Frequently-Made Mistakes

Only those who do nothing…make no mistakes.

– Joseph Conrad

As I have said multiple times before in this book, one way to make sure that people understand –- and more importantly remember –- your message is to be redundant. That means telling the audience what you are going to tell them, telling them, and then telling them what you told them. Toward that end, let me reiterate some of the key points of this book, in the form of the mistakes I most frequently see people make, in the hope that they will stick with you.

BURYING THE LEDE

As I said earlier on in this book, many newspapers structure their stories in the form of an inverted pyramid. In order to enable people to quickly get the gist of the story and determine whether it’s relevant to them or not, they try to answer the Who, What, Where, When, and Why questions in the first paragraph, if not the first sentence, of the story.

Using the same basic approach will tend to make an elevator pitch eas­ier to understand and remember. Unfortunately, in too many of the eleva­tor pitches that I hear, the really important information –- WHAT the Solution is, WHY people will adopt it, and WHORU –- is buried amidst a mass of far less important information. This is a problem because, like the readers of a newspaper, the audience for an elevator pitch will often decide in the first few seconds whether the pitch is relevant to them and their interests and whether they should pay attention to it or not.

If you don’t quickly let the audience know how your pitch relates to their interests and concerns, then they may just tune you out.

For this reason, I am not a fan of leading elevator pitches off with questions, stories, or jokes because they use up precious time that could be bet­ter spent establishing the WHAT, WHY, and WHORU of your Solution. However, the bigger problem with including questions, stories, or jokes in an elevator pitch is that they lengthen the time it takes you to establish your relevance to that audience. For that reason, if you insist on including a question, story, or joke in your elevator pitch, then I suggest that you place it after your summary sentence. That way your summary sentence will explain to the audience where you are going and make them more likely to pay attention to your entire pitch.

NOT ESTABLISHING YOUR CREDIBILITY

It is a well-established fact that between 75 and 90 percent of new businesses and new products fail. While that sometimes happens due to poor timing or bad luck, in most cases new business and products fail because they are fatally flawed; because they fail to take into account some basic and subtle, but critically important, truth about the marketplace.

One way that venture capitalists and executives try to manage this risk is by backing individuals and teams more than specific Solutions. They know that few plans survive the initial contact with the enemy, or the mar­ketplace, and that an experienced team will know how to make the adjust­ments that are necessary to be successful.

As a result, when delivering your elevator pitch it isn’t enough to establish that your Solution will be successful. You must also establish that you know how to be successful.

Unfortunately, many people are so focused on explaining their Solution that they forget to establish their own credibility.

MERELY SOLVING A PROBLEM

If you know me, then you know that I am all for solving problems. However, if you want to increase your odds of being successful, you have to remem­ber that merely solving a problem is not enough.

Instead, you have to solve a problem that is causing people pain.

Only the existence of significant amounts of physical or psychic pain will provide the customer with the incentive they need to abandon their exist­ing Solution and change and adopt your Solution.

IGNORING THE CUSTOMER

When it comes to products developed by engineers and other technolo­gists, in many cases they are so focused on their Solution that they com­pletely ignore the customer. This is a problem because spending all of your time talking about your Solution can make it look like what you are selling is a Solution In Search Of A Problem (SISOAP).

As I have learned from personal experience, the problem with a SISOAP is that finding a good problem can be an extremely time-consuming and expen­sive process. While large companies sometimes succeed in selling a SISOAP, they tend to be the exception that proves the rule. Most people do not have the time, and the money, it takes to find a problem that needs solving.

IGNORING THE COMPETITION

Ignoring the competition in your elevator pitch can be deadly if the audience is actually familiar with the market.

I once heard a pitch in which an entrepreneur discussed a product that would target a market with which I was extremely familiar. During his pitch he laid out a plan to do pretty much exactly what another company was doing. The entrepreneur gave no hint that he knew the competition exist­ed, which undermined his credibility because it made me wonder if he had done his homework and really understood the market he was targeting.

People frequently ignore the competition in their elevator pitches because they are afraid that it will make their Solution look weaker when the opposite is actually true. The existence of competition can be good, because it proves that a market actually exists.

I believe one reason I had trouble getting literary agents and publishers interested in this book was the lack of direct competition. There were liter­ally no other books that focused on creating an elevator pitch. I am sure that made some people wonder whether this was a viable market; whether enough people were interested in the subject.

In the SalesLogix elevator pitch, rather than ignoring the competition, we took on the competition directly by explaining exactly what was wrong with the state of the art...

