10 Commandments for Great Startup Pitches | Sidebean

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1:00Make sure you're watching the season. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome? That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50 page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online makes sense? There's no place like Chrome. Check responses set up require compatibility and availability, very 16 plus. I hear pitches from about 500 founders every year. Any time I have a conversation with a startup, here's exactly what's going through my mind. Are they going to make the same mistakes I keep hearing again and again? 90% of the time? Sadly, the answer is yes. So let's change that right here and right now, with 10 commandments for great startup pitches. Each commandment has a corresponding slide-been or dream eventress video that takes a deeper dive into the subject. Click on the link in the description below to see the curated playlist of videos. Without further ado, let's talk about those 10 commandments.

2:05Commandment number one. Now shall start with the problem statement. It shall be clear and should talk about the strong evidence you have demonstrating the urgency around the problem. What do I mean? I find the best way to pitch an investor is to start by talking about the problem you are solving. You help put guardrails in the investor's mind so they understand the domain you're working in. Many times when founders don't start with a problem, you're 20 minutes into discussion, and the audience still has no idea what big and urgent problem you're solving. Make sure you state the problem in an extremely focused and succinct manner. Make sure to include evidence, no hand waving that so many people are having this problem. You can't wave your hands, but you can point at data. How many people have you talked to and confirm that have this problem? That the problem is painful. How painful. Planify that and discuss it when you cover your problem statement. Next up, the second commandment. Thou shalt talk about disillusion. And the solution shall actually solve the problem, misstated, and should cover the unique insights

3:06into the solution. Let's discuss. I've seen more times than you would believe. A founder talks about a problem and then goes into their solution. The issue? The solution does not solve the problem is stated. So there's a misalignment which often points to a deeper issue with the business focus itself. Next up, when talking about your solution, make sure to hit your unique insight into the problem and your solution to it. That helps to get at your differentiation. Where everyone else is turning left, you turn right. They zig-zagged. Why? What's your unique insight and weave that into describing your solution? Okay, let's next move on to commandment number three. When talking about your value proposition, Thou must be an order of magnitude better than the competition. And you have choices to be an order of magnitude better in your product, business model, pricing, distribution, location, or other ways. We see so many startups that when you boil it all down, they're only marginally better than competitors. And they'll find it's nearly impossible to display a competitor if you're only marginally

4:08better. To win, you need to be 10x better, not 10%. One example, reaching your pocket or looking your hand. That's smartphone you use. Do you have the latest and greatest model? Probably not. Why? It's good enough. It's paid for and it gets the job done. So why would I show up more cash for a phone that's only marginally better? There you go. Same thing. Next up, commandment number four. Thou shalt calculate thy tam bottoms up, not top down. And your tam is not the size of the entire market, but the size of your market for your product. Let me explain. First, never put the size of the total market based on some consulting firms report. The US Cyber Scruity market is huge. The tam is $200 billion. No, that's not your tam. That's the size of the entire market. Your tam is your number of potential customers times your sales price. One million potential customers, price of your product is $500. Your tam is $500 million.

5:09One million potential customers times $500 per customer. Also, when you talk about your tam, like your math teacher in high school told you, show your work. Show the calculation. Show the math. Total number of customers times average selling price. This brings us to commandment number five. When talking about Thy competition, Thou shalt not use a magic quadrant and instead Thou shalt include a table showing benefits and the top competitors. What do I mean? Never, ever use a magic quadrant to show your competitive differentiation. It's BS. It only lets you differentiate on two axes and that's not enough to fully characterize what makes you unique. Instead, you'll create a table. As you go down on the rows, label each one with measurable benefits, not features. And list those benefits and order of importance from the top reason customers will buy to the lowest. Then, the first column is your company and each column after goes from your top competitors

6:10to the least competitor. Ah, commandment number six. Your go-to market strategy. Thou shalt have a go-to market strategy and Thou shalt cover the most important characteristics of your target customer, why those characteristics are so paramount and how those map to which customer segments you will go after first in priority order. Okay, so here's what you're not going to do. You're not going to say that your go-to market strategy is direct sales or network effects. Instead, you'll think about your go-to market strategy like you're going fishing. You'll define the characteristics of the type of customers in this case fish you want to catch. For example, the most important characteristics are edible, live close to shore and small. Next, you'll talk about why those characteristics are important to your business in this case of catching fish. Why edible, subtle and starved, close to shore so I can get to the fish faster and spend less money on fuel? And small makes them easier to handle and get in the boat.

7:11So in this case, that means we'll go after flounder as our first target, edible, close to shore, small and then we'll expand from there. Let's talk about commandment number seven. An oldie but a goodie. When you're demoing your product, dalshout. When you need to build up your team to handle the growing chaos at work, use indeed sponsor jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsor job credit at ande.com slash podcast. That's indeed.com slash podcast, terms and conditions apply. Need a hiring hero? This is a job for indeed sponsor jobs. Fall has never looked or tasted this good. Sweet greens fall harvest menu is back with seasonal favorites dressed to impress and made to be devoured. Warm roasted sweet potatoes, crisp apples, maple glazed brussels and crave worthy flavors.

