How do Demo your Startup

1. Show your product within the first 60 seconds
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Most folks start their presentations with information like the size of the market they are tackling (tens of billions, we only need 1%!), their inflated corporate bios, the philosophical approach they’re
taking, and boring Powerpoint graphics explaining some convoluted workflow of their product.

The longer it takes for you to show your product, the worse your product is. Folks who have a kick-ass product don’t spend five or ten minutes “setting the stage” or “giving the background.” Folks with killer products CAN’T WAIT to show you their product. Their demos start with their homepage and quickly jump into the users experience. If a picture tells a thousand stories, then a product demo tells a million.

Show your product immediately, and if you don’t have a product to show don’t take the meeting.

2. The best products take less than five minutes to demo
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The greatest tech products over the past 10 years would take no more than five minutes each to demo. For example:

a) Larry and Sergey could demo Google search in less than five minutes. Here’s a box, type something in and you get a huge reward.

b) Steve Jobs could demo the iPod in less than five minutes. Plug it in, put in your CDs and it syncs your music. Turn it on and use the wheel to select what songs you want to listen to.

c) Chris DeWolfe could demo MySpace in less than five minutes. Sign up, fill out your profile, and add your friends. For bonus points add some widgets to your page.

I think you get the idea: the better the product the LESS time it takes to demo. If your product demo takes more than five minutes to demo, it probably sucks. All the tiny little features that matter to
you are of course important–God is in the details–however, when presenting your company, you don’t have to show them. Larry and Sergey wouldn’t open up the advanced search tab and the list of operators you can use in Google during a demo.

Steve Jobs does take the demo details to a fairly detailed level, but you and I are not Steve Jobs. There is only one Steve Jobs and there is only one Apple. You’re never going to build something as cool as Steve, and as such there is no need for you to talk about your product for five or ten minutes.

3. Leave people wanting more.
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If you take my advice in point two, then folks should be either blown away or intrigued by your core product. If they are not somewhere in that spectrum, you need to rebuild your core product.

When I pitched Mahalo to investors, I had five sheets of paper with different search results on each. I put them on a table and said which one is the best. Obviously I knew my result was the best, and that
simple demonstration lead to MASSIVE discussion: how was the page built? how long did it take to build? what would it cost to make that page? how often do you need to update it? how can you scale that business? how many pages can you create before it breaks even?

It’s best for folks to discover the merits of your product for themselves, and it’s up to you to make such a compelling core product that they are intrigued enough to explore it.

4. Talk about what you’ve done, not what you’re going to do.
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Weak startups and their leaders seem to immediately start talk about “what’s next,” as opposed to focusing on the core product. Anyone can say we’re going to add: a mobile version, collaborative filtering, an advertising network, visualizations, a marketplace, a browser plugin, a browser and a social network to their product. In fact, given the amount of open source and off the shelf software out there, combined with the large number of developers in the world, anyone can bolt these things on to their service in a week or three.

Who cares what you’re going to bolt on to your startup? What really matters is the core functionality of your startup.

Steve Jobs has become at once the world’s greatest salesman and product developer because he only announces Apple’s achievements. He doesn’t waste time on what Apple’s going to do: he talks about the here and now. Microsoft’s old strategy was to talk about products that were coming and that put them in the horrible position of having to backpedal when they changed their mind about a product.

5. Understand your competitive landscape–current and historical.
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This year I’ve had three companies show me group SMS messaging products, and most of them did not know what UPOC.com was (Gordon Gould’s group SMS messaging service that was five years ahead of its time). I’ve had three or four companies over the past two years of TechCrunch50 conferences pitch me on Third Voice–the controversial “web annotation” service from Web 1.0. [Side note: I loved the concept of Third Voice so much I considered starting a company like it and even bought the domain name annotated.com.]

When I pitched the idea for Weblogs, Inc. to Mark Cuban, Yossi Vardi and Jeff Bezos, I understood all the niche email marketing and newsletter companies from the early and mid-nineties cold. I researched why they worked and why they failed, and I knew which ones were sold and bought and by whom. When I pitched Mahalo to Sequoia Capital, I knew the history of human-powered search and directories from DMOZ to Yahoo Directory to LookSmart.

If you don’t know the competitive landscape, and the shoulder’s you’re standing on, folks are not going to be comfortable giving you their money, time or attention.

6. Short answers are best.
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When taking questions about your product answer questions shortly. This is a very challenging thing for many people–including myself–to do. If you’re like me, you’ve probably thought out your startup’s
issues a thousand different ways. When I sit at the poker table I play a game where I think out every possible scenario for not only my hands, but the hands of my opponents (this is fairly standard among
advanced poker players from what I understand).

