Hello, my fellow engineers, this is Marco from 2GuyGames. I am a software developer as they are described in the books: introverted, no interest in biological things, avoiding social interactions as much as possible…I check all the boxes. Now that I am a founder and will soon be in charge of some people, I worry that I will have to drop some of these habits.
So, for us engineers, what is the hardest part of founding a company? Coming up with ideas that are worth executing on? Finding space to work? Getting money for the startup phase? Nope, if you are like me (and probably even if you are not) you will find that pitching your idea to people who have vastly different backgrounds is the most challenging part. My partner Stefan and I recently attended a workshop where this reality came crashing down on us. Today I thought I’d share with you what I have learned :)
This probably isn’t even a question, but let me set the stage just in case. In reality, when you have an idea you won’t be able to execute it alone. You either need people who implement it, who manage the work, who manage the finances, who lend you money, who can give advice on several topics, or all of the above! Most of these people will not have a single clue about what you are really doing. And that is good! You are the expert! If everyone knew and understood what you were up to, it probably wouldn’t be worth doing. Yet, all these people fulfill valuable roles that you cannot. Handling finances, for instance, is a huge pain in the butt and I am very thankful that I can push this onto Stefan. I have known him for years, but even he needed to be convinced of my ideas (and my skills). I had a lot of time to explain things to him, but in most cases, you won’t have that much time. So how much time does one normally have to convince someone of their ideas? In most cases, less than a minute.
How to Pitch
Less than a minute? Yes, shocking, I know! How do you possibly fit your ginormous, yet intricate idea into under a minute? Well, that’s simple: You don’t. You can probably talk hours about your concepts without taking a breath. You know them forwards, backwards and inside-out (at least you should). Being so near to your idea, however, has the disadvantage that you fail to see the big picture. The big picture is not how innovative your idea is and how it will change everyones lives forever. I am talking about money. In the first minute (and probably even after that), all that people want to hear about is how your idea makes money. The integral questions you need to answer as soon as possible are the following:
Why is no one already doing what you are suggesting?
If they are, how are you doing it better?
Why should you be the one doing it?
Is there a market for your idea?
How big is that market?
When will you break even?
How will you and your benefactors get rich?
You must have the answers to those questions at the tip of your tongue, always. Not only that, you also have to use simple terms. As I said, these people are not from your profession. When you are telling them that you are using *obscure technology X* to make *product that people might need*, they will turn you down, because they don’t understand what the heck you are talking about.
So when you go up to someone in the hopes that they might finance your idea (maybe you are at a meetup with potential investors), here is a rough template for how to go about it: Introduce yourself. Who are you and what is your background? You have 10 seconds. What are you selling (product, or service?) and why doesn’t it already exist? (Simple terms!) Another 20 seconds. How big is your market and who is your competition? 15 seconds. What do you need (people, machines, liquidity) and how much of it? When will you break even? 15 seconds and done.
If you are successful, they will probably come up with some questions for you. Explain your idea in more detail, or how you got those numbers. Be ready for that. Once you have them hooked you can go into more detail about all the things you plan to do. If you have multiple people who are interested in your idea (lucky you!), you may get the chance to give a 20-minute-or-so presentation. You might feel tempted to really get into all the details there — don’t! What people really want to hear is more about the questions we already talked about. Show them how big your market really is. How much money you really need. A detailed plan of your project, when are you ready to sell, how much will you sell, when do you break even (that part is really effing important!). Know your numbers and be honest. If you don’t know, you don’t know. That is part of being a startup and people know that. Making up numbers on the fly won’t get you anywhere.
To put it in a nutshell: people want to hear about how you (they) will make money with your idea. Talking about anything but that is probably a waste of your and their time.
So that is the things I learned about pitching and talking about your business idea in general. I hope you found it interesting. At least I did :)
Next time Stefan will tell you about what we learned about writing a business plan. As it turns out, it is tedious and references are hard to come by. Who would have thought? Hope to see you there!