Chris Tottman’s Post

Transcript

And what I really wanted to do was break down and demystifying the process of creating a pitch. So I think what happens too often when I see companies come to talk to me is that they don't know how to simply explain what they do and then ask for money. And that's basically what you have to do is a founder. So we're going to go over 4 things. The first is what your 30 second pitch is. This you need to be armed with constantly. This is basically how you talk about your company. This is magic. Whether you're talking to people who want to give you money or don't want to give you money, you talking to your parents, this is your go to. The second is your two-minute pitch. This is for people who are interested, this is people who you might want to raise money from, are people who you might want to get to work for you, or people who actually kind of need to get a little bit deeper. Notice. That's where I stop. A lot of people practice 1030 minute pitches, hour pitches. I think that's all garbage. I think you can get everything you need done in 2 minutes. And one thing I like to tell founders is the more you talk, the more opportunity to say something that people don't like. So just talk less and it'll probably be better. So then I want to tell you about when to fundraise because I think a lot of companies get this a little bit wrong and then. Quickly, how to set up investor meetings. So 30 second pitch. This is so simple. It's three sentences. You can take your time, you can breathe when you do this. You don't have to get that much information out. The first is 1 sentence on what does your company do? Everyone I meet for the first time screws this up. You have to be able to do it in a way that is simple and straightforward that requires no pre information on my part. You have to assume I know nothing, literally nothing about anything. This is how you make it super simple. So you know, usually what we tell people is apply the mom test. If in one sentence you cannot tell your mom what you do, then rework the sentence. There is a one sentence explanation that your mom or your dad is going to understand. So really really start there and it's OK if you use really basic language. OK, if you're saying, hey, we're Airbnb and we allow you to rent out the extra room in your house. That's simple, right? You don't have to say we're Airbnb and we're a marketplace for space. I don't know what that is. That's gonna require more time. So use simple language. Very, very important. The second is how big is your market? It makes sense to do a couple hours of research, figure out what general industry or product is in, figure how big it is. Investors like to hear that you're in a multi billion dollar market. It's pretty simple to do this. You know, Airbnb might say how big is the hotel market? How big is the vacation rental market? How big is the online hotel booking market? Is there a simple numbers to look up on Google and it makes an investor understand ohh wait, if we're big, if we really blow this company up, it can be worth billions of dollars. Don't skip this up. Second sentence, how big is your market? 3rd sentence, how much traction do you have? Ideally this sentence is saying something on the order of we launched in January and we're growing 30% month over month. We have this number of sales, this amount of revenue, this number of users. Very simple. If you can't speak to traction in terms of pre launch, you need to convince the investor that you're moving extremely quickly. So the team started working in January. By March, we launched a beta. By April, we launched our product, right? Convinced the investors that you guys are moving fast, that this isn't some long slog, that you guys are thinking about this like a big corporation, you're thinking about like a startup where you can move fast and make mistakes. That's all you have to do in 30 seconds, 3 sentences. From that basis, you should be able to start a conversation about your company. From that basis, I understand exactly what you do. You haven't. You have no idea how valuable it is to be able to explain to someone what you do in 30 seconds. So really internalize that. Like if you take nothing else away, that's going to help you. OK, two-minute pitch. Now you've got someone you actually have to convince of something. Maybe in someone you have to ask for money. SI like to add four additional components and these also go by very quick. The 1st is unique insight. Now if you talk to VCs, they'll say stuff like what's your secret sauce? What's your competitive advantage? What's unique insight? It's all the same thing. When I think about unique insight, what I think about is here's your opportunity to tell me something that I don't know. Huge opportunity to tell me something that the biggest players in the market you're trying to enter don't understand or don't do. Well, this is the aha moment and you better have it down in two sentences. The aha moments, you got to crystallize all of the reasons why you guys are gonna kill the competitors or the really intelligent thought that got this business started in two sentences and I need to aha. You can see whether it's happening when you're saying it. That's why I like to sentences so you get in and out fast. So if I look at you and I'm like oh, then it's OK, you nailed it. If I look at you and I'm like. I knew that then you didn't nail it if I looked at you. I just don't understand. You're talking about you definitely didn't nail it. So practice that unique insight in your two-minute pitch, that's all. You're only going to get 2 sentences to get that out there. So it can't be complicated. And that's basically the theme of this whole thing, right? It cannot be complicated. Next, how do you make money? You know your business model. I see so many founders run away from this question because they think things like if I say advertising, people are gonna be like, ohh, that's stupid. Just say it. Don't run away. If it's advertising, say advertising. Facebook's a massive advertising business. So is Google. If it's direct sales, direct sales. If it's a game and you're selling in app in app add ups like that's fine. Just say it. Don't run away from this sentence. It only has to be one sentence long. Where founders get tricked on how you make money is they say well. We're going to run advertising, maybe some virtual goods. We're going to figure out how to do this and maybe this and maybe this. Well, now you're saying nothing. Now you've told me you have no idea how you want to monetize this. This was a check mark that I just wanted to write, you know, monetize. Instead, I'm writing a big question mark. So do the thing that everyone else in your industry does to monetize 95% of the time. Say it and move on. Like it's totally OK. No one's going to hold your feet to the fire and say three years later you didn't monetize this way. But it's much better to be clear and concise than it is to start spouting out every single way your company can make money. The next one is Team. I think that this answer is actually really clear. I think you're trying to do 2 things. If your team has done something particularly impressive, you need to call that out. We were the founders of PayPal probably wanna say that. We were the founders of Amazon probably want to say that. So if you guys have done something that is made investors money, you want to say that. If not, then please don't go on about the awards your team has won or the PHD's or the I don't care. I don't care. What we want to hear is how many founders hopefully between 2:00 and 4:00 we want to hear. Is how many of them are technical? How many engineers? Business people, Hopefully it's 5050 or more engineers. We want to hear is that how long have you guys known each other? We don't want to hear you guys met a founders dating event three days ago. Ideally, you've known each other either personally, professionally for at least six months. We want to hear that you're all working full time. It's really helpful. We're all committed to this business and what we want to hear is how you met. That's it. You can get it out of that two sentences very easy. Your only way to build credentials is if you've accomplished something. And with an investor, typically if you've accomplish something that made some money. So don't try to over inflate yourself. If you don't have that on your resume, move on. The more you talk about a bad thing, the worse it looks. So the last one is the big ask when it comes to this, and you have to figure out whether this is a conversation involves fundraising or not. What I tell people is like, this is the time where you kind of have to know what you're talking about. This is a time where you have to know, are you raising on a convertible note? Are you raising on a safe? You have to know what the cap of that safe is. You have to know how much money you're raising. You have to know what the minimum check size is. These are things where if you don't know these things, investors going to be like, oh, these guys aren't serious or they haven't done their homework. So whereas in the rest of this whole thing, you shouldn't use any jargon. In this part, you shouldn't just be like, oh, we're just raising some money like now it's time to actually use a little bit of that jargon. If you don't know that jargon, Google search it like it's real simple. You guys learn it fast. So that's it by the way, that's all your.