195. Flip The Script & Perfect Your Pitch (Oren Klaff)

195. Flip The Script & Perfect Your Pitch (Oren Klaff)
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Oren Klaff of Intersection Capital joins Nick to discuss Flip The Script & Perfect Your Pitch. In this episode, we cover:

  • Backstory/path to finance
  • What led to the founding of Intersection?
  • What’s your mandate and focus at Intersection? Tell us about the Velocity product.
  • Your bestselling book Pitch Anything, provides a detailed methodology on effectively presenting, persuading and winning a deal during the pitch. Can you go over some key takeaways from the book for listeners?
  • In the book you talk about the “S.T.R.O.N.G Method.” Can you briefly summarize the most important components of this approach and give some examples on how it works? 
  • Your newest book “Flip the Script: Getting People to Think your Idea is Their Idea” is about to launch on August 13th.. why’d you write the book?
  • I liked the title of your first chapter… Inception.  Many will remember the blockbuster movie.  What’s the “We are evolved distrust information from the outside world”… how does this impact the approach?
  • Is there a framework of structure that folks should follow to successfully flip the script?
  • What’s the biggest mistake folks make when trying to sell?
  • Whats’ the most practical, simple, pragmatic advice you can give… let’s say a founder trying to raise venture capital… that they can take away from this convo and implement immediately. Do you have a set of questions and structure for every sales discussion going in or do understand the concepts and then treat every conversation organically? Any tips on getting the meetings w/ prospects? 
  • Let’s say someone has optimized their close rate… do you have tips on securing more qualified meetings?
  • If you write another book… what topic is next?

Guest Links:

Key Takeaways:

  1. When you’re raising capital, while there are some nuances, ultimately you are selling – with your product being equity or debt of a company. The lessons you learn when you’re raising capital, can be applied across any kind of sales situation. 
  2. Today, the focus at Intersection Capital is primarily around DTC and the e-commerce space.
  3. In deal making, especially in venture, private equity or deploying capital, there’s no perfect information. It is all about negotiation and most importantly, timing.
  4. When someone is investing in an early stage company, they’re essentially “giving money for words.” Oren says, it is an imperfect relationship between the two parties, therefore as an entrepreneur your frame on the value of what you are exchanging needs to be stronger than that of the investor.
  5. An incredibly powerful “frame” that Oren talks about in his book “Pitch Anything” is the intrigue frame – dropping the belief system that there’s more to learn for the buyer or the investor the longer that they stay involved. 
  6. Oren’s new book “Flip The Script” is intended to give readers the methodology of teaching buyers how to buy from you and teaching investors how to invest in you, to ultimately disqualify anyone that does not follow the instructions of how you’re willing to do business.
  7. Today buyers buy, they aren’t sold. This is why it’s important to drive a process where the buyer voluntarily creates their desire to do business with you because those ideas are strong and price insensitive.
  8. In your pitch it is essential to present the big idea, get people to really understand the problem that you’re attacking, why what you do is hard, who else does it and ultimately what’s your unique solution? 
  9. Another essential element of the pitch is not only presenting the team and their credentials but most importantly why this team is the right team to solve the problem. 
  10. Oren shares his perspective on the pitch as being a performance. He compares it to performers such as, actors or comedians, they strive to tell a story with confidence and authenticity, which is exactly what entrepreneurs should adopt. 
  11. Flip The Script is largely about how to take a buyer through the process of buying from you, where you’re controlling the process, however they feel comfortable and like they have autonomy to move forward, moves backwards, leave or go into the deal at any time.
  12. Additional takeaways from the book include: Positioning yourself as the prize – have your target compete for you. Creating a sense of urgency & scarcity along with a clear deadline while pitching.

Transcribed with AI:

0:03
welcome to the podcast about investing in startups, where existing investors can learn how to get the best deal possible. And those that have never before invested in startups can learn the keys to success from the venture experts. Your host is Nick Moran. And this is the full ratchet

0:23
Welcome back to TFR today New York Times best selling author Oren Klaff joins us. Oren is author of the very well read and well regarded Pitch Anything and now has a new book, flip the script, getting people to think your idea is their idea or an as a career investor and has some great insight on pitch frameworks, selling strategies, how to prep, how to get meetings, and ultimately how to drive to the close. We discuss those and more today. Here’s the interview with Oren Klaff.

Oren Klaff joins us today from San Diego. Oren is the founder and director of capital markets at intersection capital, I see is a San Diego based investment banking firm with 2 billion in aggregate trade volume across a diversified portfolio of companies and transactions. Oren is also the best selling author of Pitch Anything and flip the script, getting people to think your idea is their idea. Prior to founding intersection capital, Oren was a venture partner at several middle market equity funds. Oren, welcome to the program.

1:34
Hey, I appreciate that warm welcome better than most for sure. You

1:39
got it. So tell us about your background and sort of your path to finance. Yeah, finance

1:44
is interesting. I had a software company many years ago, I think now, that time period would call the 1800s or something. But I had a software company, and we were growing rapidly. And there, you know, there were maybe 11 venture firms, maybe there were five at that time, and we ran out of money. And so I tried to plug into the capital markets, and the capital markets could not understand the kind of company that we had. And so we were quickly went from 1 million to 5 million to 9 million, maybe doesn’t sound like a lot to you guys today, but was back then. And we were growing out of money. And so I went out to try and raise money and people say, you know, where’s your deck? Where’s your financial model? What’s your pro forma? What are your KPIs? What is your FTM for 12 months? What’s your LTM and I was a software guy. And these were all terms I didn’t understand. So in two weeks, I tried to put together a marketing plan a business plan a pro forma, you know, for, for Tom on balance sheet, and marketing plan. And I had never done those things. And there wasn’t the Internet to download templates. And we ended up sunsetting the company so it didn’t explode. But that created a wound in me for finance. And I’ve never completed so I’ve been in the finance business ever since I was unable to raise money for that company, because I didn’t understand what FTM LTM pro forma even meant, but now I know what it means.

