What to say…
As part of my research, I examined more than 80 pitches by entrepreneurs seeking funding from outside resource providers. In examining these pitches, I noticed that external stakeholders pay attention to specific types of signals in the content of an entrepreneur’s pitch. I categorised the signals in the entrepreneurial pitches into five broad categories and discovered that they were strongly related to success in accessing outside resources.
The pitches embedded with rich signals from all five signaling categories were much more likely to garner the interest of outside resource providers compared to the pitches where the entrepreneurs failed to provide content related to one or more of the signaling categories. Therefore these signaling categories provide useful insight into the type of content that should be included when trying to sell a new idea. The types of signals that were important for selling new ideas were: familiarity signals, distinctiveness signals, connectedness signals, credibility signals and viability signals.
Below I will explain each signaling category and describe how signals from that category can be incorporated into a pitch for a new idea. The examples listed below are all actual examples from my research although all names of people and businesses have been changed.
Familiarity signals serve to make an idea recognisable and understandable to an audience. People hate to feel disconnected and unfamiliar with what they are being told; therefore they try to connect new ideas to things that they know. The more that you can help them make these connections; the more likely they are to find favour with what you are saying. Signaling familiarity can come from claiming membership of a familiar category, using a well-known model to describe the idea you are selling, or describing recognisable structures and processes underlying the idea.
Examples of sentences that convey familiarity:
Musk will be a player in the independent music distribution niche within the global music industry. Musk is ebay for independent musicians; it creates a platform for buyers and sellers of independent music. The business will use the well-established ‘freemium’ model to attract users to the site after which they will have the opportunity to buy enhanced, value added services.
Distinctiveness signals serve to highlight the uniqueness of an idea. They differentiate an idea, making it noticeable and competitive. If people develop the perception that an idea is too similar to many other ideas they have seen, they will immediately discount it as just another ‘me too’ concept. One needs to signal that there are dimensions on which the idea is distinctly different from other concepts out there. This can come from describing distinctive resources or competencies attached to the idea, describing the idea as first in a particular market space or claiming that the ideas will create a position of leadership in a particular domain.
Examples of sentences that convey distinctiveness:
Datz has a patented algorithm for searching datasets that enables users to quickly find unique datasets on the platform. This increases speed and ease of use for users looking for data, making it the fastest tool for searching proprietary datasets… the company will be first to market with Java enabled search for large datasets. This will allow users to accurately search large datasets in multiple formats to find variables of interest… the patented search technology and highly qualified Java developers will make the company the leader in the person to person dataset exchange market.
Connectedness signals serve to highlight that the people behind an idea have relationships with other important people and organisations. Because new ideas are uncertain and unproven, the support of well-known individuals and organisations can make a huge difference to the perception that others develop about the idea. One can incorporate connectedness signals by providing testimonials or signals of support from well-known people or organisations.
Examples of sentences that convey connectedness:
We have shared this idea with Dr Howard Genville, the head of R&D at Innovent Labs, and not only did he say that “it’s a practical solution to a massive problem” but he has agreed to serve on our board of advisors and give us access to his team of scientists for free consultations.
Credibility signals serve to make the new business idea and the people behind the idea believable by engendering trustworthiness and expertise. Credibility comes from highlighting success in the track record of the team behind the idea, making specific reference to the education credentials of the people behind the idea, signaling that the people behind the idea have a strong commitment to the idea and highlighting the interest of others in the idea.
Examples of sentences that convey credibility:
The project will break even in month eight and after month 12 the net margins will be 25% to 35% consistently. The designs for the project are completed and approved;
all we need is funding to get this concept going.
Viability signals serve to highlight that the idea is sustainable — showing that it is a worthwhile endeavour providing adequate incentives for those involved. People only buy into an idea that can realistically be implemented; therefore demonstrating the financial and practical viability idea is critical in selling the idea to others.
Examples of sentences that convey viability:
The three people behind the idea collectively have more than 50 years of experience in marketing information management across seven multinational firms, including Coke, Adcock Ingram and Microsoft. Two of the people have an MBA from GIBS, the third has an MSc from Wits. The founders have collectively committed 450 hours and R200 000 to date to get this idea off the ground.
Although some of the signals mentioned above may seem obvious, it is amazing how many people who are desperate to sell an idea neglect to cover one or more of these critical areas. Each signaling area works in a different way to help evaluators make sense of an idea and to enable them to become excited about an idea. Therefore as you try selling an idea, use this as a checklist to ensure you are doing everything to make your idea appealing.
The research behind these insights entailed the following:
- Recording 80 pitch presentations by entrepreneurs to early stage venture investors.
- Assessing the content (what was said) and the approach (how it was said) of each presentation and then linking aspects of content and approach to the outcome of the presentation.
