Metvy

Business Program
Testing Your Offering :: Elevator Pitch
Testing Your Offering ::
Elevator Pitch

In this section, we will cover:

- Elevator pitches.

It’s called an elevator pitch because it’s designed to be short enough to be done in an
elevator ride.

When to use your elevator pitch:

- People will ask about your company both formally and informally.
- When you email someone about your company and need to introduce it.
- When your friends want to know about the cool new company you’re start
ing.

A good elevator pitch shares the right information in an engaging way that makes peo-
ple want to know more.

Your elevator pitch will cover four key components:

 - your mission,
- your value proposition,
- your traction, and
- your ask.

It’s important in your elevator pitch to be personable and approachable, so you

shouldn’t be going into any technical depth yet.

People don’t buy what you do, they buy why you do it. Your mission goes beyond your
product.
- Start with “why” at the center of your company. You can take your problem
statement from earlier in the process and turn it into your statement of
purpose.

- Now that you shared your why, explain your “how” with your value
proposition. This is your strategy that allows you to achieve your objectives.

- Next, your “what” is your attraction-- the metrics and milestones that prove
the viability of your offering.
Finally, your ask, maybe to continue the conversation at another time or to
gauge the person’s interest in being a partner or a customer.

Here is an example of a great elevator pitch:

“For eco-friendly homeowners in California, our company provides smart home

sustainability offerings that reduce water usage by over 30%. Through an easy to
install device that provides real time water usage data. We developed the first
easily self-installed device that tracks water usage with an app. Are you available to
meet next week for us to show you a demo and see if this is something you might
purchase?”

Great presentations require great content and great delivery.

Effective communication is 7% content. This doesn’t mean that the content isn’t
important, only that it needs to be reinforced; and 38% tone. You should display energy
that allows you to support your content and 55% body language.

Use an open and commanding presence. You need to be objective-oriented,

expressive, and engaging. If you’re not excited about your business, why would anyone
else be?
A startup idea is a hypothesis for why your company is going to grow really quickly.
That hypothesis must compose of three different parts;

- the problem,
- the solution and
- the insight.

The basic parts is your problem should be pretty big, pretty pervasive, have a lot of
these characteristics to make it feel like there’s a very big market, that a lot of people
have the problem.

The only thing you need to know about the solution is that you should not start with
the technology. You should start with a problem.

Lastly, you’re looking to have something that’s going to make your company unique
and have some kind of unfair advantage that we call an insight that will show why
your company will grow faster than other companies.

The thing to keep in mind about understanding and creating this startup idea is that,
you don’t need to do all the work, don’t lay everything out in detail. That’s stuff that
you’ll want to know and keep in mind, but a really good investor will do that on their
own. They’ll hear what you’re talking about and extrapolate.

What we’re going to cover here is how do you package up that hypothesis? How do
you take all the things that you understand about your company and your startup idea
and how do you present it to an investor so that they can make a decision that’s in your
favor?

An essay written by Paul Graham in 2009 reads, “Basically, we believe that for every
company we will interview at YC, we bet there’s probably another company that’s
just as good as them out there, but they messed up on the application and we didn’t
realize it. We didn’t invite them.” Basically, the reason is because they didn’t express
their idea clearly. That’s it.

An average investor, what they do is they talk to you when you tell them about your
idea and it feels like they’re poking holes. All the questions they ask about what’s all
the reasons why this could go wrong. A good investor does it the other way around.
They hear what you say and they imagine and they use your optimism and they use
knowing that some kind of rare event has to happen for you to become a billion-dollar
company, and they try to imagine all those rare events that could possibly happen to
you. Then they pitch that path back to you.
An investor always tries to evaluate these three statements when hearing your idea.

- Do I understand it?
- Am I excited by it?
- Do I like the team and do I want to work with them?

The only two things to focus on are:

- What do I put in the what’s my company going to make?

- How do I describe my company in a very efficient manner?

The first way to do this is to be clear. The reason one has to focus on this is because a
clear idea is the foundation for growth. Meaning that the best companies or around
the world grow organically. They grow by word of mouth.

What does word of mouth look like? It looks like this. It’s basically when someone talks
about your company, what you’re doing, making, et cetera, and they are the most
interesting person in the room. They tell it to other people and those people want to
tell other people. That’s it. Word of mouth is something where people remember what
you do, they talk about it enthusiastically and it spreads on its own.

Marketing and advertising, it’s a tax, companies pay because they did not make
something remarkable. Now, before anyone can remember what you do, they have to
understand it.

