My grandmother, who passed away last year was an amazing story teller. I remember the hundreds of stories she would tell me as I grew up. She even wrote several books that were collections of children’s stories from around the world.

Why does this matter in pitching your company?

Because without story, you have nothing.

Think of your pitch as having a beginning, middle and an end. It should be a story of triumph filled with passion and vision. A story that tells the tale of belonging and battle.

Dont believe your pitch should have the same elements as the greatest stories ever told? Then you are missing out on the key ingredient to a powerful pitch, because a story will allow potential investors to relate to you and your company.

Couple of key points: This is not for your 30sec pitch (you can compress the story, but the truth is that a 30sec pitch is just problem + market + solution. – “Mismatched socks cause 5% of all employee firings. Socks.io allows people to ensure that their socks are matched correctly before they leave the house, eliminating the embarrassment and saving jobs.”)

Beginning

Why did you start this business? What about the problem compelled you to act? In the beginning, you need to set the stage. Explain the genesis of the idea and why you are passionate about it. (Notice I never said solution. That will come later.)

“I have two dogs at home, and they were truly difficult to train. I constantly wished I could have a trainer in the house with me when the dogs would bark at the door or do other things that were inappropriate. Clearly, I wasnt doing a great job of training them. After doing a little research, I found that the pet market is more than $41 billion in size, and even so, there was no great in-house training solution. So rather than give the dogs away, I built PetTrainer.ly.”

Analysis: The connection point is around training dogs.  Everyone with a dog had to 1) train them; and 2) can’t understand why their dog does XXX everyday. The difficulty with this pitch is if the investor isnt an “animal person” you may find that you have immediately turned them off. Hence the importance of research into whom you want to pitch.

Middle

This is the meat. This is the section where you tell the story about the market size, the opportunity. The business itself, and your secret sauce. How are you going to change the world? What is the benefit of having this investor?

Spend the most time in the middle of the story, and allow for the most questions during this time.

“Most people dont realize how important it is to be able to zombify your parents. With the rising cost of health care, its less of a burden to have a zombie mom and dad versus parents that continue to burden their children. With the market standing at $50billion dollars, our ZombieParen.ts creates a unique delivery mechanism by putting Zombie Juice inside denture cream. Over the course of a few months, elder parents no longer desire food or need costly medicines.

We have also figured out how to deal with the brains problem. We have developed in conjunction with Zombie Juice, a wide range of synthetic brains, which really allows us to sell the razor cheaply and make our money on the blades.

To date, we have 10,000 Zombies in our system, buying on average 10 brains a month at $5 a brain. We are growing at a rate of 40% month over month, and with our upcoming Facebook and Android apps, we expect that number to double. We havent built an iOS app yet, given most iOS users have clearly lost their minds.”

Analysis: Zombie brains? Really? In this case the story is a big market and a business model based on reoccurring revenue. If you are talking to investors that dont shy away from physical products, and have been successful with the Gillette model, they now have enough information to ask solid questions and get a good feel for what the business could be, and how they could generate returns from the business. More importantly, it helps the investor understand how you are thinking about the business, and if they can trust you to steward the business.

The end

The end is the easiest part. Ask for what you want and why you want it, and then be quiet. Let the first question come from the investor. Let them absorb your pitch, your story and your ask, and then, let them respond.

“We need approximately $500,000 to fund about a year with 4 employees including myself. That will get us to the next milestone, which will be 50,000 cats herded on a monthly basis. At that point, we will probably have to raise a bit more money.”

And, thats it.

Step One was find the right people to tell the story to. Step Two is tell an interesting story. Step Three will start to cover the demo itself.

Next Post: Pitch Perfect – Demoing

Related articles

• Pitch Perfect – Pre-Pitch (learntoduck.com)
• The Art of Being a Dick (learntoduck.com)
• Perfecting Your Pitch (philpresents.wordpress.com)
• Open & Honest (startupcfo.ca)

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So I am starting to get pitched more and more on this blog. Nokia wants me to go to Helsinki, ad networks want me to join them. Basically, I am where it is at.

But, please for the love of all that is holy, be smart when you pitch me.

Here is an example of contextual advertisement (and a pitch) going wrong:

Um, well, yeah. Thinking I will pass.

Startups are based in faith, and the ones that succeed have no fear.

This morning, I read three separate lists of the rules of successful startups. I contemplated creating my own list, but among those 30 items, there are definitely some gems, so I kept reading. Fred Wilson linked to an article about Rick Rubin. The quote in the article that really got my juices flowing was:

To the right of Barnett’s large desk, above the framed Johnny Cash portrait, is a sign that reads, “Your Faith Needs to Be Greater Than Your Fear.” “I have always believed that,” Barnett told me in mid-August, “but it seems particularly relevant at the moment.”