Say I have Ace King and I raised out of position and the button called my raise pre-flop. Then they re-raised me on the flop, which had an Ace. What does that tell me? They could have an ace, they could have two aces and have slow played me, they could have a medium pocket pair and they want to see if I have an ace, maybe they are on a flush or straight draw or maybe they suck at poker. Who the hell knows?!?! You can go insane trying to figure all these things out–that’s why poker
becomes very addictive.

The point is all that inner thinking is chaos when you try to explain it to another person. It’s pure madness after 60 seconds of talking. The best thing to do is answer the question with the most concise answer. For example, when asked “what happens if Google enters your market?” answer quickly and with confidence:

a) Google has entered many markets, but they are only #1 in search and search advertising. They trail in social networking to MySpace and Facebook, in classifieds to Craigslist, in news to Yahoo and AOL, in email to Microsoft, AOL, and Yahoo, and in instant messaging to Microsoft, AOL, and Yahoo.

b) We’re not sure if Google will enter our market, but hopefully we’ll have developed our product enough that it will be a real sustainable business by that time.

c) We think Google might enter our market at some point, and if they do they and their competitors will certainly consider buying us–creating a bidding war for our entrenched position.

d) Google is a very big company right now with a very big cash machine that they have to focus on and protect–they will never do our business with our level of focus. We will out execute them on all
fronts.

These are all amazing answers (I did, after all, come up with them), and you can say them in around a minute. However, if you cram all four of these sentences together you’ve spoken for five minutes.

7. PowerPoint bullet slides are death
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Do not make slide after slide explaining your business in bullet points, because it’s really, really boring. Powerpoint/Keynote slides that are not boring include charts, product shots, feature set tables
and the like. Things that explain big concepts with ease and grace are great, but bullet points of obvious facts show that:

a) you don’t have the ability to create a compelling story with data

b) you don’t think that much of the person being presented the information

I’m not a huge fan of “funny slides” or lots of graphics for graphics sake. You’re not pitching your company to get laughs–unless you’re on stage–you’re doing it to raise capital, close a partnership or get on stage at a conference. Keep it focused and to the point.

8. How to use this new device called the phone.
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When presenting over the phone use a handset and a land-line… only!

It’s amazing to me that any person doing a business call would conduct it on their mobile phone. Mobile phones sound horrible 95% of the time, and they frequently cut out. If you are presenting your company take it seriously and get yourself to a landline. You have limited time and don’t want folks to miss a single word.

Speakerphones are horrible, and putting the person receiving the demo on speaker phone during a demo is just disrespectful. You can hear all the rustling, side conversations and horrible echos when you’re on speaker phone. When doing a demo pick up the handset and speak. If you go to a Q&A session then use speaker phone. That’s why it exists.

Only use a headset if it is very, very high-fidelity and you have the microphone right up to your mouth. Also, don’t eat, drink or breath heavy into the microphone or you run the risk of sounding like an animal. I use an amazing Plantronics headset, and I like me some Green Matcha tea, but I hit the mute key when I sip!

I know it sounds crazy to have a discussion about how to use the phone, but the majority of these young people actually think it’s acceptable to have two or three drop offs in a call–it’s not. Grow up
and get a land line.

9. How to handle questions you don’t know the answer to
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After you do your concise presentation you’re hopefully going to get a lot of questions. Here are some important tips to consider when you don’t know the answer cold:

a) take a moment to think about the question. You can even say “Hmmm… that’s a good question. Let me think about that for a second.” Folks appreciate a little consideration when someone takes a
question.

b) if you don’t have an answer be honest and say you don’t. There are many ways to say this including: “I’m not really sure, I’m going to have to think about that for a bit and get back to you,” or “I’m not sure to be honest. What do you think?”

c) feel free to think out loud and brainstorm with the person. You can do this by saying “I’ve never really considered that. Perhaps you can expand the question a little and we can explore it right now.”

d) if you’re not sure of the answer you can always say you’ll cross that bridge when you come to it. “I’m not sure how we would deal with a sudden spike in the cost of bandwidth, we would have to collect more information and answer that question down the road. It is a manageable risk factor I suppose. ”

The worst thing to do when you don’t have an answer is b.s. the person. No one has an answer for everything, except a b.s. artists. So, feel free to say you don’t know–folks find it refreshingly humble
and honest.

