Pitch Anything: An Innovative Method for Presenting, Persuading, and Winning the Deal: An Innovative Method for Presenting, Persuading, and Winning the Deal (16 page)

Before you decide to spend too much time on this part of the presentation, remember that the fol owing items are a simple punchlist of issues that most pitches have to cover.
These are the prerequisites.
The stuff you
have
to have no matter what. It’s the minimum information you need to show up and be relevant.

Recognize that you can be incredible at turning a business plan into an executive summary or any other kind of elevator pitch and stil have that pitch fail miserably. Doing a good job here is not about some genius new way of organizing and presenting information. Would you argue? We don’t need yet another organizing theory for information. The basics work fine. What we need is a way to present this material without the target becoming too analytical about it.

When it comes to a choice of what to focus on when pitching the plan that wil make the big idea work, I would start by presenting the budget because most people screw this up. It’s your chance to be different.

Pitching Numbers and Projections

In his book
High Tech Ventures
, Gordon Bel writes, “Start-ups often prepare absurdly aggressive and optimistic plans, which have a very low likelihood of success, just to maximize the company’s perceived dol ar value.” Your financial projections, whether for a product or a company, are supposed to answer such basic questions as, How strong is the company? What if plans go awry, does the company have enough cash to last a few bad quarters? Do you know how to budget wel ?

A word of caution, however, as you approach these topics: Every experienced buyer and investor knows that you wil be doing these two things:

1. Saying that your budgets are “conservative”

2. Preparing
absurdly aggressive and optimistic plans

To the investor, for example, every pro forma looks the same, a hockey stick chart that shows the fol owing:
We need lots of
money today, and
way down the road we’ll make it back
(sometimes it works out that way; usual y it doesn’t).

Unrealistic budgets and miscalculating costs are the greatest risks to a growing company,
especial y startups. How do you get around the skepticism that surely wil fal on your plans?
Focus on demonstrating your skill at budgeting, which is a difficult and highly regarded executive
talent.
Spend almost no time on your skil s at projecting revenue—a task any simpleton can perform.

Competition

The act of introducing the budgets to the target wil lead him or her to wonder, Who does the big idea compete with? This is a valid question that you cannot ignore. The attractiveness of an idea is based on the industry it’s in and how much competition there is. Yet almost no one describes the competition they face in adequate terms. Let’s do it right in the pitch. Here are the two major elements of competition: 1. How easy it is for new competitors to jump in the game?

2. How easy it is for customers to switch out your product with another?

Secret Sauce

To avoid the impression that you are a come-and-go idea that wil shine brightly in the market one day and be forgotten soon after, you’l need to show what your competitive advantage is based on. This one thing wil give you staying power against competition. In almost every pitch situation, you need something special. Briefly describe it as your “secret sauce”—the
unfair advantage
you have over others.

You don’t have to get too fancy here—just don’t take longer than 10 minutes to describe the fundamental workings of your big idea—because you’re going to need the last five minutes to offer the deal and stack the frames.

Think the need to move fast doesn’t apply to you?
You want to leisurely take an hour to do all this?
I’ve met many people who don’t believe in the limits of human attention and feel exempt from the consequences of running long. An investment banker I know brags, “I can read them the phone book for an hour, and they’l pay attention.” Is the science wrong—should we forget about dopamine and epinephrine cocktails entirely?

Consider for a minute the actor Jerry Seinfeld. His movie,
Comedian
, is a behind-the-scenes look at the business of performing comedy. In it, Seinfeld reveals the difficulty of being in front of an audience. He is one of the most recognized personalities anywhere in the world. Probably the best-known comedian on the planet. Sure, there’s Chris Rock, Dave Chappel e, and Robin Wil iams, but real y, when you think about it, Jerry Seinfeld is as big as it gets.

When he decides to go on the road to test new material, Jerry says that it’s not as easy as you might think. He can walk on the stage anywhere, even a smal town, and it’s clear that the audience knows he’s one of the most accomplished performers of modern times, with over $1 bil ion of television revenues. They’re thril ed to be in the presence of a man so popular and funny.
But the thrill doesn’t last long.

“I have about three minutes where they wil just listen to whatever I have to say,” Seinfeld says. “But after that—it can fal apart fast. I get no credit.

After three minutes, I have to be just as funny as any other comedian. That’s it—three minutes.”

And there’s more to the story. Seinfeld became aware of the three-minute mark because it takes him as long as a month of ful -time work to build up just three minutes of quality content. When he first goes out on tour, that’s about al the material he starts with. Three minutes. It takes him months more of steady work to build up 20 minutes of material that can hold an audience’s attention. That’s worth thinking about. One of the most wel -

known performers and presenters in the world has to put in months of hard work to build up 20 minutes of material—and when he eventual y goes on stage, the average audience wil cut him slack for only three minutes. After that, the material had better be real y good, or the audience wil turn on him.

So when we frame the issue of how long a pitch should be, with the Jerry Seinfeld story in mind, it becomes easier to understand why time is so precious in the pitch: How long can you real y be interesting to listen to? Perhaps there is someone who can pitch a deal as dul as the phone book for an hour, which is up to three times the basic limits of human attention, but if so, he or she is a lot smarter and more charismatic than Seinfeld or any other entertainer.

Phase 3: Offer the Deal

In the third phase of the Pitch process, you need to do one thing and do it wel : Describe to your audience what they are going to receive when they decide to do business with you. You’l want to push through this quickly for the sake of time—and get back to framing.