SalesLogix is a software company and has developed a Customer Relationship Management (CRM) system that is both easier to use and more powerful than existing solutions like Act and Siebel.

SalesLogix is targeting mid-sized companies that have out­grown contact managers like Act but can’t afford the cost and complexity of high-end CRM products like Siebel.

The problem with existing CRM solutions is that they fall into one of two categories. On the one hand, you have contact man­agers like Act that salespeople love but that do not allow people to share information across a large organization. On the other hand you have high-end CRM systems like Siebel that scale to support the needs of hundreds or thousands of users but that salespeople refuse to use. The result is that too many organiza­tions are unable to...

• Coordinate their sales and customer service teams.

• Obtain a holistic picture of the customer.

• Maximize the revenue gained from each customer.

By talking about the competition and their limitations in our elevator pitch, we did two things. First, we established that we were intimately familiar with the market. Second, we explained why people would be interested in buying our product. Third, we positioned ourselves in the marketplace rel­ative to the competition.

NOT STARTING YOUR BEST PITCHER

When it comes to the big games, baseball managers want to give the ball to their best pitcher, to their ace. They know that while that won’t guarantee them a win, it will put them in the best position to win. The same thing should be true when it comes to elevator pitches, but too often it isn’t.

On multiple occasions, I have worked with teams who had a Solution that stood a good chance of succeeding but who were undermined by the unwillingness of the leader of the team to delegate the delivery of the pitch to the member of the team (often the marketing person) who could best deliver the pitch. Instead, the leader of the team insisted that he (and in many cases it is a “he”) be the one to deliver the pitch.

In a couple of cases, this hurt the team’s efforts because the leader of the team was a technologist who didn’t understand that most people weren’t as interested in the HOW of his Solution as he was. In another couple of cases, the leader of the team, due to a fear of public speaking or some other anxi­ety, simply could not deliver the pitch in front of a large number of people.

Instead, he would absolutely lock up and end up literally not saying any­thing coherent.

The problem with not starting your best pitcher is that it says two things to potential investors and backers, neither of which is good. On the one hand, it says you don’t understand the importance of marketing. On the other hand, it says that you don’t know how to delegate.

Of course, any successful venture capitalist or management expert will tell you that understanding the importance of marketing and an ability to delegate are often the things that distinguish successful entrepreneurs from unsuccessful entrepreneurs.

As a result, if you are the leader of a team and are not a good public speaker, you have to either delegate your pitch to another member of your team or put your Solution on hold while you improve your public speaking skills.

OVER-REACHING

There is this idea going around that the only way to get the attention of a venture capitalist, angel investor, or senior executive is to characterize the opportunity for your Solution as enormous (e.g. $50 million plus). While there is some truth to that notion, in many cases people take things too far.

In one case I was listening to a series of pitches at Washington University when someone got up in front of the audience and said, “Every man, woman, and child six years old and up is in need of our technology.” Another plan I once read said, “The market size for this opportunity is huge. Currently there are roughly 7 billion people on the planet.”

The problem with making statements like this is that they can damage your credibility by making you look at least un-focused and in the worst case naïve. Even the largest companies do not target every person on the face of the earth right out of the gate. Instead, they target specific demo­graphic or geographic market segments and then expand to other market segments over time.

Rather than focusing on the Theoretical Market, which is the number of people who could possibly use your product, it is better to focus on the Addressable Market, which is the number of people who definitely need your product. This is because when delivering your elevator pitch it is bet­ter for your credibility if you look focused and let the audience come to their own conclusions about the size of the Theoretical Market.

We took this tactic when selling SalesLogix. Rather than focusing on the entire CRM market, we instead focused on the middle market. Yes, we believed that SalesLogix could compete in both the high end and the low end of the market, but we thought it was more important that we put forth a plan that targeted the market segment that most obviously needed our product due to its being ignored by both our high-end and low-end com­petitors. Once we established ourselves in that market segment, we could then move up or down-market.

NOT SOLVING A PERSONAL PROBLEM

Over the years I have heard a number of people position their Solution in the context of broader societal trends and/or problems. Obesity and healthcare are two of the more popular ones. While this can sometimes be good, the problem is that people generally don’t buy things to solve the problems of society.

Instead, people buy things to solve their own problems.

The ugly truth is that most people are generally selfish and self-centered. As a result, it rarely pays to try to solve society’s problems. Instead, a much better (and more profitable) approach is to try to solve the problems of spe­cific individuals.

If society benefits as a result, then great.