10. Always confirm the time of your meeting/call, and always be 15
minutes early.
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People are really busy and meetings get mixed up. Every meeting or phone call I do is confirmed twice: once by email, and once on the day before the meeting. Reconfirming meetings makes you look like a true player and it costs you nothing. You do this by sending a simple email saying “Looking forward to seeing you tomorrow at your offices at 123 Main Street at 3pm. If anything changes you can reach me on my mobile at 310-555-1212.”

Also, be early. Come on. If you’re doing a meeting with someone who might invest in your company, do a business deal with you, etc., you can show a lot of respect by being in their lobby or on hold on the conference call five to 15 minutes ahead of time. Don’t show up more than 15 minutes ahead of time or you’ll look like a stalker. If you get to your meeting 45 minutes ahead of time go to the Starbucks and buy yourself a treat for being so on top of things. -)

What are your best tips for giving a proper demo of your company on the phone or in person?

In your mind, what are the worst things folks have done during a presentation?

Web 2.0 Expo

I’m back in SF tonight getting ready for a week of Web 2.0 Expo madness.  I am flying in our entire company so that the devs can get a first hand experience as people check out Sprout.  It is important that everyone in the company understand our interface with customers.  Too often coding is about looking at the trees, but understanding the larger forest is very important.  I am already tired just thinking about this week, but also very excited to showcase Sprout to the world.

10 Tips to Widget-up Your Startup Brand

 My friend Mike Jones (CEO, Userplane) posted an interesting article today to help guide marketers on how to launch an effective widget ad campaign.

10 Tips to Widget-up Your Startup Brand

10 Tips for Using Widgets (Well!) to Build your Brand


1) Make your widget engaging.
Successful widgets let the user DO something. Beyond bling, they facilitate some social action on the part of the user – picture sharing, sharing of tastes in music, sharing a contest or poll – anything and everything social.

2) Use flexible formats.
Offer your widget as a square, a rectangle, in various colors, sizes and shapes to appeal to the personalization desires and expectations of social media users. Continue reading

March Madness

Whew.. I can’t believe it is almost the end of March.  This year has just flown by with the launch of Sprout, shifting the company from ChipIn and creating a new business.  Building a successful business is more than just launching a killer product.  It has to do with creating a kick ass team, listening to our users, and securing partners who complement our business goals.  Lately I have been focusing on wrapping a business strategy around an amazing set of technology built by Kevin and the team.  But strategy is just the first step.  Execution against that strategy is key to success.  There are many moving parts that have to work together.

Our plan after launching Sprout was “discover” what our users want to do with the product.  We had certain assumptions when we built our product.  That we would provide a tool that spoke to a wide range of users from novices to experts.  We wanted to build something that was totally different than anything else out there and focus on where we brought value and alleviated pain.  We didn’t want to build a better mousetrap or compete against a crowded market, but rather by providing an easy to use interface give users the power to create content in a way never before experienced online.

Well, after just seven weeks we can see the road ahead of us.  Our initial set of users have validated our business model and will be the foundation of our company’s future.  I can see the light!

Secrets of an investor presentation

Ever wonder what investors are thinking when you make a presentation? Following are the questions to address. I grabbed this off a couple angel investor docs given to me over the years I think.. it was an old post on my other blog.

1) WHAT IS YOUR VISION? – What is your big vision? – What problem are you solving and for whom? – Where do you want to be in the future?

2) WHAT IS YOUR MARKET OPPORTUNITY AND HOW BIG IS IT? – How big is the market opportunity you are pursuing and how fast is it growing? – How established (or nascent) is the market? – Do you have a credible claim on being one of the top two or three players in the market?

3) DESCRIBE YOUR PRODUCT/SERVICE – What is your product/service? – How does it solve your customer’s problem? – What is unique about your product/service?

4) WHO IS YOUR CUSTOMER? – Who are your existing customers? – Who is your target customer? – What defines an “ideal” customer prospect? – Who actually writes you the check? – Use specific customer examples where possible.

5) WHAT IS YOUR VALUE PROPOSITION? – What is your value proposition to the customer? – What kind of ROI can your customer expect by using buying your product/service? – What pain are you eliminating? – Are you selling vitamins, aspirin or antibiotics? (I.e. a luxury, a nice-to-have, or a need-to-have)

6) HOW ARE YOU SELLING? – What does the sales process look like and how long is the sales cycle? – How will you reach the target customer? What does it cost to “acquire” a customer? – What is your sales, marketing and distribution strategy? – What is the current sales pipeline?

7) HOW DO YOU ACQUIRE CUSTOMERS? – What is your cost to acquire a customer? – How will this acquisition cost change over time and why? – What is the lifetime value of a customer?