3:10
So was that the origin of kind of your commitment to how to sell how to raise capital kind of developing these methodologies?

3:17
Absolutely. So what I realized is you can get a lot of profile, if you’re the guy who runs to the front lines, or if you’ve ever played paintball, there’s two kinds of people. There’s the guys who run to the front, and they usually die early, but they can help you win. And there’s guys who run to the back and they just lob safe shots. And you know, and they’re the last one standing.

3:35
Yeah, that’s me. You know,

3:37
every sport has those guys. I’m gonna whip. Which one are you? Nick?

3:41
I’m in the back. I’m the one. All right, yeah, I don’t want to get

3:46
on the dummy. Did you guys go? Where’s he going? Right? With no support, no line, no backup storm in the front. That’s what the capital razor is. Right? If you win, you win big. If you lose, everybody blames you. And so that’s a good fit for my personality. So yeah, when you are raising capital, ultimately, and a lot of people don’t understand this, while there are some nuances you are selling, right? But your product is equity, or debt of a company, you’re selling a product, right? And it is an absolute commodity. So it’s the most difficult form of selling, because you’re selling something is even more of a commodity than rice or oil or the commodities, right, because you’re dealing in money. So the things you learn, when you’re raising money, you can apply those lessons across any kind of sales situation. So that’s what I try and do is bring people the things that work in capital raising. also work on the frontlines of sales.

4:44
Love it. Well, and it’s a great analogy. I mean, before I raised my first venture fund, I had calls with 35 Different GPS at a variety of different VCs and the majority of them told me Don’t do this. It’s so hard and it’s so painful, you know, fortunately I proceeded, but you take a lot of lumps, you get shot with a lot of pimples, so to speak, you know, learning how to do this and perfecting kind of your sales approach and craft.

5:15
So I use this explanation to people but not as steeped in this finance world as you so tell me what you think of this. If you go to North Beverly Drive in Beverly Hills, there’s the world’s best North Face store, and you walk in there, and the stuff they have is incredible. The material science that you can go to the top of Kilimanjaro, Kay to hike to Nepal for a year, you know, with the jackets and the boots and the thermal underwear, and the parkas and the zip ups. And that stuff will keep you warm, and negative 70 degrees right now and you’re buying it at sea level. They don’t develop it at sea level, they just sell it there. Right, they develop it on the top of Kilimanjaro, and sometimes they die doing it. They go Oh, oops, sorry, Frank. Yeah, obviously, that jacket doesn’t go below 50 degrees. Next, right. This is stuff, you know, the methods that work in raising capital, in in early stage entrepreneurial companies are developed in extremely risky situations. And you meet a few people come back from those fronts and have the narrative talent to describe what happened there. What was meaningful, right? What is a doing don’t? What is something from experience that might be repeatable? And what is a known element of human psychology? And that’s what I think people listening to these podcasts have to sort out. Yep, what is an absolute hard black and white doing don’t write, Makes Your Pants stay up around your waist?

6:53
Well, I want to get some of the heuristics on the show today. But before we dive into that, tell us a bit about the mandate in the focus at intersection. Yeah,

7:02
so intersection, we originally started as brokerage, so we would find a deal, go raise money for it participate a little bit. So we’ve done hundreds of deals like that, then I met a partner who had a good amount of working capital. And we would look opportunistically for deals that the principal liked, right. And so he built up sort of a net worth of, you know, call it, you know, 60 to $80 million, and was pretty frisky in the range of stuff he would look at. So one day, it would be, you know, six cap real estate or a ground lease. And another day, you know, won’t be a Facebook API plugin. So that gave us a certain a lack of focus, but a huge amount of range. And because we had a lot of captive capital, and easy access to LPs, we were pretty adventurous. And we got into some really interesting projects. I mean, a genomics deal, which, you know, I was one of the first guys in it, I got to it, when there were 2025 people in the company. Now there’s a couple 100 people and IBM has invested, we certainly have some exciting real estate in Hawaii, you know, they’re not making any more Hawaii. So that stuff tends to go up, not down. And that’s really the range of things. But wow, bunch of DTC or direct to consumer, ecommerce, because today, I think that’s a really important space. So in

8:20
advance of the interview, I went back to my copy of Pitch Anything. So I haven’t read the book in years, it’s been a while. But I went back to it and looked at my notes, and my very high level notes, I kind of framed up some of your major takeaways, and the number one thing I had was simplify. Number two was position yourself as the prize or have your target compete for you. Number three was get them to adapt your frame in your way of looking at the problem. And number four was create urgency scarcity with a deadline, can you give us some exposition and tell us a little bit more about kind of what you were trying to achieve with Pitch Anything? And maybe maybe the major takeaways?

9:02
Yeah, pitch or anything was interesting. This is stuff that we did across a range of, I would say, I learned that Pitch Anything methodology internally, across a range of 27 deals that we did, oh, very fast in just over two years. And so to be able to do that kind of volume, raise that kind of money, deploy it and turn assets, or just the way we refer to it or deals or assets. It was not possible with a four man team to do that much work, raise that much money and move that fast without something that worked better than the old scripts and the old stuff that everybody was using. Sure. And that really turned me into this concept of frame control when two people come into a deal and they have different perspectives on what needs to happen or what the deal is a deal cannot be done. This sense of when when you know from a HPR negotiation, I felt like that had an expiration date. That was passed. Yep. Right in deal making, especially in venture private equity deploying capital. There’s no perfect information. It is in negotiation. It’s timing, you know, the secret of great comedy. God asked me, Oren, what’s what’s the secret of great,

10:19
what is the secret?

