Episode 19: Pitching
Pitching to investors is like a fine art. Glenn likens it to sculpting. It takes time. It takes skill. And, it requires feedback from the people – the guys and gals with the money – to create something lasting. Pitch – learn- improve. Pitch again. That’s how one entrepreneur got things brewing for his little startup. So why not pour yourself a cup of coffee, relax, and join us?
Transcript
Glenn Suart 0:00
You had to bring along the investors, you had to pitch it right. He learned, trial by fire. And that’s what most entrepreneurs have to do. Pitch it well, because you got an idea that’s new, and it’s complicated, and not everyone’s gonna get it right away… even the most savvy people.
Doug Ross 0:28
Welcome to Conversations on Startups, a podcast brought to you by Douglas Ross, author of the book, Spark Click Go: How to Bring Your Creative Business Idea to Life, and Glenn Suart, of Today’s Great Idea, a radio series featuring over 300 origin stories of businesses, brands and inventions that have changed the culture. Welcome to today’s conversation.
Doug Ross 0:51
Hey, Glenn. How ‘ya doing?
Glenn Suart 0:53
I’m doing great, Doug. How are you?
Doug Ross 0:56
Doing great. Doing great. Thank you. And to our audience, welcome to another Conversation on Startups with Doug and Glenn. I’m Doug Ross, author of Spark Click Go. My partner in crime here, Glenn Suart.
Glenn Suart 1:09
Yeah, I’m Glenn Suart from Today’s Great Idea. And we help people, of course, start businesses. And, you know, a key thing in starting businesses is telling other people about what you’re doing, specifically investors and stakeholders and potentially clients. And that involves… pitching.
Doug Ross 1:28
Absolutely, great topic today.
Glenn Suart 1:30
Very much so. Everybody gets kind of worked up about pitching, I find. That, oh, it’s got to be perfect. It’s got to be right, for sure, you want to do a good job. But the more you pitch, the better you get at it. That’s my feeling.
Doug Ross 1:42
I agree with you there, totally.
Glenn Suart 1:44
So, what’s your thoughts on pitching?
Doug Ross 1:46
Well, in addition to that one, practicing, yes. I think of it as connecting with an audience. In this case, it’s a small audience, it could be an audience of one, two, three people in a room. You could be pitching at a competition, so that would be a few more people, but you’re really dialing into… here, we’re mainly talking about investors today. I divide the world of pitches into two things, those that are pitched at investors, and everything else. [Yep] So let’s focus in on the investor today. And I always start just like with any other conversation, or a talk that you’re gonna give… I liken it to sales as well – you have to know your audience. That’s where I start. So who are they? What have they done recently? What are they interested in, right now? If they’re investors, what kind of investments are they looking for? In other words, what types of companies? What stages are these companies at? What kind of… size of investment, all that kind of stuff. That’s where I start when I think about pitching.
Glenn Suart 2:55
Well, and I think that’s exactly right. It’s all their interests and how they like to be pitched, I think, on top of that… is… Do they like lots of information? Do they like not so much information? Who do they care about? Do they care about a team at the end of the day, which they… most, care about a team… you got to get the team right. You also got to think about what it is you’re offering them. It’s not about what you’ve got, and how great it is, it’s about what you’re giving, or what’s the benefit, again, for that audience.
Doug Ross 3:29
Yeah, that’s a really good point, and at the end of the day it’s an investment decision these folks are making.
Glenn Suart 3:35
Very much so.
Doug Ross 3:36
So why you? Why do they take their limited dollars and invest them in you?
Glenn Suart 3:42
Because they’ve got lots of other people to invest in who are sharp and they’ve got interesting ideas, etc. Yours has got to stand out to them for some reason. And you’ve got to be clear on what you’re talking about – very much so.
Doug Ross 3:57
Yeah, I just had an experience where… it was a series of pitches it was a pitching event – so there were maybe 10 companies or something like that. And I noticed after one of the pitches, in this case each of the judges, and these judges are investors, that kind of thing, sponsors… they were assigned, okay, so judge A, you’re going to ask one or two questions after this pitch. And I could tell by the question, they didn’t know what the company did. They could not name what the specific use case was because they asked about it. And it told me right away that that particular company that was pitching was not clear about what it was that they did.
