End of last year, as signs of the economic slump were just starting to show mainstream, I wrote this guest post for Mashable. I had been meeting with many European and Israeli startups at that point and saw dozens of presentations...all suffering from similar problems: lack of a clear value proposition, cumbersome structure, poor revenue model (if at all), and a product offering that may have made sense in Europe but doesn't translate in the US. When an investor can't tell what the company is doing, how it plans to make money, or has doubt about the ability of management to articulate its offering in a way that makes sense here--the result can be fatal. And in today's recession, under extreme circumstances in the Valley, getting things right is more crucial than ever before.
Knowing how to articulate what you do, what problems it solves, how you'll make money on it, is at the foundation of any conversation you'll ever have. When I founded rainpetals--an online e-commerce company designed to help artists turn their passion into business, I made sure, after a number of iterations, that my value offering was clear to each and every stakeholder I spoke with. Even today, when people ask me about rainpetals, I still speak to its value proposition, revenue model, and differentiation strategy all in 60 seconds or less. Clarity and value are the name of the game. Especially now. And it enables others to help you when you give them something concrete to which they can respond.
Since December I've met dozens of other companies--foreign and home-based. Many mentioned this post helped them understand the value of a solid pitch, value proposition, business model, and overall messaging. While they may not know how to do these, at least they know it's crucial to their success and avoid having doors closed in their face. Here it is again in its entirety. I'm glad it continues to be of help.
What Every European Startup Should Know: 10 Keys to Presenting Your Startup in the US link
With the economic downturn grinding the startup wheels to a near-halt here and abroad, companies are competing for a smaller pie. Capital, acquisition odds, advertising dollars, and consumer wallets are all becoming much smaller.
If you are a European startup in the consumer Web services or product space, you have even more obstacles to overcome than your US counterparts. For one, funding in Europe is still very limited and narrowly focused compared to the US. Second, your consumer base is much smaller—especially if your product is localized for language and service. Third, the more innovative you get, the more likely it is you’ll bump against a much greater skepticism and a much smaller pool of early adopters.
So you decide to come here—Silicon Valley, the Mecca of anything startup– to raise funds and tap into the massive and enthusiastic US customer base. But right now, even though you may have enjoyed great interest as investors expand their reach internationally, you’re up against fierce competition from just about everyone.
And this is where European startups face the biggest challenge: presenting your company in a way that makes sense—the US way.
In the past 2 months I’ve listened to over 40 pitches from French, Belgian, British, and Eastern European companies. About 1 in 15 presented their company in a way that would stick. This is because Europeans tend to build their case in a highly academic way–stating the conditions under which their offering makes sense and building their argument from there.
American audiences, on the other hand, are used to seeing “the bottom line first” and they do things very fast by European standards. “They’re like cowboys,” a Belgian CEO told me. “First they shoot then they look.” This is a fundamental difference in how people present and perceive information. And it can mean the difference that gets you to that second meeting, someone writing about your startup, and even getting funding.
Key points to remember
Let’s go over a few key points that can help you present your company in a way that makes more sense here:
1. First impression is (almost) everything.
Americans know this very well. That’s why they work on their “elevator pitch.” You have 30-60 seconds to create an impression. Want to spruce it up even more? Have a 1-2 minute demo ready on your iPhone that plays while you speak. Think: Why are you different? What makes you stand out? How do you stick in someone’s mind? Why should an investor want to see you again? These are questions that should always be on your mind and guide what you say— all in 60 seconds or less.
2. Speak in benefits. Customer benefits, that is.
Europeans tend to be highly accomplished on the technology side. In the US, you also need to think about, and communicate, what your prospective customers will be able to do thanks to your technology. How will it address a true customer need? Why will a customer use it? Better yet—why will they pay for it? Every time you speak about a feature or capability of your technology, immediately follow with “and that means that customers will be able to…” (fill in the blank).
3. Start with the end first.
It may sound counter intuitive but business communication in the US is often non-linear and starts with the conclusion first. The people with whom you meet will want to know what your product does and how much money you expect to make from it. If that sticks, then you can go back and talk about how you got to the idea, how you developed it, all those other things it can be, etc.
