With a long and distinguished career in Silicon Valley as an entrepreneur and venture capitalist, Bill Reichert has both given a lot of pitches and seen a lot of pitches. His “Getting to Wow” framework provides clear rules to founders on how to sell their message effectively.
Elliott Adams: I remembered your “Getting to Wow” talk that you did for us a couple of years ago at Startup Next. If you wouldn't mind, would you share the key parts?
Bill Reichert: Sure, sure. There are two key parts to it. The context is that there's a ton of stuff written and videoed and blogged about perfecting your pitch, right? There are all sorts of templates out there for entrepreneurs to develop their pitch and all sorts of tips about your elevator pitch and your investor pitch, etcetera, etcetera. A few years ago, I was struggling to try to understand why entrepreneurs consistently get it wrong—despite all of this coaching for pitches—and I realized that a big part of it is actually our fault. What most people call “pitch coaching” is actually presentation coaching. If you think about it, all the people who come and do pitch coaching, what they're really doing is presentation coaching. That raises the question, well, what's the difference between a pitch and a presentation? A presentation assumes you've got a fixed chunk of time and an audience that is committed to sitting there and listening to you for that fixed chunk of time. But the reality is, in 99 percent of your communications as an entrepreneur, that's not the case, right?
EA: Very true.
BR: I realized that with all this work we put into helping entrepreneurs with their elevator pitch, everybody has a different definition of an elevator pitch. Usually it's sixty seconds, ninety seconds, two minutes, even four minutes. The idea is that it's a pitch that's much shorter than what you would do if you got into the conference room at a VC firm. But, the only place you can ever use an elevator pitch is at an elevator pitch competition, right? I mean, you can't really use your elevator pitch in any normal situation in life. Would you get somebody on the phone and give them your elevator pitch? Or at the shrimp bar at a trade show?
EA: Do you mean because it’s unnatural in conversation to talk continuously for ninety seconds?
BR: Exactly. And a lot of people include slides with their elevator pitch, right? But even if it's a non-slide, sixty-second elevator pitch, they're not natural. It's not the way any human being would speak to another human being.
I mean, it's really designed to try to cover all thirteen critical points of your business model in sixty seconds. So, that was my epiphany, and in all of this behavioral economics and psychology stuff, I learned that the human attention span is essentially twenty seconds maximum. That's what all the psychologists have told us. So, my first point is that we're coaching entrepreneurs to make presentations, not pitches. My second base point is that you really only have twenty seconds to be compelling, or you may as well go home. You've got to figure out a way to get people excited, or at least intrigued, in twenty seconds. And it's not by asking them some clever question or giving them a riddle, as a lot of pitch coaches advise to start with in order to hook your audience.
EA: I’ve seen that end pretty badly.
BR: There are two classes of people who have no patience for clever presentations. One class is customers. Every customer has heard hundreds, if not thousands, of sales guys come into their office and pitch something to them. They've heard it all. They just want you to cut to the chase. The second class is investors. Any investor who's been in the game for any amount of time has heard it all.
They both just want you to cut to the chase. And those are the two most important kinds of people for an entrepreneur, right?
EA: It seems like a lot of what these people are learning is effective only in less critical situations, like a pitch night.
BR: Yes, exactly. We have constructed in this ecosystem these things called pitch nights or pitch competitions. Every VC on the planet will tell you that a tiny, tiny fraction of the companies they've ever invested in came from seeing them at a pitch competition.
EA: They seem to be a strange cottage industry that doesn't actually relate to the larger VC industry.
BR: Exactly. Now, I'm not saying that entrepreneurs should not participate in pitch nights. I think there's some virtue in trying things out and getting reactions and stuff like that, but it's not really the way you get investors. And it's certainly not the way you get customers, right?
So, that's sort of the key point on “Getting to Wow” and the difference between having a good pitch and developing an authentic presentation.The three themes I say are clear, compelling, and then credible—the three C's.
The way I try to get this across to entrepreneurs these days is I talk about the fact that almost all pitch coaching, including the entire approach that I was given for developing my pitch when I was an entrepreneur, is based upon creating a logical argument full of data, evidence, facts, and analytics. That was the way I was trained to pitch to investors. For those of us who survived and went on, we thought: “Oh, well it worked for us, so that's what we should teach everybody, right?”
But being heavily influenced now in recent decades by the combination of behavioral economics and neuro-linguistic programming, we realized that humans don't make decisions with their brains, they make decisions with their hearts. So, I talk about how we spend all our time focused on the head, but what you really have to do is figure out how to get to their heart. You've got to get them to fall in love with you. This was my other epiphany when I became a VC. I had no idea, first of all, that investors had a heart, and second of all, I had no idea that they weren't using some powerful analytic tool that had an algorithmic calculation of investable projects.