10:20
I mean, timing and deal is essential, right? Power in a deal is essential, who has the who needs the deal, the most, who appears to do need the deal most the deadline, the scarcity of the deal, the amount of deal flow, all of these advantages and unfair advantages come together in a imperfect relationship. Right? It is not possible for a entrepreneur coming from just one set of circumstances, which is totally different from Nick sitting in his, you know, glass office, writing in a elevator getting his Tesla, you know, calling a helicopter to bring him lunch, the

11:00
right these are, you know, me too well.

11:04
These perspectives are completely incompatible. Then I started asking, what is it perspective made up? Well, it’s made up values, it’s made of beliefs, it’s made of needs, it’s made of life experiences, it’s made of money. It’s made of resource availability, it’s made of willpower. It’s made of desire, it’s made a vision, right, and that is your frame. That’s how you’re viewing the circumstance. One frame in an investment situation, one frame ends up being stronger than the other, because this is not a fair exchange, right? When you’re investing in early stage company, you’re giving money for words. You’re literally this is an amazing thing like this is this is the power of language that we have day this a true power, you can you can use some words, and draw on the back of a piece of paper and get millions of dollars for it. Yeah, like that was possible 70,000 years ago, right? Oh, you want to go give me a sheep. You want a knife, give me a hammer. Nobody exchanged words for money. But we do that today. And it is an imperfect relationship. So your frame on the value of what you’re exchanging needs to be stronger. If you’re the entrepreneur, then the investors frame, right. And it’s no more complicated than a three year old, who wants ice cream before dinner, and you’re having a dinner party, right, and the guests are arriving, and you’re really trying to show off and everything’s set up perfect, and time and energy and MultiPlan in it, and you got a screaming three year old who wants ice cream is going to destroy the party, that is this strong frame, you’re not going to break that thrilled frame and say, Stop crying, stop wanting stop making a mess, that is the strongest frame, you’ll encounter. Not the strongest but a very structured, you have to give the ice cream or ruin the party, right? That is frame control, the three year old controls you because you have too much at stake. And you have to give in frame control. So frames ended up being a very, very stable way to understand situations. Now there’s different kinds of frames, right that you could put together. There’s that timeframe, which we’re all familiar with. There’s the scarcity frame, there’s the power frame, there’s the intrigue frame, right, an intrigue frame is dropping a belief system, that there’s more to learn for the buyer or the investor, the longer they stay involved. That’s the intrigue frame and it’s incredibly powerful. So now frames developed. And it just became a way that millions of people now understand social encounters, especially when it comes to investing.

13:45
So what would you suggest with the two year old that screaming for the ice cream? How do you change their frame?

13:51
Yeah, well that I use that because there’s no way out. Right? That is a strong frame. That’s right. I think a better frame to describe is is you know, we went many years ago to meet Vinod Khosla. Yeah. But you know, he had the power frame is sitting at his desk staring out the window, you know, fiddling with his phone, half paying attention. And we invested a lot of time, energy money to get there. Right, whether he liked the deal or not, that we were offering and we already had, you know, six $7 million in the deal, and we were executing. So, you know, it wasn’t just an idea, you know, in a SaaS company, and he was being by any measure or stretch of the imagination. Rude.

14:33
Okay, not surprised. All right. Okay. So

14:36
that’s what I call the power frame, right. lording over you. You know, we did a couple things, right, which the response to the power frame right is the most amount of control you’ll ever have is the moral authority frame. You frame somebody’s behavior as weird, unusual outside the norm and stretching towards immoral or unethical Call, whenever you frame somebody outside the norm, they will want to come back to the center and prove that they’re not unethical or immoral. Interesting. The way that I framed it up in that meeting is that they said, Listen, we might be right for you, we might be wrong for you. But this behavior and lack of attention shows a fundamental misunderstanding of what a startup is, which is, has a limited amount of time to do a huge amount of work and raise capital to continue doing that work. So we don’t have a lot of time to waste. If you’re telling me I came up here stopped operating or company stopped developing code, stop talking to customers, to pretty compelling out the window. Yeah, and twiddle your thumbs. It shows there’s a fondle misunderstanding about what you do. Because on your website, you say, I’m the startup friendly guy, I understand entrepreneurs. But this behavior shows you don’t know that much about the life of a startup entrepreneur, could you please explain to me what is going on here?

16:06
Wow, you go right after it, then the better you are

16:11
at using frames, the more direct and the more you can expose somebody’s behavior. Now, I’ll give you an easy way to do this. You don’t have to go to that extreme read Pitch Anything and you can learn it. But whenever I have a call with the CEO, $500 million companies $700 million, billion dollar net worth, that’s probably once every two weeks, right? Probably 99 out of 100 times they come late. Right? It’s a bit of power frame. It’s a bit of being busy. When I meet with smaller companies, you know, I’m sort of loose with my schedule. I come late, everybody does it. And so I’ll always go. Hey, Nick, are you here for the 1206? Meeting? How many words is that? You hear for the 1206? Meaning six words? Okay. Totally under control. 100% of them will go? Oh, my God, I’m so sorry. You know, we’re the tariffs are causing our freight to be stuck in Azerbaijan. You know, we can’t get oil, the manufacturer of $2 billion of goods. I’m really sorry. Won’t happen again. Impressive. Yeah. So that if you want an easy way to see the moral authority frame at work, just start telling people Oh, you’re here for the 107 meeting?

