Don't Bury the Lede.
A guide to getting to and saying the one thing that really matters.
As an Advisor in Residence (AIR) with 1517, I’m exposed to many pitches and a lot of brilliant founders. But there is one thing that I notice most commonly in founders at the early stages. Funny enough it's something that we get taught (hopefully) in grammar school but don’t remember - we bury the lede. And as a founder myself, I have been guilty of this many times. Sitting on the other side of the table I get to see how common this issue actually is.
I was recently on a call with a really interesting founding duo that was pitching an energy and crypto business. It wasn’t until 45 mins into our conversation that I heard the one sentence that caught my attention and really caused me to lean in:
WOW, wait a minute… you are going to what?!
It turns out that this founding team had been through the wringer with their pitch and had received so much feedback that they had lost their core message.
That one line was the line that would make any VC pause and ponder what would happen if this team could actually pull off what they were proposing.
As a founder raising venture capital you are signing up to build companies that have the capacity to change the world and in doing so, create outside returns - returns that need to be upwards of 10X to 100X. That's the model. This means, that the ideas being pitched need to be as big as those returns. If that doesn’t sound like what you want to do or your business simply is not meant to scale that large, then you probably want to think about alternative sources of funding and this article is only partially relevant to you.
If the above is what you want to do, then read on.
The One Thing & the Promised Land
What makes a good leading line — a good elevator pitch? The easiest way to think about this is: what is the one thing that will be possible tomorrow that is not possible today without your company, and what are the impacts this could create?
Ideally, this can be mapped back to dollars and cents. It could be potentially dollars saved, earned, markets unlocked, efficiencies gained, etc.
Whatever it ends up being, you need to communicate how, if your company overcomes all of the other chaos that comes with company building, you will be strategically positioned to capitalize on this massive opportunity. Think of the “Promised Land” (not my term): https://www.linkedin.com/pulse/greatest-sales-deck-ive-ever-seen-andy-raskin/
This core idea and concept needs to be at the forefront of your entire story. Everything you are doing today and in the future should the clearly mapped to this outcome. In that way the story becomes cohesive and I will keep leaning in. You now have my attention because I really want to hear how you are going to get me to the Promised Land.
Now onto the main point of what I have noticed. There are a lot of “venture” investors out there that are wary of big visions. Just like entrepreneurs, VC’s follow the same rule of greatness. Of the total population of venture investors, I would argue that only 10%-20% are exceptional. This means as founders, most of the conversations you are going to be having are really being had with people who are mediocre-to-good at best. Which, following this logic, means the feedback that is being provided is probably not the most thoughtful.
If you hear the following, think twice — there may be feedback behind the feedback:
“We really need to see you CAC or LTV or COGS before we can get comfortable investing.”
“What if Google builds the same thing?”
“Your market is too big.”
Then when we break it into segments “your market is too small.”
“How will you monetize this?”
"This space is too saturated... OR I'm concerned there aren't many players in the space."
"We understand you have 50 customers, but we can't get comfortable with your 10% churn."
“A bit too early for us but do reach out to us during your next round and we’ll be cheering you from the sidelines in the meantime!”
“Your revenue growth is amazing but what’s your strategy if it slows down?”
You get the point. The real goal is to flesh out whether or not the questions are valuable feedback or not.
Consider the following;
Are they actively investing in companies at your stage?
Does this investor know your space intimately?
Have they been asking other thoughtful questions during the meeting?
Are their questions appropriate to the stage of your company?
The trick with all questions is to read between the lines.
Real Questions, Real Answers
As 1517 is a pre-seed/seed stage fund, I thought I would put together a list of stage-specific questions you should be prepared to speak to:
What is the product?
Who is the customer?
Why is this important to do?
Why are you the one to do it?
What is the MVP?
How are you going to test the viability of this product in the market?
How much capital do you need and how long is it going to take?
Did you do what you said you were going to do with the first traunch of capital?
What assumptions did you make that were right and wrong?
Did you learn what you are missing in regard to product market fit?
What changes are you going to make and how are you going to test them?
How much can you charge your initial customers?
Is there a market here? (Hopefully) Tell me more about it.
How else do you need on your team to make this PMF happen?
How much do you need and how long is it going to take?
Did you do what you said you were going to do with the second traunch of capital?
How close was your product launch to your key assumptions about PMF?
What are the additional tweaks that need to be made in order for you to approach product scalability?
What are you learning about your customers and how they want to buy the product?
How are you thinking about selling the product and in what ways are you thinking creatively about this?
How are you exploring pricing options to maximize revenues?
What are your rough margins and operating expenses?
Where are the biggest gaps on your team and how do you plan to fill them?
What are the biggest Go to market hurdles you face?
How much do you need and how long is it going to take?
While the above list is not by any means exhaustive, it is meant to illustrate that different company stages mean the feedback you should be getting from investors should fall into and track with the questions above in some way. If not, chances are that they are putting you in a bucket that you do not belong in (consciously or unconsciously) Listening to this feedback is going to pull you away from your lede!
And now for the most important point: if investors are not giving you the right feedback, it means they do not understand your company and/or your stage.
How you pitch is who you will attract - investors who get it, will get this. One of the things I admire most about 1517 is that they are not afraid to hear big visions. When you lead with your big vision and the rest of your story is in support of this, you will find that the people who really get it, will lean in - literally and metaphorically. Don’t modify your pitch every time you get feedback, only when you feel that the investor giving you that feedback genuinely gets your business and your big vision.
If you are truly on a mission to change the world, don’t hide your vision in the back half of a dry deck, bring it up front and center.
Most people you speak with won’t get it.
Don’t sweat it, just move on. The people who get it will lean in.
That's what you want to look for.