EA: Many founders seem to have this idea of venture capitalists having a lot more objective insight than some actually do.
BR: I watched our team and I watched my new comrades in the venture capital industry go through the investment decision-making process, and I realized that the key to being successful was getting the investor to fall in love with you, and then having enough data to be able to make a compelling, brain-oriented case that it was a good investment to make.
But the key is always differentiating yourself from the unwashed masses of entrepreneurs that are constantly hitting on investors. I thought when I was an unwashed entrepreneur that each of my companies were so brilliantly unique and compelling and exciting, that of course I would knock their socks off if only they heard about what I was up to. What I missed was that the reason they invested in my companies was that somehow my co-founders and I triggered something that got them emotionally excited about the investment rather than concluding it was a good investment by rational means. They became emotionally excited that it was a good investment. So, the key is, you have to get them emotionally excited, and I say that means you have to get them to fall in love with something about your company.
The other body part that you have to communicate with is the gut. We have a whole bunch of psychology research on this that says that humans react instantaneously in one direction or the other. I will tell you that in any given professional or sales situation, you have an immediate instinctive reaction to each person that you come across, and usually it's directional, one way or the other. Rarely is it purely neutral, right? That's because neutrality doesn’t have any sort of socio-biological advantage.
EA: If you're investing, you wouldn't have a neutral reaction. If you're hunting and evaluating, it's almost impossible.
BR: Exactly, you're constant. Part of the instinctive reaction that investors and customers develop is getting to a fast no because with the vast majority of pitches, you're going to have to say no at some point, and you don't want to waste time on something you're eventually going to say no to. Therefore, you want to say no as fast as you can.
Sometimes I think it's baked in, and I will be the first to admit that that's dangerous. We absolutely know it's dangerous to have an instinctive negative reaction just because somebody doesn't profile quite the way you ideally want them, right?
Regardless, that’s your challenge as an entrepreneur. You don't know what they're thinking in terms of their gut instincts, so your challenge as an entrepreneur is to make sure you don't trigger that negative reaction. Most of our negative reactions are the guys coming on too strong and making it seem like he's just blowing smoke, which leads to feelings of mistrust and deceit. So, the head, heart and gut correspond to the three C's. For the head, you've got to be clear; for the heart, you've got to be compelling and get the heart racing; and for the gut, you've got to be credible, and you've got to pass the gut check and get over the instinctive reaction.
EA: Could you elaborate on that?
BR: Well, they're all difficult. The thing that's amazingly difficult for entrepreneurs is to be clear with what they do. Unfortunately, what happens is there are pitch coaches out there that say the secret to your elevator pitch is to be able to say what you do in twelve words or eight words or seven. That’s in every pitch-coach training exercise I've ever seen. They force these poor entrepreneurs to distill their essence into twelve words or something crazy like that, right?
Every entrepreneur then thinks they’ve only got twelve words, so they go super high level. So then you have, “we empower enterprise customers to maximize their profitability with mobile services.”
EA: They take all the meaning out of it.
BR: Exactly. So, you go super high level and there's nothing there. There's certainly no clarity when you go super high. The other end of the spectrum is that a lot of entrepreneurs are so deep into their core technology. They assume that everyone understands which tech stack they've combined with which deep-learning convolutional neural network and that everyone’s going to appreciate why it is that there’s only 150 milliseconds of latency compared to everyone else. So, you get both sides of the spectrum. It's stunning how difficult it is for an entrepreneur who's deeply embedded or enmeshed in what they're doing to create a simple sentence that most intelligent people can understand and that explains what they're doing. They usually go way too high or way too technospeak, so what I encourage entrepreneurs to do is imagine a good TechCrunch journalist writing a story on their company. What sentence would they use to describe their company? They're not going to use “empowering global enterprises to whatever,” right?
EA: They take the hyperbole out.
BR: What can you say to six strangers at a cocktail party and have at least five of them repeat it back to you accurately? And that's your test. Can you do that? You can't craft compound, multiple subordinate clauses into an eighty-five-word sentence, you know? Which is why all these pitch coaches ask you to do it in twelve words, but that's kind of going to the wrong extreme, right?