17:24
I feel like you got you got to do that with a smile, though. Right? I mean, it’s, this is a delicate dance, you’re playing with, you know, your, your counterpart on the other side of the table when it comes to you know, venture capital, okay, startup, founders,

17:37
two things. Yeah. Two things on that. The more aggressive you are, the more fun you need to be having cannot be bitter. It has nothing to do with the techniques. Nobody likes bitter people anyway. Yeah. Right. So what do you say, Hey, are you here for the 107 meeting, you know, in a delightful tone of voice, right, which is quite aggressive. Or you say, Hey, what did you have for lunch? In a very bitter way, it doesn’t matter what you say, if you’re bitter, you’re bitter, and nobody likes it. So you have to have fun with this stuff. You can’t be bitter with it. Secondly, if anybody who comes to a meeting late, right, who is high functioning at the level of a CEO or an investor, right, they know how meetings work, although we all make mistakes. 10 o’clock meetings start at 10 o’clock, that’s a professional thing to do. If anybody gets mad at you, because you call them out for being late, you know, in a fun way, they have the right guys to work with ever. Okay, so it’s a good way to see people’s personality as well. None of this stuff will ever get you in trouble. It can feel anything, a Pitch Anything. I’m a huge laboratory at 5000 people inside a paid, you know, membership around Pitch Anything, this might be the biggest negotiation, capital raising Business Development Laboratory in the world. So this is not stuff I do. And I’m telling you about, I have 1000s, and potentially millions of people doing this stuff and coming back every single day and say, I did exactly what you said. And it worked perfectly. So this is not experimental, right. But secondly, anybody gets mad at you, or frustrated or blows up because you try to align what’s happening, to how things should work. They’re covering up for something, they don’t have capital, they’re not intending to invest. Something weird is going on behind the scenes. And you will be surprised, you know, I would say, and, Nick, you gotta tell me, you know, three out of five capital meetings are with people who don’t have money, even if they look, you know, even if it’s I don’t want to pick on True Ventures or anybody. Certainly they have money raised, but they may not have overhang for your space. But venture groups, private equity individuals, Tech Coast Angels, they need pipeline, right? Yep. And so many times you’re there as cannon fodder pipeline, whatever you want to call it. Most of the people you’re gonna meet with don’t have money. How do they indicate that by getting mad at you for some reason and going off You know, this is inappropriate this in a good deal. You haven’t done this right. Sorry, Nick, I’m talking over you, but never take advice from an investor and investor group who’s not writing a check. Fuck off. Yeah. Okay. Sure. I

20:15
agree. So this is a good point. It was a question I had kind of later teed up. But you know, how do you prequalify? Do you have any tips on vetting sort of investors before you waste your time? You know, meeting with them and pitching them when they might just be a pretender instead of a, you know, a real capital allocator?

20:36
Let me answer an easy question with a complicated question. But I think you’d be happier. This is what flip the script my new book was written to do, to teach buyers how to buy from you to teach investors how to invest in you. And if they won’t follow the instructions of how you’re willing to do business, it disqualifies them. So instead of these checkbox qualifications, I find it’s better to show people along the way of the pitch, how you’re willing to do business, you can’t tell somebody what to do, can’t tell somebody what to think. And you can’t tell somebody how to act. And if you try and force people to do that, they reverse psychology will come into play, and they’ll resist you. Okay, but what you can do, and what you can control is yourself. So ultimately, you can control other people efficiently, effectively, cleanly and neatly by controlling yourself.

21:37
Let’s unpack that a little more. So that the subtitle of the book is getting people to think your idea is their idea. So how do you you know, in controlling yourself in your frame? And in your message, you know, how do you reorient your audience to kind of be on your team and think that their ideas yours?

21:58
Yeah, so at a high level, if somebody believes you’re an expert in your space, you know, you’re the leader, you know more about this than anybody else that you’re executing, right, and you’re hitting your milestones, if they have a high degree of certainty that being involved with you will work out. And they want, what it is you have, because they feel the world is changing so rapidly, that you have the solution for the New World era, and everything else is fair and reasonable, then they will come up with the idea to move ahead with you, instead of you having to try and ask them. So what do you think, is this something you’d be interested in? Do you have any questions? Right, that and by the way, that is where deals go to die? When you give a presentation? And you say, well, that’s our presentation. So what do you think? Do you have any questions? That is the called the deal graveyard. There’s a million other deals in there. And you’re just one more that’s going to that dumpster. But I think that today, it’s particularly relevant because things are bought, they aren’t sold, including deals, there is so much deal flow, there is so much availability of deals that when you go and unless the investor is in your process, you’re in their buying process and their mind process is to understand and everything, right, get your valuation stretch you out a bit, sorry to give a dark view of this right? And get you to take terms based on your need, not on the desire to both sides to do a deal. Sure. Right. So you know, continue to tighten up terms by stretching out an early stage company, even if it’s profitable, its need for capital, right? So today, buyers buy, they aren’t sold. All right. And so this is why you have to drive a process where the buyer comes up in his mind with the desire to do business with you because those ideas are strong. They’re price insensitive. There’s no discounting, right, or change in valuation. There’s no renegotiation. When the buyer comes up with the idea, I want this deal. When the investor says I want to be in this deal. That is an incredibly strong, resilient, and fast moving desire because it’s in him, and he wants to do it or she wants to do it. So that’s what you have to use. You can’t sell. You have to create the situation where they are buying, and that’s why it’s called flip the script because the old script was you would go in offering your deal. Yeah, right. You would pitch offer your deal, right. And then you know, they would come back with a counteroffer. There’d be a lot of negotiation. And that doesn’t work anymore. There’s too much deal flow. Too many companies starting to efficiently and quickly for you to have any control in the old script. So I love this

24:55
idea and I can relate with it right because I’ve gone out to LPs and re He’s capital. And part of that is hunting them down. Right? So you’re chasing leads, you’re trying to get meetings with these folks. And so immediately, when you do get the meeting, you’ve positioned yourself as the pursuer. Right. And in doing that, I think to your earlier point on Vinod, you kind of lose that leverage. And to a certain degree, you can lose that power. So what are some of the sort of the key mindsets or approaches how you kind of reorient? You know, you’re sitting there in the big table, they’re sitting back, they’re checking their text messages? How do you reorient and get that leverage so that they start pursuing you?

