The Two Minute Elevator Pitch
The Scenario
1. You find yourself, opportunistically, in an elevator all alone with potential Launch Clients, possible future employees, VCs, Angel Investors, Business Mentor or Coach.
2. You have two minutes to pitch your next great startup to them before they get off the elevator.
3. What do you do, what do you say?
4. Time yourself.
The Pitch
1. Introduce yourself.
2. Remember to smile.
3. Tell them what you are working on-give it a short title. ("The title can't be as long as the story, Bruce," Professor Max Neutze.)
Example: "Hi, I am Mat Lafrance, President and CEO of a new service called gradeAstudent.com. We do on site computer repair for homes and businesses.
The computer repair industry is huge and growing faster than the installed base and the industry is full of 'mom and pop' shops-it also isn't an industry that any of the established players are interested in. We are tackling the last mile of service."
4. Tell them right away what the value proposition is.
Example: "You know people can either disassemble their PCs, put it in their cars, take it to a local repair shop, be told it'll take three weeks only to find out that it takes six weeks and costs 300 bucks and that their drives are wiped or they can log on to gradeAstudent.com, make an appointment and have a highly trained gradeAstudent come to their home or business and fix the problem in a couple of hours for $120."
5. Give them some idea of how big the opportunity is.
6. Also talk about the business model, your team, your technology, whether the opportunity is scalable and why you think you are going to be successful-what you actually bring to this.
Example: "What's neat about gradeAstudent.com is that we have designed GASnet, which basically matches the Student Contractors and the Clients-Clients give us a couple of windows when we can do a site visit and then our Student Contractors can log on to GASnet and take the jobs they want; maybe, for example, the ones closest to their homes. We have an endless supply of workers too-there are engineering and CS students in every major city. We're going to expand GAS with agents in major cities in North America and we can do eight or nine figures in revenues within seven years."
7. Don't forget to talk about cash. If your cash conversion cycle (CCC) is negative or simultaneous, say so. This is a powerful advantage. For example, GAS (now branded as GradeATechs.com because of the number of SMEEs (Small and Medium Sized Enterprises) they serve and to better exaplin their offering in their corporate name)gets paid online use their back end system (called GASnet) immediately upon delivering the serv ice using a credit card billing system. They have few receivables. They don't pay their suuppliers (i.e, their sub-contractors (their techies, in other words) for up to two weeks, so for a house call, their cash conversion cycle might be on average a negative one week. (For SMEEs, they could make sure they have a negative CC, if they do what lawyers do and ask for (monthly) retainers so they are always paying themselves from their own 'trust' account. (It isn't actually a trust account but retainers are impressed with a trust since the funds aren't really yours until you deliver the service.) If your CCC is negative or simultaneous, then you can grow very qucikly without a lot of external funding (bank financing, VC money, etc.)
But if you are, for example, a consulting company that doens't ask for deposits up front, doesn't ask for progress payments and only gets paid 30 or 60 or 90 days after you delvier your report, you can run into trouble (i.e., run out of cash). In this case, the more work you take on, the more cash you burn through-- you still have to pay your employees and suppliers while you wait to get paid. So this is an important part of developing a sustainable business model.
We have an online spreadsheet to assit you with calculting your CCC: you can download it from: www.dramatispersonae.org/BusinessModels/CashConversionCycleMeasurement.xls.
8. Finally tell them how you intend to drive sales-opportunities are useless if you have to spend $2m on SuperBowl commercials before you get your first sale.
Example: "Oh, I meant to say that we have proven we can get the word out about gradeAstudent.com using a Market by Media Release strategy-the media love our story. You can reach me anytime-my email address is mat@gradeAstudent.com or maybe I could call you? Could I have your business card and here is one of mine?"
9. Always reserve your domain name (and make it exactly the same as your company name) and print up business cards-hand them out like confetti.
Copyright. Dr. Bruce M. Firestone, Ottawa, Canada. December, 2008
More on the Elevator Pitch (Update Jan. 19, 2009)
If you've got a great idea but need cash to make it go, you'd better start working on your Elevator Pitch. Even if you don't need the cash, you still need to be able to sell your idea to: your clients and customers, your employees, your banker and your spouse!
What is an Elevator Pitch?
It's the term used for a 2-minute presentation; the exact amount of time it takes to go from the lobby to the investor's office on the top floor, to capture investor interest. Get it right and they'll invite you into the boardroom. It is also about the same time you need to convince other stakeholders that they should get involved with your enterprise.
What Makes a Good Elevator Pitch?
A good Elevator Pitch is made of two key elements:
1. Lay out the pain statement. What problem is it that you are trying to solve?
2. Show the value proposition. How does your venture solve that problem?
Be specific-how exactly does your product or service benefit a single client or customer? Can you show, on a spreadsheet, in a compelling way, how by buying your product or service, a client will make money from it or lower their costs or both.
Every great Elevator Pitch must meet 4 key tests:
1. Must be succinct. You've only got 2 minutes.
2. Easy to understand. Both your grandma and your grand kids have to get it. Your product or service appeals to multi generations or, at a minimum, you can explain it to multi generations.
3. Greed inducing. Investors want to make money. Clients want to know that buying your product or service is a negative cost-the benefits generated are greater than the cost.
4. Irrefutable. If your Elevator Pitch leaves the investor or customer with more questions than answers, you'd better go back to the drawing board.
SOURCES:
Mr. Sean Wise:
http://www.youtube.com/watch?v=Tq0tan49rmc&feature=related
http://www.insidethedragonsden.com
With input from Craig Schoen, Ryan Anderson, Bruce Firestone, University of Ottawa. January 2009.
Assistance from students: David Huffman and Penelope Talbot-Kelly.
EXAMPLES:
See Craig Schoen's 2-minute elevator pitch in the National Finals of the Wes Nicol Business Plan Competition:
http://ca.youtube.com/watch?v=4PahMY0CKMk
Wes Nicol Business Plan Competition Video:
http://ca.youtube.com/watch?v=flouYGq6S1E
Wes Nicol Home Page:
http://www.nicol-award.com/
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