This is part of a series of transcripts of the proceedings of the Garage Ventures’ “Art of the Start” conference held in Mountain View. See the complete series of transcripts here.
I get the privilege of introducing myself, that way we’ll do it correctly – everyone else has run off to some meetings they had. I’m Bill Joos, I’m one of the co-founders with Guy and Bill Reichert, here. And I’d like to start, before you see my name on the screen, by again acknowledging our great friends at Comerica, which brought this morning’s break to us.
We’re going to be talking about The Art of Positioning and you will need for this session this handout that is in your pack. So you will need this handout that is in your pack.
While you’re digging that out, let me go through a couple of housekeeping chores, answering a couple of questions that have already come up. You are all going to be getting an email next week that will tell you how to get each and every one of the hundred and ninety-seven Powerpoint slides that we will be using today. So, you will get all, in the email that will be sent to you, you’ll find out how to get all those Powerpoint slides. Additionally, about seven days from now there will be MP3s of all the sessions available to purchase at an extremely modest price, using one of our partners, you’ll be able to use our partner to purchase those. So you’ll have an opportunity to do that as well.
Additionally, we did give some raffle tickets early this morning – let me explain what those are all about. Our good friends at [spa] Spa have given us two spa packages, and to help us get started immediately after lunch we’ll be giving one of them away exactly at 1:15. But you have to be in the room. That hopefully will provide an incentive for you to get back. We’ll be giving the second one away following the afternoon break at 3:30.
We are in a non-profit organization called the Computer History Museum. And so I made a deal them – and the deal is that the next time a cell phone rings, that person will make a $100 donation, a total tax-write-off, to the museum. So you can choose to either do something with your cell phones now to assist them in their fundraising efforts or you can turn them off. Thank you very much.
We’re going to be spending a jam-packed hour together, and what I’d like to do is give you a little of my DNA – I think it’s always helpful to know who’s on the stage in front of you. If you prick my finger and send it away to the OJ Simpson DNA lab, what comes back is “sales guy with heavy marketing overtones”. So, think of me in that light, and it’ll be helpful as I go through my comments.
Each of us has a slightly different view of what we’re looking for, and I’m going to breaking my presentation into two parts, roughly thirty minutes each. The first is going to be done almost in the way of a workshop talking about perfecting the art of your positioning. Additionally, after that, we’re going to be talking about pitching. I am going to be available this afternoon during the break, I will not be able to take Q and As during my hour session, because we actually have about an hour and fifteen minutes of stuff to go through. So, I’ll be happy to take some questions when you can catch me in the hall during the break.
We’re going to start with the Art of Positioning. And again, you should have that worksheet in front of you. It would be extremely helpful if you all stay on the same page, because I talk at about two hundred words a minute, with gusts up to three hundred and if you’re on the wrong page, you’ll probably miss some of the things that we’re going to chat about.
Everyone has a slightly different view of problems that entrepreneurs face, but the one that I see through my eyes the most often, as being somewhat of a professional coach working with our clients, the number one problem is the inability to explain what they do correctly. Now, you may laugh and this certainly probably, therefore, applies to the people on all sides of you, if it doesn’t apply to you, but it is extraordinarily difficult to talk about what you do quickly and precisely. So we’re going to talk about the two foundation underpinnings for that: Market Definition and Value Proposition.
I’m going to offend some of the marketing people in the audience and I’m even going to offend the conference, because positioning and marketing is, in fact, an art. However, I’m going to approach it with a little bit of scientific spin today, and give you a formulaic approach that will make a PR firm cringe, but will nevertheless help you get started down that path. So there is a way to do this and to attack this problem systematically.
When we do this with our clients, we will get their entire management team together and we will spend about six to eight hours spread over several days going through the exercise that we’re going to be going through here in about twenty minutes. So the realities are it’s going to take you and your team many hours to do this, and I say “team” because without buy-in from your cohorts, without this being a team exercise, clearly the value of this exercise is extremely diminished. Additionally, today I just want you to grasp the concepts and the fundamentals. I want you to take adequate notes so if you choose to this exercise by yourself, you know how to do that.
