Pitching Posts

High concept pitches for startups

Nivi · May 19th, 2008

“For investors, the product is nothing.”

– Marc Hedlund

Summary: A high concept pitch distills a startup’s vision into a single sentence. It’s the perfect tool for fans and investors who are spreading the word about your company.

Hollywood has perfected the art of the high concept pitch:

“Its Jaws in space!” (Alien)

“A bus with a bomb!” (Guess.)

“Snakes on a plane!” (Do I really have to spell it out for you.)

“A serial killer who bases murders on the seven deadly sins!” (Se7en)

“Bambi meets Terminator!” (Okay, I made this one up.)

High concept pitches for startups.

“Summarize the company’s business on the back of a business card,” says Sequoia. We agree—every startup should have a high concept pitch:

“Friendster for dogs.” (Dogster)

“Flickr for video.” (YouTube)

“We network networks.” (Cisco)

“The Firefox of media players.” (Songbird)

“Massively Multiplayer Online Learning.” (Grockit)

“The entrepreneurs behind the entrepreneurs.” (Sequoia)

“Venture Hacks.” (Guess who.)

A high concept pitch distills a startup’s vision into a single sentence.

alien.png

What makes a good high concept pitch?

First, the pitch should be brief: one short sentence is perfect.

Second, people should already understand the building blocks of the pitch: buses, bombs, Jaws, space, the seven deadly sins, Flickr, Firefox, MMOGs, et cetera. The pitch combines the building blocks by using analogy, synthesis, juxtaposition, combination, whatever; e.g. “Jaws in space.”

Third, the pitch probably isn’t your company’s tagline. YouTube’s tagline is “Broadcast Yourself,” and their pitch is “Flickr for video”. If you’re lucky, you can find a pitch that’s also a tagline, e.g. Cisco’s “We network networks.” But don’t worry if your pitch isn’t a tagline.

What’s a high concept pitch good for?

First, the pitch is the perfect tool for fans who are spreading the word about your company. Investors use the pitch when they tell their partners about your startup. Customers use the pitch when they rave about your product. The press uses the pitch when they cover the company, e.g. see Mike Arrington’s article, Comparing The Flickrs of Video.

hedlund.jpgSecond, the high concept pitch is a great way to describe your product and vision in an elevator pitch. We started this article with a quote from Marc Hedlund: “For investors, the product is nothing.” Bad elevator pitches go on and on about the product. Good ones boil it down to a high concept pitch. The rest of the elevator pitch should be devoted to your traction, social proof, team, and market.

What are your favorite high concept pitches? Add them to the comments.

Related: “High Concept” startups.

Is it safe to send my deck to investors?

Nivi · December 28th, 2007

“I know plenty of VCs that behave the way I do and plenty that don’t.”

— Brad Feld, on keeping decks to himself

Summary: A deck can help you get a meeting but it can also get in the hands of the competition. Whether you send a deck depends on who wants the meeting most. If you want the meeting more than they do, provide what they want. If they want the meeting more than you do, provide what you want. Finally, keep your secrets secret.

In What should I send investors?, we suggested sending investors a deck that describes your business plan. A reader subsequently emailed us and asked:

“Do I really want my business plan floating out there in venture land? What if it gets to my competitors? Is it safe to send my deck to investors?”

First, focus on executing your idea so you can make it public instead of focusing on how to keep it private. Second…

There are pros and cons to sending a deck.

We can’t tell you whether you should send a deck. At times, we have sent decks and, at other times, we have avoided sending decks. There is no right answer but there are pros and cons that you can consider as you make your decision.

The pro is it might help you get a meeting.

The first con is it can lower the effectiveness of your electronic pitch. Sometimes less is more. If you’ve got a great elevator pitch and introduction, do you need to send a relatively long document filled with arguments that are better delivered in person?

The second con is…

Your deck can get in the hands of the competition.

In Spice Girls VC, Rich Skrenta writes:

“So one day a few years ago I’m sitting in a VC’s office having a chat. I had a few ideas rattling around in my head but the VC had his eyes on a then-current space which was hot. He tossed a business plan for one of the leading startups into my lap.

“Where’d you get this?” I asked.

“They gave it to me.”

“He went on to talk about how he wanted to launch a company into the space as well…”

Your deck probably won’t get in the hands of the competition, but you should assume it will.

An investor’s handwritten notes can also get in the hands of the competition. And if an “evil” investor cares enough about your company to email your deck to the competition, he cares enough about your company to schedule a meeting and take notes.

Send a deck if you want the meeting more than they do.

Whether you send a deck depends on who wants the meeting most. Use this simple test:

If you want the meeting more than they do, provide what they want.

If they want the meeting more than you do, provide what you want.

