When entrepreneurs present to potential investors, should their focus be to say it well, say it fast?
By Laura Huang
Like it or not, we are in an age where instant gratification, short attention spans and multitasking are the norm. Less is more. Yet it’s not—because while we operate at a more frenzied pace than ever, we also have access to huge amounts of information and content. We face the dynamic where access to a wealth of information is met with (or perhaps exacerbates) our desire for it to be instant, concise and attention grabbing—so that, as the belief goes, we don’t have do a lot of deep thinking. This has changed the face of entrepreneurship as well.
Entrepreneurs now state that their main objective when pitching to potential investors, customers and suppliers is to “make the sell” by grabbing their audience’s attention and then keep it for long enough to get their message across.
This more concise, targeted way of grabbing investors’ attention is a good thing, right? After all, it enables things like crowdfunding and online angel platforms to be possible, where a simple message and short video are all you need to get ordinary people or accredited investors to invest their cash for the development of your idea.
But the problem is this: What is it that is grabbing the attention of the audience? What do audiences end up relying on to make their assessments and judgments during these pitches?
Watch Prof. Huang share why the increased interest in entrepreneurship, among students and alumni, has made her a busy person. She also reflects on her current research, which reveals that some startup founders are up against biases and other “surface perceptions.”
In my research, I find that although the fundamentals of the idea and business proposition are still regarded as important criteria in investment decisions, there also exists a profound and persistent reliance on more surface perceptions. And by “surface perceptions,” I mean surface perceptions. Specifically, my research shows that pitch success often depends significantly on the appearance of the presenters; attractive men have disproportionate success compared with women and less physically appealing men. I also find that entrepreneurs who speak with a non-native accent are at a disadvantage in U.S.- based pitch contexts.
Paul Graham, co-founder of Y Combinator—which boasts a number of successful startup alums including Dropbox, Airbnb and Reddit—went so far as to tell Inc. magazine: “One quality that’s a really bad indication is a CEO with a strong foreign accent.” Graham continued, “I’m not sure why. It could be that there are a bunch of subtle things entrepreneurs have to communicate and [you] can’t [do that] if you have a strong accent. Or, it could be that anyone with half a brain would realize you’re going to be more successful if you speak idiomatic English, so they must just be clueless if they haven’t gotten rid of their strong accent.” Graham quickly redacted this statement, but it already highlighted the potential “ugly underbelly” of how perceptions and attributions matter.
Faced with this reality, entrepreneurs ought to have the important conversation about how to pitch so that they might inoculate against these negative perceptions and attributions. We may not be able to change how we look or how we sound, but the following practices can help us to be heard.
Sequence, not sell. The most prevalent mistake that I see people making when they give pitches is that they try to sell, rather than present their point of view. When you sell, people are put on notice and immediately try to make assessments about you—your trustworthiness, your passion, even your arrogance. Instead, present information in a concise, sequential pattern— in a way that already grabs the audience—so that they don’t have an opportunity to make attributions based on surface perceptions. By presenting information in this way, you keep the attention of the audience at a high level, letting investors know what they need to know, and no more.
Craft the pitch around your plan. No single pitch template works for all ideas and all audiences. Thousands of opinions exist about what to cover in a pitch presentation and in what order—like the pain point, your story, how your business will disrupt the market, your competition, the team and so on. In actuality, the content of your pitch depends on your idea.
If you have a complicated business, your main task is to distill it down to something investors can understand: What is the product and how does it work? I often find that complicated businesses run the biggest risk. When investors are even slightly confused, their minds start wandering—again, to those surface perceptions. You need to stay at a really high level. No matter how complicated the idea, you should be able to sum it up in a three- to five-word description (think: “Facebook for Professionals?” LinkedIn. “The all-electric Porsche?” Tesla). If you can’t, it’s still too complex.
“There also exists a profound and persistent reliance on more surface perceptions.”
On the other hand, if you have a simple concept, investors will probably get it pretty quickly. There’s no need to hash out the entire business in excruciating detail. Instead, wow investors with how this simple product or service is going to completely disrupt the market.
Audience, audience, audience. Not too long ago, an entrepreneur pitched at a competition with a $100,000 prize where NASA logos were prominently displayed as the backdrop and various high-tech companies served as sponsors. The entrepreneur, speaking with a non-native accent, proudly pitched his idea for a new formulation of concrete, caring naught for the audience’s potentially diminishing attention span—and won.
How did he do it? He was authentic—about his strengths and the significance of his product in terms of the hard data.He quickly got past the “gatekeeper” and was able to get the audience to suspend their disbelief, recognizing that the audience wanted huge amounts of numbers and information about the technology right up front; this was what grabbed their attention and triggered an emotional response. The audience was won over.
In the art of articulation, never underestimate the power of authenticity.
Laura Huang is an assistant professor of management and entrepreneurship. She currently studies how an investor’s gut feelings play a role in entrepreneurial decision-making, in addition to business viability data. Prior to entering academia,Huang worked in investment banking, consulting and general management. She has also served as a consultant and adviser to a number of startups in the U.S., Europe, Southeast Asia and China. Follow her on Twitter: @LaurahuangLA.