25:43
So I think here’s a script. It’s funny, because flip the script, the idea is that the old scripts, which are scripts don’t work, right. Yeah, flip the script is things to do, and ways to say it, but your words will fill in the gap. You know, it’s a madlib, God, are you putting your words? Right, but it’s the things to do? You know, in the old days, I use in sales, you know, if you read like a Tom Hopkins or Zig Ziglar, right, a close would be like, Hey, Mr. Jones, press hard fifth copies yours, right. It’s one of my favorites in order to hand somebody the pen, you know, in the club. So used to be so not that anymore, right? But here’s a script everybody should be using, in their own words, okay? Hey, I’m really excited to be here today, we’re super busy. When you know, we might be lucky, we might, you know, might be dumb luck, we might be super smart as we think we are, might just be, you know, a twist in the way the world is working. But we’re busy. And our project is moving pretty fast. I know you guys are busy as well. So I’m glad we could all find a date on the calendar that works. We got about 45 minutes here a lot to do. You know, one of the things is we came in here openly to allow you guys to you’ve looked at our stuff, and you know, our deck and everything to allow you guys to evaluate us, which is important. You need to know what our deal is why now, who our competition is what the big idea is what problem we saw what you know, how we base our solution, what traction we’re getting, we’re going to show you all that stuff in about 15 minutes. But I’m glad we’re here because at the same time, our deals moving pretty fast. And we’re evaluating you. And we have a ton of questions and question marks, for example, we love the fact that you’ve been in our space for four or five deals. But we’re also concerned that we haven’t seen you put any money in the space for over 15 months. And so there’s some things that we’re evaluating about you that we have big question marks on. So a lot to do here today. Why don’t we get started and show you what we’re working on? So send that to rev. Okay, cost you $2, maybe $1, right, and then get that transcribed and put that in your own words and kick off the meeting with that not? Did you guys see the game yesterday? Or how about that whether so the scripts, again are things to do, which is to indicate to an investor immediately that you’re evaluating them. One of the things around here, if people come to work at an intersection capital, I allow people to do an amazing amount of mistakes and gaffes, and we’re very flexible. The one thing I absolutely do not allow you cannot work here, if you allow investors or buyers to put you in a box to put you in a box. You know what I mean by that? So this vision comes to my mind of the last scene of Raiders of the Lost Ark. Yep. Right? You remember where they find the Holy Grail, the Ark of the Covenant, a magical thing that could change the nature of humanity and potentially save the world. And the US government puts it in a crate on a forklift. And they drive it into a warehouse, where there’s at least 100,000 exactly of the same crate, it’s put in a box and on the shelf. And this is what buyers do. You pitch them and they say, Oh, this is really interesting. Send us the deck. If you don’t mind, you know, put together a proposal or your term sheet or whatever it is, we’ll take a look at it. You know, we’ll meet a committee or the board of directors, I’ll show it to the CFO or CEO or you know, my boss or my partner or some mythical entity that you can’t talk to. I’m going to show it to the mythical beast from M Night Shyamalan to the village.

29:22
Yep, yep. Okay, take it to investment committee or whatever,

29:26
right? That may or may not exist. And if we have any additional questions, we’ll get back to you. That is called being put in a box and up on the shelf, and they’re gonna take you down when they feel like they need you. That is incompatible to me with our way of doing business. Okay, so the thing to indicate, in so many words is and this is what the great pitch does. And this is what flipped the script shows you how to do is raise the stakes. So now look at what you’re doing, right? You’re saying, Hey, we’re here today to show you some things. We’re very busy. We’re doing well, you know, we got some time in the calendar, by the way, we’re evaluating you. And we have some questions, we see some things we like, we see some things that confuse us that we want to clear up. All right, so now you’re starting to raise the stakes. And this is the job of the great pitch is to raise the stakes. So it’s clear that something will be decided in this meeting, this meeting is not going to end with looks interesting, guys really excited that you came in, you know, here’s a to go lid for your coffee, and a gift box of chocolates, chocolates on the way out, right? Don’t let the door hit you, you know, will validate your parking, or usually not. So you

30:40
push you’re pushing to close at the first meeting, then

30:42
I’m not, I’m raising the stakes. So the outcome isn’t nothing, because the outcome is nothing, then you will be chasing that buyer, that investor that deal, right? And what I mean by chasing what are