Additionally, I want you to think of your positioning as a living document; however, there will be a time when you want to freeze that document. You do not want your positioning to change based on whoever wrote the last marketing piece for you, whoever changed the last website. You don’t want it to creep. If you’re going to change it, you want to do that consciously and have your management team do it. And, with all exercises, there’s no bad ideas. So it’s extremely important to hold your judgement as you do this exercise. Now, again, we’re not going to be able to do the entire exercise, so let’s recap again what I’d like you to do: understand the process, take adequate notes so you can do it when you go back.
Now, I think it’s extremely helpful to have a model or an example to look at. And so I’m going to take a look at a model, but let’s talk about what we’re doing first. The underpinning is: who do you do things for? It is the market definition statement. Now, some of you are going to be troubled by the fact that the market definition statement is going to be a long, complex, compound sentence that isn’t going to fall off your lips correctly. Don’t worry about that, we’ll talk about how to address that in a moment.
The second thing, once we know who we are doing something for, we want to talk about what we’re doing, and this is going to be the value proposition statement. Again, don’t be troubled by the length, by the fact that it’s long and complex and compound. Because what we’re going to then do is use these two as a yardstick. And on that yardstick, we’re going to have a number of communication vehicles that are built. These could be mantras, although I don’t happen to have that, but clearly that could be one. It could be any of the other targeted marketing communication vehicles that you or your company needs to develop. And these are the ones that need to roll off your tongue, and these are the ones that need to be more precise.
But what we’re going to find is once we have a valid market definition and value proposition, all of these, something’s going to happen. We’re going to get amazing consistency, and what we say is that our targeted communications need to be faithful to the underpinnings. Once you have your underpinnings developed and temporarily frozen, you can then use them as a yardstick to measure your other communication vehicles against.
I’ll give you an example: at Garage, we’ve had over fifteen hundred face-to-face meetings with entrepreneurs. And the first thing we sort of do is go back and look their web site. You would be amazed at the inconsistencies between which they just told us in our boardroom trying to get money from our billfolds, we look at their website and see various differences. So the answer is you want a consistent look, and one of the things we want to be able to do is that.
So we’re going to take a look today at a case study, and we’re going to look at a company that happens to be one of our portfolio companies – in fact, it’s going to be the way in which you can buy the MP3s, because I’d like you to get familiar with them. And it’s a company called BitPass.
Now to help you understand – and I don’t need you to understand their business model as much as the thinking – to help you understand their thinking, let me just share with you how their looking at their case study. The CEO is from Salon and is very familiar with subscription-based models – and what they have done is they felt that the world has gone through things: in the early days, everything was free; in the medium days, everything was a paid subscription; and now, thanks to people like Apple and iTunes and others, people are willing to pay by the sip rather than by the subscription. And so they see that individual purchasers of unique items are the new way of the future. And it is on this premise that we went through this exercise with them. Now I wanted you to just understand that to have the case study be more helpful.
So the first thing that’s going to happen – and I’m on panel A now of this exercise (you’ll notice the big letter in the lower right corner) – the first thing that we’re going to ask you to do in this exercise – should we be doing it as a real workshop, rather than as a lecture – the first thing that we’re going to have you do is, top of mind, write down as quickly as you can: who do you think your primary and secondary constituents are? And again, I don’t want you to do it for your company now – I just want you to understand the process.
Once you have done this, then we’re going to go into the engagement of a discussion of how to refine that. And what we’re going to find is a couple of things. Example: one of the things that was a factor in their decision was: what size companies are we going after? And obviously the different tiered companies, have different – it affects things differently. In a similar vein, the entire discussion built around this took into account a whole bunch of other things: are we doing video? What are the rights management? Is it one-use? Is it multi-use? All of those issues came into effect, and a discussion ensued, and it may not surprise you to learn that frequently it takes forty-five minutes or an hour for a group from a single company to agree on their primary constituents.
If in doubt, chase the cash. So, if you’re in doubt about who your primary constituent is, think of your company’s cash flow at the time you break even. And I stress that because early on, you may choose to do some unnatural things to make cash. You may choose to do some things to get reference customers and others that aren’t your steady-state business. So your primary constituent should be the largest slice of your pie chart at the time you break even.