8) WHO IS YOUR MANAGEMENT TEAM? – Who is the management team? – What is their experience? – What pieces are missing and what is the plan for filling them?

9) WHAT IS YOUR REVENUE MODEL? – How do you make money? – What is your revenue model? – What is required to become profitable?

10) WHAT STAGE OF DEVELOPMENT ARE YOU AT? – What is your stage of development? Technology/product? Team? Financial metrics/revenue? – What has been the progress to date (make reality and future clear)? – What are your future milestones?

11) WHAT ARE YOUR PLANS FOR FUND RAISING? – What funds have already been raised? – How much money are you raising and at what valuation? – How will the money be spent? – How long will it last and where will the company “be” on its milestones progress at that time? – How much additional funding do you anticipate raising & when?

12) WHO IS YOUR COMPETITION? – Who is your existing & likely competition? – Who is adjacent to you (in the market) that could enter your market (and compete) or could be a co-opted partner? – What are their strengths/weaknesses? – Why are you different?

13) WHAT PARTNERSHIPS DO YOU HAVE? – Who are your key distribution and technology partners (current & future)? – How dependent are you on these partners?

14) HOW DO YOU FIT WITH THE PROSPECTIVE INVESTOR? – How does this fit w/ the investor’s portfolio and expertise? – What synergies, competition exist with the investor’s existing portfolio?

15) OTHER – What assumptions are key to the success of the business? – What “gotchas” could change the business overnight? New technologies, new market entrants, change in standards or regulations? – What are your company’s weak links?

Here’s a great ebook from Seth Godin on Really Bad Powerpoint (and how to avoid it)

A couple startup pointers online

Genuine VC: Seven Common Tactical Mistakes Entrepreneurs Make in their Initial VC Pitch which are Simple to Fix

Genuine VC: Seven Founding Sins: “”

Allen’s Blog: Ten Commandments for Entrepreneurs
1) Meet with the right partner at the VC firm. Try to get your idea and meeting with the person that has the most appropriate background for your idea.

2) Be on time! Duh! Actually be early so you can set up your laptop, hook up to the projector, get access to the wireless hub, have a glass of water, and breath

3) Tease. Don’t cram several meetings into one. The objective of the first meeting is to get a second. Tell them you have a great technology idea, being implemented by a great team, and attacking a huge market in the midst of a transition. Crisply and clearly reduce a complex business message into a short set of slides that intrigues the audience and makes them want to find out more. The same tactic with the Exec Summary.

4) Know your audience. Either read up before the meeting or ask questions about domain experience, companies in their portfolio, etc. Don’t get surprised by who knows what and bore them with redundant background info.

5) Get to the point. Tell the audience what you are doing right away. “What problem is my startup solving?”

6) Describe your idea by analogy. Compare it to what else has been in the market. Google adwords for widgets.

7) 13 slides. Check out Guy’s 10/20/30 rule for presentations

8) Know, but admit when you don’t. 1) know a lot, (2) know what you don’t know and (3) admit it when asked — will get you a lot farther down the road.

9) Know your competitors and list them. Be intimate with strengths and weaknesses.

10) Listen well to questions and answer quickly. Don’t play the ego game and followup on points in dispute after the meeting.

Focus Focus Focus

EarlyStageVC

How to Double Your Valuation

That got your attention, didn’t it? Maybe I learned something from all those enlargement offers in my email after all.

Now, let’s get down to business. I re-learned something last week. Focus sells. Duh. I’ll be specific. Last week I saw two remarkably different pitches, both from companies with great technology. One sold the generality of what they could do, telling a Big Story. The other told a Focused Story about an existing customer base they were going to serve better. .They explicitly avoided in the pitch any mention of where else their technology might apply. That was the voice over in the conversation around the pitch. All other things were equal — limited management team, pre-launch, working alpha.

I struggled with the Big Story Company, befuddled about who would really use this. I jumped out of my chair (metaphorically) to chase the Focused Story, because I could envision so many more uses beyond the first beachhead market. VCs are great at imagining a big Future, but most of us want an anchored Present. The Big Story Company was hoping for a valuation $10M pre-money. The Focused Story already had a term sheet at $20M when we met.

There is an enormous temptation in startups to think and talk expansively about a long-term vision centered on the technology of the Company. That vision often includes the word enable as in we will enable … That’s your first clue. Enable is one of those value-halving words. So are Discover, Context, Create, and Build. All those words really say, The proof of value is left to someone else. That applies equally to the valuation. The proof of value is left to someone else because we can’t articulate it.

