Transcription
Translator: khalid yahya
Reviewer: Anwar Dafa-Alla
Good morning. My name is David Rose. I am a serial entrepreneur turned serial investor. And by using PowerPoints to pitch myself to venture capitalists, I personally raised tens of millions of dollars from venture capitalists by pitching with these PowerPoints and then, I went to the other side of the equation, I personally oversaw the investment of tens of millions of dollars in companies that came to me and pitched themselves to me with PowerPoint presentations. So I think it's safe to say that I know a little bit about the process of pitching for funding. So the first pressing question that you all need to understand is: What is the single most important thing that venture capitalists are looking for when you come to them to pitch and talk about your new business idea? And there are, of course, all sorts of things. There are business models, and there are financials, and there are markets, and there are also all the things that you have to do, what is the single most important thing for the venture capitalist to invest in? Someone tell me? What? Audience: People. People? You! That's it -- you are the person. And therefore, the primary purpose of pitching to venture capitalists is to convince them that you are the entrepreneurial person that they are going to invest their money in and in return will make a lot of money. Now, how do you do that? You can't just walk in and say, "Hello, how do you do," "I'm really the good guy or the good girl, that you really should invest your money in." Right? So during the process of pitching for capital, you have a few minutes. And most pitches for funding -- most of those pitches take about fifteen minutes, most venture capital pitches should be under half an hour -- people's attention starts to wane after about eighteen minutes. Tests have proven that. So within eighteen minutes, or ten minutes, or five minutes, you have to get across all of your different attributes. In fact, you have to get across about 10 different attributes while you're standing there. What's the most important thing you have to get across? What? Audience: Honesty. Yes, boy, boy, boy! And that's a direct answer that we've arrived at. Correct there, and I didn't even hint at it for you to say it. You're right, honesty. And the reason is that it's the number one thing. I will lean very heavily to invest in someone -- you know, to rely on someone -- that I know is a straight shooter rather than someone that there's a possibility of questions about, you know, who are they looking for, and what's going on. So the number one thing of all is honesty. And what's the second most important thing after honesty? Let's see if you'll know that. Audience: Confidence. Close enough! Passion. Well, you here want -- entrepreneurs by definition are people who leave a job, and start to make a new world somewhere else, create and nurture their ventures with their blood. You have to get across that you are passionate, if you're not passionate about your company, why should anyone else be passionate about it? What's going to drive them to invest more money in your company if you're not passionate about it? So honesty and passion -- the most important things so far here. Then there's a whole host of other things that you have to do to wrap up this package that you're presenting to the venture capitalist. Experience. You have to be able to say, "You know, I've done this before," and "I've done this before" means starting an organization and creating value for it? And taking it from inception to the end. And that explains why venture capitalists prefer to fund serial entrepreneurs. Because even if you can't get it right the first time, you've learned the lessons that will serve you well the next time. And now in addition to what we've mentioned, in addition to experience in starting an organization, or running something -- and it doesn't necessarily have to be a business. It could be an organization in a school, or it could be a non-profit entity. But, they want experience in creating an organization. The next thing is knowledge. If you're telling me that you're going to be the great developer of the human gene map then you better know what a human gene is. I mean, I want you to have domain expertise. So I don't want someone to tell me, "I have a great idea for a business that I know nothing about. I don't know who the key players are, I don't know what the market specs are." So you have to know the market that you intend to operate in. You have to know your domain. And then you have to have the skills to continue the company. And those skills include everything from technical skills, if the business is tech-related, to marketing and sales and management and so on. But, you know, nobody has all those skills together, there are very few people who have the complete set of those skills required to run a company. So what else do you need? Well, leadership. You have to be able to convince us that you have either assembled a team that has all those attributes or at the very least that you have the charisma and the management style and the ability to get others to follow your leadership, and inspire them, and encourage them to be part