It’s quite amazing how many founders and company leaders are making amazing new technical solutions or products but seem to have difficulty explaining the core narrative of the product themselves. Now, if the person who built the product has a hard time explaining it, then just imagine how hard it is for others to understand it – let alone promote it.

via Why defining your company narrative and creating a ‘social object’ is important. | Henrik Werdelin.

This is what makes a good pitch a great pitch (or a pitch you understand at all). Make a pitch a story and it pulls your audience right through.

On the “VCs turned Entrepreneurs” panel (subtitle “actually Entrepreneurs turned VCs turned Entrepreneurs”) at Mini Seedcamp London last week, Max Niederhofer let lose some of his wisdom regarding the perpetually pitching entrepreneur. In his view, instead of “always be closing“, Entrepreneurs should never be pitching investors out right. Instead, a “oh, we are moving along quite well, but we aren’t looking for funding right now” might go a lot further in piquing the investor’s interest.

Now, I am all for game mechanics, behavioral economics, and bashing people with lots of money, but I don’t think the reason for this to work lies in the ever greedy VC that just wants to be part of a good deal.

Rather, I think that a very big problem – especially for early stage companies – is that they are new to the game and want to pitch everything that has two legs and wears khakis. Don’t get me wrong, this is what entrepreneurs need to do – sell their stuff to others, be it customers, employees or investors. BUT, and this is a big fat but (think 2 Life Crew big), you do not want to burn any bridges or be in the wrong pile of a VCs business plan collection. If you talk to the wrong VC too early, he sees what you are doing, puts his mental model on it and writes you off as “too early”, “no traction”, or “I don’t get it”. I think these are all valid reasons to put you in a pile for, but only if you are actually pitching what the VC thinks you are pitching.

Why is this important?

VCs live by dealflow. They need to see absolutely every last deal out there – after all, it is their job to find the proverbial needle in the haystack. VCs also live by their funnel. If the haystack is the dealflow, The finding part is narrowing down the investment opportunities to the best and last one. So – when you are in a VCs dealflow, you are being evaluated as an investment opportunity, whether you like it or not. As soon as you pitch to an investor – even if you both know that you are too early or too young or in the wrong geography, he puts on his dealflow glasses (actual X-ray glasses) and tries to find out if he would invest in your company. He most likely wouldn’t – after all, you are just trying to get some feedback on your business model or market sizing – but once he thought about you in this way, you are out.

This is why early strage entrepreneurs need to make sure they take their time in pitching to later stage investors, and this is why you should not tell people too much about your fundraising situation too early. If you can get along with the “not fundraising right now”, you might actually be able to make a connection to the person you are talking to, without burning the bridge by asking for the wrong thing. You should absolutely try to get into a conversation with your potential investor and show him the nice way that you understand your business model and market. Ask for input, ask for intros, but don’t pitch too early. Trust me, even the VC will be annoyed being pitched the 5th seed deal at an event when it is quite obvious that he only does later stage. Also – once you have established a couple of ties with people in the investment community, it is a lot easier to actually fundraise when you need to.

But I need the money!

Of course, you need to pitch investors like there’s no tomorrow as soon as you need to close a round (start 6 months earlier). However, if you took the right precautions and already know a couple of great people that give you lots of input, it is a much easier to say “we want to take this to the next level – are you in?”. In my opinion, it is very important to be out there and let people know about your business so you are not a totally new face when it comes to your round. When you are able to show people that you know how to turn corners, pivot, and close gaps they identify in your strategy, they will trust you much more as an entrepreneur. And if you have never formally pitched them before, they are only now really seeing you as an investment opportunity – and you can start on the top of their pile. The right pile.

At the end of the day, I’ve really come to believe that you can’t predict success based on where a missile is pointed pre-launch.  Instead you have to assess the quality of the targeting system (the team) and the density/size of targets (the market). And hope that the missile you launch finds a true target – rather than a decoy…

via Redeye VC: Founders and Heat Seeking Missiles.

Pretty good post by Josh Kopelman about pivoting – in the right direction.

Chris Dixon with a smart post on when to shift focus:

Ask yourself: if you started over today, would you build the same product?  If not, consider significant changes to what you are building. […] You aren’t throwing away what you’ve learned or the good things you’ve built. You are keeping your strong leg grounded and adjusting your weak leg to move in a new direction.

via Pivoting – chris dixon’s blog.

Almost every company I was involved with adjusted the focus of their business model in a major or minor way.

Update for clarity: You will often not realize it, but look for companies changing pricing structure, redesigning their experience, or stopping single services or features. Think about why this happened, very often you see a closer alignment with the core of the offering or a push into a different tier of customers (private vs. business, local vs. global, etc). These changes also often give you a good insight into what works and what doesn’t in a company.

Chris Dixon with a smart post on when to shift focus:

Ask yourself: if you started over today, would you build the same product?  If not, consider significant changes to what you are building. […] You aren’t throwing away what you’ve learned or the good things you’ve built. You are keeping your strong leg grounded and adjusting your weak leg to move in a new direction.

via Pivoting – chris dixon’s blog.

Almost every company I was involved with adjusted the focus of their business model. Keep this in mind.