Don't wear an avocado costume

Today, the Wall Street Journal ran a story called "Perfecting the Pitch", consisting of tips from VCs on creating the perfect pitch. 

Ty McMahan kindly included an account about a meeting I had an entrepreneur I had met early in my career that taught me a great deal about pitching.  

Not to be redundant, but I felt it was important to give this story a bit more flesh: it was the height of the dotcom era.  People were getting a bit crazy about this thing called the Internet.  One day, a strange lady came in, unannounced, into my 13'x10' office in Hell's Kitchen, a fairly dangerous part of New York City at the time.

She was dressed in a bulbus green outfit. I didn't recognize what it was, and I hadn't met her previously.  Before even saying hello, she reached into her bag and pulled out...

a business plan. 

I almost fainted, my life flashed before me: I thought she was going to pull out a gun and I was going to get shot.  Instead she offered me a pitchbook.

While, yes, I probably would be a little put off by the outfit, and not knowing who she was; but for the record, it really was more my fear of getting shot at.  That's the full story.  So the moral of this story is: don't come in to pitch an investor, unannounced, and look like you are packing heat.   

Ok, let me rephrase: raising money is about trust.

Indeed, if you think about money itself, at it's core, it's about trust in a government and other people that they will exchange goods and services in exchange for a piece of paper with green and black ink on it.   That is kind of crazy if you think hard about it. 

The dollar bill itself says "In God We Trust", and has odd Latin phrases like "E Pluribus Unum".  It has pictures of George Washington, and has big capital letters: FEDERAL RESERVE NOTE and THE UNITED STATES OF AMERICA a couple times.  And pictures of a weird pyramid, with a magic eye, and an eagle holding wheat and arrows.  It has dates of issuance, serial numbers, and signatures of important government offices.  All this green and black ink, plus some threads that glow purple under the right light to signal that a lousy buck is really a buck, and not a fake.

There is something to learn from what gyrations the U.S. government goes through to engender trust in it's currency, phyically, and by word and deed.  Similarly, startup investors are looking for trust worthy investments and are looking for symbols, words and deeds.  In the rush to raise capital, it's easy to forget that in the end trust is really what it's about.  It might sound a little silly, just like all that stuff that the U.S. government puts on it's legal tender, but that's how it works, raising money.  It's not sexy, it's just the way it is.  One might think that a pitch is an elaborate come on, a voodoo  dance to woo investors... but investors often see through the artifice.  They want the coldhard facts about the opportunity, the product and who you and your team are.  That doesn't mean you can't have fun-- indeed, humor can be a great part of a pitch if done right-- it's just that one needs to temper the fun to serve the greater goal of engendering trust.

While there is a lot of stuff about pitching out there, later in the summer I will try to blog further about what I think a good pitch and process needs to create that investor trust.  In the meantime, do whatever you can do to increase and enhance that trust; eventually, some one might just take you up on your offer, trading their paper for your paper, the ultimate trust based exchange.

Comments

[gabegundy]

It seems that people do dumb things when pitching because they fear they'll only get one chance to nail it. Naturally, they have to do something to grab your attention.

Sure, in doing so, they ensure that it's the only chance they'll get :)

So, I agree. It's about trust. But, can you really build a relationship of trust in a 20 min. meeting? If I understand you, you're saying let the deal do the talking and then the relationship of trust will/might follow. Is that how you see it?

It's interesting that trust is so key and there really is so little to base it on (or so it seems).

[Steve Brotman]

Gabe,

Thanks for the comment. You are 100 percent right on this: an entrepreneur isn't going to sell an investor in a 20 minutes.

Also, I agree that getting an investor's attention is not easy. And gaining their trust is even harder than that in a short period of time. But just like the U.S. dollar bill per my post above there are ways to build trust relatively quickly to get that initial trust that gets you more opportunities to build trust over time.

Like I said about humor, its fine to use in a pitch, so long as it builds trust, or at least doesn't destroy it. I am sure you can imagine a prank or an off color joke that might destroy or limit the trust between two people.

The same is true about getting investor attention. Its ok to be creative, but I think you'll agree, just not to the point where an investor fears for their safety, even a little bit, as that will work against your prime ultimate objective which is to build trust; and hopefully a future investment.

Good luck with your entrepreneurial efforts!

S

[Dissertation Layout]

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