There are very simple rules for how to make things easy to understand. We’re just
going to focus on making your idea legible

Whenever you are presenting to a room full of a thousand investors it’s kind of an
interesting audience. Number one, the audience is filled with really old people. They
tend to not have very good eyesight as a result. They all can’t sit in the front row, some
of them have to sit all the in the back or stand up. That means whenever you create
slides, they have to be ones that even old people in the back row with bad eyesight can
read. How does that apply to a legible idea? Well, basically you are designing a slide
that democratizes the idea, you’re designing something for everyone in the room, not
just the ones in the first row.

A legible idea can be understood by people who know nothing about your business.
That will make things very clear to the widest possible audience. This is super
important because you will talk about your company more than anything else. This is
because you are going to need a lot of people if you’re going to become a billion-dollar
company.
You are trying to find a co-founder. You have to have a way of talking about
your company clearly, whether you’re getting users or investors or employees or
shareholders. You have to get really good at this, and you have to be able to do it
quickly and efficiently.

Here are things to avoid that makes things not clear, that makes your idea muddy.

- The first is ambiguity, so that’s obviously the opposite of clear or

straightforward. Something’s a little abstract. Something can
be interpreted in two ways, and herefore, it might take a
question to understand what you do.

- Complexity. Things that are simple are ones that have one braid and things
that are complex have multiple braids.
They’re intertwined with one another. A simple idea is one idea that does
not fold. A complex idea are ideas that are intertwined. Simplicity means
you are not trying to mix a bunch of things in your description.

- Mystery. What we mean is anything where it’s like a person is not going to
understand what is going on when you’re talking about your company.
Jargon. Any words that people don’t understand. Anything that’s fake, like
indefinite pronouns and you don’t describe what those nouns are; things
that you just suggest but aren’t explicit about.

- Ignorable. What we mean by that, is there is some language that we will
just ignore? In UX design, people will create a sort of blindness to things
that they don’t want to look at or they don’t find to be important value. For
example, ad blindness is a big one that people sort of understand.
The thing is when you’re talking about ideas, there’s a way of using
language that is also easily ignorable. Things that just won’t stick in your
head. Things like marketing speak. There’s probably lots of stuff that you’ve
heard about that. MBA speak. Talk that doesn’t give any extra information.

- Buzz words. When you say certain types of words that investors have heard
over and over again, or will equate with zero information or value then,
investors will ignore them. The result is: parts of your pitch will end up
being not even heard by the investor and therefore, she/he will not
remember them.
What you want to do is be conversational. A great pitch is one where you can tell it to
your mom and she gets it. She’s proud of you. She’s not going to shake her head. That
means it’s got to be conversational, and that’s really good for word of mouth because
we talk in normal conversational speak. We don’t talk like an MBA. We don’t talk like
CEOs all the time, so it’s best to talk conversationally. Again, avoid jargon. Words that
are only understood or used by your industry. No preamble. If you want to be clear, go
straight to what you want to talk about. Let’s not have a winding path to eventually
getting there.

The last one, is being reproducible. When someone hears your idea, can they imagine
it in my mind? Can the investors see what they would have to build to create your
company? If they don’t have that, then they have no picture in their head about
what your company does, and until they have that picture, they can’t ask any of the
questions that helps them understand if they’re excited about you or understand other
nuances of your business. To make things reproducible people need to know nouns.
They need to have objects that they’re going to imagine in their head.

There’s three types of nouns that people should understand from your startup idea.

- The first one is what are you making? That should be really clear.
- What is the problem, and
- Who is the customer?

Let’s go through some examples.

Idea: We are going to transform the relationship between individuals and information.

Verdict: This sucks. The thing is we see this all the time. Number one, all the nouns that
you see here are abstract. They’re ideas. One can’t reproduce, based off of this. It has
zero informational value. One still has to ask questions to be able to answer the three
nouns that anyone needs to have. This is a bad description for a company.

Idea: Information is the lifeblood of modern organisation. The ability to channel

information quickly and efficiently to those who need it is critical to a company’s
success.

Verdict: We will see stuff that starts like this when we ask a founder to describe what
their company’s going to make. It starts talking about the story of the company
or basically it’s like in the beginning there was this problem and we’re going to go
through this issue. Then there’s these bad guys and they showed up, but then who’s
going to save us? We’re finally here to save... And the investor is like, “I have to read
another thousand applications. That’s not going to work for me.”
This is the description on the actual application that Airbnb put to YCombinator:

Airbnb is the first online marketplace that lets travelers book rooms with locals
instead of hotels.