of your team. Well, having done all that, what do I need to know as a venture capitalist in addition to what we've mentioned? I want to know that you have commitment. That you're going to be there until the end. I want you to say, or I want you to convey the message that you're going to sacrifice yourself if need be, until your last breath -- and keep on hanging in there even as you're being dragged out. And that you're going to preserve my money and that you're going to employ it so that it makes more money. Because we don't want the person who's going to make their personal gain and run at the first opportunity that presents itself. Because bad things happen. There is absolutely no company funded by outside or inside capital that bad things don't happen to. So I have to make sure that you're going to be committed to being there until the end. You have to have vision. You have to be able to envision where things are going. We don't want another "me too" product. I need someone who has the knowledge, to change the world around them. But on top of all that I need realism. Because I need to realize that you know, that even though changing the world is a great thing, it's not necessarily always going to happen. And before you change the world, bad things are going to happen. And you have to be able to deal with that reality. And you have to have logical conclusions and the like. And finally -- you're asking for my money, not just because it's my money, but because it represents me. You have to accept direction. So you have to convince me that you have the ability to listen. We have a lot of experience -- venture capitalists or financiers who invest in you -- have their experiences and they want to make sure that you're willing to hear those experiences. Well, so how can we convey all of this 10 things in 10 minutes without saying them directly? You can't say, "I'm extremely honest -- invest your money with me." Right? You have to do the pitch that conveys all of this without explicitly stating it. So you have to think of your pitch as a timeline. The pitch begins, and you walk through the door. Whatever it is, they don't know anything about you. You can control them emotionally -- pitches and sales pitches are all emotional on some level. You can soar high or go low, okay? And it goes from beginning to end. You walk through the door. And the first thing you have to do -- you know, the overall curve of your pitch -- your pitch has to start like a rocket? You have, I guess, 10 seconds -- between 10 and 30 seconds, depending on the length of your pitch -- to capture their attention. In my case: "I've invested. I've raised tens of millions of dollars through PowerPoint pitches. I've invested tens of millions of dollars." That's the key point -- that should achieve your goal. It can be a hook, and everyone will wonder, their expectations will be piqued, it might be a story, it might be an experience. But, you have to grab their emotional attention, and focus it on you, during those first few seconds. Then from there, you have to take them on a solid, balanced path that escalates from beginning to end. And everything you do has to support that. And you have to get better, and better, and better, and better, and it builds on itself until the end, and in the end you have to -- (boom) -- draw them in, and deliver the knockout punch. You have to make sure you get them to that degree of emotional fervor that they're ready to write the check -- or throw money at you -- right where you stand and before you leave. Well, how can you do that? Well, first things first, logical sequence. Every moment you falter, or skip a step -- imagine you're climbing a ladder with some missing rungs or the rungs aren't the same height. You stop, you have to figure it out. You want a smooth, gentle, logical progression. Start by telling them what the market is and what it looks like and why you're going to do X, Y, Z, and then you have to tell them how you're going to do it, and what you're going to do with it. How you're going to do it. The whole thing -- it has to flow smoothly from beginning to end. And you have to teach me that there are benchmarks. They have to be tied to the world around you. So, for example, if I point to companies that you've heard of before, or key elements of your business, I expect you to tell me about them. Things that I can relate to: proof, or proof that someone has agreed to this, or external evidence. It could be sales, or it could be you winning an award for something, it could be, people who have done this before, or it could be your beta tests that are going great. Whatever it is. I want documented proof -- that what you're saying isn't just idle talk, but someone -- or something out there says that this makes sense and is worth considering. Then after that, and since I'm looking at an upward trend here, the upward trend has to be believable. And this is divided into two parts. The upward trend must be there, and then it must be believable. Upward trend means if you're telling me that you're going to be there in five years making a million dollars a year (hmm). That's not really an upward trend. And telling me that you're going to be there making a billion dollars a year -- that's not believable. So it has to satisfy both sides. And on the other hand, there are many things that turn me off, that lower the emotional level, and you have to address them here. For example, anything that suggests that what I know is not true. "We have no competitors. No one else has ever made this device before." I probably know that someone has made the device. And the moment you tell me that -- (boom) -- and you know the rest of the story, and from that moment on I'll only believe half of what you tell me. Anything that makes me think. Anything that I don't understand, that I have to figure out with my own mind will stop the flow of the pitch. So you have to treat me like a sixth-grader -- step, step, step, step -- but without being patronizing. And that's a very difficult path to take. But if you can do it, it will work out really, really well. Anything that is inconsistent with the initial context of your subject. If you tell me that sales of X, Y, or Z are 10 million dollars, and in the next slide, or five slides later, sales are 5 million dollars. Well, one number might be gross sales, and the other might be net sales -- but I want to see numbers that make sense and are consistent with each other. And finally -- anything that is wrong, or a typo, or a stupid mistake, or a line that's not in the right place. That makes me question your ability to even do the pitch, so how can you run a company? So all these things work in one direction. Well, the best way to do it is to look at what we're good at, look at the people who have done it before. So let's look at the most successful tech executives in this business and see how they pitch. Here's Bill Gates' PowerPoint presentation. Here's Bill Gates pitching Windows. Is that the optimal way to do a PowerPoint presentation? What do you think? No. Who should we look to as a role model? Oh, isn't that amusing! There's a great person here. Yes, well, Steve Jobs. You want the unvarnished truth -- this is the pioneer of presentations, isn't it? Here he is. A small person, black jeans and the like, on a completely empty stage. What do you focus your eyes on? You focus your eyes on him! That's Steve Jobs. So, you know, the great -- that amazing bulleted list, a list of all the things, you know -- good? No, it's not. Long bulleted lists are not good. What's better? Short, short bulleted lists. But you know what? Better than points is not using them. No points. Just tell me what the main headline is here. And you know what? How many bullet points or headlines does Steve Jobs use? Basically none. What should you do? The best thing of all: pictures. Just a simple picture? You look at the picture -- a picture is worth a thousand words. You look at the picture and you see that, and then you leave the whole thing. Then you go back to focusing on me. You'll focus on me and why I'm the great person, and why you want to invest in me. And why all of this makes sense and has meaning. So, as we said before, we have very, very little time. So let's review the things that you need to include in your pitch. Well, first of all, start. Not with those big slides, with long titles. Full of a lot of text like: I will show you X and Y, on date Z. I know the date, I know who I am, I also know that you're going to give a pitch. I don't need all that. Just show me the company logo. I'll look at the logo, and somehow it will stick in my mind. And then I'll go back to focusing on you, okay? You have to do that, give me that quick 15 or 30-second introduction, capture my attention. And then you'll want to give me a quick overview of the business. And it's not a five-minute presentation. It's, you know, just two sentences. "We make devices for the markets in X, Y, Z," or "We will provide a service to help others do X." You know, whatever it is. And it's like the guide picture on a jigsaw puzzle box. That leads me to know the content. It gives me the overall structure of the whole thing. You'll continue to progress. And that will enable me to connect things. You've given me the general idea before. So keep going -- walk me through, show me who your team members are. It's beneficial to be experienced and to have done this before. I want to get an idea of the market -- market size. Why is this market worth entering? I want to know what your product is, and that's important. And since the presentation is not a product pitch, and not a sales pitch. I don't want to get into the nitty-gritty details, and all the boring details or the like. I just want to know -- what is your product? Is it a website, show me a screenshot of your website. You know, don't do a live demo. No. Don't do a live demo at all. Do a recorded demo, or do something to introduce me. Why will people buy this thing? And then I want to know -- after I realize what you're going to sell -- tell me how you're going to make money from it. For every X you sell, you'll get Y, and you'll provide services Z. I want to know what your business model is based on the unit of sale, or the actual product you're selling. I want to know who you're going to sell your product to, in terms of customers. And I'd like to know if you have relationships that could be beneficial in helping me. Whether you have distribution