Editor’s note: Charles Moldow is a general partner at Foundation Capital, focusing on consumer Internet companies. He was previously a founding executive at TellMe Networks and at @Home.
The recent Broadway revival of Arthur Miller’s Death of a Salesman got me thinking about the differences between the pitches I hear from entrepreneurs, and why some succeed and others don’t.
Willy Loman’s character did much to lower our society’s already low opinion of sales and selling, but the fact remains that the concept, if not the actual act, of selling is a vital process in our economic system. For example, if you’re an entrepreneur looking for financing, you are selling an idea to a buyer – usually a venture capitalist like me.
Overcoming the Attention Deficit Problem
Everyone with a smart phone is suffering from an attention deficit problem, including VCs. Your future prospects and customers are inundated with too much information and too many choices. Translation: Get to the point. Now. In fact, I should have started this article by telling you that!
It sounds simple… yet rare is the pitch I sit through that includes a concise summary of the mission and values of the company and a one sentence explanation of what the company does. This is problematic, because part of what we look for when investing in a company are people who can chop complexity out of the business and clearly articulate what they do and why it’s important. Often when I ask for clarity on these points, I don’t get clear and simple answers.
The real problem with an inability to nail “the what” is that it suggests that you have not thought through your business sufficiently to explain it in a concise manner. It was the 15th century mathematician Blaise Pascal who wrote, “I am sorry to have wearied you with so long a letter but I did not have time to write you a short one.”
I’m sure you get the point. An elevator pitch is not important because you can deliver it to a guy in an elevator, it’s important because it demonstrates you’ve thought through your business sufficiently to know why it matters.
What really gets my attention is a concise description of why the thing you are most passionate about matters to the rest of us. If I’m listening to four new business ideas each day, they can’t all be good enough to make me sit up and take interest. Make sure yours is the one that breaks through the noise. Otherwise, all of the distractions I have in my life will creep back into my brain and crowd out the message you are trying to convey.
So start with your lead, not your market slide. And if you can’t tell me clearly your company’s value-add, the problem it solves and why your idea is different in under a minute, you shouldn’t be pitching it yet.
The fundraising process is tough, and it’s made tougher by the fact that venture capitalists say “no” most (read: almost all) of the time. Statistically, we fund less than one-half of one percent of the ideas that come through the door. Those are pretty daunting odds. But they’re not unlike the odds of success you’ll face once you’re in business.
The difference between the entrepreneurs who overcome those odds and those who don’t are those who won’t take no for an answer. And that’s a quality we screen from the very first meeting.
Presenting your idea is not enough. You have to sell your idea and passionately convince an investor that you’re worthy of the risk you’re asking them to take—as well as the time and money they will invest in your company.
You also have to convince your investors that you have the courage of your convictions. We want to know if you’re the kind of leader who will break through barriers and keep going despite countless setbacks. You’re going to face a lot of rejection and you need to be fearless.
Now even though I’ve just said you have to break through barriers, the catch is that I don’t want you to be hard-headed.
We want people who are convinced they have an answer, but not operating with the belief that they have all the answers. There’s a difference. Good sales people are good listeners, naturally inquisitive and they actively ask their buyers for feedback. After your next pitch, try asking the firm’s partners what they think.
Surprisingly, very few ask that question, but it is a question that signifies the entrepreneur who is flexible, self-aware, and would probably make a good partner. Don’t be afraid – you might be surprised with what you hear and you’ll probably glean some useful insights that will make your next presentation even stronger.
Finally, ask about next steps and send a follow-up note. I’m always shocked with the lack of follow up from entrepreneurs who have come in and pitched me, but leave it in my court to follow up.
The start-up world lives and dies based on the cash it raises. During its lifetime, the average start-up will likely require several rounds of funding, so being good at raising money is critical. Being a good salesman is also important because the act of selling doesn’t just happen when you’re asking for money – it happens when you’re building a team, when you’re selling your first product, when you’re looking for partners, and when you’re trying to inspire your employees. So be concise.
Show passion. Be fearless in your follow up. And finally, be brave enough to ask for feedback. All of these things will make you more credible, and most importantly, more likeable. Because you don’t want to end up like Willy Loman.