some feedback on that pitch of yours...its the best.

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  10. Great advice and examples about something that is so fundamental to entrepreneurial success but so rarely done well.

    One of my favorite resources on this topic is Guy Kawasaki's Art of the Start (and his colleague Bill Joos' presentations of the material at Garage.com events).

    Entrepreneurs looking to test out their pitch should consider Peak Pitch '06, a series of fun events where New England entrepreneurs get to pitch investors on a ski lift. Investors looking to hit the slopes should also check it out... Info at www.peakpitch.com.

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  11. That's good stuff. I took an online class from Kim Klaver. The 3 scripts class. http://www.whowho911.com/?network1
    Learned what not to say to prospectives. Was alot like what you are discussing. Thanks for posting your elevator pitch.

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  12. As promised in my earlier comment, I've just finished another posting on elevator pitches that includes exactly what I think entrepreneurs should include in their elevator pitches for raising capital.

    Anyone interested can find the post here:

    http://andrewbfife.blogspot.com/2006/01/great-elevator-pitches-what-to-include.html

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  13. Prakash1:53 PM

    I enjoy your blog very much (teaches me a lot about business ventures :-)).

    Hopefully I will be able to use all your suggestions for my start-up very soon.

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  14. My Mum likes your blog - She has a Sock Monkey Business, and does all sorts of weird business things, but I have a question - who has time to read all this?!! I like that quote about writing a shorter letter, but not having the time... I want to write an elevator thingy, now, too, but our building only has stairs...

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  15. David,

    Great post. In my time as a VC, there were many people who would have benefitted from you advice. My company has been helping companies with their preparation for VC financing and I will definitely incorporate your advice.

    See Solalta Advisors for more information about my company

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  16. Thanks for making another post so that I can leave a blatant attempt to further push my business/blog/idea blatantly here in comments! [sic]

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  17. Been enjoying your blog for quite some time now. This latest blog gives me insight into the sales perspective that I choose to ignore for quite sometime. I think I just extended my career choice.

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  18. howz this pitch

    http://arentwebeingfunny.blogspot.com/2006/02/sales-pitch.html
    :)

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  19. While I appreciate that an entrepreneur should have a short and sweet message I also feel that a good VC should be able to discern good business models despite the entrepreneur's communication short comings.

    VC's grouse a lot about how they want things packaged nice and neatly for their consumption. But what do they bring to the table if not the ability to discern a good business in a muddled message?

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  20. Stiennon,
    I agree that a VC ought to be able to cut through the haze, but you have missed my point (perhaps I wasn't clear). Packaging the value proposition and differentiation in a neat pitch is not for the benefit of the VC's--it's for the benefit of every stakeholder, most importantly customers. If the team can't do it in preparation for the VC pitch, it bodes especially poorly for their success selling to folks who won't give them the same hour of attention.

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  21. David, I appreciate your posting for the last and most important reason you give above: how to show value to potential customers.

    I am working on an idea based on the use of biodegradable plastics in medical products, and I found that I have to offer service and functionality, in addition to the product itself in order to get customers interested.

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  22. katharine sands8:50 AM

    Hello. Pitchcraft is trademarked, and the art of - and practice of -Pitchcraft is discussed in my book, Making the Perfect Pitch. A New York City-based literary agent,I think this blogger is claiming the term was his creation. It wasn't. I don't mind it being used, I simply want to acknowledge that I speak and write about pitching...I love to help and influence writers...I suspect I have influenced this one....Katharinesands@nyc.rr.com

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  23. Creation? It's a pun. And not particularly clever, either. I was neither influenced nor even exposed to your book, but still it never occured to me that I was the first person to ever use the word Pitchcraft. A quick Google search suggests that you weren't either.

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  24. Hi Dave,

    Great Blog! You made me rethink my whole Exec Summary. Now it has my passion in it as if I were talking about it.

    I am starting up a company that is going to reinvent the entire real estate process. Using a proprietary reservation system, salaried employees as agents to control the service, exclusive online channels and experienced management team.

    My question is a feel I am adressing many areas and the Exec Summary is 11 pages, is that too long? I have people at VC's I am friends with so it will be read, but want to make sure nothing turns them off to it.

    You have been a great help already and hope to update you on any success.

    Larry

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  25. I just saw the most hilarious Ali G clip where he gives a spoof sales pitch to Donald Trump and some VCs.

    http://www.thatvideosite.com/view/2037.html

    I think you will enjoy it as it seems to exemplify a bad pitch.

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  26. Nice elvator pitch post.

    Another resource that I wrote about the elevator pitch may be interesting to your readers. Check it out.

    http://blog.joshanstey.com/index.php/2007/10/19/the-art-of-the-elevator-pitch/

    Have a good day, and keep up the good work.

    Cheers
    Josh

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  27. Here's a link to a site that I have put together that discusses the elevator pitch and that goes into greater detail about this topic...

    http://www.elevatorpitchessentials.com/

    Any feedback would be appreciated.

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  28. Speaking of pitching, I have a short video on money raising which your fans are likely to appreciate:

    http://smartstartup.typepad.com/my_weblog/2010/11/how-to-raise-startup-capital-or-not.html

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  29. Just been researching a one minute pitch and this post has really helped.

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  30. Anonymous12:21 PM

    What's an "atheist Jew". You are either a Jew or you're not. I've never heard of an antheist Christian, or an atheist Hindu. :-\

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  31. Once can be Jewish by ethnicity and/or by religion. I am Jewish by my ethnicity, and atheist by my critical thinking skills.

    ReplyDelete