Tag: Startup

The four points of a good start up pitch

This morning the following tweet was trending globally. Paras Chopra is a Delhi based tech entrepreneur and founder of Wingify, a web platform. Although I work in an established institution, I have created my learning design team from scratch. We are currently working on expanding our impact at the university, so it caught my interest.

The four points of a good start up pitch

According to Investopedia, an intrapreneur is “an employee who is tasked with developing an innovative idea or project within a company.” As an intrapreneur, you can borrow much of the behaviours and tools of an entrepreneur, such as risk-taking and innovative approaches to build and launch your internal project. The idea of a startup pitch for a new business function set up to target a new market, such as non-traditional students, can help to justify funding from the company in the same way a startup seeks funding from venture capital.

Paras’ four elements of a startup pitch are:

  • How is the product 10x better than alternatives (with proof)
  • What’s their moat
  • How they can acquire users profitably at scale (with evidence)
  • Hustles that the team has done in their careers

The first point, how is the product significantly better than alternatives, should be easy to answer and forms the basis of what your business function does. Once you have a hypothesis, it needs testing. Testing the product to get proof of its superiority over alternatives needs to be done with prototypes and prospective customer interviews in the early stages. Once up and running, the next job is to gain as much data as possible from early customers that the product is 10x better or continue to iterate until this is true.

A startups moat is how the new business can protect its product, gain and retain market share. A startup pitch must suggest how the company can avoid or create barriers to entry that stop other companies from taking over their business. Moats might include brand loyalty, economies of scale, geographical barriers, being first, integration with other parts of a supply chain and legal obstacles such as a patent. As an internal project, it is likely that fully integrating into the organisation, geographic access, and brand loyalty are likely moats to pursue.

Shareholders don’t pay for the castle, they pay for the moat.

Warren Buffet

The prototype testing should provide some data for acquiring users as, without a solid plan to build customers, the rest of the plan is not important. Word of mouth is the most reliable user acquisition method, but some form of advertising will be needed for this to scale. Popular user acquisition methods include building a social media following, paid search ads and search optimisation, and ad agencies and networks. Internal project teams can use cross-promotion with existing users from other business areas.

The pitch is about getting much-needed funding to support growth. To get people to part with money, they need to trust the team can deliver on the other three points. Many venture capital firms and large companies may be more interested in backing people than the idea. Good people will adapt and change an idea till they find something that works. It is essential to leverage what the team had done before joining the startup in the early stages. This currency will only last so long before the people expect to see what the team members have been able to do since joining the startup. Spend time developing the narrative around the people in the team to build trust that you can deliver what you say you can in the other three points.

Paras Chopra list of four points for a startup pitch provides an excellent framework for either an entrepreneur or intrapreneur starting or building a new project. By focusing on how the product is better, how it will stay better, how it will grow, and evidencing that the team can deliver this, you will build trust from internal or external investors. Can you answer these questions convincingly for where you currently work? If you can, then great; if not, you know what you have to do.

Finding a startup business model

Many startups fail because of a lack of research. Founders assume that customers want to pay for their product and scale before knowing their business model works. The ‘Growth at any cost’ approach encouraged in Silicon Valley has led to some spectacular collapses when a company’s business model has not been adequately tested before it scales. 

The most dramatic recent example of a startup scaling before it has a solid business model is WeWork. The office space startup launched in 2010, and by 2019, the company had an estimated value of $47 billion, helped by an $8 billion investment from Softbank. The company never made a profit but instead focused on a massive expansion of locations without learning if their model worked. The collapse came when they attempted to transition from startup to established company with an IPO in 2019. Potential investors got to look at its finances and compare WeWork to established and profitable real estate companies such as IWG.

A startup is not just a smaller company. Traditional product development ‘Waterfall’ methodologies work for existing companies with a known market and low tolerance for failure. A startup model with ‘agile’ product development is needed when you are unsure about what you’re selling and who you are selling to and need to repeat the design and development process many times until you find something that works.

Startup: A temporary organisation in search of a scalable, repeatable, profitable business model. Steve Blank

A startup is a company in search of a customer, product, and business model. The Customer Development Model can be used to make this search systematic and reduce the risk of failure.

The Customer Development Model

  1. Search Mode
    1. Customer Discovery – translate the startup’s vision into a testable business model hypothesis.
    2. Customer Validation – Test the business model for repeatability and scalability.
  2. Execution Mode
    1. Customer Creation – Establish the market, product position, and demand. 
    2. Company Building – grow the organisation to support executing the business model.

The Build-Measure-Learn Loop can be used in the Search Mode to learn from customer feedback when developing products and services. The build phase of the first iteration of the loop creates the simplest customer-ready product known as a Minimum Viable Product (MVP).

Minimum Viable Product: The version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort. Eric Ries

The Build Measure Learn Loop

  1. Build a product from a plan
  2. Measure the product to generate data
  3. Learn from the data to create the next plan

A company should validate their business model and customer before any significant money is spent in the Execution Mode. If the business model hypothesis fails, the startup can pivot to a new idea until a scalable business model is found.