- A successful outcome in this context was a follow-up meeting between the entrepreneur and one or more of the investors; an unsuccessful outcome was no further interest from the investors in the entrepreneur’s venture.
- Of the 80 entrepreneurs who presented, just over half (42) got follow-up meetings.
- A combination of the ideas in this article were the best predictors of a follow-up meeting.
At the content level a combination of signals from each category of familiarity, distinctiveness, credibility, connectedness and viability predicted success. In terms of the approach used by the entrepreneur in pitching the idea, incorporation of stories, simple visuals, use of metaphors and finishing well within the time limit were all predictors of a follow-up meeting with an investor.
How to say it…
While the content of a presentation is important in selling a new idea, how that presentation is delivered is just as important in getting the buy-in of others. The content and approach of a presentation work synergistically to win over others. In analysing the pitches of entrepreneurs presenting their ideas to early stage investors, some revealing and interesting insights emerged about what kinds of approaches are associated with winning pitches. On the whole, winning pitches incorporated stories, visuals and metaphors, and the winning pitches were significantly shorter than the pitches that failed to generate interest. I will now discuss each of these aspects in more detail.
Stories emerged as a powerful tool for conveying a new idea. Of the ventures that attracted interest, 44% opened with a story and another 40% incorporated a story into the presentation. Of the ventures that did not get interest, only 21% opened with a story and another 27% incorporated a story into the pitch. Stories were therefore the tool of winners. Why do stories help so much in selling an idea? Stories place random concepts in context and create connections between concepts that help us interpret and understand what has been said. They are probably the most powerful communication tool of all time. Jesus Christ, William Shakespeare , Winston Churchill and Martin Luther King all used stories to sell ideas and get people to connect emotionally with their cause.
As the old saying goes, a picture is worth a thousand words. On the whole, the winning presentations had less text and more pictures on their PowerPoint slides. On further examination it was evident that those with lots of text on their slides spent more time reading the slides and therefore failed to engage with the audience effectively. If you want to sell ideas you need to be engaged with the audience, you need to look into their eyes and let them see your passion. You cannot do this if you (and they) are reading the slides. Drop as much text as possible from your slides and use pictures to spark your thoughts and help you tell a story.
At the end of a presentation an audience remembers very little about what was said. One thing they are more likely to remember is a meaningful metaphor. A metaphor is a figure of speech that constructs an analogy between two things or ideas. Because new ideas are foreign, people find it meaningful to connect them with what is familiar; a metaphor can help others do this effectively. So terms like ‘on-demand art’, ‘reference based dating’ or ‘a mortgage marketplace’ can make an idea more meaningful and memorable, encouraging the others to follow up on or share the idea with others.
Shorter is better. When selling new ideas many people fall into the trap of wanting to cover every last detail of the idea, causing their presentation to be long and drawn out. Mistake! When selling an idea it is better to give enough information about the idea to the audience to get them intrigued and then let them ask the questions. In the presentations that I examined, those who spent less time on one-way presenting and more time on two-way engagement were significantly more likely to get interest from resource providers. An important lesson in selling ideas is don’t say too much, rather keep it short and then spend time engaging around the questions that arise. This means that if you get ten minutes to present the idea, speak for eight minutes and use the extra time to address questions from the audience, if you get half an hour to present, speak for 20 minutes and allow the audience to interact with you for the rest.
In the end, a massive part of business is selling ideas. The sooner we become aware of this, the more effort we can make to become better at it. Becoming better at selling ideas is likely to have a significant effect on any person’s career, whether they are an entrepreneur, corporate manager, social worker or government official. Now is your time, go out and make it happen. n
Often, people use PowerPoint in selling new ideas. Over many years of using PowerPoint I have developed three core principles for making slide presentations more effective:
- Consistency. Keep the look and feel of a deck of slides similar. A slide deck with a consistent theme (look, feel, colours and picture types) signals professionalism and care.
- Contrast. Slides work best when the colour schemes contrast with one another. Dark backgrounds with light letters or light backgrounds with dark letters.
- Simplicity. Keep slides simple. I estimate that over 80% of slides are over-engineered with too much text and too many diagrams. Simple slides force you to be clear on the message of the slide and allow you the flexibility to say as much or as little as you wish to about the slide.
Alternative Idea Selling Tools
Not all ideas need to be sold with a PowerPoint presentation. Many times it might be more powerful and meaningful to get away from PowerPoint. Here are some ideas for breaking away from PowerPoint:
- Demonstration. Using a model or other physical artifacts to demonstrate the essence of your idea.
- Whiteboard. Talking through your ideas and drawing on a whiteboard (or flip chart) as you do to illustrate your point.
- Tour. Taking people to a location where they can see your idea (or the potential for your idea) in action.
- Discussion. Sometimes it is better to sell ideas to people one-on-one in a less formal environment. Some people are prone to listen in such a context and one can address their specific concerns directly.