It all comes down to who has the most leverage—that’s it. And leverage comes from traction. Traction speaks louder than plans.

preacher.png

Keep confidential things confidential.

If you do send a deck, keep confidential things to yourself. In What should I send investors?, we wrote:

“Write “Proprietary and Confidential. Please do not distribute. Prepared for Blue Shirt Capital,” on the cover of your deck (some companies write it on every page). Investors are less likely to forward it if their name is on it. And ask any recipients, in writing, via email, to kindly not distribute the deck outside their firm.

“And if you must keep something absolutely confidential, don’t email it to investors and don’t mention it in person. Investors often look at several similar companies at once. Your plans probably won’t get to your competitors, but you should assume they will.”

Finally, you might want to try the private sharing feature on SlideShare. Please leave a comment if you do, we haven’t tried it yet.

Related: Are Watermarks on Presentations Useful?

Grockit's founder on pitching investors

Nivi · November 12th, 2007

grockit2.pngBrian Norgard (Newroo founder and Venture Hacks investor) recently interviewed my brother, Farbood Nivi, about his experience raising money for Grockit from Benchmark et al:

Brian: Tell me about the funding process.

Farbood: I think raising money is great fun. The bottom line is that the money has to be spent. VCs are not in the business of holding their Limited Partner’s investment in a 5% security. They have to spend the money on startups. So, either your startup gets the money or someone else’s startup gets the money.

No VC has a perfect track record, nor do they pretend to. So, (1) either your idea or business sucks and the VCs knows it (despite their imperfect record, they are not bad at telling) or (2) you suck at explaining it. There is literally more money to invest than the world’s VCs know what to do with.

Getting a meeting is another issue.

What did you learn from raising your Series A?

I learned that a disproportionately large percentage of VCs, relative to most populations I’ve encountered, are extremely smart, gregarious, easy to get along with, excited, positive and insightful. I’m usually surprised when I meet one that isn’t.

This makes financings a far more positive experience than they would otherwise be and, just as importantly, makes the time and energy spent in meeting with them worthwhile in and of itself.

I also learned that, amazingly enough, of time, money and great people, time and great people are more scarce.

Any parting bits for entrepreneurs out there?

Make sure your deck is great not good.

Read the rest of the interview where Brian and Farbood discuss Grockit and the massively under-served education market.

What should I send investors? Part 3: Business Plans, NDAs, and Traction

Nivi · November 8th, 2007

Summary: Don’t send long business plans to investors. Don’t ask for NDAs. Don’t share information that must remain confidential. Understand that investors care about traction over everything else.

Hola! If you like this article, check out our free e-book on Pitching.

In Parts 1 and 2 of ‘What should I send investors?’, we covered the elevator pitch and deck. In this article, we present a few dos and don’ts of sending collateral to investors.

Don’t send a business plan.

“Nothing slows down a VC as much as a comprehensive business plan.”

— David Cowan, Bessemer Venture Partners

Don’t send a 50-page business plan to investors. Nobody reads them and nobody executes them. Investors who want a long plan look bad—so do companies that generate them.

The milestones slide of your deck summarizes the company’s plan for the next 1-3 quarters. Document your detailed plans on a napkin, wiki, spreadsheet, deck, to-do list, or whatever. Share it with investors sometime around your second meeting and make sure they generally agree with your plan.

But don’t send investors a 50-page sales pitch that you call a business plan—an elevator pitch and deck are sufficient. You don’t need an executive summary either—an elevator pitch and deck are sufficient.

Don’t ask for an NDA.

“Because of the large number of business plans… that we review, and the similarity of many such plans… we cannot accept responsibility for protecting against misuse or disclosure of any confidential or proprietary information…”

— Sequoia Capital

Getting an NDA from professional investors is almost impossible. It can happen (like a rainbow!), but you shouldn’t bother.

Investors don’t sign NDAs because they don’t want to get sued over them. Competing companies tend to get started at the same time because the market timing is right. Investors don’t want you to sue them if they fund your competitor—so they don’t sign NDAs. Read Why Most VC’s Don’t Sign NDAs by Brad Feld to learn more.

Asking for an NDA creates a barrier to getting funded—aren’t there enough barriers already? And this barrier is insurmountable: your request will be declined or, worse, ignored because you haven’t done your homework.

Accept the fact that your elevator pitch and deck will contain information that you don’t want printed on the front page of the Wall Street Journal. Fortunately, they won’t get that far.

Write “Proprietary and Confidential. Please do not distribute. Prepared for Blue Shirt Capital,” on the cover of your deck (some folks write it on every page). They’re less likely to forward it if their name is on it. And ask any recipients, in writing, via email, to kindly not distribute the deck outside their firm.

And if you must keep something absolutely confidential, don’t email it to investors and don’t mention it in person. Investors often look at several similar companies at once. Your plans probably won’t get to your competitors, but you should assume they will.

