1.1.27. The Elevator Pitch

Today, we are going to be talking about your high level pitch. Traditionally, an elevator pitch was a summary of the business plan. It was a way to distill a large document, such as a 150 page business plan into a more succinct version. Nowadays, the elevator pitch is a standalone presentation of your business. It might include things like the problem or pain point, your solution, the target market for your business, competitors, the team, a financial summary, and milestones going forward. However, one of the misconceptions is that each of those things needed to be included in your pitch, and that there is a right way to order your pitch. The reality is that the pitch changes, the pitch actually depends on multiple things including who you to talk to and what your business does? So it’s important to know whether you’re talking to an investor for example, or a potential customer, and to know whether your business is something that’s high-tech and very complicated, or perhaps more low-tech. Let’s start with your audience, who are you talking to? The first thing to remember is that as an entrepreneur, you’re always pitching. What your pitch looks like, depends on who you’re talking to however. Successful pitches will tailor the message to the purpose at hand. So, you might think about it in terms of what you currently need, is it financing, is it talking to potential employees, and so on. And what the most relevant way to communicate this message would be. So, if you’re thinking about financing, you want to think about things like, what are you offering? How is it special? And what’s going to enable you to win, increase the value of your potential financier’s investment? If you’re talking to a potential employee for example, you might think about why they should choose this job over another job? Will they adapt your vision? Will they be able to succeed in this job?
If you’re thinking about potential customers, what’s relevant to communicate is why they would choose your product or service over another, and how it will specifically bring them value?
Potential partners on the other hand, you might want to communicate why working together will be beneficial for everyone. Your product or service will matter to the listener. You also need to think about the level of detail to go into, however. After you know what you do, you need to decide how deep to go into your product or service?
One way to think about this is that pitching is not about selling, too often people think that pitching is equated with selling. It’s more about generating interest, and starting a conversation. It’s not a one way spree where you’re talking and trying to communicate something, but in fact you’re trying to give your lay of the land and your vision and start a conversation. One way to think about this is to think about it in two distinct phases. The entire pitch might be composed of phase one where you’re talking, and phase two where you’re answering questions, and you may go back and forth. In the first phase what you’re trying to do is establish what your business does. You’re trying to communicate your vision, and your lay of the land. Your objective here is to explain your offering in a high level fashion. You don’t necessarily want to get into the details and need agree. You want to be generating interest, so that at the next level the questions will be interesting and it really allow you to shine.
In phase two, you’re answering questions. These are questions that are more specific from the listeners. You want to make sure that their key questions, concerns, and doubts are addressed. This is one way to increase your credibility, and establish legitimacy in their eyes. When they have doubts, you’ll be able to answer their questions, and really shine, and generate interest for further conversations. The point of a pitch is often to create conversations, and create a standpoint from which you can discuss things going forward in the future. In terms of level of detail, you can think about it from the standpoint of your audiences’ knowledge vis-a-vis the particular attributes of your product or service. You might want to think about the complexity of your offering, and the level of knowledge of your audience. In the upper left box, this is where the complexity of your offering is extremely high, but the knowledge of your audience is low.
People tend to have the most trouble with this box. The tendency is to get too deep into technical details, and you end up losing your audience. This happens because you know your product well, and you assume that your audience will also know the technical details of your product as well, when they in fact do not. As an example, let’s watch this pitch on Evernote. >> Hi, I’m Phil Libin, the CEO of Evernote. Evernote is your external brain. Whenever anything important happens, you put it into Evernote, you’ll always have it on hand when you need it. You can use Evernote with lots of devices you currently have. We have a version for Windows and for Mac, you can also use us from any web browser, any phone, or any camera. Now, your memories take many different shapes, there’s lots of stuff you want to remember. So, you can use Evernote for example to take a picture of someone’s business card, or to take a picture of a whiteboard, or a wine label that you want to remember. Or you can leave yourself a text note or a voice note, all of this information goes up to the Evernote servers where it’s processed and indexed. Letting you do things like search for all the text in your images, letting it search by location. The information is the synchronized back down to your client, so that it’s always on hand, so you can always find what you need wherever you are. Evernote has two subscription levels, so we have Free subscription and Premium subscription. Premium subscription is five buck a month and you get virtually unlimited storage, and all sorts of the goodies. Thank you. >> As we just saw the founder of Evernote knew a lot about his company as he should. He talked about a lot of particular attributes of his product. He talked about all of the various options for pricing, and what he really did was focus on this upper set of boxes. However, what he didn’t think about was the knowledge of his audience.
If his audience was not familiar with Evernote, he might have ended up losing a lot of potential clients because they’re not familiar with what the company does, and needed him to stay more high level about what the particular offerings were. Equally as important as the content itself is how you come across as the entrepreneur. In some of my research for example, I find that attribute such as authenticity and passion are critical though not in the manner that we might always think. Let’s watch an example pitch. >> The most widely used manufactured material on the planet is concrete. On average, each person uses more than three tons of concrete a year. Unfortunately, concrete manufacturing process contributes to more than 10% of carbon dioxide emissions worldwide. However, we have been able to develop a concrete that not only cuts the carbon dioxide emissions by half, but also it is five times stronger than normal concrete. Our design is unique because we have discovered how to change the very unanimous structure of concrete. This approach is environmentally friendly, and at the same time it reduces the cost of concrete manufacturing by 40%. Given that the US market for concrete is over $100 billion a year. This makes our product extremely lucrative for concrete manufacturers. We are a team of five researchers, including three superstar professors at MIT. I, myself, I’m a last year PhD student working on innovative concrete, and we are looking for two more passionate [INAUDIBLE] complete our theme for financial aspects. >> As we just saw, this entrepreneur has a very distinct style.
I often ask students to vote on whether or not they think this entrepreneur won the pitch competition that he was competing in, and they vote no overwhelmingly. However, if you think about authenticity and passion, this entrepreneur demonstrates a lot of authenticity. He talks about his passion for concrete, he talks about his PhD in concrete innovation, and in fact he did win this competition because he did come across as very authentic and passionate. As we’ve seen, it’s important to be clear on what you do, and who you’re talking to. It’s also important to know what your audience knows. This is just an intro into the basics of the pitch. In the second course, launching your start up, we’ll get into more of the details of pitching, and look at the mechanics of the pitch as well as go through the additional examples of effective and non effective pitches. Thank you for joining this session.

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