The seventeenth century polymath Blaise Pascal famously quipped that he was sorry for the length of his letter – he didn’t have time to write a shorter one. Woodrow Wilson extended his point to say that he needed a week to prepare a ten minute speech, but could talk for a full hour off-the-cuff. Nowadays, thanks to the success of The Dragons’ Den TV show, startup founders are realizing the real cost of the five minute pitch.
This piece originally appeared in the Sunday Business Post on 14th July 2013
Business Model as a Stage Performance
Startup pitching competitions have become a regular spectacle in Startupland, featuring contestants in the shape of founders, attempting to adequately explain their high-tech plans for global domination in five minutes or less. Startups are investing a month or more of research, rewriting, polishing and practice to produce a condensed stage performance version of their business model.
Pitching Culture in Ireland
@seanblanchfield Good piece in the SBP this morning, well said!
— chris horn (@chrisjhorn) July 14, 2013
Ireland’s early-stage startup funding landscape has adopted the Dragon’s Den format wholesale. Angel investors have recast themselves as Dragons, mimicking the TV format in hotel conference rooms. Each startup accelerator programme runs a finale event of pitches, featuring prizes, judges and an audience.
The pitch competition is the centrepiece of the Web Summit and the Startup Weekend, while open-mic pitching events like Pitchify and Inventorium IdeaJam attract hundreds of people. Business consultants, powerpoint gurus and speech trainers have sprung into action to ensure that Irish startup pitches stand shoulder-to-shoulder with those from the US and Britain.
If a startup ecosystem can be judged by the quality of its pitches, then Ireland should be proud. Whether from the stage, the judging panel or the sidelines, I’ve been watching for ten years, and the quality has soared. Our startups can now pitch with the best. Despite this progress, the money still isn’t rolling in for the contestants.
Hopeful Contestant vs. Unstoppable Founder
Founders ultimately learn that pitching from a stage is not an auspicious way to open investor relations. They cannot make a personal connection with any investors who might care, they are subject to hecklers in the form of wannabe Dragons, and they are damaged by the context of being a hopeful contestant applying for approval. Meanwhile, interested investors are turned off by the prospect of competing like pigs at a trough, and instead spend their time catching up with one another and talking shop.
Defending the Pitch
Many people will defend the pitching culture by saying that a startup founder who cannot sell to investors will not be able to sell to customers. This reasoning sounds great, but is easy to pick apart.
First, the charisma that often carries an audience along with a great pitch is increasingly irrelevant for today’s digital startups, whose founders will never personally meet their customers.
Second, investors are looking for startups that have already figured out how to sell to their customers. The investor pitch is not a practice session for the sales pitch.
The Pitch is Not the Product
Thanks to the Dragons’ Den culture, the pitch has become the real product in many startups. Winning prizes and grants is now the revenue model, and the grant-giver and competition judge has become the customer. It takes courage and conviction for a new startup entrepreneur to avoid getting stuck on this conveyer belt of startup drip-funding.
The Investor is Not the Customer
The real tragedy is that the conveyer belt rarely leads towards serious venture funding. Serious investors know better than to judge a book by its cover. They look carefully to see if there are customers who care about what the startup is doing. On the winding journey of the drip-funding conveyor belt, pitch perfect startups lose sight of their customers, and put investors in their place. Ironically, this means investors will turn them down.
Stand Out: Go for Coffee
@seanblanchfield disagree with everything you said, still love ya though 🙂 as for dragons den you know my feelings
— Pat (@patphelan) July 14, 2013
It’s time for us to leave Dragons’ Den entertainment on the TV, where it belongs. It may be great for PR, but it does few favours for the startups or investors who are taking the real risks, putting their cash and careers on the line in the name of building business and employment.
Wise founders will instead seize the opportunity to stand out from the crowd, and ask an investor out for a coffee.
Do you agree or disagree? Let me know below.