Editor’s note: This is post 2 of 3 for the Teaching Startup Funding Series. Joe Procopio is the founder of teachingstartup.com. Joe has a long entrepreneurial history in the Triangle that includes Spiffy, Automated Insights, and ExitEvent. More info at joeprocopio.com. Last week’s part one in this series can be read online.
DURHAM – Early in my entrepreneurial career, I got really good at the elevator pitch — a collection of word salad that purports to highlight the most valuable aspects of a startup idea in 60 seconds. In fact, I peaked at mastering the elevator pitch right before I realized the utter uselessness of mastering an elevator pitch.
I recently asked some of my peers for their opinion of the traditional elevator pitch — these are successful serial entrepreneurs with exits. The responses that came back were peppered with words like “stupid,” “waste of time,” and “is that still a thing?”
Joe Procopio
Maybe I’m firmly in the minority here, but in over 20 years of being an entrepreneur, I have never once found myself riding an elevator with the kind of person to whom spitting a 60-second summary of my idea would have made a life-altering difference. I don’t know. Maybe it’s me. Maybe elevators all over the world are nothing more than vertical cradles of innovation, bursting to capacity with idea-laden entrepreneurs and unsuspecting but eventually generous venture capitalists.
Or maybe an elevator pitch is just one more dumb hoop in a long list of dumb hoops that entrepreneurs are told to jump through.
Problem #1: You can’t paint a compelling picture of the future in 60 seconds
My only experience actually executing an elevator pitch goes all the way back to the first time I was invited to a speed pitch session at a regional venture conference.
At the time, I was pitching Intrepid Media, a startup I eventually bootstrapped to profitability and a rewarding 12-year run. For the speed pitch session, I had been tasked with describing my entire idea in 60 seconds, followed by 60 seconds of questions, and I’d move from investor to investor over the course of 30 minutes.
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I killed the pitch each time. But I failed, spectacularly, specifically because of these two problems:
Intrepid Media was essentially a social network for writers who wrote specifically for the web. In 1998, not a single person, including Mark Zuckerberg, knew what a social network was. If I had opened my pitch with “It’s a social network for writers who write specifically for the web,” I would have received blank stares.
No one had any idea how much content would explode on the web over the next decade — or how valuable containing that explosion would be. Except for maybe Google, which was founded exactly one week later.
My point is, to try to cram a picture of the future into a context-less 60 seconds is always going to sound crazy. It’s like me telling you that rainbows are going to power our personal time machines. You have no freaking idea what I’m talking about and I just sound like a nutcase.
But today, when I tell you that Intrepid Media was a social network for writers who write specifically for the web, you’ll laugh because that idea is so 15 years ago. Then you’ll remember there’s that website Medium.
Problem #2: The ratio of idea to success is pretty freaking high
The cold truth is, even if you master your elevator pitch, and even if you do wind up in an elevator with a venture capitalist or large customer, and even if they understand the critical importance of the next 60 seconds, and even if they’re in the mood to listen, and even if they get it, and even if they’re interested…
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None of it means anything.
First of all, to coax any reasonable person from zero knowledge to writing a check is usually about a six-month cycle. Or 60 seconds multiplied by about 250,000.
Then consider the numbers around ideas. I’m totally making this up by extrapolating on my own experience, but I think I’m close: 10,000 good ideas will produce 100 ideas that are intriguing and 1 idea that might be worth funding. So even when you hit your elevator pitch out of the park, you’re still 0.01% of the way to your goal. About the same increase in your odds as landing one paying customer.
Worst of all, an elevator pitch misses the point.
Look, if you throw a lot of something at the wall, you’re going to hit a lot of people with something.
If you’re pitching to an investor who doesn’t have hardware in their thesis, it doesn’t matter how awesome you can make your hardware sound in a 60-second window. If the big potential customer you happen to bump into doesn’t need an automated QA solution, they don’t want to hear about your automated QA solution.
The point of any pitch is not to impress, it’s to find fit.
Let’s say you do luck into a chance encounter with an investor or potential customer who can change the trajectory of your company. When you have 60 seconds to find fit, you need to hit the right notes quickly. And since every investor and every customer is different with different needs, you’ll need to know, from them, which notes to hit.
This means you’re going to have to custom pitch, on the fly, every time. A canned pitch is likely going to fail, not because your product and company isn’t amazing, but because they don’t care about you. If you don’t address fit, fit will never be found.
To find fit, you need to be able to qualify and quantify both the problem and your solution. Quickly.
Qualify then quantify the problem
Any investor worth their fleece vest knows that no one buys technology or innovation or disruption.
People and businesses and organizations don’t walk around wishing they had iPhones or Ubers or Amazons if they don’t yet know what those things are. But people and businesses and organizations do know their own problems, usually intimately. And quite often, they don’t know the root cause of those problems.
You need to be able to show them that you do.
At Spiffy, we come to your office or home and wash your car and/or change your oil (among other things). I won’t pitch that. You might not need your car washed or your oil changed. And if I go deep into our tech stack and the innovative, patented processes we use to change your oil at your location with a touch of a button on your phone, your eyes will glaze over real quick.
But once I start talking about your valuable time, I’ve got you. All I have to do is ask if you enjoy spending a chunk of your Saturday at Jiffy Lube. You may not have to do that, but you know what it’s like.
In this generalized example, I’ve qualified the problem.
Then I have to quantify the problem. I have to understand every aspect of the problem we’re addressing, because you’re going to be skeptical. I have to know who feels the problem, how they feel it, how often, and how painful. Then I have to relate each of those aspects to hours and dollars.
I can quantify the problem we’re solving in a heartbeat: Millions of hours wasted, every walk of life, every three months or 5,000 miles.
Qualify the problem for understanding of fit. Quantify the problem to address the scope.
Reverse that for the solution: quantify first then qualify
Once you’ve painted the picture of the problem and answered all of the questions and addressed all of the skepticism, you need to make it very clear how your solution attacks the problem, aggressively, everywhere and every time it happens.
Start by quantifying. How do you reach and address the entire market? How much value, in time and dollars, does your solution offer the customer? How much does it cost you to create and deliver that value at scale? And most importantly, how do you convey that value to the customer quickly and effectively enough to close the deal?
Again, there will be questions. There will be holes in your theories. You’ll be guessing a lot. So the more you know about how your solution does its solving, the better your chance of quantifying your solution quickly and concisely.
Now, and only now, only after you’ve completely scoped the problem and quantified your solution, do you talk about how you’re going to get it done. You should talk about your product and your company not in terms of a single use case or a pie-in-the-sky growth plan, but in terms of everything you’ve just established.
Where is the pain? How much pain is there? How do you solve all of it? Then…how does it work?
Quantify your solution to address value. Then qualify how your solution gets it done.
If done right, this is far more than 60 seconds, so use that first 60 seconds or whatever time it takes to find fit. Then you can address any and all questions in concise bursts. If you answer those questions properly, they’ll lead to more questions. Then that initial 60 seconds has a chance of turning into a long useful conversation, maybe in the lobby of the building of whatever elevator you stepped into.