It’s concise. It’s descriptive. We understand what they’re building. We have a sense
for what they’re making and then we can start thinking about our other two ideas of
whether we are excited about it and then, are we going to like this team.

Here’s Dropbox.

Synchronizes files across your or your team’s computers.

The thing about this is, it’s refreshing but also there’s no pretense. They aren’t playing
defense.

We see a lot of company descriptions where they’re like, “I’m worried about this,” or,
“I’ve gotten this kind of feedback.” They give up clarity to make themselves look bigger
and blow themselves up or make themselves try to look more interesting. They’re
trying to protect themselves against something way ahead of time. The whole problem
is usually what it ends up doing is it brings the investor farther away from you, all that
padding that you’ve put on yourself.

Luminize.

Building X-ray vision for soldiers and first responders.

Invesotrs don’t have to go deep into the details. Investors don’t need to understand
how they exactly do this, et cetera. This creates a foundation for curiosity. Now invesotrs
will start from here to try to figure out “Oh, how do you do this? Is this the right team
to do this? How far along are they? Do they have traction? Do they have customers?”
Investors start going down the route of asking all the right questions based off this one
description. This is a good one.
A lot of companies try to use the X for Y.

Meaning: LinkedIn for blank or Uber for blank or Airbnb for blank.

That X for Y is super useful because it allows you to shortcut business model and some
kind of complex behavior and then attach it to some other vertical or something that
you’re trying to make work.
X for Y is okay, but most people abuse it or do it incorrectly, so we’re going to give you
some tips.

- Number one, is X a household name? This should be like a billion-dollar

company. You can’t use your uncle’s pet shoe store as the X for this 
because people don’t know your uncle’s pet shoe store and they don’t
know if it’s successful or not. Everyone, as many people should know about
this as possible and for an investor it should be clear that it’s a billion-dollar
company or opportunity. Everyone has to agree that it is successful.

- Second, does Y want X? Is it really clear why the target that you’re going
after wants this kind of model applied to it? This kind of solution applied
to it? It should be really clear that your market not being served well by
some other model, and also that those people want to have that kind of
model (X).

- The third one is, Y should be a huge market, so if you’re building X for
Y and the last part doesn’t sound like a really big business, that’s not going
to work well for you. You’re essentially saying that you are something, but
that’s a subset. What we want to make sure is that subset feels like it could
be really, really big. If you choose a subset that sounds like it’s going to
be really, really small, investors won’t be as interested. It means that the
investor is worried that you will not have enough potential headroom to
grow to become a billion-dollar company.

Basic summary for this section:

Lead with what, not why or how. You don’t need all that other stuff. That stuff gets in
the way of your clarity, for the most part. Make the time that the investors spend on
your idea very efficient. They’ll look at it, they’ll understand really clearly, they’ll move
it around and be like, “Oh, I’m kind of excited. Maybe the’re going to have this,” and
then the investors will look at that part and be like, “Oh, they do have it. That sounds
awesome. Oh, what about this? Ooh, that sounds awesome too.”

What we don’t want is the investor to go like, “Oh, what are they talking about?”, then
they will have to go to your website, and be like, “Hm, don’t know what they’re talking
about. I don’t know how this works.” They go back to your idea, try to figure something
else out, try to see if some other partner might understand what you’re doing, et
cetera. Super inefficient.
If we’re thinking about this in an active voice structure. The subject, the verb and then
the object, the customer, the market, the people who we’re going after. Everything
else, if we add anything back to this, we want to be really careful about why we’re
going to add back to it. The artificial intelligence IOT-suitable stuff. Hopefully that’s like
a secret weapon that you have, but it’s not the defining characteristics of whether this
company is successful or not.

Then we see two modifiers for medical devices; “low cost, low power consumption.
Low cost, that’s super interesting. If you make a low-cost device in a sub-Saharan
community, then one is like, “Oh, that’s interesting. That’s really interesting because
it’s hard just to make something for developing countries, but to make it so that it’s
actually affordable for them? That’d be interesting.”

The low-power consumption, we can give or take there. we’d have to know more about
the company to know whether that’s actually crucial to understanding whether this
company has an unfair advantage or not.

Redo: We create affordable medical devices for sub-Saharan Africa.

Some people are going to be very squeamish about this. A lot of founders are worried
that, “You’re putting me in a box, man! It’s too reductive. My business is complex. I do
a lot of things, and a lot of things make me great. I want to tell you all of them.” The
thing is, you don’t have time. There’s no investor that thinks any business is simple and
easy. Once they get to this, then they’ll start asking the other questions. It creates that
foundation for curiosity.

The best way to pitch is therefore, to be clear and concise.