In a similar vein, there’s going to be a discussion about who your secondary constituents are, and in some of your cases you may find that you may or may or may not have them, it may not be quite as clear. But here we have the same thing – if we’re going after a pool of buyers, we want to understand: is that a pool that we have to make, or is that a pool that we can adopt? I’ll give you an example: if you were a famous cartoonist, you would maybe put up your own website and built a culture around selling your cartoons online – but you would have to build it. If, on the other hand, a company was lucky enough to land CNN, they already have fifteen million users, therefore there’s a pool. So, in a similar vein, there is an entire discussion built around the secondary constituents.
And what comes out of this process is a clear-cut market definition. And in their case, here’s what they found: tier one large resellers of premier digital content. That is their primary source of revenue at the time they break even. That isn’t saying that selling my cartoons online is unimportant – but in the scheme of their pie chart at the time they break even, this will be their primary constituent.
In a similar vein, their secondary constituents are different than they initially thought – and that is, it is all Internet buyers of digital content and anyone other than tier one. So the walk-away from panel A is pretty simple, that is that you should be defining a very broad focus and then a come narrow to a reachable market. Nothing makes a VC crazier than having you come in saying you’re going to conquer the world – we don’t believe you. Find a reachable market – start broad and go narrow.
Moving over to panel B, we then have to figure out what the burning problem is that our primary constituent has. Now in the old days (eighteen months ago), steroids and vitamins could get sold online. I don’t mean that literally, but I mean things that made your website “stickier” or marginally better or beefier. That’s the old days – the only thing that’s getting funded nowadays is painkillers. You can’t sell a painkiller until you’ve identified the pain. And you can’t identify a pain, until we establish a burning problem. So thinking in terms of our primary constituent, their first cut problem is that they have lowered than desired usage levels. And that is, there’s only so many people in the world who will go for subscriptions, but they’re a whole bunch of other people that would sure like to sign on maybe an read, oh, about Ronald Reagan. There’s something very timely that doesn’t justify a full subscription – maybe they want to read about Ray Charles, but they don’t want to join an entire subscription. So people will buy by the sip.
Once you’ve done this “first glance” burning problem, then engage in a discussion of the symptoms: how do I know if I have that problem? And this will generally fill up a whiteboard. And in this case, I’ve put some more illustrative examples: churn, low subscription renewal, competitive losses, flat growth, abandonment, user reluctance to subscribe to one pressing need (you know, the all or nothing).
And once you’ve done this, symptoms and secondary problems, I want you to scrape them all off the whiteboard, put them in a kettle, put them on the stove, turn the heat up to â€˜simmer’ and see what comes off. And we noticed, and they noticed, some commonalities – and that is the commonalities were all tied around the premise they had that the subscription model isn’t the only way to go forward, even though for many people it had been in the past.
Armed with those commonalities that came off stove in the simmer, I then can go back and I can refine the burning problem to be: limited product offering because of subscription-only modeling.
Now problems are not actionable. Pain is actionable. When Maslow did his breaking study on what motivates humans, he found that people run from pain faster than they run toward pleasure. So a burning problem means nothing – I also have to have, and identify, what the big pain is of my primary constituent that has the problem we just discussed. And in this case, we’ve identified the big pain. And the big pain in this case is: lack of revenue growth. Lack of revenue growth.
Pain’s an interesting thing – people buy or sell for a combination of reasons. Like, I wasn’t going to buy my car which I happened to like until I learned it had eight airbags. That appealed to part of my brain, totally irrational, but nevertheless it helped me and allowed me to make that buying decision. So from pain, we have to involve emotion into the selling or buying solution.
So the answer is: if my primary constituent is tier-one content resellers, and the primary problem is limited growth for lack of revenues, what of emotions would that evoke? Well before we go there, let me give you the acid test. If your primary constituent can instantly identify with the burning problem and big pain, you’ve got it right. You start telling them and the guy finishes the sentence for you and slaps his forehead and says, “That’s me!” – you’ve got it right. If you’ve got to explain it – you’ve got it wrong and you will not succeed. So the acid test: will your primary constituents, a subsample of your primary constituent, will they instantly identify with the big pain and the burning problem? You’ll be amazed how many…don’t.
So, once I have it, I have to evoke emotion. What kind of emotion does my primary constituent have with my big problem and big pain? And this is a whiteboard exercise: what does somebody feel like? Maybe I’m at an individual level – and the gamut, runs the whole gamut of things. And once again you’re going to pick one of those, you’re going to pick one of those to build your argument around. In this case, the example we’re going to be using is centered around fear. It’s a tremendous motivator. Tremendous motivator.