Companies started by technologists routinely fall into this trap. (I mean both business and engineering technofiles, BTW) They don’t start with the intent of solving a specific problem. They start with the intention of “leveraging” a specific technology. The fact that the technology is a piece of many potential futures seduces the team to think they have a big opportunity. It is uncomfortable for the team to commit to a market because they don’t know the end user. There are two solutions to this. Turn inward and build technology, or turn outward and recruit people who do understand the solution. It is dilutive, but if it doubles your value, you can’t afford not to do it.

Years ago I was on the board of a company that had phenomenal technology for building predictive models from text or data. The team had identified potential applications in CRM, online advertising, search, database marketing, customer support, and others. The CTO referred to the product as a bolt-on brain, because it made many existing applications much smarter. The problem was that the technology was 10% of any given solution, even though it was the piece that differentiated the rest of the system. Capturing the other 90% required domain expertise not present in the team. The Company never went deep, straddling several potential markets. They were eventually acquired for the team and tech, not for the book of business it created. It was an unsatisfying outcome for nearly everyone. It was positive, but vastly under the potential.

So how do you double your valuation? Pick one application; serve one type of customer and be in that business. Show how you can conquer a specific set of competitors by virtue of the technology, but don’t be in the technology business. If you can persuade your investors that the first beachhead is attainable and interesting, you will get credit for subsequent applications and the big, horizontal play. Tell a story that shows you understand who your customer is, how to get to them, and why they will buy or use your product/service. Show how powerful the technology and team are, but stay on message about the focus. Let us imagine the Future.

* Don’t enable – solve
* Don’t provide context – provide conclusions
* Don’t ask customers to build – ask them to use

Technology is raw material. Create finished goods.

Enhance your value with this Vi@gr@ for startup companies. Your partners will love you for it.

The Meaning of Badge Proliferation

The Meaning of Badge Proliferation: “

It seems that the number of conversations I have had in the past two months and the number of articles/blog-posts I’ve read about online badges has skyrocketed. By ‘badges’ I mean small snippets of HTML code which consumers cut and then paste onto their blog or social network profile. (I am not necessarily talking about ‘widgets,’ which contain richer interactive functionality and often reside on the desktop, though I do realize that the definitions and manifestations of the two blur together quite a bit.)

For example, Fred Wilson posted last month about his ‘new blog bling.’ The number of badges has exploded so much recently in that Pete Cashmore asked earlier this week, ‘Are there any startups that don’t plug in to MySpace these days?’. The importance of for the industry of badges and widgets for MySpace pages was highlighted with the recent scramble after the mandate that all Flash-based ones be upgraded to newest version from Adobe.

Tim Post coined a very apt term, calling these badges, the ‘flying seeds of the internet’ and has an excellent blog entirely devoted to the subject (it’s a must read on the subject which I’ve poured through extensively). In a conversation he and I had the other day, we discussed how badges are a unique combination of marketing and technology, like interactive stickers for the web. They are becoming another method for self-expression in and of themselves. Bumper stickers for the internet generation to communicate to others in ‘traffic.’

Just like those sticky pieces of paper slapped on the back of a car, online badges can and will allow people to express affiliations with schools, groups, locations, brands, bands, and much more. But unlike static stickers, online badges (like those created by Badgr) possess the ability to be personalized. And they’re not just for people – Brian Phipps has an interesting post about ‘widgets as brand pipelines,’ which can easily be applied to badges as well.

Beyond the above affiliations, badges have the capability to communicate about individuals’ relationships with products. As many long-time readers of my blog know, I have a keen interest in ‘social commerce’ sites (see a post from last December), as I have a vision where they could provide consumers with rich social context and relevancy to the purchases which they are making. The current crop of social shopping sites are experimenting with badges as a way to promote their service. StyleFeeder, Wists, Nabbr, Kaboodle, Sprout Commerce (the creators of MyPickList and FavoriteThingz), and StyleHive – just to name a few – give consumers the ability to express themselves via products in various ways. It’s a very powerful notion, especially as it introduces the notion of monetizing these badges as forms of advertising. It remains to be seen, however, if any of these services can attract significant enough consumer adoption.

Resulting from my recent exploration, there are two questions which I am currently contemplating and learning about:

1. What are the best practices for marketers to harness the power of these badges to promote services, brand, or products?
2. What are the business models for the services that enable and create these badges? Or are they just another marketing tactic for services as opposed to something to develop a business around? Are they a means to an end or an end in and of themselves?

(Via Genuine VC.)