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…

• 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…

• 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.