So, we’re going to start concatenating and bringing some of the work we’ve done together. Don’t be troubled by the fact these are long, complex compound sentences because, remember the foundations? You’re not here to use them in that manner. These are only going to be the common yardstick. And I’m going to start with the tag line that establishes your space in the present. And in BitPass’ case it is: they want to be the leading payment platform for digital content. And when we get to value proposition, I’ll explain why they chose “platform” rather than “solution”, or some of the other things it could be.
So if I go over panel, if I go, this should hook them. This should get you to the point that you sort of say “tell me a little bit more”. If I now go over to Panel E, you’re going to find that I’m going to pull together some work that I’d previously already done. So, I’m going to start with this: “BitPass is becoming the leading payment platform for digital content.” And my linking words are going to be “for” and “who”. And we’ve already done the heavy lifting on the panels that we’ve identified. This one’s going to come from Panel A, this one’s going to come from Panels B and C. And so let’s take a look at how this would read.
“BitPass is becoming the leading payment platform for digital content for [primary constituent] who fear stagnant revenue growth due to subscription-only pricing.” And when I pull those together on F (I told you we’d move quick), we have the example of the market definition for the case study. And since it’s helpful to always have an example, when you go back and do this yourself, you’ll see there’s a spot to put your own in there. Make sense?
What really transpired? We have two pieces to this puzzle, and the first one is market definition, and it has these three elements (this slide you do not have): who, pain, and emotion. This gets someplace so it’s actionable by your solution. So let’s move onto the second piece: who, pain, emotion. The three elements that are in our long version market definition. Remember, I’m never going to use it in this manner. I’m going to build my silo communication vehicles on top of this, targeted for individual audiences. So let’s move onto the second piece.
The second piece has to do with your Value Proposition. And what we want you to do in an exercise manner, and on Panel G, is I want you to engage in a role-play exercise with your team on every single thing that you really do. And in BitPass’ case, there’s a whole bunch of stuff that they do – and it’s not my job today to make you understand all of these, but suffice it to say there’s a wealth of things that they have to do to make good on their dream of selling content by the sip. And, just as we’ve done before, we’re going to take all of these words and, for the second time today, we’re going to put them in a kettle on the stove and turn the heat up and see what comes off.
And when they did this exercise, we found that a couple things came off. What they really do is they provide an elegant digital content payment platform. When you really understand what they do, “elegant”‘s a key word because they’ve taken something that’s unbelievable complex and made it extremely easy for me as the seller of my hand-drawn cartoons, or any of those Internet buyer to go ahead and engage in that transaction. So I’ve come up with, I’ve come up with the composite essence of what you do as a firm or an organization.
Now I know for a fact, from looking at the registration, I have some non-profits in the room, I have some people that don’t have products in the traditional sense of the word, but the answer is “what is it that you really do?” Even though all of our examples today are based around venture-capital fundraising. A lot of this trends, goes across all segments of all industries. If you’re a member of a large corporation, and I know I have some of you in the room, you have to justify your projects to management – you have some of the same issues, and in fact you may have even some harder issues.
So once I’ve figured out the composite essence of what you do, I can then go on, and I’m going to link some things together. And again, I’ve already done some of this work on prior panels. So, the first thing you’re going to do is talk about “what we do”. In this case: BitPass offers an elegant digital content payment platform” – and then I have two linking words, “that” and “which” – “provides an efficient technical and economic solution” – remember those were identified as a problem of the primary constituent – “which allows our customers to grow revenues by adding new products” – “new products” here being digital content by per-use, per-sip, per-file, per-photo, per-whatever.
So, when I start putting this together I then end up with a Value Proposition that has some elements. And we’ve already talked what those elements are. We know that this first slide is “who, pain, and emotion”, the other slide is easy. It’s “painkillers” and “benefits”. If you’re not selling a painkiller, good luck today. You only do that when you haven’t identified pain on the part of your primary constituents. We’re going to talk a little about benefits, matter of fact I have a couple of slides devoted to it in my closing session today which is The Art of Rainmaking, so hang on and we’ll come back to some of those issues on the “benefits” side later today.