8:12In the autumn harvest bowl, maple glazed salmon plate and roasted bacon brussels side. The season's most desirable menu has returned to sweet green. Featuring falls best dressed. Make your move. Order on the sweet green app. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome? That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50 page restoration block or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online makes sense? There's no place like Chrome. Check responses set up require compatibility and availability. Very 16 plus. Only demo using a use case approach. Showing how you solve specific problems. Talking about users like actors in a play and focusing only on the top benefits of your product. What does that all mean? You are going to demonstrate exactly how your product solves the problems you mentioned and always use a use case approach to doing that.

9:14In the demo, you'll talk about the role you're playing, like an actor in a play. For example, let's say I'm the doctor, nurse, architect or software developer. What problem you're solving for that role and show how the product actually solves the problem. To do this, you'll use phrasing like, well, where before doctors had no way of knowing or doing X, now they can. Let me show you how with this use case. That brings us to commandment number eight. When discussing forecasts and financials, that shall not say our numbers are conservative. Because 95% of the time, you are completely wrong and your numbers are wildly optimistic. Instead, for any forecasts, financials or estimates, not only will you not say our numbers are conservative, but you'll openly state your level of confidence in your estimate on a scale of 0 to 100%. And oh, by the way, 100% means you're betting your paycheck on it. As well, you'll state the top assumptions you're making when you came up with your estimate.

10:15Do this for your financials, sales forecasts, etc. and you'll be so much better off. And now let's talk about commandment number nine. When discussing how much you're raising, that shall not quote the number of months of runway the money will provide. And instead, you will discuss the measurable milestones you are looking to achieve. Let me be very, very clear. Time is not a fundable milestone. I don't care how many months the money will buy you. Investors don't want to buy months. They want to buy measurable goals. For example, we're raising $3 million to get to $5 million in ARR. 25 customers each paying us on average $200,000 per year. To add one more vowel here, vowels shall talk about benefits that are important to investors, not features. Just don't care that you want to hire five software developers or three inside sales reps. Those are all features. They want to know the quantifiable benefits. For example, revenue and number of customers. And that brings us to our final commandment, commandment number 10.

11:19If thou art earlier than a series C, thou shall discuss your vision. And when doing so, thou shall not include a discussion of your exit strategy. We see bringing up your exit strategy when asked about your vision from founders and startups who spent a lot of time around angel investors. Who are always asking, what's your exit strategy? When do you think I'm going to get my money back? Your vision should focus on what the world will look like in three to five years. And how your company will completely dominate your segment. Talk about that big vision. That's what will get professional investors excited. You win and dominate and the right exit will come along. You'll go public or you'll get acquired. But if you focus on your exit early, you're absolutely focusing on the wrong thing. We find exit focused entrepreneurs won't stick around if things are tough. And startups are usually a series of big ups and big downs. So that's nearly it. But wait, there's more. Hang on for one more minute and hear three bonus commandments after the summary.

12:19So let's do a quick recap. Number one, problem. Clear and includes evidence. Number two, solution. Solves the problem. Includes your unique insight. Number three, value prop must be an order of magnitude better. 10X, not 10%. Number four, tam is bottoms up, not top down. Number five, competition, no magic quadrants use a table with prioritized benefits and competitors. Number six, go to market strategy defining the most important characteristics. Why and the resulting prioritized target customer second. Number seven, only use case demos and clear on the role you're playing. Number eight, your numbers are not conservative. State your level of confidence and the top assumptions you're making. Number nine, raising to hit a measurable set of milestones. Not how much runway it brings you. Number 10, vision. Not your exit strategy. How will you dominate your market in three to five years?

13:20Okay, here are those three more bonus commandments. Bonus Commandment number one. If thou hast traction, ye shall discuss such traction within the first five minutes of your pitch. Real traction is your strongest evidence that things are working. It will cause an investor to pay close attention and make sure you are clear and accurate about your traction, which brings us to bonus commandment number two. If thou art running an annual recurring revenue, ARR business, thou shall make sure that when talking about your revenue, any revenue included in your ARR is revenue that recurs, you know, annually. That means that revenue from your trials, selling services, selling hardware, all things that do not recur annually are not included when talking about your ARR. Oh, and if you sign a multi-year contract from that, you divide out and talk about only the revenue from each year. And lastly, bonus commandment number three. When describing Thy team, thou shall clearly delineate who is full time, who is part time,

14:23and who is just an advisor. Do not intentionally or unintentionally lead investors to think that all of the photos on your team slide represent full-time members. Be crystal clear and delineate accordingly. Okay, follow those ten. Hmm. Thirteen Commandments. And you'll be well on your way to vastly improved business strategy, pitch deck, and much more compelling and believable story for investors. And a reminder, each commandment has a corresponding slide bean or Dream Adventures video that takes a deeper dive into the subject. Click on the link in the description below to see the curated playlist of videos. We hope you found this helpful, and if you did, please like and subscribe to both the Slide Bean and Dream Adventures YouTube channels. We both release great start-up content weekly. Thanks for watching. Follow us on Facebook, Twitter, and Facebook.

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