
What I’ve learned from seeing 20k company pitches - sebg
http://blog.elizabethyin.com/post/151582614970/what-ive-learned-from-seeing-20k-company-pitches
======
duncanawoods
One thing I found interesting was "PR is cheaper than marketing" in the slides
she references. I think I lazily assumed PR was the expensive end of marketing
that also required luck and special access - I have never really seen the
numbers that show it might be be better value.

"Speed as the primary business strategy" Dave McClure:

[http://www.slideshare.net/dmc500hats/best-strategy-is-
speed-...](http://www.slideshare.net/dmc500hats/best-strategy-is-speed-
startup2startup-may-2008)

~~~
davemel37
>I have never really seen the numbers that show it might be be better value.

I think people misunderstand the function of PR vs. Advertising.

PR is a way to build credibility through third party validation. Advertising
is how you convert that credibility into sales.

They both have their time and place and you really need both to build a big
brand.

If you run PR as your only marketing, you will be disappointed by the lack of
direct sales and quantifiable ROI it drives.

If you run advertising without PR (or other third party validation) you will
get frustrated with how expensive your cost per acquisition is from
advertising.

------
matchagaucho
These are lessons learned by a _seed investor_ with bias and pressures coming
from Limited Partnerships, term of fund, liquidity, and portfolio harvesting
demands.

These are _not_ necessarily good practices for starting an enduring company.

------
_pmf_
> At the seed stage, there are companies who have been around for 5 months and
> others for 5 years.

And what is the reasoning behind considering the former as better than the
latter? The latter most likely has a more mature product with less technical
debt and has shown that it can shoulder its operational costs for 5 years. The
former has "speed" ... great.

> Demonstrate that you can pull the trigger on things quickly — whether it be
> getting customers, hiring / firing employees, or product development.

Quick turnaround is first and foremost an indicator of something wrong, not
something right.

~~~
jasonshen
Speed is the denominator that any progress or success is measured against.
More progress in less time is a better thing. Another way of thinking about it
is: what company would you rather invest in, one that hit $1M in annual
revenues in 1 year, or one that hit $1M in annual revenues in 5 years?

The former implies there's a lot more opportunity still to come, the latter
suggests a small market, a mediocre product, or a team that isn't good at
selling.

------
infinite8s
Was that first email reply a thinly veiled fart joke? Seems like they don't
really take cold pitches seriously (or people for whom English is not their
first language).

~~~
adambenayoun
Some context is needed. That specific email was a scam email sent to the
investment team and Sean (partner @ 500) jokingly replied to it playing along
with the scammer.

~~~
infinite8s
Ok that makes more sense. But not sure why she would use an email that paints
her partner in a bad light unless you knew the context.

~~~
elizyin
Ah sorry - I didn't realize people wouldn't understand this was a spam pitch!
Point taken. I address non-native English speakers later in the post.

~~~
infinite8s
The immediate quote below the email images is: "(In fact, the vast majority of
pitches I’ve seen probably fall under this category and these only take a few
seconds to read and archive, so this is how you get to see 20k pitches!)"

So the majority of pitches you see are spam pitches? As a former grad student
in chemistry/biophysics, I would see no reason to read that pitch as a spam.
In fact, at first I thought it was quite liberating that 500startups would
entertain non-traditional startups trying to tackle real-life hard problems in
the physical science industries instead of another startup in the food
delivery or cleaning services space, and then the response from your partner
was, shall we say, discouraging. You might want to edit your post since it
doesn't paint 500startups in a good light.

~~~
anindha
It would have been good to see a pitch that you discarded quickly to
understand your reasoning.

I thought the post was really good otherwise.

------
jkaljundi
Either it's pitching in person, via e-mail or via your landing page, the most
common mistake is: sorry, but I don't get what you do and why it matters or
differentiates.

~~~
onion2k
"If you can't explain it simply, you don't understand it well enough." _Albert
Einstein_

This applies to startups just as well as theoretical physics. If you struggle
to get your idea across in a pitch then something is fundamentally wrong, and
it's quite reasonable for an investor (or a customer) to move on.

------
erikb
Seeing 20k pitches does not mean a lot. How many of the 20k got funding, are
still around, have become ramen profitable, and why?

I don't think the author really knows what's important for pitching. That
doesn't mean I know, but I'm quite sure it's not "make sure you stand out".

The author got that feeling because if you read 10k pitches a year, it gets
boring as hell, and you are happily surprised by anybody and anything that
achieves to look different. However there are different ways of being
different. For instance, spelling errors stand out to her immediately. But it
doesn't make her give you a thumbs-up. Yellow jackets and loud music will
probably achieve "standing out", but are not something that brings you a step
forward.

To me the blog post reads like her not having figured out the important thing
yet, but she certainly wants to make sure that you make her job a little more
interesting. Honestly, is it not weird to advice three times to stand out,
then name a thing that stands out to the author (spelling), and then saying
that people who stand out that way go to the trash bin? (This is not to say
she or the post is bad. But it doesn't give the value it's promising.)