30:56
the examples of the good outcomes you can get? Yeah, so a good outcome

30:59
would be here’s a perfect example. You know, if it’s a call, you know, so we do get to the point where so, you know, that’s what we have, when we have a little discussion now, right? And see if our circles overlap. And if it makes sense, to move forward, do our circles overlap enough? where it makes sense to move forward book, the next call book, The next meeting, get a milestone, you have some discussion of real interest, right? And start to get questions that are real, not the non substantive questions like, hey, you know, how do you guys see SAS emerging? Or, you know, what are the what are the holes in your management team are just the classic questions, but so you know, the low stakes are looks interesting. Once you send us an update to your deck, right? We’ll circulate it internally here and get back to you. If there’s any interest. The quality of you, the way you have it set up the script that you’ve used, then allows you to say, No, we’re not doing that. Right? Imagine you’re in a venture meeting. And you can professionally, ethically from a standpoint of professionalism and high integrity, adhering to your values and not being weird in any way, that when they say, once you send us an update to your deck was circulated internally. And there’s further interest, we’ll get back to you. You can literally say, No, we’re not doing that here. Because I’d say look, it’s not possible. We picked you guys, because you have 15 premier investments in SaaS companies, right? You guys know as much or more about this than anybody. We’ve been together here for an hour. But ultimately, you probably spent five hours in analysts, Junior analysts, Senior Analyst, you know, Venture Partners, senior partner time, and I don’t know how you value your time, $3,000 an hour, $5,000 an hour, let’s just call it five, right? You got you guys have $25,000 in this, well, we value our time the same way, maybe pirates call 5000 an hour, you know, we probably have 10 hours. So So we’ve spent just counting the chips $50,000 in high, high value time, you know, our senior management team preparing for this talk and you guys Kunis, you guys are smart about this as anybody in the world, you’re gonna say we spent 10 hours collectively, the smartest guys in the world about API plugins for accounting software. And we’ve deployed collectively 75 100,000 owners to get to this point, and we’re all scratching our ass going, and we don’t know what to do. I don’t allow that. That’s not possible. It just means to me there’s nothing here.

33:33
No, I get it. I get it. I mean, I I recently had a founder, a pretty bold founder in that, you know, I asked for a thick pro forma p&l, and he was like, okay, Nick, you know, happy to send that over. Do me a favor? Can you send me three of your founders contact info, I’d love to do some founder referrals on you. And it caught me off guard, to be honest. But you know, I thought about it. And I said, that’s exactly what he should be asking for. He should be asking for references on us how we are to work with and it made me like the founder more and move the conversation forward?

34:10
Absolutely. I mean, there’s a thing around references, by the way, you know, I see it the other way from your side, right? Where I think the right answer would be, hey, listen, happy to give you references, right as confirmatory diligence, but the CEOs of my founder companies are pretty busy running their company, they’re not my marketing department. Okay, so, you know, that would that would have been the moral authority frame for his power frame, right? It’s too big of an ask. It’s too big of an ask, you know, send me founder references, happy to do it as confirmatory diligence. It’s so funny, you know, I talked about like due diligence, Nick, you know, used to be like an insider investing term that, you know, the general population didn’t know what it meant, you know, years ago, that’s sort of a legal term that then moved into investment and capital and then it leaked into, you know, early stage. I mean, really, how do you do to diligence in a early stage company. So it’s kind of an oxymoron. But today, it really changed, right? You have two housewives in Madison, Wisconsin going to buy a dishwasher, and one says the other, Hey, have you done your due diligence? Says it’s funny, but you know, back on track. So the job of the meeting is to raise the stakes where it doesn’t end up in nowhere Ville, your polite conclusion of nothingness. And so that is the power of frame. So my frame is, right, this is not kabuki theater, we’re not here to be part of a pipeline to be part of a market report for knowledge, it we’re not an information booth for your investment report, right? We’re doing business. And so if we can’t do business with you, we need to flush that out, and be aware of what’s really going on. And so this is a great thing is when you can get yourself in position to say, hey, it’s a little strange what’s going on here? I don’t fully understand it. Right. And we know how this stuff works. It’s my third company, you know, I’ve raised $15 million. I’ve been in two exits. So I’m not the smartest guy in the world, but I’m not confused about it. Right? And, and what’s really going on here? Because I don’t understand. And if I don’t understand, that’s a problem.

36:19
So you know, you clearly you do your research on your audience, before you get in the meeting? Or do you also, do you have a set of questions? Do you have a structure for the discussion going in? Or do you kind of ground yourself on these concepts from flip the script from Pitch Anything, and then kind of just treat the conversation organically?

36:41
Here’s what I think about that. Especially, I mean, for salespeople, it is sort of a different case where you need to morph your product to the needs of the buyer. You know, not that much. You know, if you sell accounting, API, AI, machine learning driven SAS plugin for QuickBooks, that’s kind of like what you have, right. And when you go to a sales presentation, you know, you got to sort of make that if they have a triangle, you know, you got to make your round peg fit that triangle. But that’s basically what you have you you know, you don’t have 27,000 Different kinds of paper. But when you’re going to a investor presentation, right, what you have is what you have, there’s not really a way to adapt it to them. Mostly, you know, unless you’re hopping from private equity, to venture to Angel to accredited. What I think about is, you know, you gotta go, you gotta give people the big idea. You gotta, they got to really understand the problem that you’re attacking, and why what you do is hard. And by the way, if there’s one piece of value, I think out of this whole conversation, and whenever I see people present, what’s missing is, can anybody do this today? Like, can’t two nine year olds and their mom’s basement in Sweden do this?

37:57
What’s different? What’s your mo 3d

37:59
printing said, you know, marketing automation, lead automation, website, plugin Bitcoin, to Why is what you do hard? Yeah. Right, that’s missing. So the problem you saw was what you do hard. Who else does it? What is your solution? What is it? How does it work? The value proposition, the ROI, you know, for the potential buyer, you know, quick demo, if one is needed, the pro forma that KPIs the assumptions, how the assumptions, create a pro forma, and then the end, how is this team? And the other thing is not Do you have a team? Everybody has a team, right? And they all have resumes from Stanford, Harvard, MIT, Yale, otherwise, you want to put them on your team? You know, they all have credentials? Not Do you have a team, but why is it this team going to be able to hang together when the growth starts? So that’s the presentation, you can add a couple of things in there. Right, competitive break down? Some, you know, basics on the technology, I don’t know what else you’d add. So that’s what you have to pitch. Yep. And I don’t know how to change that. Right. So maybe I think about it. This, I’m trying to be helpful to your questions. This is something I don’t discuss much, it’s probably going to be my

39:07
third book. So I was just gonna ask you, what’s the third book?

