Super helpful, Auren. I'd love to hear you think out loud about ways that nonprofit organizations, research centers, and movement builders can adapt this model.
Loved this, lots of parallels to pitching TV - get in, get out, explain it quickly, no rambles. Usually you *are* the product to some extent so personal story comes first but otherwise, surprisingly similar!
This is absolutely great Auren - against some conventional wisdom on pitching to be sure, but I completely agree with the approach. We demo'ed our product even in later investment rounds at Resonate because the product told the story so well for us. Seeing the product in action tells you so much about a company - how have they solved/simplified a market problem, how did they approach the UX and does it fit to their typical user, are there opportunities for later expansion, etc.
I do wonder however, if the reason you (and I) like this approach is because we come from operating/building businesses and we know first hand that without a great product, the rest doesn't matter.
I can think of many 'pure investor' style VCs who would not prefer this approach. They want to hear you mention a market/sector that's hot and a TAM that starts with a 'B' before they are ready for the product discussion.
I have appreciated this aspect of Calacanis' approach to early investing. First things first, show me the product.
Andy, I agree that it seems that investors are lemmings that jump off every market sector cliff that is anointed as the next Big Thing. But investors are not drawn to a sector because it's hot; a sector becomes hot because investors are drawn to it because of some event or series of events that creates dramatic tailwinds or demand pull for a sector. For example: Advances in compute hardware plus AI software plus low-cost, high-resolution sensors enable autonomous vehicles. End result: 25+ venture-backed AV startups, plus 75+ venture-backed Lidar startups, etc. Ouch.
The TAM point is a tricky one. A savvy investor who asks you for your TAM is testing you. They want to see if you really understand your target market, or if you just googled to find the biggest number you could find. No investor actually believes your TAM, and no startup ever failed because the market was too small. Startups fail because they can't convert prospects into customers, not because there aren't enough prospects.
Almost. But not quite. The spirit of the "focus on product" is right, but the coaching is wrong. Yes, too many pitches are painfully lacking in clarity because we don't understand what the startup does, but what makes a company great is not the product.
What makes a company great is the value proposition the product delivers. I worry that most entrepreneurs who read the advice above will think it gives them license to go on and on about their elegant architecture and their proprietary stack and their brilliant implementation of edge processing and their five issued patents.
So what? Who cares? What is the 10x value proposition that will simplify your sales cycle, minimize your churn, and accelerate your growth?
Please don't misunderstand my pushback. Yes, in order to believe your compelling value proposition, investors and customers need to understand your product. But if you can't paint a clear picture of your product/service offering in just a few simple sentences, you are in deep trouble.
My editorial advice on the above article: Instead of recommending to "start with the product," good pitch coach advice is to "start with the solution." The solution is the product/service and the benefits it delivers to the customer.
[For more advice, check out "Getting to Wow! Silicon Valley Pitch Secrets for Entrepreneurs"]
Super helpful, Auren. I'd love to hear you think out loud about ways that nonprofit organizations, research centers, and movement builders can adapt this model.
Loved this, lots of parallels to pitching TV - get in, get out, explain it quickly, no rambles. Usually you *are* the product to some extent so personal story comes first but otherwise, surprisingly similar!
This is absolutely great Auren - against some conventional wisdom on pitching to be sure, but I completely agree with the approach. We demo'ed our product even in later investment rounds at Resonate because the product told the story so well for us. Seeing the product in action tells you so much about a company - how have they solved/simplified a market problem, how did they approach the UX and does it fit to their typical user, are there opportunities for later expansion, etc.
I do wonder however, if the reason you (and I) like this approach is because we come from operating/building businesses and we know first hand that without a great product, the rest doesn't matter.
I can think of many 'pure investor' style VCs who would not prefer this approach. They want to hear you mention a market/sector that's hot and a TAM that starts with a 'B' before they are ready for the product discussion.
I have appreciated this aspect of Calacanis' approach to early investing. First things first, show me the product.
Andy, I agree that it seems that investors are lemmings that jump off every market sector cliff that is anointed as the next Big Thing. But investors are not drawn to a sector because it's hot; a sector becomes hot because investors are drawn to it because of some event or series of events that creates dramatic tailwinds or demand pull for a sector. For example: Advances in compute hardware plus AI software plus low-cost, high-resolution sensors enable autonomous vehicles. End result: 25+ venture-backed AV startups, plus 75+ venture-backed Lidar startups, etc. Ouch.
The TAM point is a tricky one. A savvy investor who asks you for your TAM is testing you. They want to see if you really understand your target market, or if you just googled to find the biggest number you could find. No investor actually believes your TAM, and no startup ever failed because the market was too small. Startups fail because they can't convert prospects into customers, not because there aren't enough prospects.
Crisp, clear and value add. Thank you Auren :)
Almost. But not quite. The spirit of the "focus on product" is right, but the coaching is wrong. Yes, too many pitches are painfully lacking in clarity because we don't understand what the startup does, but what makes a company great is not the product.
What makes a company great is the value proposition the product delivers. I worry that most entrepreneurs who read the advice above will think it gives them license to go on and on about their elegant architecture and their proprietary stack and their brilliant implementation of edge processing and their five issued patents.
So what? Who cares? What is the 10x value proposition that will simplify your sales cycle, minimize your churn, and accelerate your growth?
Please don't misunderstand my pushback. Yes, in order to believe your compelling value proposition, investors and customers need to understand your product. But if you can't paint a clear picture of your product/service offering in just a few simple sentences, you are in deep trouble.
My editorial advice on the above article: Instead of recommending to "start with the product," good pitch coach advice is to "start with the solution." The solution is the product/service and the benefits it delivers to the customer.
[For more advice, check out "Getting to Wow! Silicon Valley Pitch Secrets for Entrepreneurs"]