Again, I'm no expert either, but usually what stands out positively to
investors(!) is traction. Traction is growth of leads -> possible sales. And
traction is important because that is what an investor is buying. He buys a
ticket at making X-times more than what he gives you. Everything else, like
team, color of your jacket, spelling capabilities, features in your prototype,
are only important in that regard as that they give a hint to the investor
about your traction or lack thereof.

~~~
elizyin
The purpose of standing out is so that you don't get inadvertently ignored.
The point of the post wasn't to talk about what I look for in pitches. It's to
illustrate what happens when you're an entrepreneur sending a deck to an
investor. This is a viewpoint that I didn't have before as an entrepreneur and
thought would be useful to other entrepreneurs.

Investors see lots of decks and realistically don't have time to do a deep
dive for an hour or more on each one given the volume. This could be a flaw
with the industry, but these are the circumstances that entrepreneurs have to
work with right now to get noticed to even get that deeper dive meeting.

~~~
nickpsecurity
20k is misleading. Did you keep a record of how many face-to-face or otherwise
full-on pitches you did? That would be an interesting number.

------
paulsutter
No, no, no and no.

If you need to meet with 100 investors to raise money you are promoting a
shitty deal and you shouldn't be investing your personal time in it.

Conversely, if 500 startups routinely invests in companies where 90+ other
investors already said no, you gotta worry about 500 startups.

> So, I made up a rule of thumb: 5-100-500. Over 5 weeks, meet with 100
> investors to close $500k in your seed round. If you want to close $1m,
> double all of these numbers.

~~~
dredmorbius
"No" is almost always the safe answer. Some long shots succeed.

Colonel Sauders famously was rejected over 1,000 times with his pitch for
Kentucky Fried Chicken.

[http://theartofapplying.com/rejection-and-fried-
chicken/](http://theartofapplying.com/rejection-and-fried-chicken/)

~~~
notahacker
I think Sanders would have probably had a higher initial success rate if he'd
been pitching a business opportunity to people that make a living from
investing in multiple high risk ventures, rather than pitching the opportunity
of becoming a franchisee to people whose roadside cafe was doing just fine,
thank you very much.

~~~
dredmorbius
The story, though I know only bits and pieces, is fairly interesting. In
particular, Kentucky Fried Chicken (it wasn't delettered to "KFC" until 1991),
like McDonald's and Burger King, capitalised hugely on the building of the
Interstate Highway System (begun in 1958), and a sudden interest in familiar
food whilst on the road, an experience far more Americans began sharing in the
1960s and 1970s.

To that extent, his company and legacy are a very fascinating study of
complementary developments and capabilities. And sinking money into the
Colonel in the early 1950s would have given extremely strong returns.

~~~
jimmydddd
Related to this point, I think I read that Sanders previously had an inn
(small hotel) located on a local road. The new Interstate Highway bypassed his
inn, thus causing his business to tank. So, I guess KFC was his pivot in the
face of a new disruptive technology (interstates).

~~~
dredmorbius
I've run across a few histories. Robert J. Gordon spends quite a bit of time
on the 1950s (his own teen years, I believe), and the culture surrounding
them. Including fast-food, entertainment, cars, and freeway culture.

There's a pretty good general biography of Sanders floating around somewhere
online though I can't seem to find it. A long-read type piece that starts with
his gas-station shooting incident.

------
cloudjacker
> Use a company domain name as opposed to a Gmail / Yahoo / Hotmail / AOL
> email address.

I've seen more and more professionals not do this so it is good to see it
reiterated now

Sometimes I'm not sure how I want to be perceived : as a big firm or as an
individual

Sometimes company emails scare people off, other times personal emails do

------
crdb
The section on referrals was very interesting. Effectively, she states that
cold emails are fine, since on balance many referrals are low quality.

Investors reading this: do you think cold emails and referrals are equivalent
in terms of deal origination, or do you stick to referrals only? Please also
mention your geography.

~~~
ig1
It depends on the type of fund.

For VC funds almost all deal origination is referral or outbound, virtually
none is cold inbound.

For seed accelerators the majority is cold inbound.

500Startups sits in a slightly odd category between those two so it's
behaviour is likely to be unusual in any case.

But she makes a good point about the quality of referrer as well, who gives
you the referral to a fund makes a huge difference to how much attention
you'll get. As a fund if you treat all referrers as equivalent then you're
inevitably going to get a lot of junk (anyone who works in VC has a huge
network).

Some funds go so far as having formal categorisation of referrers (platinum,
gold, etc.) based upon the quality of their dealflow and rewarding them based
upon that.

~~~
alain94040
A huge difference between two referrals is whether the person recommending the
startup is investing some of their own money or not. Saying "Joe is a great
founder, check out his startup" is not as strong as "I'm putting $50K in Joe's
startup and you should look into it".

------
javajosh
Cool note about speed, but I was hoping to read more about the patterns she
sees in the _value_ people are hoping to create. For example, there are a lot
of "let's build a marketplace" ideas. There are relatively few "magical
technology" ideas. And I bet there are plenty of ideas that are well-meaning
but address problems that people don't realize they have yet (like privacy and
digital autonomy). Oh well, maybe next post.

