I have attended a few events for Angel Investors this week to get a feel for the community and how the system works here in LA. While I got a great perspective at the Tech Coast Angels Fast Pitch Competition, today’s time at the Pasadena Angels Screening Event cemented some of my perceptions.
The format of the screening event was geared for fast presentations (less than 20 minutes) rather than 1 minute elevator pitches. This allows the presenter to paint a much more elaborate picture of what they are doing and why you might be interested in investing. As it turns out it can help, but it also masks some basic communication problems.
By luck one of the presenters at the Screening event, HauteSpot Networks, was one of the winners at the Fast Pitch event. HauteSpot is a solution for streaming CCTV and HiDef video over wireless. At the fast pitch it was unclear what the target market was and how the product was used. The questions from the judges aimed at a consumer play and that didn’t seem to jell or make sense with what I knew of the competition in that space.
The presentation at the screening presented a much different picture of what the company was about and I had an opportunity to talk to HauteSpot’s CEO Bob Ehlers after the event. It turns out that the technology developed by HauteSpot is geared towards government, large public installations and the media. In those markets they had done a lot of work to get government approvals, partnering relationships and start the ball rolling on lucrative contracts.
The interesting thing here is that Bob was using the same type of language in both presentations. In the screening with his PowerPoint there was enough context to see exactly what the business was, but in the fast pitch there wasn’t. Instead the judges assumed that it was yet another consumer play based on their experience and context. If it looks like a hammer we know where to find a lot of nails.
As I talked with Bob afterwards we recounted some of this and that the miscommunication was simply the lack of understanding of the context of the investors. In Bob’s case he assumed that he used some of his terminology that everyone would instantly know his market. That in a way the market speaks for itself. His context was the presentations he had been so successful with in government meeting rooms.
In business as anywhere we need to start by understanding our audience, what they are looking for, what they need to understand. We assume that many things are obvious that just aren’t. Lessons learned, drop the domain specific thinking and adopt the language of the audience. Focus on what the audience understands and build a bridge to your vantage point.
HauteSpot is great technology put out by a company that knows its market and to my view is making the right moves to capture it. They have enough on the ball that most investors can see potential past the delivery, but Bob is also taking his experience to heart and will be tuning his presentations to address defining his market, its potential and their exit strategy in the language of the investor. I look forward to seeing his company grow and have no doubt they will be a great success.
I just want to re-iterate here that HauteSpot is a good company with a real handle on what their market needs. They communicate that effectively, but just didn’t in this instance get into the mindset of the investor. It was the “domain specific thinking” that was to blame rather than specific jargon.
To an extent we all work inside a bubble that is the world we must execute in. We know it like we know the back of our hand. The trick is remembering that other people don’t understand things the same way.
-Marty
So the results are in (so far)…
First a comment on the Pitching Competition: The Tech Coast Angels have gone a long way towards helping entrepreneurs build up concise business summaries by supporting this pitch competition. It really does force you to drive to the core mission of your company and throw out irrelevant messaging.
The elevator pitch is the Haiku of the business world and sometimes trying to say more with less is difficult. For those of us who are long-winded poets (oxymoron) Haiku is a real challenge.
Frankly, I was very disappointed with my pitch and think that I completely failed to convey our core message in 60 seconds. But the process of constantly revising and refining the message helped me better understand what is important and what is not.
However, my opinion of my own presentation and how it was received by investors was completely contradictory. The investors seemed to get it.
As a result of the pitch competition, we had a large turn out at the Pasadena Angels screening event on Wednesday. At this event we could present our entire pitch, not just 60 seconds. This allowed context, particularly customer case studies, which drove our case home.
We made it past the screening to present to the Pasadena Angels membership last week. Again, our presentation resonated with enough members of the group that we are now moving on to the next step of due diligence. Still no guaranty of funding, but getting closer.
In summary, some companies can make their case in 60 seconds (“Women’s hair extensions are difficult to use and expensive. Our product is easy to use and inexpensive. Millions of women will buy our product” – 10 seconds). Whereas some companies have more complex technologies and business models which cannot be properly put into context in such a short time. Driving to 60 seconds forces you to distill your message, even if the end result is 10 minutes long.
Hi Bob,
Thanks so much for the well thought out comment and status update. The Haiku analogy really captures the flavor of the elevator pitch. It is about conveying something that embodies the essence of what you do and will intrigue the listener to want to learn more. It really is one of the best exercises I can think of for an entrepreneur to gain clarity in what he is set to do.
In the end all of our pitches and presentations are going to be shades of gray and degrees of understanding. Which points we emphasize will color perceptions depending on the audience. I talked to a few people after your fast pitch and almost everyone mistakenly concluded that you were in the consumer market.
That said, it is important to remember that the elevator pitch is about gaining interest rather than communicating everything about your business. What was communicated was that HauteSpot has a solid and intelligent team who is already making money with a product that has some potential. That is enough to get anyone interested in hearing more.
Your screening presentation allowed everyone to get a much better understanding of the company and the industry you work in. With the case studies it was plain that HauteSpot had done its homework and was positioning itself in the right place to succeed. With that in focus any savvy investors are going to want to investigate the real potential.
The intent of these exercises is to expose value and opportunity to the investor. Show them that you understand your own market and there is a reason they should be interested. You have done a great job getting to this stage and I am sure once you are able to let people really dig in, HauteSpot will get what it needs to capture its goals.
Please keep us updated, and good luck!
-Marty