In clear and concise terms, tel the audience exactly what you wil be delivering to them, when it wil be delivered, and how. If they play a part in this process, explain what their roles and responsibilities wil be. Don’t dril down into a lot of detail; just provide summarized facts that they need to know so that their mental picture of your offering is complete.

It does not matter if you are offering a product, a service, an investment, or an intangible—there wil be a fulfil ment process involved, and that is what you must explain.

Keep it brief but rich in high-level details so there is no question as to what the audience is going to get. And remember, the most important deliverable in your deal is you.

In Chapter 4, I showed you the first three phases of a pitch. By this point, you have held the target’s attention for a while. The target knows the essentials: who you are, why this idea is important, how it works, what the “secret sauce” is—and what the target gets when he or she buys. But you’re here to do more than just show and tel ; this is a pitch, and you’re here to make a deal happen. Now you have about five minutes left to propose something concrete and actionable—something so compel ing that it wil cause your target to chase you to get what you have.

Welcome to the next phase.

Phase 4: Frame Stacking and Hot Cognitions

In the course of my activities seeking out money for deals, I discovered that investors do not operate only on cold, rational calculation. Do you think that the guy sitting across the table from you is an analytical machine?

The target can like your deal (or be afraid of it) before he knows much detail about it—and the target probably can decide “Yes” or “No” without even knowing what it is. This is
hot cognition
at work.
Deciding that you like something before you fully understand it—that’s a hot cognition.

We have been led to believe over time by managers, consultants, bankers, and professors of finance that business is analytical. That it’s rational. That there are three very wel -ordered stages in each business decision: Identify the problem, examine solutions, and make judgments.

This makes sense, and this is how it should be in a perfect economic world. In fact, if you took out a blank sheet of paper and asked yourself, “How
should
I make this decision?” that’s how you probably
would
do it. Research. Analyze. Decide. And if we were al computer-like or even behaved like rational economists think we do, it
would
work this way. But we aren’t, and it doesn’t. What’s intriguing here is that when we decide on something, we believe that it’s because we real y “thought it through” or we “used a decision matrix.” We think that we are smart, careful, and rational decision makers.

In decision making, however, we don’t do much analysis, if any at al . We go with our gut. When Jack Welch eventual y wrote his biography, it wasn’t cal ed
Intense Analysis
; it was titled,
Straight from the Gut
. And when George Soros updates his next edition of
The Alchemy of Finance
, he’s going to include the research of Dr. Flavia Cymbalista, who believes that we feel decisions in our body, not our mind.

There’s a whole side to us that computers don’t have and the “rational economic man” economists like to talk about doesn’t have either. Our
bodies “know” the situations we meet in life and how we should respond.

“Brain Scanners Can See Your Decisions Before You Make Them” is the title of a provocative article that appeared in
Wired.
The first line in the article reads, “You may think you decided to read this story—but in fact, your brain made the decision long before you knew about it,”

referring to a study by John-Dylan Haynes, a Max Planck Institute neuroscientist. Haynes says, “Your decisions are strongly prepared by brain activity. By the time consciousness kicks in, most of the work has already been done.”

The patterns he found in the brain consistently predicted whether test subjects eventual y pushed a button with their left or right hand—

about seven seconds before they felt they had made a conscious choice to do it. Do you stil think that your decisions are postconscious, in other words, that you rational y think about things and make decisions afterwards? The peer group is shrinking of people who think like that.

We Tend to Like (or Dislike) Things Before We Know Much About Them

People do not become friends with each other, choose one career over another, or choose what sport to watch on the weekend based on a detailed cognitive analysis of the pros and cons of each situation. If we stop to think about it, most major decisions are
not
made by cold cognitive processes such as evaluation and analysis but instead by
hot cognition
. We quickly realize that there probably are very few decisions in our lives that aren’t “hot.”

Most of the time, the data we have col ected about choices and alternatives and options aren’t used to make a decision anyway. They are used
to justify decisions after the fact.
We buy the cars we “like,” choose the jobs and houses that we find “attractive,” and then justify those choices to other people with any number of facts and explanations. “Why this deal?” or “Why this investment?” We don’t need facts and explanations to convince ourselves.
We
know what we like.
Even when we try the rational approach—making lists of pros and cons—if it does not come out how
we like, we go back and redo the list until it does.

If you had invested $1,000 with George Soros when he opened his Quantum Fund, you would have about $4 mil ion today. Yet he is known for whimsical y changing his investment tactics—we’re talking market positions of hundreds of mil ions of dol ars—on a feeling in his back or some other physical signal.

Cymbalista, who has studied Soros and financial decision making, writes, “This might sound mysterious but, in fact, human thinking is constantly guided by subtle bodily tensions. Traders need to learn how to isolate and identify these bodily tensions and relate them to the analysis of the market problem at hand. Certainly, Soros has learned how to combine theory and instinct to make money.”

George Soros’ backache decision-making is consistent with the research of Dr. Jerome Bruner. According to Bruner, “There are two modes of cognitive functioning, two modes of thought, each providing distinctive ways of ordering experience and constructing reality.” Bruner says that one mode of “constructing reality” is cal ed the
paradigmatic mode
(one can think of this as the detective mode). In paradigmatic mode, the target takes the content of your pitch and analyzes it in terms of “tightly reasoned analysis, logical proof and empirical observation.” In other words, the information you’re providing is getting analyzed. If you push your listener into this mode, he or she is looking to find a formula that explains you.
Your
audience/target will be doing only one thing in paradigmatic mode—trying to analyze. All your creative concepts, future projections, and human
inferences are going to be ignored by the analystical/paradigmatic thinker. The only thing that will count are cold, hard facts.