Transcript Entrepreneurship

MBA – Business Model
Integrative course
How to pitch a new venture project ?
Bruno M. WATTENBERGH
March 2011
How to pitch a new venture project ?
• What is a pitch … an elevator pitch ?
• 8 key steps ?
• The essentials ?
• The mistakes ?
• What if you’ve been good ?
• Back to some basics
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Expected Outcome
• Give you an understanding of the purpose of an
elevator pitch.
• Provide a technical framework for how to give an
elevator pitch.
• Provide a context and intangible approach for a
successful elevator pitch.
• Highlight what not to do !
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Sources ?
• Entrepreneurship Development Program MIT Sloan
(the top school to learn how to pitch) …
• Own experience :
– As a pitcher …
– As a finance executive …
– As a client …
– As member of BP competition’s jury …
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What is really a PITCH ?
What’s an Elevator Pitch ?
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Where does the word comes from ?
• Marketing & Communication world …
• Presentation to sell something, to tease, to attract
the attention …
• To tell a story to sell something … (product, you,
your venture, …)
• Entrepreneurship, theatre, movie, …
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To sell or to attract finance ?
• Both … !
• Almost the same structure … !
• Not exactly the same composition / objective ...
• The same introduction  hook
• The same conclusion  appointment !
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In a few words ?
• Bare Essentials : Effectively conveys the essence
of your company in XX seconds – minutes (from
‘55 to 5 minutes).
• Pitch not Presentation : Not the complete story !
• Creates Action : Convinces the target to have a
follow-up meeting …  binary result YES or NO !
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Outcome of a successful pitch ?
• Prepare the next stage  appointment  On – Off
(good control !)
• Create in the mind of the interlocutor a positive
mindset for future success !
• Avoid useless appointments  are you in the range
($), scope (sector, stage, …) of the investor … or
for a sale pitch  do we have some potential
interest to make business together ?
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What’s an Elevator Pitch then ?
• « Elevator » as your
message is supposed to
be delivered in the time
span of an elevator ride,
that is from ground floor
to exec level …
• … between 30’ to 55’
seconds, less than 220
words.
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Duration of the Pitch ?
•
•
•
•
2 minutes ?
4 minutes ?
10 minutes ?
Q&A ?
• Depends on the stage of the relationship … ?
• Depends on the country … ?
• Depends on the place … ?
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The Momentum ?
• If it is a real pitch :
– Mr BIG
– Preparation
Eminem …
– You own it, you better never let it go !
– You only get one shot !
– This opportunity comes only once in a lifetime !
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A pitch is NOT …
• A technical description of your product or
technology …
• A childish attempt to persuade …
• A process of seduction …
• An abstract thing …
• Is rather convincing than persuasive  respect
• …
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Some key interdependencies ?
1. Customer Pain
2. Value proposition
3. Quantifying value proposition
4. Decision making unit (DMU)
5. Identification of targets (market vertical)
6. Finance
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8 key steps to succeed
your (elevator) pitch ?
8 key sentences !
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1st STEP : “A good Hook”
« The hook ! »
Ask a closed question
Known answer !
Clear customer pain
 Get connected - Attract attention
 Highlight the problem, pain, need that your enterprise wants
to solve or meet  make it clear, obvious.
 Your interlocutor will project himself in the problem and be
ready to understand the value of your proposition
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2nd STEP : “Your SOLUTION”
« The SOLUTION ! »
How you can solve the
customer pain !
A G.O.U.S.P
PPASX ?
 What is your product, service  description based on the
pain highlighted in the hook.
 Describe briefly what exactly you’ll sell  risk / value
 No technical details !
 The value must be understood  Quantify ?
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3rd STEP : “Who’s your Customer”
« The chosen Customer ! »
Market vertical chosen !
Select and describe a
vertical … and explain why !
 Who will be your customers ?
 What is their activity sector or industy ?
 Some indications on the market size
 Known market – if possible – a market test
 If possible show letters of intent
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4th STEP : “Where is the $$$$$$$$”
« How will you make
money ? »
Business Model ?