Similarly, with a few exceptions (e.g. social entrepreneurship and other non-profit ventures) investors generally don’t invest in companies to solve society’s problems. Instead, they invest to make money. As a result, when positioning your Solution, it is usually best to do so in the context of a specific problem that is creating a specific cost (or pain) for a specific individ­ual or set of individuals.

CONTEMPT FOR THE AUDIENCE

Once, when reviewing a pitch that I was writing, a programmer expressed frustration with what he perceived were my efforts to "dumb down" our message. Rather impoliticly, he told me, "If they are too stupid to under­stand what we're doing, then I don't want to talk to them."

As I told him at the time, the problem with this attitude -– which is unfor­tunately all too common among engineers and other technical people –- is that it ignores reality. Most venture capitalists, angel investors, and senior executives are no longer, or never were, very technical. They have people who handle the low level technical details for them.

What they focus on is the general concept.

As a result, when writing your elevator pitch you must not treat the audi­ence with contempt. Instead, you need to think like a trial lawyer. A trial lawyer cannot pick their audience. Rather, they have to take what they are given. They have to get their message across to a jury that is made up of pretty much randomly chosen people.

DIS-INTEGRATION

With very few exceptions, when I look at the one-paragraph, 100-word summaries that many entrepreneurs produce, they do not address the issue of credibility. This is a mistake because you never know how someone will first encounter your Solution. As a result, the same basic message should be conveyed, and the same topics should be addressed, in all of your marketing materials. That includes your one-paragraph summary, one-page summary, business plan, and marketing materials. I know that it can be hard and time-consuming to keep all of these documents in sync, but in my experience it is necessary because at a minimum it helps you look organized and professional.

TRYING TO CLOSE THE DEAL DURING YOUR PITCH

One reason why elevator pitches get long, and why people have a hard time cutting things out of their elevator pitches, is that people too often try to close the deal during their elevator pitch.

However, the truth is that few deals are closed without the team and the backer meeting multiple times and for many hours, during which they dis­cuss every possible aspect of the Solution.

As a result, during your elevator pitch you should just focus on estab­lishing WHAT you are doing, WHY you are doing it, and WHO you are. If you do that properly, and you are speaking to the correct audience, then more likely than not you will get to the next step, which is a longer, more detailed discussion of your Solution.

UNDER-REHEARSING

In national polls of the things we fear, public speaking regularly ranks up there with things like death. That’s because it’s incredibly hard to stand up in front of a big group of people.

I can relate to this fear because I used to feel it as well.

What I have found that helps me is being prepared and then rehearsing the heck out of my elevator pitch to the point that I can pretty much deliv­er it in my sleep. Before I deliver an elevator pitch to a large group of peo­ple, I have usually delivered it 25 times to an empty room and then anoth­er 75 times to individuals or small groups, which helps it become second-nature and thus builds up my confidence.

TALKING ABOUT YOUR FINANCIAL PROJECTIONS

In all my years of listening to elevator pitches, I have yet to hear someone say that they are never going to make money. As a result, in my opinion it’s a waste of precious time to include things like your expected Return On Investment (ROI) or break-even point in your pitch. Instead, I believe the things you should focus on in your elevator pitch are your distinguishing factors; the things that are actually unique about you and your Solution. Experienced investors will know that your financial projections will tend to be overly positive, overly optimistic, and generally wrong. As a result, at some later point in the process they will get into the details of, and usually tear apart, your financial model.

INTRODUCING EACH TEAM MEMBER BY NAME

Quite frequently, presenters will introduce each member of their team during the course of their pitch. In most cases, I find this to be a waste of pre­cious time because the people who are mentioned don’t bring anything special or unique to the team. Instead, they are just playing a role (e.g. the marketing guy or the finance person).

A good rule of thumb to follow is that unless a person has a significant amount of extremely relevant experience, there is usually no need to intro­duce them during your elevator pitch. Instead, it is enough to just mention how much total relevant experience you have among the team as a whole. That is the approach we took with the SalesLogix elevator pitch...

The SalesLogix team has over 75 years of combined experience in the industry and is led by Pat Sullivan, the co-founder and former CEO of Contact Software International, the original developer of Act.

We mentioned Pat Sullivan by name because he was the leader of the team and had significant credibility as a result of his past accomplishments. We just lumped together everyone else’s experience and only named names during our investor presentation and in our business plan.

Copyright Notice
This document is copyright © 2009 Chris O'Leary and the LIMB Press LLC. It is licensed for personal use only. Any organizational or institutional use must be approved by Chris O'Leary.