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A few weeks ago, a friend called me who wanted my feedback on his business model and pitch. We jumped on Skype and in the first 10 minutes, he walked me through the model. As always, I tried to put myself in the shoes of the investor to make the situation as real as possible.
The model was fairly easy to understand and straight forward but something was clearly missing. I listened for the first 10 minutes and then said “I get how the model works and what it looks like. But why should I care? Why should anyone care?”
Without any hesitation, he said “Because Switzerland does not have enough entrepreneurs”.
Now we were talking.
I challenged him on this belief and what we concluded during our conversation what that his real belief was that “Switzerland does not have enough innovative and disruptive entrepreneurs”.
He then explained why the world (or Switzerland) needs more of these kinds of people and why he is so driven by this belief.
Why Should Anyone Care?
Most pitches are boring. Not because the idea is bad but because how it is communicated.
Most pitches start with the idea and how it works. The question, that most investors ask themselves in their head during such a pitch, is “Why should I care? Why should anyone care?” and if you can’t answer that question with a supreme level of confidence and clarity, you just lost the investor.
I hear pitches from entrepreneurs pretty much every day, either because they want to work with me or because they want my opinion on something.
The ones that stand out always start with Why.
Consider the difference between “We change the way people interact with art” and “We build a platform for people to connect with art”.
When I hear the first one, my eyes open widely and I think “Yes, tell me more!”. When I head the second one, I think “Ok… Interesting.”
The first thing that comes out of your mouth sets the stage for the rest of the conversation. This applies to a face-to-face meeting as much as connecting with an investor on LinkedIn.
How Not to Pitch
Engineers, rocket scientists or quantum physicists sometimes have a hard time communicating their ideas and concepts in a way that other people can understand them, not to mention, in a way that inspires people.
A few weeks ago, I talked to an entrepreneur from Canada who is building a venture in the BioMass field to replace coal with a revolutionary new product that shares all the characteristics of coal except for the damaging CO2 output.
How awesome is that?!
We talked about thirty minutes over Skype, and even though the venture is very exciting and definitely creating impact, he lost me within the first minute by starting, and continuing to talk about the technical details for the rest of the thirty minutes.
What if he had started the conversation with something along the lines of “We change the way the world produces and consumes energy”?
This entrepreneur is certainly not an exception. Most entrepreneurs I talk to, share this challenge. This makes it extremely difficult for them to share their vision and idea with investors in a way that inspires them to take action.
This is why I developed the Golden Circle Pitching framework, which is based on Simon Sinek’s famous Golden Circle.
Let’s look at the example of SpaceX to illustrate this.
Here’s what SpaceX claims on its about page: “SpaceX designs, manufactures and launches advanced rockets and spacecraft. The company was founded in 2002 to revolutionize space technology, with the ultimate goal of enabling people to live on other planets.”
How inspiring would that claim be without the second sentence?
It would be about What but not about Why.
Here’s another example of an inspiring communication in action.
“Acumen raises charitable donations to invest in companies, leaders, and ideas that are changing the way the world tackles poverty.”
That’s a pretty dense, bold and inspiring statement. This can be translated into the mission statement of “We change the way the world tackles poverty”.
How different would the message resonate if Acumen would only say “We raise charitable donations to invest in companies, leaders, and ideas”?
Golden Circle Pitching
Simon Sinek became famous for his concept of the Golden Circle that he calls “the most simple concept in the world”. It may be the most simple but it’s also the most powerful when it comes to communicating anything.
If you want to create a pitch that has the highest probability to get investors on board, you need to satisfy both parts of the investor’s brain, the emotional side and the logical side.
The Emotional Brain
Every major decision is not a rational one but an emotional one first.
We buy our coffee at Starbucks not because it’s the best coffee in the world but because the brand arouses a certain emotional state.
We don’t buy Apple products because they are faster or of better quality (even though that may be true), we buy them because we identify ourselves, to some extent, with “the crazy ones” and with Apple’s belief in challenging the status quo.
With your pitch, you want to satisfy the emotional brain first so the investor gets inspired and can resonate with Why you build what you build.
The Logical Brain
Once you have the attention and interest of the investor, you can dive into how things work.
However, you don’t want to dive into how everything works or you overwhelm the investor and we’re back to “Let me get the hell out of here!”.
Some important questions you want to answer for the investor’s logical brain are:
- What’s the problem you are solving?
- How do you solve it?
- How big is the market for that solution?
Of course, there are plenty of more questions that are important in this part but the three questions above will challenge you to start thinking in the right direction.
You’re Not Pitching to a Customer
When you are raising capital for your venture, it’s crucial to understand who you are pitching to. The needs and desires of a customer and investor are two completely different pairs of shoes.
While the customer buys your product, the investor buys you and your idea.
Yes, it’s important that the investor understands the customer value proposition but not before he understands Why you do what you do.
Most entrepreneurs know about the importance of having an ideal customer avatar but few understand the importance of having an ideal investor avatar.
Do you know what your ideal investor wants? Do you know what drives them? Do you know what they stand for?
If you don’t, chances are, you will not make an emotional connection and therefore lose the attention of the investor the moment you start with your pitch.
If you are building a positively disruptive venture that shapes the future, I would be delighted to help you make your pitch legendary.
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