Pitching is all about persuasion.
As a businessman, entrepreneur, or manager in an organization, you'll be called upon to sell an idea to strangers from time to time. The idea might be a new venture, or a new product, or a new marketing campaign. In fact, it could be for anything that needs funding or budget approval. In my past, in the advertising world, I have had dozens of times to present strategic presentations for campaigns, and what made this challenge the most significant was the fact that the goal was to get funding and I'm talking about millions of dollars. So how do we pitch effectively?
As you can guess, the outcome of such is uncertain, so pitching is essentially a persuasion process. In this article, I will discuss a few important points to note when making a pitch in the context of a business. In business, there are often two overarching risks the presenter needs to mitigate. First is the quality of the idea. In the context of business, this usually means the idea is so good that it can unlock growth, leading to a profitable outcome. Second, the pitcher must be trustworthy, exuding calm confidence in the belief that he or she or the team possesses the skills and motivation necessary to achieve success. These two requirements would differ across situations, so let's unpack them a bit more.
In advertising, the quality of the idea usually refers to whether you can come up with a big creative idea that can make consumers think or feel differently about the brand to the extent they become motivated to buy. In a new venture, the concern is whether your idea can generate large enough demand that makes it highly profitable and if this profitability can be protected from competition.
New venture pitching is especially challenging because very often you, the entrepreneur, are not known to the investors. Trust then becomes important. For instance, even if you have all the necessary knowledge and background, investors still want to know whether you have the tenacity to push forward in the face of adversity. They must also believe that you are able and willing to iterate the business model until success is achieved. In short, setting up a new business is insanely difficult and investors must believe that you have the capacity to get the business off the ground. And to do so with integrity instead of creating more risk. Therefore, the funding decision boils down to risk-return assessment.
So how do you create a successful pitch? You need to reduce as much uncertainty as possible while simultaneously providing credible evidence to support your business case and behaving in a trustworthy manner. Typically, numerical content needs to be included in your presentation to support the business case. But this should not be numbers and more numbers. Rather, data should be presented in a way that is meaningful and can influence the funding decision. And to make it interesting, the presentation of data should be balanced with emotional content, since emotions tend to move people. Therefore, include a storyline to help bring the presentation to life.
During the presentation, you'll be tested and your assumptions challenged. Being well prepared is therefore paramount. Research has shown that more than passion, investors are impressed by our preparedness. For instance, by showing that you thought through many of the contentious issues, you signal that you have done your homework. And if you don't know the answers to some question, just say you'll find out, or ask the investors' opinion. Bottom line, show that your responses are thoughtful and not glib. In certain situations, when you're seeking funding for a creative product, like a movie or an advertising campaign, it often pays to consider the suggestions of the investor. So look for ways to incorporate their suggestions into the project or look for areas where you're willing to compromise. Research has shown that collaboration with investors increases the chances of funding.
Now, let's explore trustworthiness through a cautionary tale. If a pitch is nothing more than a persuasion process, then it is possible to hoodwink investors if the pitcher is very, very convincing. For instance, by appearing sincere and providing evidence of success, you can project a very positive impression of yourself, even if it's all a lie. In short, if you're very convincing, you can hoodwink many, as in the case of Elizabeth Holmes.
Elizabeth Holmes, who shot into fame in 2015, is the highly attractive and charismatic founder and former CEO of Theranos, a health technology corporation. She falsely claimed that her company, which is now defunct, had pioneered a revolutionary blood testing method that required only a finger prick of blood to assess up to 200 medical conditions. If true, it would have been a game-changer in the blood diagnostic business. In fact, no such technology existed. However, it didn't stop her from getting funding. At its height, Theranos was worth $9 billion US, and Elizabeth herself was named the youngest and wealthiest self-made female billionaire by Forbes Magazine in 2015. She gave a TED Talk, appeared on the countless covers of business magazines, surrounded herself with powerful investors, and became a celebrity in her own right. And positioned herself as the next Steve Jobs. I guess the desire to see the next financial unicorn emerge, founded by a woman, helped fuel her status as a trailblazer.
I won't go into any more details about her case, but the point I want to make is simple. Many of the persuasive can be subverted for ill-gotten gains. Be warned, once you lose your integrity, it's nearly impossible to get it back.