39:11
I think it’s gonna be on this. You go to a meeting, there’s three layers, that you have to lay down to operate at the NIC level, there’s three layers, maybe, you know, you’re just learning this stuff. You got to start just at layer one. But the first layer is content. What is the content of the pitch? The big idea? How is the world changing? What is the problem you saw? Why is that problem hard? Who else does it what’s the solution? What is it how does it work value proposition ROI, assumptions, pro forma track record, Team demo, content layer skit that give the buyer or the investor the information he needs in the order that he needs it in the amount of detail that he can absorb in that period of time. That’s the content layer. You can win. Just getting that right. People say to me, Hey, or what happened when people look at their phones or interrupt you? I don’t know. No one’s looked at their phone or interrupted in a pitch I’ve given in years. Why is that? Well, because I give them the information they need and want in the order that they want it, and the amount of detail that they can absorb it. And then they pay attention the whole time. And don’t do anything else. Oh, that’s smart. Yeah. Fuck. So the content layer. It’s critical. Gotta get that, right, because people want to do the fancy stuff. Right. The next is the performance layer. Yeah, yeah. Right. So it’s not what I would say, you know, it’s not monolithic. It’s not monotone. You’re not nervous, you’re confident you’re not over confident, you’re in line, you’re doing a performance in line with the strengths of your personality, and you’re not trying to be someone else, that you’re not you’re not trying to be Oren Klaff. You’re not trying to be Nick, you’re not trying to be, you know, anybody else Kleiner or

40:57
you can see that a mile away. When somebody’s nervous. They don’t know what they’re talking about. They’re trying to be something other than themselves. There’s, there’s a lack of authenticity in the pitch.

41:07
I think a great exercise for anybody listening to this is just go watch some of these clips on YouTube that has a lot of use of a comedian, right? You don’t even watch the whole joke, right? But watch the setup, which is watch the setup part of the joke. And there’ll be a guy’s like, yeah, you know, I was hanging around at home and my friend Frank, call me up. He’s like, Hey, you want to drive down to Florida? So yeah, me and Frank, you know, we get a truck. And then we’re driving around like, Hey, should we pick up Tom on the way, and then we go to pick up Tom and his girlfriend jumps in the truck, too. So now there’s four of us on the way to Florida, and we stop off at Jim’s bar, right. And so it’s just all set up. But he’s he’s telling this story, whatever it is, as if it’s the first time he’s ever told it. You know, he remembers it from his childhood. And it’s casual, and it’s breezy. And it’s fun, and it’s fluid, and it’s smooth, and you’re in raptured. The reality is, he’s practiced this hundreds, maybe 1000s of times, in order to deliver it smooth and casual and fun and relaxed and charismatic. And my point is, other fields, who are performers, putting the time putting the energy putting the cycles, right? If we go into pitch a deal we’re performing, right? If you think you’re going in there and winging it, and it’s finance, and you just show them what you got. And if they don’t like it, you know, too bad. You are not plugged in and switched on to the modern world. This is a performance. Yeah. And other performers put in the time. So there’s the performance layer. You know, it’s funny, I, at one point, I went and googled, like, hey, how do actors learn their lines, because I was interested in that right now, I figured there was like, going to be the complaint scheme method, or the, you know, the Johnson Smith, method of lying learning. And there’s nothing. The way you learn lines is you repeat them, you practice them, you read them out, then you take a nap, and you wake up, you film yourself, you listen yourself doing it, you give it to a friend at a coffee shop, there’s no method, but they learn them. Do you or did you see Goodwill Hunting? Of course. Yeah. How did they learn those lines?

43:14
Well, you know, it’s funny, you bring this up, because I was I came across something where young folks were memorizing long strings of numbers, very long strings. It’s amazing, like the memory these people have, but it’s not real memory of numbers. It’s they’re all telling stories about combinations of numbers. So they attach these numbers to stories in their heads. And, you know, stories from their background and their childhood. And I would imagine, it’s, it’s similar for these actors, they’re thinking of the stories, they’re, they’re thinking of situations, and it probably helps them get in the zone and remember the lines?

43:50
Absolutely. So you know, just to circle back to where we are. I totally agree. So there’s the content layer. And then there’s the performance layer. And I think as often than not, you can see a company leave a pitch room, you know, where they’ve given us a presentation. And someone here will say, hey, you know, that wasn’t that good of a performance. So we even use that language of performance, you’re performing an act around why this dry? Now? Why you? Why is it hard to do? And what’s your traction, right? So you have to perform that. And then on top of that, are the things we’ve been talking about Nick is the control layer. So the content layer, you can do great with that, right? Get that stuff, right? You can succeed, put a performance layer on top of that. So people believe in you, trust you, like you. Remember, you want to talk about you, and it is a positive experience. And then on top of that is the control layer. Okay, that’s the exciting stuff and flip the script is largely about the control layer. How do you take a buyer through the process of buying from you in which you’re controlling the process, but they feel comfortable and like they have autonomy to move forward moves backwards, leave or go into the deal anytime. Well, that’s what flip the script is about.

45:08
So when the conversation gets off track, you know, the target maybe starts talking about something random. You reframe it, you bring it back to your lens and control the conversation. Is that one of the elements?

45:20
Absolutely. Do you play any sports or have any hobbies? I was a collegiate swimmer. Okay, collegiate swimmer. Alright. Let’s not the greatest example. There’s no really equipment that goes with swimming. What about mountain biking or motorcycle riding this year? I

45:33
was hiking in Breckenridge last week. Snowboarding? No, but I do some skin.

