Pitching… that thing we force notoriously introverted geeks to do for funding. The main idea is that an entrepreneur— unless his name is Elon Musk or Tony Stark — has limited resources and needs the financial support of pockets that are substantially deeper than his own.
If you, as an aspiring business leader, want potential partners and investors to buy into your idea, you need to sell it in a concise, explicit and exciting way to a floor of overconfident, seen-it-all financiers who might not know much about the technical complexities of that next big idea you’re certain to have found.
The idea that a unilateral monologue, performed onstage by an individual who has little to no public speaking experience, would make or break a startup sounds sub-optimal at best. Being a poor public speaker or salesman doesn’t necessarily mean you will be unsuccessful as a businessman, leader or creator. Is it not possible, after all, to have an absolutely incredible idea that is just too complicated to be presented in two, four or even eight minutes?
Today, pitching is an integral part of the entrepreneurial ecosystem and an inevitable hurdle on the road to financial sustainability. However some people call it out for being an overrated exercise.
Derek Lidow, author of “Startup Leadership” said, “The problem is that pitching is a waste of time, and teaching this as a primary skill of entrepreneurship is misleading and sets the wrong priorities for aspiring business leaders.”
He goes on to say that “there is no evidence that people who give the best pitches have materially better chances of business success than any other entrepreneur with the same motivations, traits and skills presenting the same idea.”
This pitch mania can give way to a critical analysis where form trumps substance, and becomes a distraction from the core competencies of the entrepreneur who has all but lost sight of his own priorities. Basically, pitching can be a dream killer.
So why do we still pitch?
Surely, there must be a better way for VCs to spot startups with potential, right?
Well… not really. Pitching is a MUST, and no other process allows you to gather your thoughts, distill them into a crystal clear proposition, and give an opportunity for potential investors to size you up. So, dear entrepreneurs: Rejoice! Your efforts, your endless rehearsals and those nightmares you’ve been having where you realize mid-presentation that you forgot to put on pants will not have been in vain.
First of all, the only way for the world to become aware of that awesome idea you have will be for you to go out there and put on your storytelling hat. And it turns out, there are people who make a living out of listening to these stories and who even give you a whole lot of money if they like what they hear. However, angel investors, VCs or PE firms are on tight schedules and have an ever-increasing amount of people to listen to — so yes, you need to make your mark when you do get a few minutes of show-and-tell.
Dr. Margarita Cruz, a strategy professor who teaches an entrepreneurship class at Ecole hôtelière de Lausanne (EHL) said it best when she explained in a recent interview that “even if entrepreneurs have really good ideas and business orientation, they need to stand out to be able to attract resources.”
Carson Booth, a technology startup consultant and former Starwood senior vice president of global property technology, explains the exercise of pitching as necessary because it “hones a founder’s or their marketer’s ability to succinctly define their product, market and approach.” “It’s a bit like knowing within a few seconds whether you’ll like a song or not,” he added.
"The goal should be to distill the idea down to what interests the audience and elicit a desire for more information." - Carson Booth.
Booth, who says pitching is indeed an essential part of the business creation process, also makes a point about the choice of the speaker being an important indicator of the founder’s leadership skills. After all, the job of a CEO is to know who within his team is most suitable for each task.
“Sometimes there is no one else than the founder to go on stage, and that’s OK, but they need to work extra hard. However, they should remember the audience is on their side and rooting for them,” he said.
Also, investors — especially in the early stage — want to feel they can actively add value to the venture. Pitching is therefore a good opportunity for them to see how “coachable” entrepreneurs are. Openness to constructive criticism and a generally positive demeanor will go a long way to gain their favors.
EHL’s Dr. Cruz also points out the fact that preparing for the pitch isn’t only relevant for external audiences. “Learning to pitch their business idea helps entrepreneurs highlight their value proposition and prioritize the most relevant parts of their idea.” This process will efficiently work to ensure the plausibility of the project.
“Being able to pitch without having a sound idea, or without testing that idea in advance, does not really work. From that point of view, I think pitching complements the entrepreneurial process,” she added.
It also turns out, apart from the obvious reasons to attend pitch competitions, like meeting investors or networking, pitching serves many other purposes such as probing your future consumers, getting a healthy dose of motivation from the buzzing corridors of the convention center, or witnessing other great performances that can truly inspire you.
Finally, if we spend our time complaining about pitching being “form over substance,” we need to be reminded that this is, in many ways, how consumers react to products. This is basically the concept of brand value, and it will be a major determinant of your success in business — so we might as well get attuned to it as early as possible, and even enjoy it while we’re at it!
Initially posted on HFTP Connect on April 10, 2018.
HITEC Amsterdam 2018 featured its successful pitch competition E20X, where 11 innovative hospitality technology startups presented their breakthrough business concepts to an expert judges panel and a roomful of industry professional spectators. EHL Alumna Anastasia Hofmann and Naomi MacKenzie from Kitro Waste Management won the 2018 Judge's Choice Award.
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