 Briefly describe the business model chosen
 How will you deliver the value to the customer ?
 How will you capture the value from the customer ?
 Recurrent revenue channel ?
 Distribution, Sales, Test-case, … ?
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5th STEP : “Who are you ?”
« You & your team ? »
Explain who you are …
Expertise
 Complementary team
 A lonely wolf … or a team ?
 An inventor, a manager, entrepreneur ?
 Track records
 Explain why you and your team are capable of solving
the announced problem and why you deserve to be
paid for that ?
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6th STEP : “Comparative Advantage ?”
« What is you U.C.A.? »
Explain why you are ≠
Explain why it is a competitive
advantage
 You not a dreamer … you know what your are talking
about … you know the value for the customer
 You know the customer & the competition  Metrics ?
 Take the angle of talking about the comparative assets
of your project, how you distinguish yourself from the
existing competition : distribution, partnership,
technology, …
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7th STEP : “Competition?”
« Who are the Competitors
?»
It there are competitors …
great ! … There is a market !
 What are your main competitors (very figurative for the
investor) ? Why ? What is their market share ?
 Competition is a good thing. It means there is a market!
 Metrics
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8th STEP : “Closing”
« Follow-up Action ? »
Goal of the pitch is to induce a
follow-up !
 Explain what you expect from your interlocutor …
 What is the next step for you ?
 How to induce a follow-up concretely ?
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Yes …
it is possible
in 55 seconds
…
!
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The Essentials ?
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5 essentials for your (elevator) Pitch ?
1. A good catchphrase  the Hook
2. +- 150 to 225 words
3. Value (for the customer)
4. Passion
5. A clear request (value for the investor)
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The hook ? We talked about it …
 Captivate immediately the attention of the investor
with a catchphrase, a teaser, a « hook » …
 Get physically and mentally connected …
 Set the playingfield … the battleground …
 Ideally a question or affirmation that will raise his
curiosity so that he will want to hear more ...
 Work to find a good one !
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Duration ?
 Basis of 150 to 225 words …  Maximum 60 seconds
 Your time is valuable. So is his, if he is an important
investor (Mr BIG)
 Allows you to reach a lot of people in a small room …
(Cocktail Strategy)
 Must be « finished » … within this lapse of time
 Must allow an immediate follow-up (if there was some
affinity)  Answering questions
 May be longer but if U able to do it in ’55 …
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Value ?
 Investors will be attracted by the existing value and
the potential value :
Potential Value : the UCA, the model, …?
Existing Value : what has been done so far ?
 Be CLEAR : Investors must understand the value
created, delivered, captured by your business
model
 They also need to know what you do and don’t do
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Passion ?
 Investors love passion … that lead to ambition,
engagement, investment, …
 Clients too …
 Make your pitch interesting for them …
 Show them your passion …
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Don’t forget the clear demand !
 No interest to pitch if it doesn’t open the door for the
next step
 Next phase is :
a meeting,
with a clear agenda,
with the right people, …
 … with the objective to raise $$$$
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The Fault ?
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You’ll head of a crash if … ?
1. Talk about technology
2. Talk about yourself
3. Lack empathy
4. Do not prepare enough
5. Don’t know the interlocutor
6. Waste time  disrespectful
7. Lack of confidence
8. Fishing expedition
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Fault 1 : Too much Technology ?
☹
☹
☹
☹
Don’t talk too much about technology
Technology is not a the means to an end !
Technology is a way to create value
We are talking about a venture, not a research
project
 Mention technology once but be ready to answer
question or to offer a demo
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Fault 2 : Talking about yourself ?
☹ Don’t talk about yourself all the time
☹ Pitch must be focused on them, not on you
☹ Dialogue must be focused on their interest for the
venture
 You = Team + stock of competencies and skills,
stock of experience, …
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Fault 3 : Lack of Empathy ?