Glenn Suart 3:57
Oh my gosh, that’s tough.
Bridget 3:59
You’re listening to Conversations on Startups with Doug and Glenn, thanks for joining us. Let’s get back to the show.
Glenn Suart 4:53
Well, Doug, in your experience when you’ve seen pitches, and again you see lots of them, what… the actual document itself, how important is it? What should it look like?
Doug Ross 5:05
Well, a lot of the ones I’ve seen have been PowerPoint based. So they’re somewhat formalized. I think it should start with… well, the deck itself, let me just answer that. I think the deck itself needs to be really crisp. It has to not be cluttered. And I mean, you don’t have massive amounts of text suffering from what I call small font syndrome. That’s not what you want in a pitch deck. You can put a lot of information in other materials, for example, a business plan. But your pitch deck I think needs to be pretty uncluttered, not a ton of text, use some good diagrams, minimize the number of slides you have to something like 10, 12. Don’t go crazy but make sure you’re covering the essential elements. And I would typically start with maybe the problem that you’re solving, something that’s going to draw in your audience right away and get them interested. What about you? What do you think for the actual material?
Glenn Suart 5:26
I’m on the same wavelength, less is more. So simplicity, and there’s going to be a bit of a wow factor, but lots of investors have seen lots so, you know, don’t try to be cute. Be factual and be authoritative. If you don’t know something, don’t pretend you know something. You don’t have all the answers, that’s why you’re looking for some money. And people want to help other people, especially if they realize you’re close to being successful. So I agree with you, start with what the problem is. What the benefits of your solution… why nobody else is solving it quite the way you’re solving it. But like anything else it’s all about execution. You might have the greatest solution but if you can’t execute properly that is a problem for investors. So people want to know you’ve got a team that can actually execute. So that… focus on a little bit on the people and what experience they have that would allow them to overcome the hurdles that invariably are going to come forward.
Doug Ross 7:15
Yeah, I think that’s right.
Glenn Suart 7:16
It’s not all about money. It’s not [all] about returns and, you know, we’re gonna be, you know, a billion dollar corporation tomorrow. That’s the nice part. The good part is you want to create a stable long term business that is going to be profitable. That’s what investors are looking for. And it’s got scalability.
Doug Ross 7:34
Yeah. So you have to show those things. So some of the things we’ve talked about before. Get into what your gross margin is, talk about your production plan. If you’re just producing prototypes, now, that’s fine, you can even talk about the price that you’ve got. I’d say, here’s our plan, going forward to get that price down. This is the kind of margin we’re looking at. I think that entices people. The other thing in pitches that really, you know, once you’ve got that hook, and some of that other flesh on the bone that you just talked about, Glenn, is, what evidence do you have that people need this? Who is working with you. Show who you’re working with. If you’ve got interest from some customers, show that. If there’s partners, if you’ve had some previous investments, either grants or something else, talk about that and show how you’re starting to make progress with your startup, that’s really impressive and sets you apart from a back-of-the-envelope type of pitch; here’s my idea, which is really only at the concept stage.
Glenn Suart 8:38
Yeah, no, that’s very good. In fact, that’s a key point I tell a lot of people too.. its people want to know that they’re not the first one to get in on this, because the likelihood of that happening is very remote. Why, you know, people ask themselves, investors ask themselves, why am I the lucky one, to see this presentation now and what have I missed that other people might have seen and why haven’t they invested in this business? So you have to overcome that a little bit by showing a juggernaut of people who are excited about this and to your point, previous experience, or you’ve had some sales… people are coalescing around the idea, and they better get in while the the timing is good.
Doug Ross 9:20
Yeah, they don’t want to miss it. Yeah, absolutely. Timing is good. Why is this the right business, the right product, the right solution, the right people for now? Yeah, I completely agree with you, Glenn on that.