relationships with someone, you know, you have a manufacturing partner. Or, you know, again, validation and documentation. This helps you to appear bigger than you are here. But then every business has competitors. No company at all has no competitors. Even if the competition is a traditional way of doing business, I want to know specifically who your competitors are, and that will help me estimate where you will be in the whole process. Also, I want you to tell me how you are unique. If you've identified your competitors, how will you prevent your competitors from eating your lunch here? And all of this relates to the overall financial outlook. And you must have -- you can't do a pitch for funding without showing me the financials. I want to know three and -- a year or two ago. Or for the entire duration of your existence. And I want to know three or four or five years into the future. Five is a bit much. Four is probably more reasonable. And I want to know that the business model you've shown me in terms of product will later translate into a company model. And, you know, how many devices you're going to sell. And you'll get X amount for the device. I want to know what the driver will be. We'll have 1,000 customers this year, and 10,000 next year. And our revenue will grow, and so on, and so on. And with that, you've given me a complete picture of the next few years that I'll be investing in. And I want to know how the money you get from me will get you to your goals. You'll open a factory abroad in China, you'll spend all sales revenue on marketing, you'll move to Haiti, or whatever. There. But then the question arises. And here you'll tell me how much money you want. You're looking for 5 million -- and what kind of valuation? 2 million at a rate of 100,000, and how much money do you have so far? Who has invested? I hope it's your personal investment. Because I'll follow you in that. If you can't invest in your own project, why should I? And I want to know if you have friends and family, or angel investors, or if you've received venture funding before. What is the capital structure up to this point? And then finally, after doing all that, you've told me everything, you have to come up with that conclusion. It's that rocket that takes off. So I hope things are positive, positive, positive, and more positive. And everything, everything you say appeals to me, and makes sense. And I think, "This is really, really great." And then you'll take me back to your company logo. Just the logo on the screen, and I'll look at the logo -- okay, good. Now, I'm focusing on you. Nothing else to look at, okay? Now you have to fold it up and wrap it up here. You have to come up with the conclusion, you know -- (boom) -- the final step that will send me into space. Well, while doing this here, how do you remember the sequences and their execution? You've noticed I'm not looking at the screen here, right? In fact, the screen in this room is set up so it's in front of me. So I can't see it even if I wanted to. So how do I know what's going on here? Well, I have a laptop in front of me, but you're looking at me and at this. What do you think I'm looking at? You think I'm looking at that? No, in fact, I'm looking at a special version of PowerPoint here, which displays the next slides and the previous slides, my notes from here -- so I can know what's going on. This is built into all versions of PowerPoint. This is built-in. If you're using Apple Keynote, there's a better version in Keynote. Then there's a program called Ovation that you can get from Adobe. I bought it last summer. Which will help you run all the timers and will make you aware of what's going on. So, here's my conclusion that will take you to the moon, right? David's usually has the top 10, we don't have time for the top 10. So David's five favorite tips for pitching: Number one, always use a presenter mode, or Ovation, or presenter tools -- because they allow you to know exactly where you're going. They allow you to control your pace, they provide you with a timer, and so we'll finish on time without missing anything. Number four, always use a remote control. Did you see me touch the computer? No, you didn't see me. Why? Because I'm using a remote control here. Always use a remote control. Number three: The printed handouts that you'll distribute are not the presentation. If you follow my suggestions, you'll have a follow-up presentation-worthy copy. It's great for expressing who you are and for gaining sympathy, but it won't be useful as printed handouts because the printed handout is usually for conveying detailed information, because the printed handout must convey information without your presence. Number three. Don't read your speech. Can you imagine? "Well, you should invest in my company because it's a really good company." That won't lead to a good outcome, okay? Don't read your speech. And the number one tip for pitching: Never, ever look at the screen. You are here to create a connection between you and the audience, and you always want to create a direct connection (person to person). The screen should be behind you, it's to support what you're doing, not to replace you. And this is how to pitch for venture capital.