Review of the live pitch to Mark Suster

Venture capitalist Mark Suster has a blog with a large following, and is also active in producing video about venture funding and startups. A few days ago he hosted a live startup pitch for funding on his show. As I said before, I am a big fan of making (at least part of) the fund raising process more public. The 53 minute video is embedded below, I watched it and give some of my thoughts.

I have great respect for these entrepreneurs to be vulnerable and go with their pitch on video, and they were probably a lot more nervous than when sitting a conference room without a camera. I have made the comments below a bit sharper on purpose, in the hope that other people pitching for VC money can learn from them. In part I am helped by my Dutch/Israeli cultural environment where people use a slightly more direct style than in the US.

Look how Mark is forming an opinion about the business right in the first seconds. What is it that we talking about? Many investor presentation deck hold off the answer for too long.

The opening sentence full of buzz words gets cut short. Mark starts paraphrasing “Right, so you are a sort of eBay/Etsy widget for blogs”. It is indeed a better way of saying things, but hidden in this comment, Mark is already hinting at his major concern about the business. The presenters could have come out with a snappy/high-energy “OK, that you call it like that for now, but we have something amazing under the hood that makes us stand out in the middle of all these eCommerce giants, advertisers, and affiliate programs.”

Next thing, see how Mark is zooming in on the team. He asks them a very open question (tell me about your background) that gives his intuition time to size up these people, Mark just observes them more than he is listening. His attention for detail comes back when he asks questions about years. Are there holes in the CVs, are these people that have a success track record (or successful failures).

Mark wants to know how solid the team relationship is. The entrepreneurs could have read on his blog that Mark does not believe in startup competitions (people have not enough time to get to know each other before deciding to spend then ext 5 years of their life together. In the end Sahney responds to the challenge and says “Look, 5 weeks is not a weekend, and I know what I am doing”. Exactly the response Mark wanted. One more thing on team, listen how he probes whether there is no hard feelings about the decision who is CEO (Mark is listening and looking people in the eye).

Here Mark admits that he has already made up his mind. This is where pitchers need to stand on their feet. Guessing the major concerns and adjust the pitch to iron out the weak spots. It is hard to do I admit, to go off script.

Then comes the product demo, and it is only here that the big idea of the business comes out: the eCommerce engine is filled by the community of the blog itself. This should have been linked straight to the widget comment that Mark made upfront. Mark himself is actually drawing out a lot of the arguments for the business, clarifying points that the entrepreneurs make in more woolly language (everyone takes about community, engagement, when talking about social media and blogs).

My feel is that the first vertical segment that the team choose: mom bloggers does not resonate well with VCs like Mark. Just a personal style thing. You could strengthen how this technology could also be applied in less feminine content segments. (Mark himself starts talking about cameras, electronics).

Know the details. Mark probes with detailed questions about CPMs whether the team understand the fundamental business drivers of the business they are operating in.

The team interprets some of the business suggestions Mark makes as criticism. How you could help small bloggers with interpreting their visitor data. Mark is testing how these people would be to work with. Do they respond to ideas? Can they build on input? Can they admit that they are wrong? Sometimes, when Mark asks a question, the entrepreneur repeats part of an answer he has given before. You can see Mark getting a bit restless, and cutting over to another question. Sometimes it is better to admit that you do not know, or Mark had a great idea.

So, stepping back. I think the biggest lesson from this is to anticipate the big concerns that a VC will have with you, more or less admit some of these weaknesses, but have a story about you go about fighting against the odds. Part of that is technology and your business. But part of that is energy, will power, and enthusiasm that needs to jump across from the other end of the table. And maybe because of the uncomfortable video setting of this interview, that spark did not fully light up here.

As a feedback to Mark, do more of these video pitches, but find a format to make them shorter and punchier, that will make it more interesting for the video audience to watch, but increase the quality of the pitches and the interaction as well I think. I would not mind if Mark would be a bit less polite and a bit more direct. Still nice, but make it a real business discussion. Who knows, maybe one day Mark will host The Apprentice or American Idols for aspiring entrepreneurs...