What do we fear more than death? The surprising answer is: to speak in front of an audience. According to Psychology Today, the reasons are hard-wired in our past. The fear we feel when speaking in front of a group isn’t a fear of talking per se, it is rather the fear of being rejected. Back in cavemen times, such rejection from a social group, meaning being left alone in the wilderness, did indeed lead to death more often than not. This fear and the accompanying panic does not come in handy when we try to convince an audience. When we present an idea, we like to come across as confident, competent and self-assured as possible – mostly because very little people are happy to put their trust, time and possible money forward to support someone who is rambling confused and panicking on stage. Pitching a business idea is therefore very much about two things. First having something to say and second to say it clear and in a convincing way.
1. Less is More
Smart sentences are simple and do not have commas. Do not waste time. Be precise. Use short sentences. Any pitch focuses on a (general) problem, a specific solution and a call to action. The value proposition is the most important part of the solution, hence focus on that. The call to action has a multipurpose. You get initial feedback about your pitch and you explicitly trigger an initial decision. Every little decision brings you one step forward to your goal and makes it much harder for the other side to back out later in the process – we tend to love and value our initial decisions and are by nature very reluctant to correct them (choice-supportive bias).
2. Know your Audience
More often than not we do know our audience in advance. At least we have names, job titles or the company, allowing us to gain some information up front. Use that information to understand the motivation of your audience. Business angels for example are looking for a team that matches their personal working style. They usually represent smart-money and aim to become a part of your team. Venture capitalists do not care much for the specifics of your team-spirit but focus rather if you are a fit for their portfolio. They focus on an easy due diligence process to understand where to best put their big-money at work. Not knowing who your audience will be, is begging for failure.
Knowing your audience implies that just one generic slide deck is not enough. Adjust your pitch according to your audience for success.
3. Facts over Theory
Focus on the solution and hence the value proposition but chose the right level of detail. There is no audience in any pitch looking forward to being educated about your theoretic formula of a solution. It is barely the recipe that sells your idea, it is the product or service that comes out of it. Hence keep the formula, the detailed recipe and lengthy assumptions in the appendix of your business plan document. Focus on the value proposition and how this is relevant for your audience and future clients. Present your product, not the recipe.
4. No Hockey-Sticks
Be careful with financial projections. Be ambitions and believe in your idea. In a pitch situation, you are the only one who does. Your audience is putting a lot of effort into figuring out, why your idea is not going to fly. Hence avoid too optimistic graphs („hockey-sticks“) in your financial forecasts, especially if you have no hard evidence or data to back it up. You might believe, that your $ 25k startup is evolving into a $ 100m company over night and it might even be true. Nevertheless, the bigger the jump, the better supporting argument is needed and the harder it will be when hitting the ground.
It helps knowing a few valuation methods used, to estimate the value of startups/companies or projects such as multiples, NPV or DCF. They all have their merits and weaknesses but they are used by practitioners, often in combination. Hence having a basic understanding of these methods supports your arguments.
5. Accept Feedback
Accepting feedback is hard. Especially in cases where it is delivered in a way that we really dislike. In such a situation it is key to focus on the feedback and ignore the wrapper around it. Although delivered badly, it is essentially a learning opportunity, helping to further shape your pitch and product.
Feedback does not imply to change no matter what was criticized. But it forces the entrepreneur to decide what to do. And the hardest decisions are probably those about what not to do. Mastering this is mastering the essentials of strategy. Or with the words of famous Michael Porter:
The essence of strategy is choosing what not to do.
Overall feedback gives you the chance to fail fast. And if you must, failing fast is what you like it to be. It allows you to learn fast, adapt fast and getting ready to try again.
Use any chance to test your pitch. Practice in front of your mirror or video camera. Practice in front of your family and friends. Use their feedback to fail fast the first few times and adopt. But you do not have to punish your family and friends over and over again. There are wonderful resources available allowing you to practice your speaking skills in safe environments. The number one organization, dedicated to develop speaking and leadership skills worldwide are the Toastmasters International. Chances are high, that there is a local club in close proximity to your home where people meet to speak, give feedback and learn how to lead. And if you happen to be around the corner in Berne, Switzerland, feel free to visit the club I am attending: The Rhetorik Club Bern (German) or Toastmasters Berne (English).