5 Pitch Mistakes Entrepreneurs Make, and How To Fix Them

thank you so much for for having us it's been five years since I've been to Istanbul the last time and I loved it so much in the week I spent here that I was very excited to come back so thank you about five years ago I moved to Silicon Valley and started working with AngelList which is the platform for investors and startups to connect and they didn't know what to do with me when I arrived and so I just started reviewing some of the pitches that were coming in and I was the second employee it was very early and so there was not a lot of pitches but they started to grow as AngelList started to grow and I started managing all of the deal flow eventually managing about about eight of the first 9,000 startup pitches that went through that platform at the same time I was doing some research at Oxford on how startups and investors connect sort of a network analysis and I really care about how they match I left those those two places and then I joined Greylock for about three and a half years as a director and then I left recently this isn't to put a bunch of logos up onto the screen only to say that over five years I've come to really care about how investors and startups meet each other and how they connect and how they match and how that turns into investment I really care about that it matters to me and I've and I've started to wonder why some of them succeed and some of them fail some of the some of the startups I've worked with or the the founders have gone on to raise hundreds of millions of dollars and others have failed and so I've been thinking a lot about why that happens and what the great ones are doing and what the rest of them are not so that's what we're talking about today thank you we're gonna talk about five main pitch mistakes entrepreneurs often make and we're going to talk about how to fix them the first is probably the easiest to say and the hardest to do they fail to tell a story this this is not bread this is a collection of ingredients right this is flour this is egg this is garlic this is time a lot of pitches actually look like this because entrepreneurs think that they want they need to have a revenue slide and a product slide and a traction slide and a team slide and they just they do it like a checklist and then they end up having a pitch that sounds like and here's the problem and here's the solution and here's the product and here's the traction and here's the market and it doesn't flow it doesn't convince anybody so I've been thinking a lot lately about how to do that and how to fix this problem and we've moved a little bit i've been working recently with with a handful of entrepreneurs and we've moved from looking at a whole pitch to breaking it into a few pieces and we call those pieces story arcs so a story story arc might be two three four five slides in a row but it tells a story through those five slides and you can give an arc a name so this might be called pain and response right and if I was an entrepreneur I might say well I worked as a marketing professional I had this problem where there were no tools to solve that problem so I wasted hours every week I saw the pain firsthand as I looked around in my company I saw that there were dozens of people like me and my company with the same problem and there are tens of thousands of people in the country with the same problem as us there are millions like me or maybe tens of thousands whatever so I left that company and I started this startup to solve that problem we built a solution and here's the product right so this is a story arc this might be four or five slides and it tells us a pretty cohesive smooth story through all of it now there's there's two reasons why this seems to be working the first is that once you have all of these arcs and you might have many different ones and some of them might have the same slides they might address things like the the differentiation and how you're different than your competitors or how you see the future or what you know that the rest of the world is not now once you have 10 or 12 or 15 of these they actually assemble very nicely into pitch into one or two or three different versions of a pitch so for example we talked about pain and response the next arc after that the next story might be it's working okay so I was a marketing professional I had this problem I wasted tons of time I noticed there were millions of people like me so I started the company we built this product and then it's working we launched it to many users engagement is high it's growing and then it's spreading to a big place might be the third art which might say we're ramping up our sales here's how we think about sales we're addressing this market and there's a there's a huge market opportunity there I'm not saying this is right you know there might be two other versions of their pitch that might work for them but the first reason it works well is because these story arcs combine really easily to make a great pitch the second reason which surprised me that people seem to love it is that when we get to the stage where they have all these different story arcs they seem very relieved I see the entrepreneur go ah and I wonder why why is that why is that I think it's because people are scared that they're going to need to know all the answers in a pitch that they're gonna be challenged and when you have all of this even if it doesn't go in the main pitch and it's somewhere in the appendix or it's just in your head you can answer all of these different questions already because you've thought about these things and so it tends to be a very good thing so it pitches a story and you can build it by by building story arcs the second thing that entrepreneurs tend to do wrong is that they don't think at an investor's level and I don't mean better or worse I don't mean that