So when I put this all together, you’ll see that there’s market definition – who do I do things for, predominant emotion and pain – and I have the value proposition – which is the painkiller and appropriate benefits. And because we really would like you to do this later, this Panel J is where you can carry your work forward.
Generally, the things take this form. They take the form of a problem being in the negative and the solution being in a positive. But you can do that other ways, but this is generally the form this will take. Now, remember what I said: our market definition is going to be long, complex, compound sentences that are going to fall into the market definition and the value proposition, and we’re going to custom-tailor the silo messages to the audience. And what I’d like to do is I’d like to spend a few minutes to talk about competitive response. So if you jump with me over to Panel K.
Here, you want to make a page for each and every competitor. And you’ll notice a very careful wording. This is where outsiders feel are your competition, because inside, you’re too close to it. You may say to yourself “Oh, those guys are not my competitor”, but knowledgeable outsiders may think they are. And we have case after case after case where our potential clients, when they did their competitive slides for us, didn’t put some names on there that our analysts found when they went to do due diligence – and that tells me something. They either don’t get it or are clueless, or they’re lying and none of those are conducive to funding.
So, this is who would knowledgeable outsiders think are your competition. This is as important as who you think is your competition. So, obviously in the case of BitPass, one that always comes up is PayPal. So then the answer is “how do you differ?” And there’s a whole discussion that goes around how this differs. There’s a whole discussion that goes around. But now I have to find a way to communicate this. And remember what I said to you: be complete and comprehensive on who these are.
And the last point, let me explain. What if you really are, what the cynic would call, the tenth solution? Well, you gotta tell me the other nine, but you’re going to scare me if you don’t do it right. So the answer may be to put them in groups. You may say, and this is not a BitPass example, you may say that historically there have been multiple approaches to solving the solution.
“The original solution was founded by this company and three or four people followed in that model. Then there was a new approach and these other companies followed in that model. But we’re a fresh, different approach, and here’s what we do.”
You see what I’ve done? I’m now the third-generation solution, not the tenth competitor – follow me on that? Remember on the K panel, we had you do one page per competitor. Now we’re going to pull them together and we’re going to use, just as we’ve done before, some linking words.
On my K Panel: the first thing we do is we acknowledge them: “who or which primarily handles money transfer for the sale of physical items” – and the example that comes to mind is eBay, and this in fact is their primary business, some of you may be aware of some others, but their primary business is the sale of physical items – “BitPass handles the unique needs of digital content: access control, authentication, and payment.” Now this is why they call themselves a “platform”, because they have those three elements; access control, authentication, and payment.
So the key here is, when you’re talking about competitors, never again should the name of a competitor just come out of your mouth – what should come out of your mouth is the phrase dealing with that competitor that has these attributes: you acknowledge them, you categorize them, and then you differentiate yourself from that categorization. And on your top three or four competitive issues, you and everyone in your company that touches, outreaching/outward facing in your organization, should clearly understand how to do a competitive statement for each of those three.
The key again is: never just mention them, but differentiate yourself every single time you have the chance. So again, we have the foundation, we have a number of other things. Let’s talk a little about one other before I move into how to pitch. And the one that I’d like to talk about is the mission statement. Now it’s interesting. One of the very largest Sand Hills venture capitalists, whose name I will not mention, invited me to their CEO summit last year where they had ninety of their executives in the room, and they wanted me to talk to them about positioning. Many of these companies you would know because you envy them. And you would envy getting money from the VC. And they had prepared in advance, for the use of the other people in the room, a brochure that showed the logo of the company and their mission statements. There were ninety of them on this page. Hold that thought.
Part of what we do as a VC is pattern matching. We look for things that we think are going to be most conducive to betting correctly. And I’ve come to an observation that we have a lot of dialogue with people on the phone, and then when you get together, you’re sort of guess what that meeting is going to look like. And when I say people who is “us” oriented mission statements – “we’re going to be come the market leader by…” – sure enough, more often than not, that face-to-face meeting is mostly about them. If, on the other hand, I’m having a dialogue and reading executive summaries and things that we see in advance of having a face-to-face meeting, I see that it has a customer-orientation – “we give corporations an unfair competitive advantage by…” – guess what? The presentation very frequently is more customer-centric. And more often than not, when I find things that are in this category, the focus is exactly one-hundred-and-eighty degrees opposite where it should be. Back to my CEO executive summit.
