2.6 – A Game with Three Pitches
If you really were an Educational Venture Analyst, as you are now emulating, you would spend a significant portion of your time responding to “pitches” from people who have ventures they want you to support. A good entrepreneur needs to be instantly and professionally prepared to present three different kinds of pitch, and you need to be ready to critically review and be confidently decisive for each. Here they are, in the order you’re likely to receive them:
1. The Elevator Pitch
Also called the “front-door pitch” (for those salespeople who come to your front door and try to get you hooked in a sentence or two before you close it), the Elevator Pitch involves succinctly and cogently communicating your “value proposition” (exactly why your venture is sure to succeed) within the duration of an elevator ride (the idea being that you’ve cornered a prospective investor in an elevator, so you’ve got their attention for only as long as that ride). For the entrepreneur the process is intensely real and humbling – it’s just you and your ideas, often without audiovisual support. An Elevator Pitch is something every entrepreneur refines and practices at every available moment. The sharp rationale is that if you can’t condense your brilliant concept into a compelling 30-to-60 second sound byte, then you probably also won’t be able to sell your product to prospective customers. Case closed.
For a professional EVA, Elevator Pitches are equally crucial. You typically don’t know the individual who is pitching, so you have no interpersonal cues to work with. They will be intense, probably nervous. Within a minute you must accurately evaluate both them (their credibility and competency) and their idea (it’s viability) decisively. You encounter lots of sketchy people and sketchier ideas, so you try to pay attention, not to be jaded. You also need to be constantly vigilant that charm, beauty and great graphics (when part of the package) are only superficially attractive; don’t be swayed by someone who is just a good salesperson. After all, if this idea is so good, why hasn’t somebody else grabbed it already? Finally, you rarely know very much about the detailed context of the idea, so you’re frantically trying to understand unfamiliar language and logic. Ultimately, your success depends on identifying true diamonds in the rough: the worst thing for your reputation would be for the disruptive brilliance of this idea to be recognized by some other EVA, and you’re the one who let it get away!
In ETEC522 you’ll get your own chance to review, and compose, Elevator Pitches. The truth is that the vast majority fail. Less than one in twenty will convince you, the EVA, to ask the entrepreneur for something more:
2. The Venture Pitch
Just as the Elevator Pitch is predictably brief, the longer Venture Pitch is traditionally 8-12 minutes. For the entrepreneur it is typically a stand-up performance with as many persuasive tools and tricks as they can muster. Glitz is wrong, of course – it’s all about conveying the credibility of the presenter (yes, this is most important) and the venture. Eight minutes may sound like plenty of time but it isn’t: the entrepreneur must capture and hold attention while delivering an exciting, confident, comprehensive and well-evidenced summary of their enterprise that anticipates and dispenses with every concern or doubt an EVA might have. The content and structure of a Venture Pitch are relatively standardized in terms of the kinds of information and arguments that are expected, so most of the magic comes from the presenter, the presentation design, and the power of the ideas they convey.
For a professional EVA, the Venture Pitch is a much more reliable way to assess the entrepreneur and their concept. It would be great if there were enough time to review all opportunities this way, and if the people and ideas behind them were worthwhile. By agreeing to review a Venture Pitch the EVA is agreeing to invest their valuable attention. It shouldn’t be wasted by either party. The EVA has two decisions to make:
- Is There Really Something Great Here? – Was I just fooled by the Elevator Pitch? What is the nugget of true value that got me excited about this person and their venture?
- Can I Help Make it Great? – Even if it is great, do I have the wisdom, experience, expertise, resources, connections and possibly patience to help realize it? This is where the concept of “smart money” comes in. While an entrepreneur may accept money from anyone, they should prefer someone who can also open doors, make connections and aggressively add other forms of value to their enterprise. Likewise for the EVA (or any investor in anything), it’s always wiser to invest in something where you know you can contribute to success in other ways. Smart EVAs will walk away from great ideas if they don’t know excellent ways to accelerate them.
In ETEC522 you’ll also get the chance to review Venture Pitches, and compose one. The truth is that the vast majority of these fail as well. Less that one in twenty will convince you, the EVA, to ask for the final pitch:
3. The Business Plan
For this last pitch the entrepreneur is rarely on stage. The Business Plan is almost always a formal document, typically 10-100 pages, laying out the detailed arguments and equations of the enterprise. It is this quantitative document that allows the EVA to engage formally with the entrepreneur via a negotiation that establishes the benefits an EVA can expect to receive based on how their investment can trigger the execution of the plan, and therefore the success of the enterprise. As with the Elevator Pitch and Venture Pitch, Business Plans canalso fail to capture the interest and commitment of the EVA. However, at this stage of the process the highest failure rate is actually the plan itself. Business Plans are simply projections – most eventually fail upon execution, even with great EVAs on board.
As important as Business Plans are (and you’ll probably be happy to hear this!) their rigour is beyond the scope of ETEC522; it is sufficient that you know they need to exist and to be as high-quality as the other pitches.
The Nesting of Pitches
Finally, it’s natural to think that the Venture Pitch and Elevator Pitch are just shorter, more condensed versions of the Business Plan. If this were true you could just create a Business Plan and derive the others from it. It’s not quite that simple. While the separate pieces clearly need to be coherent and mutually-supporting, they tend to exist independently – and symbiotically.
For example, the Elevator Pitch is mostly about sizzle, not steak. Its function is all about marketing: do people “get it”? There’s nothing better an entrepreneur can do than try out their Elevator Pitch on as many prospectively influential people as possible, altering it every time to learn what resonates. Refining and capturing that resonance infuses life into the Venture Pitch and Business Plan.
The Venture Pitch, meanwhile, is for a much narrower audience, conveying the fullest personality and possibilities of the venture in a highly optimistic but entirely open and honest way. And the Business Plan lays out all of the hopes and dreams on the table in a confident, complete and businesslike manner.
A human-scale analogy (perhaps a dangerous one?) might be with the stages of a relationship: the three pitches are like flirting, a first date, and a marriage discussion, respectively. There’s just one individual behind them all, with largely distinct personifications. So an EVA needs to accurately assess the benefits of a great marriage from the first flirtation! It’s a daunting job, but we all do it…