there's stronger thinkers or weaker thinkers I only mean that there are different wavelengths I think let me show you oh I'm gonna go back so I think entrepreneurs live at execution let's start the bottom entrepreneurs our execution machines every day every week they need to figure out how to build products how to sell how to hire they need to do all these details they're very very good at talking about execution and most entrepreneurs are actually very good at stepping up one level and talking about their company vision what they're trying to do they need to do that because they need to talk to their their employees right they need to talk to that team they're not most entrepreneurs are not great at talking about the top the top wavelength which is how the world is changing but investors live at this level because they're not building anything every day or every week they're really meeting a lot of different people they're thinking about how the world is changing where that creates opportunities and then they're trying to find companies that that satisfy those opportunities so the question is how to help and you know honestly the best entrepreneurs do hit the top level the most exciting pictures I've been in are ones where the entrepreneur is teaching the investors something about the world and they have a strong opinion how are people changing how is user behavior changing how is the technology landscape changing I don't know so the question is how to do this the simple question that I like to ask that helps with this is the first one why is now the only time this company could be built so if you're pitching now in October 2015 why is October twisting October 2015 the only time this company could be built why not 2010 and why not 2020 this helps pull out examples of what's changing and why why opportunity is being created the second question which which works fairly well with it is why is this the only team that could build this company right so let me give you an example I like to go back a few years I can't remember exactly what year it was but the year the time when Zynga got very very big right that was probably 2007 8 9 I can't remember exactly 2008 Zynga had a window of opportunity to use Facebook as a platform and connect with hundreds of millions of users that they did not have three years before that and an opportunity a window of opportunity that has closed since and that opportunity was Facebook was introducing the new user interface which was the newsfeed and they were opening that up to their platform right and synced new this and they were one of the very few companies that was able to jump through the window and use that opportunity on Facebook and combine it with relatively new research in how well how do a dick to you sirs unfortunately but that was the only time and actually you can answer the second question - why was Inca the only company that could do that well you could look back at Mark pincus's background he started a previous company called tribe net which was eventually not successful successful but for a while it was quite successful which is a social network so he had already started a social network and he knew exactly how people connected in social networks and he knew how to exploit that or how to use that for Zynga when he had this moment of opportunity for Facebook so I think this is a fun question why is now the only time that this company could be built so what's changing in the world and what has changed in the world the third the third thing entrepreneurs often get wrong is that they think a pitch is rational this is a this is a strange thing to say because it seems to make sense that investors are smart right investors follow a logical line of thinking and they and they build a case a logical case for why do you invest but that's not the case if you look at the companies of the earliest stages they are they're stupid it's stupid to invest in a company when it's at seed stage or a most of them fail most most investors lose money by investing in those companies instead of rational I mean they all do some analysis but usually they're looking for excitement and they're looking for intuition right this is the simplest way I can think of to look at this company on the left gets funded company on the right doesn't green is excitement red is hesitation right when the excitement of an investor is larger than their hesitation then you have a good chance of raising money and when the hesitation away is the excitement you know it's the other way so the question is how to figure this out right how to figure out what is exciting about your company and what you have to tell a story about right the way I like to do this is to play a game I call the excitement and hesitation game I'm not very good at naming but when you have a draft of a pitch and you're you're giving it to your first few practice pitches right so you're giving five or ten people who can tell you what is weak and strong about your pitch ask them to do this ask them to take a piece of paper draw a line down it and put excitement on the left and hesitation on the right and every time you say something or they think something that they get excited about in terms of your business just ask them to take a note and similarly any time there's a hesitation and they think that's weird that's not a good thing ask them to write it down and you'll find after five or ten pitches that the same things are coming up between different between different practice pitches and you'll say these three or four things people seem to be getting really excited about these three or four things and these three or four things people are starting to hesitate about and so you make sure that the things that people are excited about are early in the pitch are clear you're telling a great focused story about and the hesitations you have to deal with because the