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Is your venture pitch-ready?

I see far too many founders focus way too early on creating a pitch, whether it’s to raise money or gain entrance into an accelerator. But what does it mean to be pitch-ready? I created a PowerPoint outline – not a presentation! – of what it means to be pitch-ready for whatever purpose. Rather than leave it to languish on my hard drive I’m posting it here. Before you dive into the multifarious tutorials on how to create a pitch, review this outline, it will save you a lot of wasted effort once you are ready to pitch.

Pitch readiness

The big changes in entrepreneurship

business-plan-template

Things have changed mightily since my first startup in 1989, and all for the better for founders. Here’s a list of the major changes I’ve seen over the decades.

Entrepreneurship was something you did, not something you studied

While I can’t say definitively there weren’t any courses in entrepreneurship in 1989, not having gone to business school, they were rare. Then VCs like Brad Feld and Fred Wilson started blogging about startups and demystifying the process, especially from an investment standpoint, for example explaining what a term sheet was and how it works. They made a real effort to educate founders. They were followed by educators like Steve Blank at Stanford and Bill Aulet at MIT, who wrote books about entrepreneurship and taught courses. Business schools like Babson seized on the subject as a way to differentiate their business schools. Eric Reis documented the lean startup method and all of a sudden the mystery of entrepreneurship was dispelled.

You needed funding to start a business

Unless you were independently wealthy already you needed to raise money to pay for the computers, servers, software, office space, telephone systems (!), not to speak of all the people you needed to hire. Without a million dollars or so you couldn’t get started. Now with a laptop and AWS you can start in your basement or your bedroom. Perhaps you might raise some money from friends and family to build a prototype, get it to early adopters, and you might even be able to finance your company from customer revenue. Today with traction, i.e. evidence of product market fit, you raise money not to start a business but to scale it.

The first thing you needed was a business plan

The received wisdom was that 15 to 20 page business plans were absolutely necessary to get funded by VCs. Of course, few investors actually read these plans, let alone waded through the pages of financials – five year plans were what we were told were necessary to raise money. I don’t remember when it was but all of a sudden people realized that your investor pitch deck was your business plan! And if you got a meeting with investors they would actually listen to your pitch. Business plans went the way of floppy disks.

Keep your ideas to yourself

I never met a founder back in the last century who wasn’t worried about having his (and it was always his, not hers) idea stolen. We were all under the misimpression that ideas were valuable. Somehow we had never come across that quote from Thomas Edison, the greatest idea man ever, that “Invention is 1% inspiration, 99% perspiration.” Finally Bill Gates came out and said in public that “Ideas are cheap. It’s all about execution.” And while Bill said some really stupid stuff, like “I don’t know why anyone would ever need more that 640k (that’s kilobytes!) of memory” he was right about the need to execute. In fact the received wisdom completely flipped to the fact that if you had an idea the odds were good that a dozen other founders were working on the same thing!

Graduates of the top business schools went one of two places: Wall Street or consulting firms, depending which was in favor that particular year. Today students at top schools are dropping out to start businesses and business schools are all desperate for students. Kids once wanted to all be rock stars, today they all want to be Mark Zuckerberg. And they have about an equal chance of that happening as becoming the next Mick Jagger, but that’s ok. Without hundreds of startups mentors like me would be out of a job!

 

Founder of Evernote has a new product development model

libin

For years as an entrepreneur and now as a mentor I’ve been frustrated by the current startup model. VCs aren’t interested unless you can build a billion dollar company but often angels’ pockets aren’t deep enough to finance a worthwhile company that could grow to $50 or $100 million a year in sales and be quite profitable. To me there’s been a sort of death valley between VCs and angels in which many great ideas simply perish.

The article on Business InsiderThe founder of a beloved productivity app thinks the startup model is broken — here’s how he’s trying to keep the tech industry from ‘making the same 10,000 mistakes over and over again’ by Tory Wolverton illustrates just where the current startup model breaks down. Phil Libin is best known as founder of Evernote, an app I use every day, so maybe I’m a bit biased in his favor.

But he’s founded a new kind of company called All Turtles to solve the death valley problem. As Libin sees it there are two basic models for promoting innovation. The first is through the research efforts of the giant tech companies including Facebook, Microsoft, Google, and Apple. However, he sees these companies as being quite conservative and afraid of disrupting their core business. The second model is the current startup model, focused on creating new companies. And it’s that last phrase that made me go “aha!” Creating a new company requires skills that have absolutely nothing to do with invention or innovation: fund raising and recruitment.

Of his All Turtles incubator Lbin says:

“We’re indifferent toward companies,” “If some of these products then become independent companies, fine, that’s the best outcome, but they don’t have to.”