Ninety people in the room, seventy-two of them started that way. When I made this slide, they all pulled it out and some giggled and some didn’t. So, before we move to the second half of my presentation and the final twenty minutes, let’s take about a couple of things.
We didn’t do it all here, we just got started. And any quality PR firm or professional is going to say we left a whole bunch of stuff out. It’s not my intent to do it all. Bring professionals in when you need them – but you’ve got to be able to articulate who you do things for and what do you do. You’d be amazed how difficult that is for many people to do. Take the time to do it right. This isn’t something you go back just do. Matter of fact, you may need to bring someone in to facilitate this.
It’s a great exercise and the real hidden value is once you’ve done it, you’re going to repurpose your market definition/value proposition endlessly as you change your silo messaging. Now, remember what I said when I started: your company, of course, has to be fast, fluid and flexible. Of course there’s going to be factors in the marketplace that require you to change your market definition and value proposition. I’m not saying be rigid – but I’m saying that if you’re going to change them, change them consciously. Don’t have creeping positioning.
You’ll notice that the next page in your handout’s going to talk about the ten things I’m going to talk about. Give you a quick place to put a few notes.
Everyone knows you got to talk about what, and everyone knows that you should talk about how, but the fact of the matter is most people presenting spend a disproportionate, if not exclusive, amount about the what and they don’t worry about the how. The fact of the matter is, this really should really be more analogous to 50-50. So let’s go through and here’s where Guy’s ten points come in – I am going to do ten, so you can track my progress.
The first five. Now let me peel open the mind of an investor to show you what really goes on. If you think about an investor, or your boss (if you’re in a corporation), or your grantors (if you’re a non-profit), they’re going to be looking at you doing this sort of SWOT analysis. They’re going to look at you in terms of: strengths, weaknesses, opportunities, and threats. Now, some of our executives, when we work with our clients, they actually come to our management meetings on Monday with a SWOT, they actually do this for the people we’re looking at. But whether the person says they’re doing it or not, they really are, and if you understand what’s in their mind, you’re going to know how to position yourself better. In The Art of Rainmaking later today, we’re going to talk about setting up and qualifying your audiences correctly and playing into this. So this is going to dovetail into something that I’m going to be dealing with later in the day.
Point one: allow for pitch decay, begin at the end. Now I’m a student of presentations- my undergraduate degree was psychology, I love learning how to persuade. And one thing that study and study after study says is there is this thing called “pitch decay”. And let me tell you how brutal it is. Pitch decay says that when you hear someone say something to you, like I’m doing now, you’re going to start forgetting it almost immediately. In fact, you’re going to lose half of it one hour after we close. Half – one hour after we close. You are going to lose eighty percent of it by this time tomorrow. This time tomorrow, eighty-percent of what you’ve learned at this conference will be gone past you. Which is why many of you are listening with a pencil – that’s good idea. A week later, there’s only ten percent left.
Now, imagine you went to a VC partner or associate on Tuesday – that associate is going to get back together with his partners at their Monday morning meeting, six days away, and they’re going to say “What did you see when you looked at XYZ on Tuesday?” They’re only going to know ten percent of it. So the answer is, if pitch decay is a factor, figure out what the ten percent is that matters and drive it home relentlessly in your marketing, in your communications to them: “if you just remember three things today – A, B, and C…” And wouldn’t you be disappointed in me if this wasn’t my last slide when I’m done today?
That’s why, when you put together your presentation the first slide your put together is the last. Your summary isn’t an accident of putting a presentation together, it’s the reason for the presentation. The rest of the presentation is to prove those points. This is the ten percent.
We’re going to talk about the Dirty Dozen slides. We think any good company should be able to tell their story crisply and briefly in what we call the Dirty Dozen – I’ll call it twelve today. You’ve already done the hardest one, and this is the reason for the presentation. And as you put your presentation together, this slide may take you the longest. What do you want them to remember a week from now? What’s the ten percent that matters?
Point two: Be brief.
How ironic: I’m going to use eighty-seven slides in an hour to tell you, but I happen to like Mark Twain, whose famous quote was: “I didn’t have time to write you a short letter, so I wrote you a long one.”
