Below is the “Tip of the Week” transcript from the Podcast Episode 31: The Pitch (David Brown):
I was recently doing some consulting for a local, very early-stage startup called The Mentoring Edge. They were looking for some help crafting their elevator pitch. So, I figured I’d re-purpose some of the material I put together for them in today’s tip of the week.
The best place to start is the pitch deck, itself. We often hear experts reference the ten, must-have slides in every pitch deck. They include…
10 Must-Haves:
1- The Elevator Pitch / Summary
2- The Problem (What problem are we solving?)
3- The Solution (How the approach ideally addresses the problem?)
4- The Market (Who will buy & how big?)
5- The Business Model (How do we make money?)
6- The Competition (What current offerings exist?)
7- The Go to Market Plan (How & Where do we acquire Users?)
8- The Team (Who are we and why are we most qualified for this?)
9- The Progress (Key Success Metrics and Traction to Date?)
10- The Ask (How much and what will it be used for?)
In all honesty, if I could avoid reading through Powerpoint pitch decks and just get every startup in my deal-flow funnel to answer these 10 questions, in two sentences or less, I could separate the wheat from the chaff in 20% of the time I currently spend. We discussed today w/ David the sending of teasers in advance of an entire pitch deck. I am definitely an advocate of this. Clearly, a deeper level of review is required for great startups, but this allows identification of those potential great ones very quickly.
From the 10, must-have elements of the deck, items two through four (ie. problem, the solution and the market) are used together to create the elevator pitch. A great bonus of going through this exercise and recording these things explicitly, is that these elevator pitches, sometimes referred to as “Concepts,” become the foundation for marketing in developing the messaging and positioning for a product. So, it’s a worthwhile exercise for a number of reasons and it’s output flows well as the inputs for other stages of commercialization.
And, often idea-stage founders won’t know the key benefit very early on. I think it’s great for founders to create three or four elevator pitches or concepts as a hypothesis that can then be tested with customers. Pivoting, adapting, refining and improving are all part of the process.
The Four Elements of the Elevator Pitch / Summary:
- THE TARGET CUSTOMER… WHO is feeling the pain?
- THE PROBLEM… WHAT is the most visceral pain?
- THE SOLUTION… HOW will it be solved?
- THE KEY BENEFIT… what’s the outcome of this solution?
I often advise idea-stage founders not to worry about a super impactful, hard hitting, perfectly worded pitch at first. If the basic elements are done well, then it can optimized and word-smithed later. Fundamentals first, then play around with it. And, as a last note, the focus for the core elevator pitch should be the users. There may be other constituents like purchasers or partner organizations that the startup is solving a problem for, and a seperate elevator pitch can be constructed for them, but it all begins with the user.
So, typically the elevator pitch takes on two forms..
- Long-form version. This includes all four elements
- Short-form version. This includes just number one and number four… the target customer and the outcome
Long Form
Example Structure (long-form):
- We address PROBLEM / THE WHAT for THE TARGET CUSTOMER/ THE WHO via THE SOLUTION / THE HOW resulting in THE KEY BENEFIT.
So, the other day I met with the founder of Packback… maybe you are familiar with them as they were funded on Shark Tank by Mark Cuban. Let’s use this company as an example and keep in mind I’m use hypothetical numbers, I don’t, in fact, know the exact dollar figures:
- We (ie. Packback) reduce excessive textbook costs for college students by offering a digital textbook rental platform, resulting in over $1,000 of savings per student per year.
You can also flip the order of these elements and, ultimately, achieve the same message:
- We save college students over $1,000 per year by reducing excessive textbook cost through our innovative textbook rental platform.
You may think that the wording of this is pretty boring and disinteresting. That’s okay. As mentioned before, it can always be spiced up and made exciting later, after the foundation is set.
Short Form
Okay, so the second form we discussed is the short-form. This can be used for even more impact and can get your audience curious to hear more. It is rare to deliver the short-form elevator pitch and not receive a follow-question, such as: “How do you do it?” or “How is that possible?” “How does it work?” etc.
Recall that the short-form only includes the target market (#1) and the outcome/benefit (#4).
Example (short-form):
- We save college students thousands of dollars per year.
Notice how much shorter and more concise this is than the long-form, resulting in it being less descriptive but having more impact.
Know your Audience
The last question to ask is, “who is your audience?” In general, a startup’s audience falls into two categories:
- Those that have no exposure to the problem (ie. your friends, mentors, investors, some channel players, etc.).
- Recall that David mentioned this in his story about the dating app, of which, he is not the target market and thus can’t judge the value as a customer.
- Those very close to the problem (ie. customers, other channel players) and
So, one needs to account for addressing both. And the pitch is different for each. Those that are in your target market don’t need the problem and customer profile explained. While those that have never had exposure to the market may still struggle to grasp the concept even with an excellent, descriptive elevator pitch. On a rare occasion, these two can be the same b/c the mass public is very familiar w/ the problem.
Example (long-form, different audiences):
1. Not in the target market- includes ALL FOUR ELEMENTS: We reduce excessive textbook costs for college students by offering a digital textbook rental platform, resulting in over $1,000 of savings per student per year.
2. In the target market- includes only the PROBLEM and KEY BENEFIT: We can save you over $1,000 per year by eliminating the need to purchase textbooks.
“Yeah, but….” The Key Objections
The final note on this, is to practice often and know the what the most common objections are. I like to refer to these as the “Yeah, but” responses. Knowing the top 2-3 key reasons why customers won’t adopt and/or why investors don’t believe your solution will work better allows the founders to address the objection.
In sales, startups or ideas, you’ll always get the “yeah, but.” In the Packback example, I’ll come up w/ a few examples of what these could be…
So, the audience may say, “Yeah, but publishers will never allow their material to be rented b/c they’ll lose money on purchases.” Where, in fact, they’ve shown to create additional, incremental revenue for publishers that is usually lost to the used book market.
Another objection may be, “Yeah, but students won’t want to get their material digitally, they’ll want a physical textbook.” Where, in fact, maybe Packback has done research on college-aged student’s content consumption and found that the majority actually prefer everything in digital format. It goes without saying that framing a response from the customer’s standpoint using data, research or an actual customer quote can be much more effective than saying “We believe X.”
So, whether you are a startup founder or you are advising early-stage founders, it becomes clear that the elevator pitch provides the foundation for focusing on what’s critical and communicating the value that’s being created. Whether the audience is internal or external stakeholders, nailing the pitch is the first step of many in building a community of believers.