If research is to be believed, this article has about 8 seconds to capture a reader's attention before their attention span disintegrates.
Start-ups face the same problem when pitching their start-up to potential investors. In 8 seconds, (the average attention span of a human being not focused on a task, according to psychologist Michael Formica), start-ups need to be able to attract the attention of an investor. Once start-ups get the attention, they probably have 2 to 5 minutes to explain the value proposition and other details. Known as elevator pitches, these conversations can be hard because companies have to refine all their ideas into a few sentences.
To develop an effective elevator pitch, start-ups can use these tactics: grab attention with a problem question, focus on need, be conversational, and use the pitch deck as a guide.
Grab Attention with a Problem Question
Wouldn't it be weird to launch into a 60-second monolog just because there is an investor nearby? Start-ups can ease investors into an elevator pitch by grabbing their attention with a question. The University of Central Florida (UCF) calls this a “hook.” It can be a statement or a question. Questions may be better, however, because they allow the person into the conversation by giving them an opportunity to respond. Here's an elevator pitch example from UCF's Kirstie Chadwick:
"Have you ever had your cell phone fail inside a building?"
She follows it up with a short value proposition, which explains how her company solves the problem.
"We provide a communications network that enables any cell phone to work anywhere inside all types (of) buildings while ensuring your communications are secure."
This is a great example because most people automatically want to engage with the question. Doesn't everyone want to complain about that time that they lost a call in the elevator? However, sneaking in the value proposition quickly is also important because otherwise, the investor may think that the start-up founder wants to complain about failed communications rather than pitch a cool solution. The tactic is to lead in with a question and then direct the conversation with a value proposition.
Focus on the need, not the technology
After the investor responds to the question, it's the start-up representative's chance to propose the company's solution. The hard part is getting this down to one or two sentences. Elliot Loh, a seasoned start-up founder, recommends this format.
"We solve [problem] by providing [advantage], to help [target] accomplish [target’s goal]."
Of course, the start-up founder already identified the problem with a question, so he can drop the first part. Kirstie provides an example of a value proposition after leading in with a question.
"We provide a communications network that enables any cell phone to work anywhere inside all types (of) buildings [advantage] while ensuring your communications are secure [goal]."
She does a great job highlighting the advantage. The goals are secure communication, and no dropped calls. Because she's already stated that dropped calls are an issue with her problem question, she doesn't need to do it again. What Kirstie might be missing is the identification of a clearer target. She says “all buildings.” However, businesses have more problems with dropped calls in high-rises, and they may need more security than most consumers. To improve her pitch, Kirstie might want to target downtown businesses instead of everyone.
Kirstie's example is also appropriate because she doesn't waste time explaining how the technology works. While execution is important in a longer pitch deck, she doesn't have time to explain all the technology here.
She provides some other elevator pitch examples to show how to focus on need rather than technology.
WRONG: "Our technology is the first integrated and automatic book scanner that will scan and digitize bound documents at a speed of 1,200 PPM at a fraction of the cost of existing solutions based on a disruptive digital imaging technology initially developed at Bell Labs and protected by 12 patents."
BETTER: "We capture the future of knowledge by seamlessly digitizing physical libraries at very low cost."
WRONG: "We provide non-penetrable intrusion detection for digital voice, fax and wireless communication devices with our 2048-bit Hellman encryption algorithm that is combined with the latest 168-bit Hellman DES."
BETTER: "We allow you to communicate safely on a broad range of digital devices."
After introducing the issue, the start-up rep should explain what the company does to solve the problem. There is no need to go into minute details of execution here. Remember, an elevator pitch is supposed to mimic a conversation.
One reason that starting with a question can be effective is that it's more conversational. Investors can respond to the question. This is not a 30 minute PowerPoint presentation. Talking for 60 seconds straight may even be awkward. An elevator pitch is a chance to engage in a conversation with an investor.
Unfortunately, it's hard to tell when someone is doing this right. Conversation flows naturally and seems effortless. However, it's really easy to see when people are doing this wrong. Check out this video for an example of a buzzword-heavy speech that will cause investors to tune out.
Elevator pitches are a different beast than a pitch deck, so try to include the investor in the conversation by asking and responding to questions.
Use your Pitch Deck as a Guide
Although an elevator pitch is different from a pitch deck, a start-up's pitch deck can help determine the problem question and value proposition. If the startup has followed a pitch deck template, there are usually slides that clearly state the problem and the solutions.
Startups can modify the information in the pitch deck to make a great elevator pitch. In this example, Airbnb's original pitch slide deck will be transformed into an elevator pitch.
Airbnb's problem deck highlights three issues: the price of hotels, disconnection for locals and no way to book a room with a local.
This is a great problem statement for a pitch deck. However, it's not quite a problem question. It can be turned into a problem question in many ways.
"Aren't hotels expensive?" This addresses the first problem, the price of hotels.
"Wouldn't it be great to stay with a local when you travel?" This addresses the second problem, disconnection from locals.
"Don't you wish there was a way to book a room with a local rather than staying in an expensive hotel?" This question addresses all three problems. However, it's a long specific question. Investors might sense that the startup rep has an idea in mind.
There are many different ways to convert a problem slide into a problem question. Start-ups can test out various questions and gauge which ones spark the most interest from an investor.
The pitch deck can also help determine the value proposition. Airbnb has a solution slide that clearly spells out the goals of their product: save money when traveling, make money when hosting, and share culture through local connections to the city.
It only takes a few minutes to turn it into a value proposition that includes the goals, advantages, and targets.
"We provide a platform [advantage] that connects locals with extra rooms [target] to travelers [target] who want a cheap place to stay [goal] and a chance to experience the culture [goal]."
Again, there are many options for the right turn of phrase, but starting with the pitch deck summaries will put start-ups on the right path.
Attract an investor's attention and keep it
Elevator pitches can be hard because start-ups don't have a platform for talking about their products. Instead, they have to squeeze it into a conversation. Introducing a problem question related to the product is one way to get on the right track and engage the investor. Once the start-up rep has their attention, he can direct the conversation toward the value proposition. It's possible that investors will respond to the value proposition with a question. Start-ups can also dig into more detail about competitors and the target market if given time. However, start-ups should avoid getting into nitty-gritty technical details unless the investor asks for them. Start-ups should begin with selling the idea. Then they talk execution. Remember, it's a conversation. Start-up reps should allow the potential investor to talk and minimize their use of buzzwords.
Elevator pitches are just another way to spread the word about a start-up. They contain the same information that start-ups already have in their slide deck. The key is simply to present it in a different way.