Brief is hard. Brief is very hard. And I could replace the word “letter” with things like “overview presentation”, “elevator pitch” – it’s hard to be brief. It’s hard to be brief. I carry around in my billfold the best executive summary I’ve ever seen: it’s on a fan-fold business card. And I asked the team that did that how long did it take them, and it took them forever because just like the elevator pitch should be limited by time, you should limit your executive summary by space. A secret: all of us VCs have attention deficit disorder.
Somebody came in, they did this: “Our technology integrates all yadda yadda yadda” – you know what happens to my brain? It does that, and then I say to myself, “Boy is this guy boring me to death!”
“We capture the future of knowledge” – oh, that’s interesting. Keep it simple, stupid.
We had a company, came in from Monteray, they had this phenomenal product. And the product was used with landlines, and it would allow me to plug a device into my handset that encrypted my phone call to somebody else on a landline – and if you don’t think that’s important, read the book someday on how Boeing lost an order to Airbus because of a wiretap. It was a two billion dollar sale that was lost – it’s well-documented it was tapped offshore. And so they came in, and they had this terrific device and here’s, honest to God, what they said:
“Utilizing the 2048-bit Diffie-Hellman key exchange, and 160-bit TripleDES, we provide intrusion detection for digital voice, fax, and wireless connections”
Doesn’t that grab you? We changed it to: “We safeguard your communications”
Three: Bait the hook.
You know in the old days, let’s talk about US Mail – I’m old enough to remember that. In the old days of direct marketing, there were two schools of thought on direct mail campaigns: bait the hook or feed the fish. Do you want to entice them to do something (lick the sticker, put it on, mail it back), or do you want to sell them something on that direct mail piece? Well we sort of have the same continuum available to use when we talk to anybody we’re talking to. On one hand, we have the “bait the hook” side, which is really talking about getting them interested. On the other hand, we have the “feed the fish” side, which is really on “close’em” and most people make the mistake of having the elevator pitch way, way too far to the right. The elevator pitch is a “bait the hook” activity – you want me to get of the floor with you, when you stop the elevator, to ask you more. That’s what you want. That’s what you want.
Because like all communication vehicles and especially with my example, which is VCs, you have to peel the onion – and you’re going to peel this onion at various stages when it’s ready to be peeled for whatever audience you are with. So the trick is: know what the task of each communication vehicle is, and don’t make it something it’s not. It should be proud to be an elevator pitch – it shouldn’t lust after being a mission statement.
Simple elevator pitch, you all know them. Heck, I’ve got people in this audience who should be up here doing this presentation. It’s pretty simple really. Now you can make it as complicated as you want, but the fact of the matter is that it has to grab them. It has to grab them.
Four: Give high, stay high. No, it’s not what you think.
You need to be flying at fifty-thousand feet, you need to be up in the zone where you’re talking about the “what” and the “so what”. We’re going to talk a lot about “so what” as I close the session today, the conference, because “so what”‘s are the benefits and are they are the keys to what you’re going to be doing. The trap is, you do not want to get down into the “how”. Stay high. Stay high. There’s a time to get down into the “how” and they will tell you what that time is, if you just ask and listen. Again, benefits are so important, I’m going to hammer on them a couple times today. Think about them in different categories. Think about them in different categories. I can have technical benefits. I can have business benefits. We’re going to match benefits to the audience when we talk about this later today.
Five: Obey the 12-15 rule.
About a dozen slides in fifteen minutes. Now that doesn’t mean the meeting’s going to take fifteen minutes. I mean, nothing makes me crazier than the potential client, I say, “Off to see another VC on a syndication?”, and he says, “Yeah, it’s an hour meeting and I’ve got forty-five slides.” Did that hit close to home? Uninterrupted, your slides should take fifteen minutes – that’s an hour meeting because you’re going to ask a lot of questions and you’re going to do a lot of listening in that meeting.
Now at this point, some of you in the room have done this – you’ve mentally crossed your arms and said, “But Bill, you obviously don’t understand my business – I can’t possibly tell my story in fifteen slides.” And the answer is “Yeah, you can” – and on my hard drive I have a hundred and fifty client presentations to prove it. Now some of you are going to get real anxiety about what’s on each of these slides – don’t. There’s nine pieces of information I need to disseminate – you’re going to get these slides when you download them for free, so don’t go wild on me here.