Traction rules. #

“Do whatever is required to get to product/market fit. Including changing out people, rewriting your product, moving into a different market, telling customers no when you don’t want to, telling customers yes when you don’t want to, raising that fourth round of highly dilutive venture capital—whatever is required.”

— Marc Andreessen

Whether they’re reading an elevator pitch or listening to a presentation, investors care most about actual traction in a seemingly large market.

If you have incredible traction in what seems to be a large market, you can raise money no matter what the product and team look like—although a good product and team will improve your terms.

If you don’t have incredible traction but the market seems large, your product and team are both critical to raising money.

If the market doesn’t seem large to them, investors won’t care about your product or your team.

Traction is demonstrated profit, revenue, customers, pilot customers, or users (in order of importance), and their rates of change, and the rates of change of the rates of change, and the rates of change of…

Read The only thing that matters by Marc Andreessen to learn more. Also see Brendan Baker’s post on traction.

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What should I send investors? Part 2: Deck

Nivi · November 6th, 2007

“PowerPoint plans greatly increase your chance of getting a term sheet, or at least the dignity of a quick no.”

— David Cowan, Bessemer Venture Partners

Summary: An introduction and elevator pitch are critical to getting a meeting. You can also provide a “ten-slide” deck that tells a compelling story about your team, product, traction, and plans.

Bonjour!: If you like this article, check out our free e-book on Pitching.

A PowerPoint plan (“deck”) is less important than an elevator pitch, and an elevator pitch is less important than an introduction. Read What should I send investors? Part 1: Elevator Pitch for tips on crafting an elevator pitch. Many investors will just skim a deck and take a meeting if the introduction and elevator pitch are good.

But you can still send a deck. A deck lets investors learn more about your company. It demonstrates that you’ve thought about the company in detail. It’s an industry norm. And you need one for presentations anyway.

selleck.png

Include a “ten-slide” deck with your elevator pitch.

The best deck template in the universe is David Cowan‘s How To Not Write A Business Plan—use it. There are other templates from excellent sources on the Web, but this is the best.

Read David Cowan’s article and apply these headings and minor changes:

  1. Cover.
  2. Mission.
  3. Summary. Summarize the key, compelling facts of the company. You can steal the content from your elevator pitch.
  4. Team. Highlight the past accomplishments of the team; if your team has been successful before, investors may believe it will be successful again. Don’t include positions you intend to fill—save that for the Milestones slide. Put yourself last: it seems humble and lets you tell a story about how your career has led to the discovery of the…
  5. Problem.
  6. Solution. Include a demo such as a screencast, a link to working software, or pictures. God help you if you have nothing to show.
  7. Technology.
  8. Marketing. Include market size estimates here or in the Problem. If you haven’t launched, discuss your plan to acquire users or customers.
  9. Sales. If you don’t have sales, discuss your business model and prospective customers. Ignore the cost of customer acquisition unless you have some insight into the issue.
  10. Competition. Describe why users or customers use your product instead of the competition’s product. Describe any competitive advantages that remain after the competition decides to copy you exactly.
  11. Milestones. Don’t build a detailed financial model if you don’t have past earnings, a significant financial history, or insight into the issue. Instead, include your current status and milestones for the next 1-3 quarters for product, team, marketing, sales, and quarterly and cumulative burn.
  12. Conclusion. This slide can be inspirational, a larger vision of what the company could do if these current plans are realized, or a rehash of the Summary slide.
  13. Financing. Dates, amounts, and sources of money raised. How much money are you raising in this round?

These slides tell a story.

This sequence of slides tells a story:

We have a mission and a team that is taking us there. Why? We discovered a large problem and solved it with a product that has this amazing technology inside. We’re going to market and sell it to these customers, with these advantages over our competitors. In particular, we’re working towards these milestones over the next few quarters. In conclusion, this financing is a great investment opportunity.

The product isn’t revealed until the fifth slide of this methodical sequence—that’s annoying. Fortunately, the elevator pitch and Summary slide kill the suspense by summarizing your company and product before an investor jumps into the deck.

Put pictures in the slides and text in the notes.

Keep the slides simple, visual, and minimal, with 30 point or larger font. The slides will look great when you present; see Gates, Jobs, & the Zen aesthetic. (We’ll cover presentations in a future article, this article is about the deck you send investors.)

Put talking points, reasoning, and prose in the notes that accompany each slide. Don’t try to cram cogent arguments into bullet points on the slides; see The Cognitive Style of PowerPoint.

Email a PDF that combines each slide and its notes on a single page; slide on top, notes on bottom. Please don’t email a PowerPoint file unless your deck contains critical animations or movies.

