Anand Rajaram of Pixily recently posted a piece on approaching industry competitions/award programs if you are a startup. I thought that you may find it interesting.
While nothing says success like an increasing customer count, sometimes a startup can appear bigger, more established and get great free marketing from success in a prestigious industry award. The right award or two can help get a customer over the “should I trust this startup” hump!
Should startup founders spend time creating a crisp elevator pitch? Yes! Let me explain what got me thinking about this…
I recently received an email from a student in Texas who is thinking of starting a business. He stated, “I’m 23, I have my eyes on an idea with IP that’s protected, I’m piecing together a business model, and I’m doing all in my power to make this happen. The problem is that I’m so young I don’t have many industry contacts and, even though I’ve yet to try, I think it would be difficult to get a VC to sit down in the room with me and listen to my proposal because I’m so young. I think because of my youth they may not take me seriously even though the idea is solid, potentially very profitable, and has IP security. ”
My advice to him was that if his idea was good, and if he could articulate it well, then he could make smart people interested in helping him. First he should get together a smart elevator pitch and then approach potential advisers who could help him evaluate his idea’s probability of success, firm up the business plan and then introduce him to capital sources and team members. I really think a crisp elevator pitch will be critical in getting experienced people to lend him a hand. (I guess I just articulated it better here that I did in my emails to him! Sorry Steve!)
What is an elevator pitch?
Venturehacks has a great post on how to prepare an elevator pitch for an investor and says, “the major components of the pitch are traction, product, and team.” If you are preparing to raise venture capital you must read their take on the elevator pitch.
But I think that an elevator pitch has an importance greater than just impressing investors. If you are a startup, no one has ever heard of you. No one knows what you are doing. No one knows how or why they should lend you a hand or buy your product or make an introduction to someone who could join your team. You need to be able to let people know what you are up to quickly, and interest them enough to get them thinking about how they can help you build your business.
An elevator pitch is a short description that will help the entrepreneur quickly explain the purpose of their startup to someone who has not heard of the company before. I think you should have a single elevator pitch (that you occasionally tailor to a specific audience, such a customer or investor or potential team member). You will need to have practiced this pitch to the point where you can recite it in your sleep, because you never know when you’ll be in front of the CTO of a potential customer or find the VP of Sales that you’ve been dreaming of for months. Make that first impression a solid one.
Here is my take on how to get a good elevator pitch put together:
- Problem definition
- Size/magnitude of problem
- Your solution, including why it is better
- Your company’s traction
- Who you are
I don’t think your elevator pitch should be more than 30 to 45 seconds long. (And you probably don’t want to talk at light speed, unless you are pitching a speed speaking product – lame joke.) If the listener is interested then they will ask you questions and you can elaborate on the points that interest them.
I’m not convinced that my formula for a good elevator pitch is perfect, nor is it the only way to create an effective pitch. I’d love to hear other people’s ideas on elevator pitches that have worked for them.
Having spent some time over at TechStars, it is pretty clear that the TechStars founders take the elevator pitch very seriously. The teams are forced to play with their elevator pitch over and over – practice, modify, get feedback on and practice. These pitches are not focused for particular audiences – rather they are generic pitches that would be interesting to customers, investors and people who might want to pitch in with their time or introductions. My experience at TechStars has really re-inforced the impression that an articulate elevator pitch is very important for pretty much any entrepreneur. After all, you never know when you’ll bump into the person who will somehow help your startup take over the world!
I attended last week’s Web Innovators’ Group meeting, and I have to admit, I was a little disappointed vs. the previous Webinnos I’ve been to. I’m not going to pass judgement on any of the companies, because I think they were of the similar caliber to many that have presented before. Rather I was pretty let down by the quality of a couple of the actual presentations. I just didn’t think a couple of the companies put much effort into preparing to speak to such a large group.
I understand that the purpose of the forum is to allow up and coming web startups to get exposure to the wider New England web community, and believe that David Beisel of Venrock has done an amazing job creating a such a strong networking group. However, I wonder if the community would benefit from an established local internet company making a presentation every now and them. I, for one, would love to hear a talk by an executive from a company like RueLaLa or Logmein. Before anyone starts attacking me for going against the spirit of Webinno, let me explain a bit:
- I think it is valuable for startups to see what success looks like, or at least one version of success. At Webinno, everyone is chatting about new ideas (which is really fun!!) But it is easier to understand the steps that an interesting idea needs to take to become a legitimate business if you’ve seen an example or two.
- This could be pretty inspirational for a lot of the younger entrepreneurs. There ARE big internet companies in Boston – and there can easily be more. The community should be getting pumped up about the established companies in the area that are really making a difference on the internet scene nationally, right here from their bases in New England.