4. Know your numbers.
In Silicon Valley numbers speak louder than anything else. They’re also important as a reality-check for you as technologies and competitors evolve. Don’t let anyone fool you–no one really knows what’s going to happen so it’s okay to make assessments—just make sure they’re intelligent ones. Be ready to talk about your 3-year profit-and-loss (P&L) model and about your Total Addressable Market (TAM) in clear terms.
The American idiom is “put a stake in the ground.” It’s when of all the many things your technology can be, you choose one (or two) things for now and go with them. This is a tough one, I know, because you want to show all the great things your idea can become. But where you see options, VCs see lack of direction. So let’s keep things in order: Decide on a focus for now, and put the framing, benefits, and numbers around that choice. You will later have plenty of time to develop your roadmap.
6. Investors are not your friends.
They are meeting with you because you might represent a good investing opportunity. As such, come prepared with all your materials and if possible, with a beautifully executed demo and present your case. If you need advice, ask your friends, other CEOs, or advisors if you have them. In fact, ask anyone–just not investors you’d like to work with. Once the term sheet has been completed and the deal signed, they’ll provide you with plenty of advice whether you want it or not. It’s their job.
7. Networking is key.
Many European CEOs think networking and mingling is “cocktail hour saved for those who don’t do real work.” But in the US—and especially in the Silicon Valley—this is an important catalyst to getting business done. You need to get out of your three-cubicle office which you’re sharing with four other companies and go to events. You need to tell other CEOs, bloggers, and investors about your product. You’ll get invaluable advice that will undoubtedly help you move forward, new connection points, and a perspective on the startup world within which you operate. This is just as important as making phone calls and taking meetings.
8. Keep it short.
Repeatedly I hear that CEOs talk about their companies for too long. Yes- you want to make sure people understand the breadth of your offering, but more talk doesn’t necessarily get you results. Lucas Grassi Gurfein, former International Product Manager for Yahoo!Inc. suggests bullet points often work best: Use them as talking points and keep your presentation short. More important than demonstrating the history of your idea is creating a stellar impression and a genuine curiosity in your listeners’ minds; you want them to come back and say “can we talk more?” Less, you see, is truly more.
9. Don’t be argumentative.
In most European countries, debating a topic is just part of daily conversations. To most Americans—unless they were on their college debate team—the practice of debate can be unnerving. You already know that Europeans can be perceived as uncomfortably direct here—add debating and you come across as argumentative and maybe even hostile, which is hardly what you meant.
Try to balance between presenting your rationale and listening to feedback. If you have a thought about the point being brought up, you can always start by acknowledging the feedback’s validity and then add how you’re thinking of addressing it.
10. Tap into the existing infrastructure.
There are a number of organizations and initiatives designed directly to help advance European companies in the US:
• Each country typically has a Chamber of Commerce in the Bay Area which puts together business-related events and can help you get connected much faster than you could do on your own.
• There are non-profit organizations like SVOD and VC backed events like the Dow Jones’ Venture Wire EuroTech Showcase that help promote European startups through connections to venture capital firms and journalists.
• A number of organizations sponsor conferences, competitions, and “boot-camps” for startups. GuideWire’s Innovate!Europe is one example—it focuses on identifying new and promising talent in Europe and helping them grow globally. Make sure you’re aware of these and attend at least a few each year.
As the CEO of a European startup you will need to overcome a number of obstacles. At the same time, the European tendency to take more calculated risks, base products on proprietary technology, and have demonstrated success abroad, can translate into leverage especially in these difficult times.
As venture capital firms increasingly diversify their portfolio with a greater reach abroad, you may in fact enjoy more opportunity than ever before. If your product is truly offering customers a way to do something new, something they want—if you help them make existing interactions less painful—you’re just as likely (if not more) to get a piece of that funding pie and more of those cavorted consumer eyes. The key is to communicate what you do and what’s unique about your startup’s offering in a way that matches how people perceive and respond to information in the US.