You now have a single file for emails and live presentations. An investor can read the slides and notes together and imagine a presentation. And you can present the slides while you refer to the notes.

Finally, try Keynote if you’re on a Mac. It makes beautiful decks and it’s fun to use.

Business plans, NDAs, and Traction.

Read What should I send investors? Part 3 for suggestions on sending business plans, asking for NDAs, and what investors care about most.

Got a question for us?

Send your questions to ask@venturehacks.com. We read every question and answer the most interesting ones here!

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Image Source: kimcm.dk.

What should I send investors? Part 1: Elevator Pitch

Nivi · November 2nd, 2007

“Summarize the company’s business on the back of a business card.”

— Sequoia Capital

Summary: An introduction captures an investor’s attention, but a great elevator pitch gets a meeting. The major components of the pitch are traction, product, and team.

Yo! This post is out-of-date. For the latest on elevator pitches, investor presentations, and more, check out our free e-book on Pitching.

If you’re building an interesting company, people will offer to introduce you to investors—it makes them look good. In Hollywood, content is king; in Silicon Valley, dealflow is king.

So, what should you send investors? Send an elevator pitch and a deck. We’ll cover the elevator pitch in this article.

Get a first meeting with an elevator pitch.

A great elevator pitch is more important than your deck and less important than the “introducer”. If you don’t have an introduction, the elevator pitch is critical to a cold call.

An introduction sells the investor on reading the elevator pitch, which sells the investor on reading the deck, which sells the investor on taking a meeting. Many investors will just skim the deck and take a meeting if the introduction and elevator pitch are good.

An elevator pitch.

Send a brief email that the introducer can forward with a thumbs-up. I crafted this elevator pitch from Marc Andreessen’s job listing for Ning:

Subject: Introducing Ning to Blue Shirt Capital

Hi Nivi,

Thanks for offering to introduce us to Blue Shirt Capital. I've attached a short presentation about our company, Ning.

Briefly, Ning lets you create your own social network for anything. For free. In 2 minutes. It's as easy as starting a blog. Try it at http://ning.com

Ning unlocks the great ideas from people all over the world who want to use this amazing medium in their lives.

We have over 115,000 user-created networks and our page views are growing 10% per week. We previously raised $44M from Legg Mason and others, including myself.

Before Ning, I started Netscape (acquired by AOL for $4.2B) and Opsware (acquired by HP for $1.6B).

I've admired Blue Shirt's investments from afar. We're starting meetings with investors next week and I would love to show Blue Shirt what we're building at Ning.

Best,

Marc Andreessen
xyz@ning.com
415.555.1212

Your email should be no longer than this example (which is already too long).

Dissecting the elevator pitch.

Let’s dissect this pitch:

Subject: Introducing Ning to Blue Shirt Capital [A useful subject line!]

Hi Nivi,

Thanks for offering to introduce us to Blue Shirt Capital. [Reiterating the social proof of the introducer.] I've attached a short presentation about our company, Ning. [Did you notice the attachment?]

Briefly, Ning lets you create your own social network for anything. For free. In 2 minutes. [What is the product? What does it help the customer do? Who is the customer?] It's as easy as starting a blog. [What's the metaphor?] Try it at http://ning.com [Link to the product, screencast, or screenshots.]

We built Ning to unlock the great ideas from people all over the world who want to use this amazing medium in their lives. [What's the big problem or opportunity?]

We have over 115,000 user-created networks and our page views are growing 10% per week. [Traction.] We previously raised $44M from Legg Mason and others, including myself. [Social proof and more traction.]

Before Ning, I started Netscape (acquired by AOL for $4.2B) and Opsware (acquired by HP for $1.6B). [Team.]

I've admired Blue Shirt's investments from afar. [Why are you interested in Blue Shirt?] We're starting meetings with investors next week and I would love to show Blue Shirt what we're building at Ning. [Call to action and subtle scarcity.]

Best,

Marc Andreessen
xyz@ning.com [Contact information—how thoughtful.]
415.555.1212

[OVERALL, TEH EMAIL USEZ GOOD GRAMMAR, PUNCTUASHUN, AN CAPITALIZASHUN, AS WELL AS SHORT PARAGRAFS AN SENTENCEZ.]

See David Cowan‘s excellent Practicing the Art of Pitchcraft for more examples.

Pop quiz.

How does Ali G apply these techniques (or not) as he pitches the Ice Cream Glove to Donald Trump? The best answer gets a wonderful Venture Hacks mug.

The deck.

Read What should I send investors? Part 2: Deck for suggestions on crafting a deck.

Yo! This post is out-of-date. For the latest on elevator pitches, investor presentations, and more, check out our e-book on Pitching.

Got a question for us?

Send your questions to ask@venturehacks.com. We read every question and answer the most interesting ones here!