Tuesday, August 31, 2010

Ten Tips On Elevator Pitches

Two of my favorites, Chip & Dan Heath, just posted six great tips for Elevator Pitches [those brief, compelling and credible descriptions of your venture that will motivate your listener to (a) tell others that they think could be interested/helpful and (b) ask you to tell them more]. Here are their six:

1) Think short.
2) If your topic is complex, use "anchor and twist"
3) Don't wing it, script it.
4) "Why" before "what".
5) It is mandatory... to include a story. (this isn't exactly the way they phrased it, but this way rhymes)
6) Check out other pitches for inspiration.

To their list, I would add four more, to make it to that ever useful "10 tips":

7) Know what you want, and build in a soft "ask" to every pitch. This anchors the idea for your listener so they will think about who else they might want to tell about your idea. Whether you see yourself as a social entrepreneur or a "plain old" entreprenuer (irony intended), it is important to know what you want, and ask for it. Your ask is also a gift- you are providing the listener with an opportunity to get involved with something AWESOME... your venture. Don't make it a "guess what" gift. Be clear about the opportunity!

8) Tell "who"- people tend to overvalue the idea and undervalue the team. Don't. Ideas are a dime a dozen. Worthy ideas with strong teams are rare and valuable.

9) Use questions as well as statements. This shifts your audience from questioning and challenging your idea to wanting to assist you. (Paul Graham gets credit for this framing idea)

10) No matter what your pitch is, "how" you deliver it is at least as important as what you deliver. Are you passionate? Formal or informal? Team based? Think through all the non-verbal aspects of your pitch. Videotape yourself. Seriously. You get one chance to make your best impression.

When Andy Hargadon and I do our session on pitching new ventures, we say: "if you can't say what you are doing in 150 characters or less, you don't know what you are doing." Provocative? Yes. But in our experience, the ability to describe the essence of a venture is indicative of a successful entrepreneur. This short statement can then be used as a framework around which to build the rest of your pitch.

Finally, remember a big part of the pitch is to provide for retelling. If you have ever done the class room exercise of whispering some words to the person next to you, who whispers to the person next to them, etc., you know how garbled a message can become through retelling. That is why being clear, concise and compelling is so important. You are not just creating an elevator pitch, you are designing an elevator pitch that will be retold. Test your early prototypes. How well is your message retold?

Friday, August 27, 2010

Big Shorts and big LIEs

The Big Short, by Michael Lewis, is a great story. But it is also awful. To hear about the arrogance and ignorance of those who profited from the subprime mortgage market is at first unsettling, then disgusting. Unfortunately, in my experience, Laziness, Ignorance and Ego are often at the root of many such stories. The next big short will probably be on the next big LIE.

The guys that shorted the subprime market- Eisman (and partners at FrontPoint), Burry, Lippman and the fellows at Cornwall Capital- are the heroes of Lewis's book. But that is because his yardstick is one of using maverick cleverness to make a lot of money. While their big sting targets were Goldman Sachs, AIGFP and other Wall St. firms, I don't feel any joy in their final win. Nor did they. Eisman compared it to being like Noah- he was on the ark, but not happy about the flood.

If I understand it, the protagonists were offended by the exploitation of the poor by the subprime market, and disliked the greedy traders on Wall St. They made a bundle (so did the greedy traders). But what have they done with their "winnings"? They aren't Robin Hoods, from what I can tell. While they lightened the bank accounts of some of the big firms, nothing they did helped rebuild the decimated neighborhoods that were hurt by the whole scam. As far as I can tell, they haven't given back any of the loot that represents what communities lost with the housing collapse, or families lost with the resulting recession. Probably "Hey, I pay my taxes" is sufficient for them.

In the introduction, Lewis bemoans how his first book, "Liar's Poker," had become a "how to" guide for college students wanting to get a job on Wall St., rather than the cautionary tale he had intended. Will the Big Short become a "how to" guide for those wanting to profit from the next big LIE? Eisman says it could be "for profit education." And I bet someone got rich selling BP short, too (and that trade may not be over). BP CEO Hayward certainly seemed to be leading the LIE lifestyle and building an organization based on LIE.

One interesting angle of the Big Short was the work these guys did to come up with ways to short the American housing market. It wasn't easy. If there are things you think are fundamentally intolerable or unsustainable in the current system, how would you short them? Don't like coal fired power plants and global warming? Do you go long on renewable energy investments, or short the coal companies and utilities? How would you short poverty in Sub-Saharan Africa (or if you are Bill Easterly, how do you short foreign aid in that region)?

It is an interesting perspective to consider, as one doesn't need to look far to see Lazy, Ignorant and Egotistical policies, people and organizations at work. These characteristics are often those underlying "conventional wisdom" and "business as usual." Perhaps the field of social entrepreneurship needs a few shorts, as well as "change makers," to really make a difference. As I have said before in this blog, entrepreneurship isn't always about playing nice.

If you do figure it out, I'd ask that you contribute some portion of your earnings to the social or environmental problem that motivated you in the first place.
If you'd like the short version of the story, here is an NPR's Fresh Air version.