☹ Don’t be self-centered
☹ Investors & clients do business with people they
have a relation with … People think they have
such a relation when they feel they are understood
(need, situation, pro / private / CP)
☹ Listen and keep your concentration on their
questions ?
☹ Too much preparation on the form (2muchtraining)
?
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Fault 4 : Lack of preparation ?
☹ Vague … no logic … no red line
☹ Lack of knowledge about the product, … or the
customer pain
☹ Unable to play with the VP
☹ Don’t know the target or less knowledge of the market
than the target
☹ No BM
☹ Basic questions without answer
☹ Nothing to ask
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Fault 5 : Don’t know the target ?
☹ Lack of respect
☹ Lack of preparation
☹ Unable to adapt the Customer Pain
☹ Impossible to know what to ask
☹…
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Fault 6 : Too long ?
☹ Lack of respect
☹ Lack of empathy
☹ Lack of preparation
☹ Unclear Value creation and/or Business model too
complex
☹…
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Fault 7 : Lack of confidence ?
☹ Lack of preparation ?
☹ Lack of knowledge of the market ?
☹ Weak BM …
☹ Don’t know what you want ?
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Fault 8 : Fishing expedition ?
☹ No clear objectives
☹ Nothing to ask
☹ Don’t do that with Mr BIG !
☹ Change you training program !
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What to do if my model is complex ?
 Try to use mind mapping
 Tell a nice interesting story
 Think about the media tools
…
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What you have been good ?
 You have convinced and documented the right
person … and he will convince other (appointment,
…) … OR … You convinced the right person to give
you a longer appointment, probably with other
important people
 Next time you will meet the right guy …
 You have created a good context to develop the
business with you …
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What you have been good ?
 You have been sincere … You “touched” the guy …
 You have shared your values, your empathy, you
took advantage of the momentum !
 You convinced about your knowledge of the market
…
 They want to know more about your venture and
probably about you …
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Reminder : Some key interdependencies ?
1. Customer Pain
2. Value proposition
3. Quantifying value proposition
4. Decision making unit (DMU)
5. Identification of targets (market vertical)
6. Finance
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1. Customer Pain ?
 Notion of customer pain
 Identifying current pain
 Developing latent pain
 Quantifying the pain
 Understand needs, situation, vision, constraints, …
Create relationship when you sell
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1. Customer Pain (2) ?
 Market segmentation indispensable
 Choose a vertical market subset
 In relation to your offer (resources & competencies)
 In relation to the market interest (customer pain,
tendency, wave, …)
 Do some questioning
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2. Value Proposition ?
• A value proposition is generally a clear and succinct
statement (e.g., 2-4 sentences) that outlines to potential
clients and stakeholders a company's (or individual's or
group's) unique value-creating features.
• A value proposition is a clear statement of the tangible
results a customer gets from using your products or
services.
• A value proposition is an offer to some entity or target in
which they (the possessor) get more than they give up (merit
or utility), as perceived by them.
• A value proposition is the basic reasoning for why people
should consider your product or service.
• Describes what you do in terms of tangible business results.
It draws interest and shares a success story within a few
words.
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2. Value Proposition (2) ?
 Some questions / issues about the VP ?
 P.P.A.S.X. ?
 Product / service / Levitt ?
 Business model ?
 Pay attention to Swiss knife syndrome !
 Make choices !!!!!
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2. Value Proposition (3) ?
 P.P.A.S.X. ?
 Product  characteristics ?
 Price  more than costs only strategy ?
 Access  distribution  PoC with client / CR ?
 Service  Levitt / whole product ?
 eXperience  feelings, emotions ?
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2. Value Proposition (4) ?
 The challenge of the Value Proposition ?
 Identify & compose the characteristics …
 … identified clients are ready to pay for …
 … with a clear differentiation …
 … while making a minimum / maximum profit …
 … being able to present it attractively / value
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2. Value Proposition (5) ?
 USP  Unique Selling Proposition ?
