As Jess heads down to Austin to help judge the SXSW Release It pitch competition this week, we got to talking about what makes pitch events truly valuable for startups.
Access to capital is one of the most obvious benefits and usually the prime motivation for founders to put so much time and effort into creating and delivering a show-stopping performance. Of course, most participants don’t get funded. Does that mean the experience isn’t valuable? That all depends on how you approach it.
The startups who gain the most value from pitch competitions know that the pitch is about much more than the technical aspects of growing a business. It’s about having what it really takes to do so. By creating a great pitch, you hope to demonstrate that’s true. However, the value lies not in who you convince, but in how the process improves your business.
Breaking the Framework
Startups exist to introduce an innovation into the market– to create value for customers in a brand new way. That requires questioning the framework that already exists. It requires asking a lot of questions, forming hypotheses, taking risks and operating effectively in an environment of high uncertainty. Because much of the startup lifecycle takes place before a product ever gets to market, pitches help provide a way to talk about ideas and plans that aren’t yet public knowledge. It’s also an opportunity to conduct low-risk tests: talking about plans, as opposed to executing them.
To approach the pitch as a defense of your idea so you can win money is the wrong framework. And that’ll mean you prepare for it, and answer questions in the wrong way.
The Riskiest Assumption
Startups take risks. Calculated risks. What’s the riskiest thing a new startup founder can do? It’s to assume everything they believe about their product, their market and their customers is correct, then proceed to build, launch and try to start selling without testing a thing. While it might feel risky to get up on stage and possibly look like you don’t know what you’re talking about, it’s not. (All great ideas are kind of crazy!) The risky choice is to avoid talking with anyone about it, then bet lots of time, money and effort on untested assumptions and attempt to build a company first.
Pitching allows you to make what is essentially a “low fidelity” mockup of your business and get help beating up on what might be wrong or missing. It’s a super-quick and efficient way to gather valuable insight. Compared to building a company on guesses, building a pitch is peanuts. Compared to being rejected by the market and losing all your time and effort to a failed enterprise, the risk of “failing” at a pitch competition is about zero.
Therefore, a great pitch is much more than a polished story. It’s a chance to be sure you see the challenges ahead of you clearly and that you can crush them with extreme prejudice.
What did the process of putting together a complete pitch deck teach you about your business? What did presenting it teach you about the clarity of your value proposition? How did judges challenge you to think better about your strategy?
Founding a startup is nothing if not a long series of experiments, and your pitch is simply a vehicle to learn more. When you use a mockup to talk with users, or launch an MVP to get some early feedback, you aren’t expecting to hit a home run. (You want to, of course, but you probably won’t– same with your pitch.) What you will do, if you’re smart about it, is learn, improve, and move forward.
While style points count, substance is what builds a business. Start sharing your pitch as a way to discuss what you’re working on, not so much how you talk about it, or whether your delivery is just right. Don’t obsess about a line on a slide– obsess about what you know that backs up that slide.
Time is of the essence in every startup. It’s a more limited resource than money. Spend it poorly, and it doesn’t matter how much money you raise– runways always run out. How do you prioritize working on the risks and opportunities you face? You might have what seems like an incredible idea, but ideas aren’t companies. Neither are pitches. Or “rockstar” teams. Or exciting projections. Companies are built on lots and lots of hard work. What you choose to work on is vitally important.
Maybe you have the best pitch ever seen. Everyone loves it. Your mother approves. But, can you execute on it? Don’t use your pitch just as a marketing tool. Use your pitch preparation and the event itself to be hypercritical of what you’ve learned, where you are now, and where you need to go. To recognize your challenges more clearly and faster than anyone else puts you in the best possible position to grow a viable business, not just talk about it.