But I’ve already done number twelve – it’s the reason for the presentation. I’m going to tell people who I am, what I’m after, how much money I’m looking for, I’m going to give them an overview and a mission statement. I’m going to talk a little about problem buy-in – if they don’t agree there’s a problem, I might as well stop talking. I’m going to spend a couple of slides talking about my solution and the benefits. I’m going to spend at least one slide talking about some technology. I certainly am going to talk about who else is involved. I’m going to talk about who are my leverage points on my success – and we’ll talk about that today, leading up to five o’clock. We’re going to talk about some success metrics – this doesn’t say revenues per se. What drives revenues? You know, Guy mentioned in his opening comments, and you see it time and again – “I don’t care what your spreadsheet says as much as I care about the assumptions that went into your spreadsheet. I’m going to look at assumptions more than I’m going to look at the mathematical role of those assumptions.” I’m going to spend a little time talking about who’s doing it, and I’m going to spend a little bit of time talking about where you are, you progress and these milestones that Guy talked about earlier today.
I’m going to spend about fifteen minutes and about a Dirty Dozen slides to tell a competent brief story at a high level. It’s like any politician: what do they want – they want their next term. What do we want? We want the next meeting, driving the ball down the court.
We talked about the “what”, and we’re now going to spend a little bit talking about “how”. And the first one is going to be: you’ve got to change people’s pulse. I will joke with clients – I will put my finger like this, I will listen to their pitch and I will say, “Didn’t do it for me.” Didn’t do it for me.
So what I really want to be able to do is understand who my audience is, I want to understand how to bond with them, and then how to communicate with them on their level. And we will spend some time chatting about that.
It’s OK to ask questions. Here’s a couple of my favorites: “What are the three most important things I could tell you about my company today?” – I love stack-ranked questions, it gives me insights inside that person. Now, I can better off do this on the phone – “Yep, we’re coming over to see you next Thursday. Yes, it’ll be my CTO and myself – great. To make this the most productive meeting possible, what are the three most important things that you and your partners would like to learn about my company?” Gee, “I want to have a productive meeting” – that’s pretty nice. “Help me understand” – boy, I’ll tell you there’s no wrong answer to that question. The other one is, “I’m really glad you decided to see us – what attracted you to my business plan?” – most don’t have the guts to ask this, but boy is this a good one. You’re going to find out whether it’s revenues or technology, or whether they’re thinking of a keiritsu with one of their other portfolio companies, we’re going to find out a lot of things. It’s OK to ask them questions. I love this one: “How will you accelerate our success?”
Now, I have a lot of tools – I’m a big talker, I talk loud. If I want to draw you into a meeting, I’m going to talk softer. So I have a lot of tools in my ability to help communicate and to change people’s pulse. Use them. And the thing that I want, is I want to see passion, I want to see energy, and I want to see a compelling reason on why you’re going to change the world and I should come along and help you do that.
Eight: […] transition
You ever seen a presenter get up and they click the slide and it’s like the next slide is like a total surprise to them? And it’s their slide? You know, make these things work together. Make these things work together. You may say, as an example, a rhetorical question, “This is the big problem, how are we going to solve it? Let me show you our underlying technology…” You may want to build upon the last topic – “We just talked about the background of our team. Let me tell you what expertise they’ve brought from their prior employers to make our company successful.” I may want to build on the last statement, or worst-case scenario, say, “Next.” Next.
When we have people going out to syndicate around, it is not unusual for us to videotape them several times and have them look at themselves. Most people have never done that. And whether you practice or not, it shows either way. It shows either way. You know, figure out whether you really can do your pitch in the time allowed. Figure out what you really do look like on camera. I’d guess ninety percent of you in the room have a hand camera, video camera of some sort. Use it!
Now, we’re already talked about the meeting. At the start of the meeting, I want to tell them what I’m going to them. In the middle of the meeting, I want to tell them. And on the summary slide, I’m going to tell them what I told them. Now, it isn’t going to be this transparent, but why am I gong to do this? It’s simple: I need to allow for pitch decay, and I need to make sure that ten percent sticks.
My last point: pitching is an attitude, don’t give up.
Pitching is an attitude, don’t give up.
What’s the ten percent that matters from my pitch? I like these: begin at the end, be brief, and change people’s pulse. Understand your position, understand your market, understand how to change people’s pulse, and do those things. And you’ll notice that I finished on time.