I’ve been out talking to people about raising money for Fluidinfo.
Over the last 7 years I’ve read literally thousands of articles on talking to potential investors, pitching, raising money, angels, VCs, dilution, control, rounds, boards, strategies, valuations, burn rates, equity, etc. I’ve bought and read dozens of related books. I’m a regular reader of about a dozen VC blogs and the blogs of several entrepreneurs. I’ve swapped stories in person and learned lessons from probably a hundred other entrepreneurs. I was CTO of Eatoni Ergonomics, a startup that raised $5M in NYC, and I sat on the board for 4 years.
I like to analyze things, to sit around thinking, to generalize, to look for lessons, to find patterns, etc. So I reckon I have a fairly good idea of what creating a startup and raising money is about.
Some aspects of doing that are relatively formulaic. But others have significant variation.
For example, what should you put in a business plan? You can spend many months working on business plans. It’s hard work to write well and concisely. Then you show it to VC A and they tell you they’d also like to see X and Y and Z, that are not in your plan. So you put them in. You show it to VC B, and they tell you the plan is way too long! That you should take out P, Q, R and S. That leaves you with a wholly new-looking plan and when you show that to VC C, they’ll tell you it’s incoherent and doesn’t flow and look at you like you’re some kind of innocent child who doesn’t even know how to structure its thoughts. When you tell them you actually already know all that and that you agree, they’ll think you’re even weirder. And so it continues.
Thinking is changing on the business plan front, though. Some entrepreneurs and some investors have realized that creating or insisting on a business plan too early is probably a waste of time. Everyone knows the market numbers and the financial projections are probably rubbish. People expect the business and the plan to change, etc., etc.
When someone asks me for a business plan, I (politely) tell them I don’t have one or intend to write one. I tell them I’m looking for someone who wants to understand what I’m doing and fund it, without needing to see a formal written business plan. I suggest that if I reach the stage of looking for someone who wants the comfort of a better-thought-out plan that I will get back to them.
I think that’s a good change all round. You have to push back a little. A tiny engineering team focused on building a product probably shouldn’t stop, or be stopped, to write a business plan. I’m certainly not going to do that. I could spend that time writing code, working with people I’m paying to create more of a product, to get more online, to have more to point to, etc.
There’s definitely been a change with respect to business plans.
And now to the meat of this post, to a place where a similar change has yet to penetrate: the blind insistence on having an elevator pitch.
Almost universally, potential investors will want or expect an elevator pitch. Tons of VC sites will advise you that if you can’t describe your idea in a couple of sentences, it’s probably a non-starter. If you don’t have a compelling elevator pitch they wont talk to you, wont reply to email (even if you have been introduced), and they certainly wont read any materials.
Some even go so far as to tell you that without an elevator pitch you wont be able to communicate your ideas to your employees to motivate them! Uh, excuse me? Since when did the intelligent, driven, dig-in, curious, thoughtful, dedicated people who join startups acquire the attention span of gnats?
Listen. Some ideas can’t be summarized and/or grasped in a two-minute elevator ride. Sometimes you don’t even know yourself what the outcome will be. The history of science and innovation is full of examples. Imagine what the world would be like if, in order to get seed resources to push a new project along, all ideas had to be pre-vetted, each in 2 minutes, by a fairly general audience (I’m being polite again).
Entrepreneurs have to push back—where necessary—on the demand for an elevator pitch.
I’ve tried to put my round ideas into the square hole of an elevator pitch for long enough. I haven’t managed to do it and I don’t want to spend any more time trying.
Until tonight I’ve just been telling people I don’t have an elevator pitch, sorry. I’ve even told them (hi Nivi!) that instead of robotically insisting that I shape my ideas to their expectations that they try being more open minded about the process and try working on their expectations.
From now on, I’m going to give the following elevator pitch:
Here is a list of people. Each of them has had the curiousity, time, and patience to listen to my ideas for at least an hour. Ask them if I’m worth talking to further.
(See below for my list.)
If that’s not ok, then I agree that 1) if I reach the stage where I need to talk to people who really need an elevator pitch, and 2) you’re still interested, then I’ll try again to work on getting you what you need. Same goes for a business plan.
Up to this point I’ve tried to only talk to people who are willing to put the time in, to listen and think, to talk among themselves and draw their own conclusions. But I’ve still run into a bunch of people who wont do that. That’s ok, of course. I also know what it’s like to be busy.
Here’s my list. I’m very happy and very thankful to have recently spent at least an hour, sometimes much more, with each of the following:
Esther Dyson (now an investor),
David Weinberger, and
That’s my new elevator pitch.
If you buy it, let’s talk properly sometime soon. If you don’t, but you’re still curious, talk to some of those folks. Take your pick.
And if you don’t know any of those people, maybe you should be sending me your elevator pitch.