Glenn Suart 9:32
Now, some of the smartest investors in the whole world you might have the greatest idea, but timing might be an issue. And the investors might be the wrong people. Or they might be the right people, but they don’t see it yet. There’s great stories about Xerox photocopier and how investors thought, well why would I need a photocopy… [why would] people want [or] need photocopiers because they have the secretary pool to retype stuff. So you have to get the investors into the right mindset.
Doug Ross 10:02
Hey podcast listeners, we’re gonna take a short break now. If you’re enjoying the show, feel free to invite your friends, remember to subscribe, and if you want to help spread the word leave us a review on Apple Podcasts or your favorite podcast app. Each episode of Conversations on Startups focuses on a single topic. If you want to comment on something you’ve heard on the podcast, or suggest a topic for us to cover in a future episode, send an email to: go@todaysgreatidea.com or douglas@sparkclickgo.com. Glenn and I appreciate you and hope you find our uncut and unrehearsed stories, perspectives, and tips helpful. Speaking of helpful stuff-let’s pick up where we left off.
Glenn Suart 10:47
Now one of the stories I really like – Today’s Great Ideas – and these are stories, of course, about famous business brands or inventions and I don’t tell you who it is until the end so you’ll have to guess on this one, Doug. I’m half wondering if I’ve told this story before but I probably have, so you might know the answer already.
Doug Ross 11:03
People forget, you know… and a good story, Glenn, people like to hear more than once.
Glenn Suart 11:07
So I won’t even tell you the guy’s first name because I might give it away. [Okay] So he’s working for a company in New York City that makes these small appliances. And his number one customer, their… their client is Macy’s department store, but their number two customer is a small little retail shop in Seattle, Washington. So he heads out there to find out why these guys are being so successful. And they sell these small appliances, and they are doing gangbusters. At the end of the day, before he flies home, he says I want to work for these guys. And they’re not interested. But he keeps pestering them for about a year and finally they say yeah, come work for us. So they open a couple of shops selling these small appliances. And then this guy goes to Italy and comes back all excited about a great idea to be perfect for this company. And the owners say, [sorry] no, not interested. So what he does is he puts his pitch deck together and he goes out and he pitches it to investors. And this guy is, you know, savvy, he knows how to do a pitch deck. He gets turned down 200 times. And, you know, rejection, of course is a big thing. You got to learn from this, you know, what is… the right thing, right? So finally he gets some investment and he opens, you know, five or six of these locations. And they’re very successful. Then he buys out his previous guys. And of course he expands everywhere. And do you know which company I’m talking about?
Doug Ross 11:08
Did it start in Pike Place?
Glenn Suart 12:39
It did.. you got it, yes…
Doug Ross 12:42
Did it have to do with coffee?
Glenn Suart 12:44
It has to do with coffee, the appliances were coffee makers, and it is Starbucks, Howard Schultz. Perfect example of someone who has a vision, has an idea in an area that is relatively new that people aren’t comfortable with – that they’re not aware of coffee shops like this, like Starbucks was selling. They were selling an experience as opposed to just selling coffee. So that you had to bring along the investors, you had to pitch it right. He learned trial by fire. And that’s what most entrepreneurs have to do. Pitch it well, because you got an idea that’s new, and it’s complicated, and not everyone’s gonna get it right away even the most savvy people. So you just got to be careful.
Doug Ross 13:24
Well you bring that up, and one of the ways I’ve seen people do this is they make it tangible in some way. So for example, I was working for a software company in California, and when we pitched we would have people join this URL and experience the product. And I can tell you, Glenn, that made a huge difference. Just anything that’s tangible, especially if you can do it pretty early on, get people involved. So in the case you just mentioned Howard Schultz could have, you know, he could have had some of his coffee or he could have set up a little bit of staging where you’ve got a comfortable place to enjoy your coffee. Who knows what. I love that idea. You’ve got an experience in mind that you’re gonna be creating, how you’re going to do that, how you’re going to scale and find these people that will jump into your idea. You know, I don’t think it’s… you’d mentioned earlier that you have these rejections and you have to learn from them. I love that, that’s great. It’s not just woe is me, but learn from them. But also… every pitch you should leave… leave those folks and your relationship with those people in as positive a frame as possible. If they reject you, ask them, why? They are willing to tell you. These people are used to giving bad news. So they will tell you why. If you ask them correctly, you might learn something. There’s always something to be gained, I think from getting out there and pitching.