45:39
You do some skin. Okay. And mountain biking? Oh, a little bit. Sure. All right, great. So you do a little bit but you’re not an expert. So you go into that Breckenridge mountain bike shop, right? And you go, Hey, I’m looking for a mountain bike. And I’m a casual rider looking to get into it a little bit more. And you got the typical Colorado mountain bike shop guy there with the tattoos and the Rastafarian hair and the, you know, skinny guy. And you know, the out of central casting the guy there. Right. And Spencer

46:07
in the back. Yeah. And he says, Look,

46:11
here’s how you buy a mountain bike correctly, right? Everybody wants a carbon frame or a Kevlar frame. It’s the most exotic stuff ever. And people really love that. But for you get a steel frame, it’s a little bit heavier, right? But you drop a carbon frame, right? And that thing cracks. It’s useless. Right? So unless you want to spend $4,000, every 12 weeks not mine, just get the steel frame. And by the way, right? Don’t buy it online. Because frame size and track is a 42 is a 43. And specialized is a you know, 45 in s works is a 46 and Kemp and yellow. There’s no standards. And unlike a USB plug, right, get the bike from bike shop. So it gives you a couple of points of advice, right? And then you start hesitating. And you say, yeah, I really liked this Kevlar frame. Well, the expert has already given you the way that you can be successful buying a mountain bike. And so all he has to do is say, Yeah, you know, I know he’s Kevlar sexy, but you really going to be unhappy with that in the end. So he’s taught you how to buy and when you start getting out of line, all this do is push you a little bit back to center. Right? If you truly believe he’s the expert, which that bike shop, and his look and his experience, and his language is set up to do. Right. And then when you start equivocating and go Yeah, you know, I really liked this one. And I’m just gonna look around a little bit, right? And he says, Listen, I gotta tell you, I’ve heard this 1000 times, I’ve sold 10,000 mountain bikes, in the last 15 years. People always come back to me and go, I bought this one online, can you make it fit? No, we don’t have a mountain bike stretcher here. Right? Hear me out. Getting a bike online is going to be cheaper, but you ain’t gonna get a bike, you’re gonna get something that you’re never going to ride. And you’ll Yeah, yeah, yeah, that’s a good point. That’s a good point. Right? So he’s not overcoming objections, which never works, what he’s doing is he’s establishing the rules of successfully buying a mountain bike for you. And yes, and he’s gently pushing you back into those rules. If you are so dedicated to getting the cheapest price ever, and going online and getting it then you’re actually not a good buyer for that seller. Right, and you’re proving it by not staying in the guidelines. So hopefully, that gives you an idea of how to guide you know, when you put it all together, it really helps you got a buyer to urbane, the way that you’ve set up the you’re willing to sell and it’s exact same thing for a deal you can literally say here’s how to be successful investing in us.

48:51
I like it I like it a very good sales guy expat based in Europe, I was chatting with the other day he he kind of called that, you know, being an agent of the truth. So it’s yeah, it’s not like my opinion or it’s not you know, here’s what I think it’s, you know, this is what serves one best in this situation. This is what is going to help you, you know, be successful regardless of my shop or my position or my inventory. You know, here’s how how you can win in mountain biking and often that directs you know, the buyer toward what you have to offer 100%

49:30
I like that. I like that perspective. What’s the guy’s name? His name is Seth the heart. Seth the heart Alright, yeah, the heart you’re gonna potentially have one more fan.

49:42
Or and if we could cover any topic here on the program, What topic do you think we should address and who would you like to hear speak about it?

49:49
Yeah, for me, the topic would be financial model. Companies come in, and they’re asking for money. And I go, where’s the model and they either give me accounting, or they give me some kind of a few numbers and a chart going up to the right, a real financial model that has levers in it, where you can say what happens if something gets better or worse financial modeling, it appears to be a lost art form.

50:16
Love it, or what investor has influenced you most?

50:20
I think the investment investor that not super well known but a guy named Jim McLean, who was at crosslink is an incredible Harvard pedigree. But the reason is, the reason he impressed me or influenced me the most is he’s a career venture capitalist, right? He started day one in business in venture capital. So that’s his profession. He’s not a entrepreneur in residence, or a converted lawyer, or an MBA turned venture capitalists this. This was his career from day one out of Harvard and Berkeley. And so guys, super impressive. Jim Mclean from a crosslink capital. Love it.

51:00
We’re in what’s the one thing you know, you need to get better at?

51:04
Wow, well, it’s not pitching. You got that down? I mean, truth. If I look inside, I swear a lot. It’s probably not appropriate for nine out of the 10 places that I go or speak at or pitch. I just like to maybe be able to like put a well cap on the oil Gusher. That is my personality, and just not swear as

51:29
much. And then finally, what’s the best way for listeners to connect with you? Oh, yeah,

51:34
if you really want good stuff, you go over to pitch anything.com and just put your email in there. We’ll send you only high quality stuff that you can use tomorrow in your next sale or pitch. So I’m Oren at Pitch Anything but go to pitch anything.com. Put your email in there, and we’ll take good care of you.

51:55
The man is Oren Klaff. The book is flip the script, getting people to think your idea is their idea. Oren, thanks so much for the time today. I’ve been a fan for years and a reader of your books and look forward to the next one.

52:08
Hey, Nick, I appreciate it. You are a good interviewer. I’ve done a lot of 1000 podcasts maybe and you can get some rough experiences, but the time flies, thank you for being patient as I talked over you or interrupted you, or but I really appreciate this interviewing style. So thank you. Likewise,

52:25
you’re the man. Thanks, Lauren.

That will wrap up today’s episode. Thanks for joining us here on the show. And if you’d like to get involved further, you can join our investment group for free on AngelList. Head over to angel.co in search for new stack ventures. There you can back the syndicate to see our deal flow. See how we choose startups to invest in and read our thesis on investment in each startup we choose. As always show notes and links for the interview are at full ratchet.net And until next time, remember to over prepare, choose carefully and invest competently. Thanks for joining us