Wednesday, May 05, 2010

The Hook

It's 5:40am and I'm lying here in the hotel, waiting to get up in 50 minutes after staying up all night due to jet lag. I'm listening to Genesis' "shapes" album and writing my first blog post on my iPhone (does Blogger have an app? Using Safari for this is a bit tedious!)

At any rate, I wanted to talk a little about pitching for fundrising, although this applies to many sales meetings as well. When I was visited by many companies at my old firm I was amazed at how many entrepreneurs would try to cram as much as they possibly could into their pitch. It reminded me of my first resume writing attempts in undergrad where, in a desparate attempt to look like I had more experience than I did, I would cram every part-time and afterschool job or activity onto the page. I assumed that people would view my worth as the literal sum of the activities listed. To remove one would be to lower my overall worth.

I now understand the purpose of a targeted message and I understand the truism of "always leave them wanting more". Your goal in any pitch is not to sell yourself to your audience, but, if possible, make your audience clamor to know more about you (and, ideally, think that it was their idea). As I said, this is true for fundraising as well as a sales demo. When doing this, prepare two things in mind. I call these, "the stick" and "the hook".

Busy people are usually looking to quickly resolve something and then move on. Even worse, whether you are talking to a hiring manager, a purchasing manager, or a VC, these people often have very little penalties for rejecting good candidates, but strong penalties for accepting bad candidates. An HR manager at Ballard once told me that everyone remembered if he recommended an employee who was a dud, but no one would know about a good employee that he passed up, so his incentives (especially if he had a large stack of resumes to get through) were to find ways to reject people as quickly as possible, and bias his filter towards rejecting people. This shouldn't necessarily be this way, but it is rational behavior. Purchasing agents do it, investors do it. Heck, Google acknowleges that they do it too.

So, what is "the stick"? "The stick" is the one question that a lazy/busy investor will ask, hoping to discredit a company as fast as possible so he can move onto the next one. It isn't fair, but it is quick and easy, and common. I call it this because when I was with a tracking solar startup, many investors would see the moving lens assemblies (they moved because they tracked the sun) and say, "aha! What happens if a stick get jammed in there?". Never mind the fact that most rooves didn't have sticks or trees nearby, and if they did then the shade from the tree would surely cause a problem for non-tracking solar, or the fact that a twig hitting one panel wasn't going to bring down the business. It was easier to wave it off and say, "it'll never work, sticks will just get jammed in the thing". Other famous paraphrases of "stick" statements are "So people are going to pay money to sell their used socks online?" (eBay). Or, "People are going to pay $4 for a commodity that they can get anywhere for 50c?" (Starbucks). It may not seem fair, but try to think of the easiest, most narrowminded question to discredit your business. That's "the stick". Be sure you've got an answer to it.

The second thing is "the hook". It's now 6:19, and I can say that writing on an iPhone is pretty bad for this sort of thing, so I'll talk about "the hook" in another posting.

Oh look, the sun is up! Yay.


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Phil Bangayan said...

Good point regarding "the stick." I think everyone has seen that type of question before, usually from someone who doesn't understand the industry well. So, when you were at the tracking solar startup, how would you have prepared in advance for that particular question?

Aaron Fyke said...

I think it was a question that we didn't think would be as common as it was. When you spend your time with incident angles and packing factors and power/performance curves - that's what you think other people will as about. So, it was a learning point, for me at least.