Crafting your pitch is an art form, and just like any true mastery of the arts, it requires a ton of time and focus.
Your pitch isn’t about a Steve Jobs-esque delivery and Macy’s Day Parade pageantry. It’s not about optics. It’s about doing a phenomenal job of thinking deeply about how your business will operate and then taking all that information and summarizing into as few words as possible.
In this Phase we’re going to go into a bunch of detail about how to craft every element of your pitch, as well as how those elements come together in presentation form such as a pitch deck and a business plan.
We’ll approach this in two big parts:
Here we’re going to get into the nitty gritty of each of the 10 sections of a modern business plan from the problem you solve to the business model to your financial projections. Even if you have this knocked out in some form, it may be worth taking a look at some of the examples and constructs that we use to make sure we deliver a highly polished presentation.
Once we have a sense for what our pitch looks like, we’re going to review all of the different forms of delivery. This will include the simple stuff like our Elevator Pitch, but will then dig into the more complicated and nuanced parts such as the Pitch Deck and Business Plan. We’ll even cover off on what types of business collateral you’ll be expected to show such as your Web site or product demo.
There’s no version where you knock all of this out in a week. A startup can work on their pitch documents for months, although that doesn’t mean you have to wait months to begin fundraising. Even while you’re in the process of pitching investors you’ll be constantly updating your docs as you get real world feedback from investors.
Our goal in this section is to give you portions of the business plan to work on so that you can start the process of refining your approach.
There’s two ways to think about your pitch – the short version and the long version.
The short version is a very well crafted, bite-sized description of the problem you solve, why your solution is amazing, and perhaps how big the market for that opportunity would be. It’s also called your “elevator pitch”.
The long version is all the details that back up your grandiose claims. That comes in a few form factors such as a business plan, a pitch deck and an executive summary. We cover those elements in “Part 2: Key Pitch Assets”.
Each of these elements draws from the same 10 aspects of a modern startup’s business plan. In this section we’re going to walk through each element, one at a time, to give you the best way to truly understand the full anatomy of a business plan, and by way of that, every other type of investor document you will need.
The 10 sections of a pitch include:
Bear in mind – this is a ton of work! You don’t need to complete all of these in a single sitting and many of these will evolve over weeks and months. Right now, just get a good feel for what each of the pitch elements look like so you can pick a comfortable place to start.
Most people start with the Problem, Solution & Market Size and build from there – so let’s begin with that.
The heart of every startup pitch involves 3 elements - Problem, Solution and Market Size.
The best startups solve painful problems in huge markets. Long before they become all the apps on your phone or your favorite restaurant chain, they spent countless cycles refining how they would communicate this problem to investors, employees and customers.
These three elements also form the basis for your Elevator Pitch. In its shortest form, if you were pitching your business to a potential investor, they would want to know these three critical pieces of information before they would listen to (or care about) the rest of your plan.
Simple, right? Well, not so much.
A seasoned Founder may iterate on this pitch hundreds of times until they get it right. It's not just words, but an understanding of the business itself that comes with lots of cycles and experience. The constant revision until you get it right is what makes this so hard.
Before you do anything else - create financial projections, detail the competitive analysis, or put a funding plan in place - you need to nail this part.
Every great company starts by solving an important problem. The more accurately you articulate the Problem, the more valuable the Solution will be.
In many ways, theProblem is the heart of your concept. It’s what intrigues people about the rest of your business and ultimately becomes the focal point for everything you build. Building a great case for your problem isn’t just about stating the problem, it’s about building an engaging story around that problem that people can empathize with personally.
Let’s use the example of Netflix who initially solved the problem (back in the days of yore) people had while having to travel to the video store to rent a movie. Netflix sought to avoid video stores altogether and instead deliver movies in an envelope to your mailbox, allowing you to keep the movie as long as you’d like.
At the time, the Netflix problem statement would probably look like this:
That’s a pretty simple problem statement, and it’s accurate. Notice that it doesn’t include any reference to the solution. We’ll get to that later. A good problem statement focuses entirely on the problem so that the audience can build a powerful case for that problem and ideally connect to it personally.
A great problem statement has a lot more character to it. It tells more of a story and provides an emotional connection to the solution. Building a better story takes more effort, but the payoff is real because you can draw your audience into your world and get them excited about your journey.
There’s a good chance that your product solves multiple problems, and that’s wonderful. Right now, however, it’s time to lead with just one of them – the biggest problem you solve.