 One value that distinguishes your from others
 One value that lets you dominate the offer
 The other values must meet the standards of the
competition
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2. Value Proposition (6)
Value proposition can be synthetized …
–Domino’s Pizza : Fresh, hot pizza delivered to your door in
30 minutes or less, or it’s free
–FedEx : When your package absolutely, positively has to get
there overnight
–IBM : Global solutions for a small planet
–Intel : Intel inside
–Lexus : Passionate pursuit of perfection
–Visa : It is everywhere you want to be
–M&M’s : the milk chocolate melts in your mouth, not in your
hand
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2. Value Proposition (4) ?
 Test you VP  4C’s check :
 Consistent / Logical / Durable
 Concise
 Clear
 Credible
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2. Value Proposition (4) ?
How to look for a VP ? :
 Step 1: Use your biggest benefits
 Step 2: Be unique
 Step 3: Solve an industry “pain point” or “performance
gap”
 Step 4: Be specific and offer proof
 Step 5: Condense into one clear and concise sentence
 Step 6: Integrate your USP into all marketing materials
 Step 7: Deliver on your USP’s promise
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3. Quantify the Value Proposition ?
 Value Proposition must be quantified ?
 Measure clearly the economic & social benefits
 Move from burden / cost to return on investment
 Imposes to know the client weel  Study / prepare
 Ideally  a well documented test case
 Ideally you need to focus on a specific vertical
market  Focus
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3. Quantify the Value Proposition (2) ?
 Get into your client’s mind
 Try to understand how your client currently solves
his problem
 Assess the impact of your value proposition on his
processes
 Calculate – Estimate the change  you need to
give a good return on investment
 Be better, faster, cheaper !
 Pay attention to NIH
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3. Quantify the Value Proposition (3) ?
 NIH :  In-house competition is a trap you need to manage
 Be capable of evaluating the option of in-house development
rather than evaluating your value proposition
 Economic redemption
 Learning and scale curves
 Maintenance
 Synergies
 …
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3. Quantify the Value Proposition (4) ?
 How to fix prices ?
 Cost +  hmmm, not so good
 Vs competition  not so good
 Rather a benefit for the client  good
 Ideally : integrated approach of all these options
 Be creative
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4. Decision Maker Unit – DMU ?
 Who will you pitch to sell ? Why ?
 You might have some choices ? Do you ?
 Choose the good / right interlocutor regarding your
quantified value proposal …
 The pitch must fit the DMU …
 Prepare, prepare (identification, quantification, …)
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5. Decision Maker Unit – DMU ?
 Focus on ONE market subset
 Startup  lack of resources (time, money, …)
 Credibility <-> capacities
 Need to validate the BM quickly
 Know a vertical market very well, test your VP
quickly, adapt your VP, test again, validate, explain,
scale up
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Some basics to remind ?
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Building the competitive advantage ?
VISION
MISSION STATEMENT
VALUE PROPOSITION
QUANTIFIED VALUE PROPOSAL
BUSINESS MODEL
DMU
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Somes movies ?
The classical video on Elevator Pitch (380.000 views) :
http://www.youtube.com/watch?v=Tq0tan49rmc
Some examples + feed-back from judges
http://www.youtube.com/watch?v=vAvErchnM_w
A finalist at the 100K$ BP Competition at MIT
http://www.youtube.com/watch?v=-ddSp71oIno&feature=related
10 things to know when you pitch a VC – HBR
http://www.youtube.com/watch?v=lzDBrMisLm0&playnext=1&list=PL836838
DACEB39198
Some good advices …
http://www.youtube.com/watch?v=q0EWScOXFpA&playnext=1&list=PLFC6
C881B6B313D64
Some students pitching
http://www.youtube.com/watch?v=Bh5TA6S4X24&feature=related
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Some books ?
• Elevator Pitch Essentials:
How to Get Your Point
Across in Two Minutes or
Less  The 9C’s
• The Art of the Start: The
Time-Tested, BattleHardened Guide for Anyone
Starting Anything
• Made to stick or the Art of
making ideas unforgettable !
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