Ali 15:01
You’re listening to Conversations on Startups with Doug and Glenn, merci pour nous avoir joindre.
Glenn Suart 15:10
So, pitching. It is a wonderful sport. You know, the best way to jump in… is just jump in and keep learning from other people’s examples, you know, look at pitch decks that are out there – there’s lots of them – read why they were successful. Some of them are successful, some aren’t, and create your own and just keep working at it and honing it like a sculpture.
Doug Ross 15:30
Good analogy and good tip to have people look out there. There’s an example on LinkedIn, about LinkedIn. So not on LinkedIn, but about LinkedIn when they were early on in their growth. And they had just great numbers that showed interest in the platform. And they brought this data out in their pitch decks, you can see it online. And of course, they attracted some major investors and the rest is history, as we say. But yeah, that’s a great tip to look online for other examples. Any other tips for folks, Glenn?
Glenn Suart 16:08
No, I think start with that and see what happens. Less is more.
Doug Ross 16:15
Less is more.
Glenn Suart 16:17
Start simple, and then get better and better.
Doug Ross 16:19
And be clear too though about what you’re asking for. Okay, I’m asking for $10 million. All right, for what? You better be pretty clear about that, or $1 million, whatever the amount is, How are you going to use that money?
Glenn Suart 16:34
Oh, and one more important thing, is exactly right, is risk mitigation. How risky this is. If you’re asking for $10 million, it sounds risky, right to me right now. That’s my $10 million. Why am I giving it to you? You have to figure out… do the hard, heavy lifting for the investors. Make it easy for them to make a positive decision.
Doug Ross 16:57
That’s a great final word, Glenn, I think we should leave it at that. I don’t know if… if you have an idea of something we can talk about next time, if something queues? Just while you do that, I’ll kind of wrap our session here today. But, you know, we focused in on pitching to investors today. We talked about making connections. Glenn just mentioned keeping it simple – less is more, all of that. Having some evidence in there, talking about your team and why you’re the right team in the right business for the time. So these are some of the things we talked about. And you had a great example in there, Glenn, about someone who pitched more than a couple hundred times, and obviously ended up having a successful business. So we hope you’ve enjoyed today’s Conversations on Startups with Doug and Glenn. Any thoughts for next time or should we ask our audience?
Glenn Suart 17:50
Well, we could always ask the audience for sure and we’re always open to that. I think an interesting subject and we can talk about it some more is what not to spend money on in a business. It’s easy to spend money, you should spend it on this or that. But what don’t you spend money on?
Doug Ross 18:08
It’s a great one, Glenn… I’m sorry to interrupt you, but we’ve already covered that. We would have to refer to it.
Glenn Suart 18:14
Oh, did we do that already? Oh my god. Okay, I feel bad now.
Doug Ross 18:19
It’s still a good topic.
Glenn Suart 18:21
Well, that sounds fantastic. My memory.. my memory is going. So I guess really the subject will be next week… let’s talk about memory, what to do when people lose their memory.
Doug Ross 18:34
Yeah, funny. Okay. All right. We’ll come up with a topic for next time. Yeah, so it’s been great talking with you, Glenn.
Doug Ross 18:51
Conversations on Startups is a production of Glenn Suart and Douglas Ross. We hope you’re having fun listening but mostly that you take action on your business idea. For more inspiration visit our websites: todaysgreatidea.com and sparkclickgo.com. Another episode of Conversations on Startups will drop soon, or is already available to binge. Thanks for joining us, and remember to subscribe and invite your friends. See ya next time!
Transcribed by https://otter.ai