hesitations will stay in somebody's head the whole time that they're listening to your pitch there was one example that just totally stuck out to me lately I work a lot with Brazilian startups in in Silicon Valley and there seems to be a lot of really good companies that are coming out of Brazil but not all of them are great at telling their story and pitching and so I was listening to this one pitch and it was something like 30 slides long which is way too long way too much information and for the first 26 slides I was wondering is this company real has this company actually built anything has it gone to market have people started using what they've built is it working I was I could not listen to the pitch because I was wondering the whole time is this company even real he was all concepts and and sort of he was all conceptual and then he got to the twenty-seventh slide and not even the main part of the slide but the side of the slide was the fact that over three-quarters of e-commerce companies in Brazil used their software and their revenue was in the millions I thought holy why are you waiting until the 27th slide to tell me this this is something that should be at the very beginning of the story all of a sudden that was a very exciting company to me because they were real but for so long I was wondering and so try this try excitement and hesitation and see what emerges for your company the fourth one which is which is similar and it's kind of counterintuitive it seems strange is that I think entrepreneurs try too hard to be credible right credible means that if somebody challenges you you can defend it and you can defend anything and I think the people who do this the most are people who have been in consulting like at McKinsey or BCG and then they then they start a company or people who have been in research who have done a PhD or people who come from the medical field but all these places where you have to be credible if people challenge what you're saying and what you're thinking you have to defend yourself right the problem at least in places where there are many entrepreneurs and many startups is that everybody is credible I can't throw a rock in San Francisco without hitting a Stanford Graduate so credible is not separate you from anything credible doesn't set you apart instead you want to be unique and special right different the company version of this is that way too many companies if you ask them what they do they start with something like oh we're we're in the b2b space and we build SAS software for company collaboration I don't know what that is nobody knows what that is and 15 people have told me the same thing be specific so that I know that you're different and then I know that you're unique it's scary to be specific it's scary because people can challenge you and they can say oh that's stupid and if you stay general and vague nobody can challenge you but also you know nobody wants to get on your team if you're just super vague I was working with a friend on his pitch quite a while ago and we were trying to figure out how to tell the story of his team and his co-founder was a Stanford computer science graduate so she was smart and but that wasn't enough and so we talked about it talked about it and I we learned that or we realized that she had worked at the Stanford Linear Accelerator so where they accelerate particles to study essentially particle physics and we thought holy she has written code that powered the world's largest laser that is awesome say that or at least start with that she has powered the world's largest laser and she comes from Stanford at least people will remember it then the last thing again it seems easy to do is that entrepreneurs find it hard to cut the out of their pitch they want to include everything because oh here's another piece of information that can convince people and this is also positive and this is also positive so here's the story I like to tell I was a few years ago I was a part of a photography community good photographers maybe a couple hundred thousand and I wanted to come across as a good photographer so in my portfolio I realized if I put my best three photos that I had ever taken people would look at those photos and they would say Brendan is an amazing photographer and if I then if I added the fourth best fifth best tenth best photos they would look at it and they would say Brendan is a pretty good photographer and if I added my hundred best they would look at it and they would say Brendan is a very average photographer with three amazing photos right the next best and the next best and the next best thing just get weaker and weaker and when you add more stuff to your pitch investors see that they see where the weak point is and worse than that it distracts from the most important things I'm a really strong believer in the view that perfection really only occurs when there's nothing left to take away so try to cut the again it's hard because every piece is positive but if it's weak and positive it won't help and it distracts you from the few things that are really really important that's what I have five things you can do better try to tell a story and do it through story arcs try to think it at an investor's level by asking why is now the only time that I could build this and taking the answers to that and telling that story try to be exciting and figure out what is exciting about what you do try to be unique and different it's scary I know try not to be like everybody else and then just try to cut everything the distracts from your pitch I hope it works I really wanted to succeed I really want it to work out for you thank you for your time

Channel: Webrazzi

Views: 268,273

Keywords: Brendan Baker, Greylock Partners (Venture Investor), Webrazzi15, Webrazzi Summit 2015

Id: xr1PKaoflLo

Length: 18min 12sec (1092 seconds)

Published: Fri Nov 06 2015