I really like Libin’s model of “products first, companies later” and I recommend you read the full article for the details of how All Turtles operates and the views from critics who believe separating product development from corporate development could cause problems.

Whether or not that’s accurate only time will tell. But in the meantime I salute Mr. Libin for developing a new model for creating innovative products without forcing their creators to choose either the big company R & D path or the VC-driven company creation path. There’s a middle way!

Confusing “mentoring” with “advising”

facebook

One of my mentees alerted me to the article on TechCrunch Facebook is testing a feature for mentorships between users by Ingrid Lunden. She writes:

TechCrunch has learned that Facebook is testing a way to use its social network to link up users who are looking for mentorships, either as mentors or mentees.

There are basically two types of mentoring, as I’ve written previously, career mentoring – where a more senior person in a company advises and guides a more junior person to help them climb the career ladder, and entrepreneurial mentoring, where experienced founders provide advice, guidance, and feedback to unexperienced or less experienced founders.

It appears that both LinkedIn and Facebook are focused on career mentoring, but unfortunately they are diluting the meaning of mentoring.

The dictionary defines mentor the noun as an experienced and trusted advisor and mentor the verb as to advise or train (someone, especially a younger colleague).

The key element in mentoring, whether for career advancement or developing a startup is trust. In the entrepreneurial world where I mentor, organizations vet their mentors to assure that they can provide trusted, unbiased advice. This is one of the most basic tenets of the MIT Venture Mentoring Service and I found this element of trust by affiliation to be true of TechStars, MIT Sandbox, and the Social Innovation Forum – all organizations where I have mentored.

Are we to assume that because someone is on Facebook that we should trust them? That idea seems ludicrous given the recent scandals over fake accounts, fake news, and other violations of trust.

So whatever mentoring service Facebook ends up launching, whether for career guidance or startup guidance, be very wary of connecting with strangers just because Facebook’s algorithms matches you up based on interests. location, or friends of friends.

Ingrid Lunden provides no indication that Facebook will vet their recommended mentors, who in reality will be much more like advisors than true mentors.  Virtually anyone can provide advice and in this day and age they do!

So if you are looking for a mentor look first to a trusted organization, whether it be an academic program like MIT VMS, an incubator like MassChallenge or a well known and successful accelerator like TechStars. What differentiates mentors from advisors is vetted expertise and experience relevant to the mentee’s needs. And while expertise and experience are necessary, they are not sufficient. Your mentor must be trustworthy!

 

 

Trying to predict the future when you don’t even understand the past

kevin kelly

Kevin Kelly was a co-founder of Wired magazine and he’s authored several technology related books. I picked up his book The Inevitable Understanding the 12 forces that will shape our future at my local library on a whim. Surprisingly the book is riddled with errors and the writing is very repetitious.  Book publishers have been cutting back on copy editors as the pressure on their operating budgets increase and I think this book could have really used one. In fact the book would have made an excellent Wired article if the fat was boiled out of it.

No, Mr. Kelly, Lotus 1-2-3 was not the first spreadsheet. That was VisiCalc. And while we are on the subject, Microsoft Windows was not the first platform either – that was the Apple II. Steve Wozniak put seven slots in the Apple II to enable third parties to develop new hardware add-ons for the Apple II. He also wrote a version of BASIC to enable development of Apple II software.

Perhaps the most humorous gaffe is when Mr. Kelly claims to have founded Wired before the invention of the web. Maybe he should learn to use Google, which will inform him that Tim Berners-Lee invented the web in 1989, four years before the publication of the first issue of Wired.

Finally I’m a big fan of Brian Eno – I’ve been following him since his days with Roxy Music. I’ve have been following electronic music since my undergrad days at Michigan State and can state definitively that Brian Eno did not invent electronic music, contrary to Mr. Kelly’s assertion. Perhaps he means that Brian Eno invented ambient music. Informed observers will differ on that claim.

What was most interesting about the book was that from his perch in the Bay Area Mr. Kelly got an early, insider view of exciting new technology, such as Jaron Lanier’s virtual reality system and one of the first online communities, The Well.

His book would benefit from footnotes, as he makes many assertions and quotes various experts and studies. I did find a Notes section at the back of the book. These citations would have been a lot more useful within the text as they are then presented in context rather than as pages of notes organized by chapter. For example, he quotes a study of 2,734 open source developers as concluding that the most common motivation for working without pay was “to learn and develop new skills.” Such pearls kept me reading in hopes of finding others.

So while I can’t recommend the book to the technorati it’s probably an eye-opener to those not familiar with phenomena like Linux and Wikipedia.