There are two important reasons for this.
Investors don’t have time to remember every detail of your pitch. Can you remember the last time you spent an hour watching a TV show and remembered every line of dialogue? You need to focus on the highlights and save the details for pointed questions later.
If your biggest problem isn’t compelling, it stands to reason that the second biggest problem you tackle isn’t going to save you. You don’t win on the number of problems you solve, you win on how well you solve a particular problem.
In the example of Netflix, we know that movie delivery solves lots of problems – convenience, movie selection, and cost effectiveness – among others. Yet some are more important than others. If Netflix was far cheaper than its rivals but less convenient you could argue that it could fail. Therefore, Netflix needs to be cheaper, but more importantly it must be more convenient. We then realize that “convenience” will be our lead problem.
This doesn’t mean we will ignore the other problems. We can certainly cite those as well, but we want to tighten our focus initially so that we can talk about this problem first, build a story around it, and then expand into related problems to solve later.
Not all problems are created equal. The value of a problem is proportionate to how painful that problem is. The more painful the problem, the more powerful the solution.
You don’t have to be addressing a life-threatening problem to make it powerful. You need to focus on the detail of the pain in your problem. Even “convenience” can be presented very differently if it isn’t given enough character.
Compare these two versions of the same problem:
Both statements have the same intent, but the second one details the pain. You don’t want to hope your audience will remember what fighting traffic was like – you want to tell them. You want to remind them of the nuances that make “going to the video store” such a miserable experience.
As emotional beings, we attach to things we can relate to personally. The vision for your product is no different. The more your audience can relate to your story the better they will understand it and want to connect to it.
There are a handful of ways that Founders tend to build a relatable story:
You’ve seen this in populate “explainer videos” where the story opens with “This is Jim. He loves watching movies but hates having to travel back and forth to the video store every week.” Startups use this to give their audiences a persona to connect to which allows them to more easily relate that to their own experiences.
The problem often comes from the Founders themselves, which suggests a personal story that people can relate to. In this case, you’re relaying the origin story of your startup or product, discussing how this problem affected you personally. This allows you to be the central character that people can relate to and connect with.
Some problems are universal, such as a common frustration people have in everyday life. In the case of Netflix, the frustration of movie rentals was something almost everyone could relate to. They could open with “Aren’t you tired of having to travel back and forth to the video store every time you want to watch a movie?” Chances are their audience has dealt with this. It’s a bit of a gamble, so be mindful of assuming your audience shares your problem.
Any of these approaches can be used to create a story around your problem if they naturally work. If there’s nothing particularly relatable about your product or story (it may just be too specific) don’t torture it. These techniques can help communicate your problem more effectively, but they aren’t an absolute requirement.
Now that you have a sense for how to pick your problem, to focus the pain, and build a story around it, we can construct our problem statement in a very deliberate manner:
We determined that convenience was the biggest problem we were going to solve. While other problems like cost and selection were interesting, if consumers didn’t think Netflix was more convenient, they just wouldn’t use it.
It’s not just going to the video store that’s a pain, it’s all the frustration that involves making that journey. We expanded upon just how painful the convenience problem is.
We then began to build a story around who feels that pain and how it was something our audience could relate to.
Even though you know the elements of a good problem statement, it’s still possible to articulate this poorly. Just assume the first 20 times you pitch this problem (maybe a lot more!) you’re going to refine it. Don’t try to get the definitive version right out of the gates. It’s nearly impossible.
Here's a horrible way to articulate the problem:
The video rental industry has a categorically broken distribution model when delivery video-based content to consumers.
Is that true? Yes. Is it relatable? Not at all! Remember that facts alone are not a compelling narrative. A good problem statement isn’t just correct - it’s compelling. It pulls the audience in and gets them fired up.
Compare this to the version we developed earlier where we detailed the pain more acutely:
Going to the video store requires fighting traffic, wandering the aisles and waiting in long lines just to get a single movie.
If we really wanted to get creative, we could try to build a story behind who is frustrated by using a character or a relatable scenario as well. This is helpful but not a requirement. If it doesn’t feel like adding a character tells the story better, leave it out. Less is always more if it gets the job done.
The goal of the problem statement is not only to garner the attention of your audience, it also serves to make the solution look amazing. Next, we are going to dig into the Solution, but mind you we’ll be tweaking each element – problem, solution and market size – as we go. Iteration is our friend here!