- A lot of these companies are hiring. There is nothing wrong with a smart developer spending time at a quickly growing, successful internet company before launching their own startup. This might also provide a reason for these bigger companies to want to present at Webinno.
- Finally, seeing professional managers present might help the startup CEOs understand what a more … crisp presentation looks like. If you’ve got a room full of topically relevant people who are sitting at the edge of their seats waiting to hear about your startup, a rambling product demo isn’t good enough. You are presenting to the preeminent web startup crowd in New England and I think the group deserves better. Hearing a well delivered presentation by a successful executive might really help others understand how to articulate their startup’s positioning.
To summarize – Webinno is awesome, and I only want it to get better. It should be more than just networking, although, as Scott Kirsner points out, it does have some pretty good networking. I’d love to see an established company or two present occasionally; I think the group would enjoy it and the region’s entire startup community would learn a lot. See you at the next Webinno, if not sooner.
Properly supporting and working with the CEO is the most important action a venture capitalist can take after funding a startup. When I was a VC, I was very impressed with how often the partners I worked with would communicate and brainstorm with their portfolio companies’ CEOs. Part of the VC’s responsibility, and the board of directors’ responsibility, is to perform annual reviews of the CEO’s performance.
The board evaluation of the Chief Executive Officer
The CEO position of a startup is pretty lonely sometimes. Just because a CEO is in charge of a business doesn’t mean that his/her professional development is over – but getting the right feedback and guidance that can help the executive grow professionally can be challenging. Getting effective feedback from employees can be hard, since it is not always easy for them to speak “negatively” about their boss to their boss. And of course, your employees and co-founders are probably pretty busy trying to grow the company. Interactions with the board can be enlightening, but usually focus around discussions of strategic imperatives and operational milestones, not the CEO’s professional development.
While it is certainly the CEO’s own responsibility to try to grow as a professional, it is up to the board to provide the critical feedback and development. Some of the partners I worked took their CEO’s growth very seriously and ran rigorous CEO evaluation processes from the board level. This is a huge amount of work. Sometimes my partner would run the process, other times another VC on the board would, and sometimes it would be the independent director. This is not the same as the “hit this revenue number and these operating metrics and your bonus with be $XYZ” that is put together by the compensation committee. This is really a process intended to help the CEO become a better leader and manager.
I only got to see this a couple of times; I wasn’t a VC long enough to run through this cycle more than that. I’m sure that I am missing some of the important nuances (heck, maybe even some of the important macro-themes) of a CEO evaluation. However, from what I could tell this is what happened:
The CEO was informed by the board that one of the directors would be running a review process. That director would inform the CEO what the expected timing of the evaluation would be. The end product of this review would be a discussion with the CEO as to his/her performance for the previous year against the company’s stated goals and the CEO’s developmental goals from the previous year, critical feedback and the setting of additional goals/areas to for improvement for the following year. That director would also have a private conversation with the board alerting them as to his/her findings in this review.
To prepare for the review evaluation forms were distributed to each member of the board of directors (I’ve put an example of this form below – I’ve embedded it with Pixily’s document sharing/embedding feature). The director in charge of running the review would collect these forms and have conversations with the other members of the BOD as needed. The director would also do the same with critical members of the management team, such as the CTO, Sales VP, etc.
The evaluation focuses on:
- The company’s previous year’s goals and performance vs. those goals
- The company’s near and long-term prospects
- The CEO’s character, as demonstrated in the past year
- The CEO’s ability to develop and articulate a vision for the company
- The CEO’s leadership of the company
- The CEO’s leadership of the board of directors
- The CEO’s management of the executive team
- The CEO’s ability to recruit talent into the company
- The CEO’s decision making skills
- The effectiveness of the CEO’s operational style/skill-set
- Top strengths and weaknesses of the CEO
- Critical advice from the BOD and team on how to improve management skills and lead the company
I’ve put my own version of this CEO evaluation form into Pixily and embedded it below. This is not a perfect copy of what I’ve seen other VCs do – it is my own attempt to make a more clear, less overlapping review form. I’d love comments on it, as I’d like to leverage other people’s experiences to make up for my own lack of experience and then improve the evaluation form…
After collecting all of this feedback, the director would then create a master evaluation form that would be shared with the CEO during an evaluation.
Anyone else going to Webinnovators tomorrow? I’m looking forward to the presentations. Raj and the team from Localytics will be presenting in one of the side dishes. Localytics is a TechStars company that seems to be making some good traction with their product, a tool to help mobile app developers understand their customers’ usage of their mobile applications post-download/install.