~~~
elizyin
Thanks Josh. That's a good idea for a post. :)

------
InclinedPlane
I see this notion that ideas are worthless, or that everyone has the same
ideas, a lot and I could not disagree with it more. I think this comes from a
fundamental misunderstanding about the nature of novel ideas.

For one, novel ideas are often difficult to communicate effectively, and
difficult to grasp. Ideas that are notably different and blatantly obviously
advantageous are typically few and far between, because such ideas would have
already been implemented, being obvious, after all. Most good novel ideas have
some degree of subtlety involved in them, or require a paradigm shift to truly
understand well. Trying to digest such ideas without having that shifted
mental model will often lead to misunderstanding. Additionally, communicating
complex ideas can be very difficult. Consider how often book adaptations into
movies fail to carry over even the core ideas or zeitgeist of the original
material, and in that case you have a richly detailed (multi thousand word)
source material as well as the resources of thousands upon thousands of folks
who have read it to aid in that translation. In comparison, the idea that a
complex idea can be easily and trivially transmitted from one mind to the next
without error through a short pitch is ludicrous. And even _less_ likely the
more novel and interesting the source idea happens to be.

For another, novel ideas are often quite subtle, and don't look as
revolutionary until the revolution has passed. Consider, for example, the
transistor, or heavier than air flight. Neither of which received a great deal
of press at the time, both of which were, undoubtedly, some of the most
transformative inventions in history, based on numerous new ideas. The
transistor seems, on the surface, to be little more than a different kind of
thing in the same vein as the vacuum tube, and thus to be met with a similar
level of success as the vacuum tube. But, of course, it is a different beast
entirely. Solid state, miniaturizable, more suitable for mass production, more
reliable, etc. It would lead to a revolution immediately in transistorization
of electronics such as radio sets, making them smaller, cheaper, and more
reliable. But, of course, it would also lead to the advent of the integrated
circuit, digital logic, micro-processors and the personal computer revolution.

Yet to someone like this silicon valley marketer if they saw a pitch for the
transistor they would almost certainly think it was nothing special, and not a
new idea.

There are countless similar examples across the tech industry, and across
history. The web, for example, was not all that different, per se, from gopher
or FTP or other forms of information exchange from the early years of the
public internet. But, of course, it was the specifics of the web that truly
made it not just slightly different from other "ideas" for sharing information
but transformatively, revolutionarily different.

If you look at cells under a microscope they mostly all look the same. Yeast
cells, bacteria, even animal cells, they all just look like little mostly
circular blobs. But just looking at a cell tells you almost nothing about it,
you can't see the DNA, you can't see the cellular machinery. You can't see the
difference between a cell that belongs to a sea sponge and one that belongs to
a human being. Ideas are similar. When you view ideas by buzzing over them at
the 10,000 ft altitude level of a pitch deck that you stare at for a few
minutes they're going to blend together a lot.

~~~
elizyin
Yes. High level ideas that people pitch are in themselves are not novel. The
idea to come up with a cure to cancer is not novel. The idea to come up with a
kickass search engine is also not novel.

It is execution that matters. The details matter. The subtle insights matter.
And, I believe that is what you are trying to say here. Google may not have
been the first search engine but their technology was faster and the user
experience was better than their counterparts. This execution is what I'm
saying should be highlighted in pitches as a way to differentiate one's
business -- not the high level ideas.

~~~
danieltillett
A cure for cancer that actually works is novel. Execution is not all that
matters, you need to have both a good idea and execute on it. There are many
more good teams that can execute than there are really great ideas.

------
CiPHPerCoder
You counted 3 twice...

------
asah
another amazing post, I'm so impressed.

------
ronilan
_If you are in a super competitive space - areas like cleaning or food
delivery.._

Sigh.

~~~
ljf
Care to explain? THese are areas that people (especially those with disposable
income) are prepared to spend their money. Find a problem that people WANT
fixing. Sure, other ideas might be cooler, or more 'fun' to work on, but you
know - someone has to pay.

~~~
HillRat
Those aren't just competitive spaces -- those are almost the paradigmatic
examples of concepts that have repeatedly failed over the past two decades to
demonstrate business value, but that startups and investors keep returning to
like Kipling's burnt fool.

Those are concepts that are highly competitive because they have near-zero
barriers to entry, while the underlying markets are themselves highly
fragmented (significantly driving up your acquisition costs), highly
competitive (meaning that there isn't much revenue to share with your
startup), and already using multiple capture channels for their customers
(meaning that you are unlikely to provide killer value to them). But for some
reason -- I have my own theories there -- there's always some concept in those
spaces getting funded, so they seem more greenfield than they are.