It's just a normal sentence. A normal sentence spoken in ten seconds contains twenty-two words for most people. That's plenty of words to be clear with what you're doing. So, number one is being clear. Number two is being compelling. What causes the heart to race? You've got to give them some compelling benefit that separates you from the rest of the pack. Something that makes them go, “Wow, you can do that?” Normally, entrepreneurs spend the first thirty seconds describing their product. You can't talk about your product for thirty seconds because everybody's eyes are going to glaze over. They’re either going to think they've heard about products like this before, or they're thinking to themselves, “Well, so what? What's in it for me?” So, what I'm telling them is to be compelling. You've got to offer a customer benefit. It’s value proposition 101. You've got to offer them a value proposition that is significantly better than the alternatives that are out there. For example, you're five times faster, or you're one-tenth the cost, or you're half the weight, or whatever a customer would consider a benefit.
Everybody on the planet who speaks English knows the difference between a benefit and a feature. You hear it so much in the world of business, at least, that you know you have to talk about the benefit, not about the feature.
And yet, so few entrepreneurs ever translate that into a compelling value proposition. I ask every entrepreneur to complete the following sentence: “The big idea behind our product/service is . . . ” That sentence has got to be a compelling value proposition for your customers. The whole idea is getting them out of the habit of describing the product, which, in essence, is its features, and get them focused on what value the customer will appreciate.
No matter what, every company needs a compelling value proposition. I mean, you don't have a company if you don't have a compelling value proposition. The unfortunate thing is there are a lot of companies that have been widely successful without a clear, compelling value proposition.
And that, unfortunately, is a false positive for a lot of entrepreneurs.
EA: Are we thinking Twitter here?
BR: Right. Twitter and Facebook. If you think about it, how would you articulate the value proposition of the original Facebook? I mean, it's kind of entertaining, you know, as personal existential validation, but no investor would invest in that. You have this problem that a lot of things that are highly successful. It would have been very hard for the entrepreneur to originally articulate a compelling value proposition for it. I mean, Zuckerberg had the benefit of momentum. It was the same with Google. Nobody could tell the difference between Google's search and anybody else's search, but Google developed a cool factor and that gave it an exclusivity aspect. You had to be invited to get a Gmail account. Anybody could get a Hotmail account, anybody could get a Yahoo account, but you had to be invited to get a Gmail account. It’s the same with Facebook. If your company’s success is dependent upon you being totally cool, then frankly, I can't help you, you know? Either you are or you aren't, and that's where my partner in Garage Ventures, Guy Kawasaki, says, “If your 'wow' is that you’re totally cool, then the only way you get that across is if you can demo the product in the first thirty seconds.” That's hard to do, but that's what's going to get people interested. You could not describe Facebook in words at a cocktail party and get people to go “wow,” right?
EA: It's the experience.
BR: You couldn't describe Twitter. For companies that are dependent upon being cool, you have to communicate in a different way. I would say 99 percent of real businesses are more objective in terms of what their value proposition is. I think probably 50 percent of entrepreneurs think that their advantage is their coolness, but I think that's a really risky strategy. But it's compelling, right?
EA: It certainly can be.
BR: And then the third C is being credible—the gut check. There are two big components to credibility that are tightly interwoven. As soon as you start talking to a potential buyer or customer, or as soon as you start talking to an investor, their reaction as soon as you open your mouth is, “Oh yeah, I've heard this before.” Because, overwhelmingly, most entrepreneurs are pitching something that is some flavor of something that we've seen before. The challenge is, you've got to get out of that rut as fast as you can, so you can't wait until slide six—the template says you don’t have to talk about competition until slide six. You can't wait until slide six to pre-empt that skepticism. To get over the negative gut reaction, you’ve got to say something like, “You might have heard of other companies doing something similar, but unlike those companies, what we can do is . . . ”
EA: It can really undermine a pitch's credibility, as you say. If you’re sitting there for ten minutes until they show you that they understand the competition, by that point, you've largely written them off.
BR: Exactly. So, the key to the third C, credibility, is pre-empting the competitive noise problem. Then the other piece of that is, do you have evidence that what you're saying is, in fact, true? Meaning, what do you have other than your pathologically high confidence and optimism that this is going to work?
I encourage entrepreneurs to give us some reason to believe them. I mean, the fact that Unilever is piloting your product in South Asia, for example, means that you've got some credible third party who’s already decided you guys are the best thing they could find on the planet. So, give us whatever level of traction you've got. Maybe the best you've got is that your professor happens to be one of the world's experts in this domain, and he signed on and lent his reputation to your advisor report that you’re two guys in grad school who've got a clever idea. But today, most people are smart enough that they've talked to some customers, they've got some sort of traction in terms of, for example, “we over-subscribed our Kickstarter campaign by 250 percent.”
EA: Ha! I can agree with that.
BR: Add some credibility. So those are the three Cs: clear, compelling, credible.