The Art and Science of the Pitch

Posted: April 8, 2012 by Chuck Matthews in Marketing, Money, Planning, Startup

With the new baseball season now officially underway, this column could be about hurling 90 mile per hour plus fast balls or change-ups at unsuspecting batters.  Actually, it is about entrepreneurs pitching ideas to investors, but interestingly the two share similarities.  Many of you have seen the popular television shows such as “Shark Tank” that feature would be entrepreneurs “pitching” their ideas to potential investors,  who would like nothing better than to take a swing at the idea and “hit a home run” with it to make money.  While the television shows are mostly entertainment, it does raise a serious question about how to make a real pitch to a potential investor.

What does it take to put together a killer pitch that can convey your idea while at the same time entice a potential investor?  How do you balance the need to share your idea with others, while at the same time, keeping others from taking it to market first?

1. Tell them who you are. Know your audience and something about them ahead of time if possible. Don’t outline your life’s journey here.  When appropriate, include a personal anecdote that brought you where you are today but, in general, keep it simple and focus their attention on the next item.

2. Clearly define the Pain/Problem/Opportunity nexus.  This is the pitch trifecta – keep it clear, simple, and direct.  Try to avoid what I like to call “MBA hyperbole” such as “the market is enormous” or “sales are limitless.”

3.  Solution.  This is the heart and soul of your pitch.  It is how your venture addresses the unserved and/or underserved market experiencing the “pain” outlined above.  You may want to save some of the details for later in the pitch, but basically this is your moment to put the spotlight on your value proposition and get the listener nodding in agreement that this makes sense.

4. Inside the “Black Box.”  This is often described as the “secret sauce,” or magic behind your product or service. Avoid going too techno here unless of course you are pitching to fellow scientists/wizards – you don’t need to open up the black box, only ensure that it works or what will take to make it work.  Often a picture or diagram here is worth a thousand words.

5. Business and Sales model.  The $64,000 question: “Will this make money?”  This needs to be tied to your business plan assumptions, financials, etc., but overall you need to outline how you plan to sell your goods and/or services and who is the customer/buyer. Remember, buyers and users may be different, but be clear that you have a sales plan.

6.  Competition.  Never say you don’t have any competition – you do.  Substitute products/services and competition for your customers earned income is everywhere.   I like a one page pictorial or a simple verbal comparison outlining how you compete on value, offerings, features,  and more rather than just listing who your competitors are.

7.  Management team.  The key question: Do you have the right team? If not, what are you doing to get it.  Many potential funders once interested, look past the idea and prefer to invest in the person first.

8.  Financial projections and key metrics.  This should be tied to the business plan time line and milestones and should clearly outline the sources and uses of funds and how you will measure progress.

9.  Timeline and milestones.  Here you want to convey that you have a sense of knowing where you are, where you are going, and how you plan to get there.

10. Current status, accomplishments to date, future plans.  Your time to shine with a strong finish.
This brings us to the question of confidentiality.  While a non-disclosure agreement (NDA) affords some protection, not everyone is willing or able to sign one.  As noted above, you don’t need to open up the “black box,” only ensure that it works or what will take to make it.  The actual “secret sauce” can be addressed if there is money on the table from investors and due diligence is under way.

Keep in mind the need to succeed eventually outweighs the need for total secrecy.

  • Focus.  Edison did not invent the first electric bulb as many give him credit, but rather he invented the first commercially practical incandescent light.
  • Feedback. Better to get on with it and make something happen than to sit on it and let others get to the finish line first.  Inevitably, if it is a good idea, it is going to be imitated and there will be competitors (in this case, imitation is the sincerest form of flattery).
  • The “Skyline Rule.” (Okay, so this only works where Skyline is available. Alternative, “Coca-Cola Rule.”)  At some point, you are going to have to put it out there for public assessment, acceptance, or rejection.  The minute the Lambrinides Brothers conjured up their now famous Cincinnati chili concoctions consisting of Coneys, Cheese Coneys, Three-ways, Four-ways, Five-ways, etc., it was out there for everyone to see.  Of course, the “secret sauce” in this case really is “secret sauce” and that has been a “proprietary secret” from day one.  There have been many imitations, but no duplicates.

 

You can find more on our web site at https://cincyentre.wordpress.com.  Till next time, all the best for continued entrepreneurial success!

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