5 tips for a better elevator pitch

You’ve finally got that precious moment of attention from a potential investor (or employee, business partner, etc). Now’s your chance to excite them about your business venture and get them involved. But you’ve only got a few seconds to do it. How can you communicate what your startup does, why it is special, and why they should care in such a short space of time?

The “elevator pitch” – i.e. the critical few seconds in which you pitch your business – can be a huge stumbling block for many startups. I’ve heard professional investors say they screen out most of the pitches they receive simply because the entrepreneur could not convey the opportunity within 15 to 30 seconds.

It’s not easy to communicate the key elements of your business in a compelling way to people with little or no context … and in such a short space of time. In fact, it’s arguably harder to distill your 50 page business plan into a 15 second killer elevator pitch than it was to write your plan in the first place!

As Blaise Pascal once remarked:1

“I have made this [letter] longer, because I have not had the time to make it shorter”

So, to help you avoid falling into this trap, here are five tips on preparing a better elevator pitch…

Tips to improve your elevator pitch:

1. Anchor and twist:2  Start by hooking into existing ideas by using an analogy, then demonstrate your unique difference. For example, “RedBubble is an online art gallery for aspiring artists”. Most people already have some associations in their mind about art galleries – e.g. it’s a place where art is displayed and sold. Once they’ve got some anchor for the concept, you can communicate the twists – e.g. it’s online, it’s an inclusive environment for all artists (not just the elite), etc.

2. Prove the need:  Demonstrate why there is a commercial need for your product or service. What’s broken right now and how does your approach fix it? Remember: the real world has plenty of inertia – people will put up with the incumbent for a long time, if the ‘better’ solution isn’t ‘better enough’ in ways that matter to the customer. Why is your point of difference strong enough to change people’s behaviour?

3. Define your market:  Be specific about who will use your product or service, and use evidence to show this is a big enough market to be interesting. If you’re saying ‘everybody is a potential customer’, you don’t know your market well enough! Narrow in on a specific group.  For example, The Eureka Report targets the 360,000 self-managed superannuation funds in Australia, not ‘anyone with money to invest’

4. Making money:  Outline briefly your revenue model – i.e. how do you make money? For example, selling your own products, selling advertising space, getting a commission on sales,  selling services on a fixed price or hourly rate, monthly newsletter subscriptions, etc etc. You don’t need to go into great detail here, just explain which of the many options you have chosen (and be ready to explain why, if they ask).

5. Keep it simple:  You don’t have to explain all the nuances in your business model, nor clear up every possible misconception. The purpose of your elevator pitch is to pique their interest, and lead to further conversations that can explore your business in more detail.

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1. Often mis-attributed to Mark Twain (see http://en.wikiquote.org/wiki/Mark_Twain)

2. For more on this and many other techniques to maximise the impact of your messages, see “Made to Stick” by Dan and Chip Heath. Highly recommended!

Vic Pitch 08

It’s always good to meet people with a passion for innovation and the guts to do something about it. Last night I attended an information session for Vic Pitch 08 finalists, and met a bunch of interesting folks who have taken the plunge with their own promising ventures.

Pitch 08 is a series of business pitching competitions in each state designed to connect innovative ventures with development capital. In their own words:

The philosophy behind Pitch ’08 is to support innovation and to educate the investment community and general public on the excellent project and business propositions available in Australia that often have difficulty raising capital because they are too early-stage or don’t fall into the usual funding criteria

The driving force behind Pitch 08 is ASSOB, the Australian Small Scale Offerings Board. Think of this like a mini-version of the ASX specifically for early-stage companies … although it is not actually a stock exchange and the companies participating are ‘unlisted public’ companies.

(Since my own startup venture, Trigora, is one of the finalists, I should get a lot more insight into ASSOB and its proposition for startup ventures as we go through the mentoring and judging process. Expect a post on this later on…)

For now, I thought I’d just call attention to the business ventures in the finals – they span a variety of industries and stages of development. I’m looking forward to getting to know these fellow entrepreneurs better in the coming weeks.

  • Artabase: Artabase is a Web 2.0 Social Networking website for Fine Artists.  Their exhibition calendar lets art lovers find out what’s on in galleries anywhere around the world.
  • Trigora: Trigora is an online platform designed to help small to medium businesses compare, select and buy the right specialist software for their needs.
  • Cinergix Cinergix is a software service company that provides a web-based intelligent diagramming and design  platform for various fields.
  • Lavender Hill Projects: Lavender Hill Projects researches, develops and commercialises unique, highly effective and natural herbal products with significant therapeutic, cosmetic and commercial potential. 
  • Carbon Reduction Industries: Carbon Reduction Industries Pty Ltd seeks skilled investment to help take its unique energy abatement devices on to global markets
  • Humanitee: Humanitee produce high quality clothing using organic fabrics and fair trade business principles. Their styles are modern classics, designed to be versatile and long lasting and the business model values social, environmental and fiscal profit equally.
  • ICT Distribution: ICT Distribution is now Telstra’s largest distributor of business products across their mobility, fixed and data suite. With a network of 500 IT skilled channel partners utilising ICT’s connection services, ICT has a competitive advantage and significant market potential for growth
  • Professional Linkage Services (CounselLink): Professional Linkage Services is an online counseling service that will match clients with psychologists, enabling them to meet online anonymously and effectively, regardless of location.
  • The Physio Co: The Physio Co provides solutions to mobility problems of Australia’s rapidly ageing population. Affordable products and specialist advice – The Physio Co makes it easy for the 100’s of 1000’s of baby boomer retirees and their parents
  • Travel Bubs:Travel Bubs is pioneering the family travel and baby equipment hire industries, offering a comprehensive “travel light” service directly to travelling families and corporate partners. Travel Bubs intends to have a presence at  major Australian airports by 2010
  • Turn me green / ecoincubator: A business incubator and resource centre aimed at developing and accelerating ecologically and sustainability-based enterprises

Fact or Fiction in Startup Land

It is easy to get a distorted view of what startup success looks like. After all, we hear so much about the tiny few that capture media attention, such as Facebook, YouTube, etc. Not surprisingly, this sample skews towards consumer-facing, mass market companies that are bought out or invested in for megabucks.

The reality is very different. Some industries just aren’t newsworthy, even if they are lucrative. Not all opportunities are consumer-facing:  business-to-business is, well, big business. Many startups remain privately held and below the radar. And most don’t end up being worth billions, even if they are very successful.

The latest BRW Fast Starters edition ("the 100 fastest growing start-up companies") gives a more representative sample of "successful" startup profiles than we typically see. A few of the interesting factoids that jumped out include:

  •  57% became profitable in the first year
  • only 29% started the business with a planned exit strategy
  • 67% say their long term goal is to retain ownership, with only 13% aspiring to list on the stock exchange
  • About half spent 1 to 6 months planning the business before starting, and a further 20% took 6 to 12 months
  • Average age of the company founders was 38 years old
  • 78% used their own savings to start the business, rather than taking money from banks or outside investors

No doubt the BRW statistics have their own biases, but they are still a useful antidote to the urban legend of "20 year old founder scribbles business plan on beer coaster, raises millions in venture capital, and is now worth billions". Nothing wrong with aiming high, but you need to keep things real as well.

Perhaps Jim Collins of Good to Great fame put it best when he advised: "Confront the brutal facts yet never lose faith"