At this moment in the startup world, this seems as relevant as it does in the music business. There are hundreds of startups showing up daily. Most are “Web 2.0″ or “social networks” or “the new new…”

With the success of a few like Photobucket, Fotolog, FeedBurner, there is much talk about a Bubble 2.0. And certainly, as it seems to happen in every industry, there will be a few winners and a ton of losers.

So, what does it take to be a winner? More than anything the startups that I have been around that have been successful have all shared the same thing. Faith that far outstripped their fear.

The first startup I worked for was Kozmo.com. We raised more than $250 million dollars in financing, with $60 million coming from Amazon. It was started in 1998, and I joined the company in late 1999 as the marketing manager in San Diego. I was hired to develop local business relationships and drive local marketing. By mid 2000, the company was dying, and I bailed out and moved to MyPersonal.com (now Synacor after a merger) in the SF Bay Area. Talk about walking into a town just to watch everyone leave…FuckedCompany was the most read website (mostly to see if your company appeared on it.)

MyPersonal raised around $6 million, and by the end of 2001 was dying and so merged with another company that was stumbling in the dot com bust. Like two drunks stumbling out of a bar, MyPersonal and Chek became a marriage of convenience/necessity and became Synacor. (True story, when the merger was happening, there was a three day meeting about the new name, among the discarded names was Current Wisdom, which I bought the next day, and used as a consultant and later as my search engine marketing company.)

After MyPersonal, I consulted with a few startups, and after making the move to Colorado joined ServiceMagic. ServiceMagic raised around $35 million (Including Tango and Mobius Ventures, where I met Seth Levine organizing a search marketing conference for portfolio companies), and was acquired in September 2004 by InterActive Corp for an undisclosed amount (guessing it was around a couple hundred million.)

At ServiceMagic, I was responsible for the early development of their search engine marketing strategy, which has certainly served them well. I left ServiceMagic in mid 2004 to start Current Wisdom, a full service search engine marketing company, which I sold to the Indigio Group in early 2007, making the missing out on the ServiceMagic acquisition a bit easier to swallow.

Since then, I have advised several startups in multiple stages, and have begun to make small angel type investments in early stage companies trying to get a clear understanding of the difference between startup success and failure.

It was the quote from the Rick Rubin article that finally brought it all together for me. Looking at each of the startups that I have worked with for a period of time:

Kozmo

Faith: There was definitely a faith that no one could do what we did better. Joe Park was looked at as a someone who could take Kozmo to the promised land.

Fear: From the beginning, Kozmo feared everyone. First there was UrbanFetch, which was seen a serious competitor. For those that know the story, the rumor was that UrbanFetch was started by a couple of hedge fund guys that Joe pitched Kozmo, and launched as a high end competitor. Every marketing decision was based in the fear that someone would beat us to the punch; that if we didnt pay Starbucks $150 million to put drop boxes in their stores, we would lose. Once the market began to dip and layoffs started, everyone became fearful of their jobs. In the end, Kozmo was killed by a fear of being copied and done better, the faith in the idea had died.

MyPersonal

Faith: When I joined MyPersonal I knew it had a difficult road to climb. They were basically offering a MyYahoo experience for Colleges and University for Free. My faith was, and still is, in the MyPersonal management team (they have since left the company).

Fear: We feared everyone. zUniversity was a major competitor, there were university sports sites, the Internet Association Corporation and some of the alumni directories, such as Harris Publishing.

The interesting with the fear factor at MyPersonal, the employees began to not care about whether the company “made it” or not. In fact, we still busted our asses, just with a sense of impending doom, and given the market conditions, the longer we could hold onto our jobs the better. In the fourth round of layoffs, I was cut after being asked to sell a previously free product to our clients. Needless to say, it was not easy or very successful. No MyPersonal people are left, and the Emeryville office has been closed for quite awhile.

In a strange turn of events, Synacor recently filed for an IPO.

ServiceMagic

Faith: The was the first time that I saw faith overcome fear. We had faith in our management team. Co-CEOs, Michael Beaudion and Rodney Rice are two of the most intelligent, savvy, ruthless driven people I have ever met. Founded in 1998, I joined in 2002, after ServiceMagic had weathered the dot com storm. The feeling among those that were still there, that the experience made them stronger, more resolute and laser sighted on the future. When I was there, we launched real estate and lending lead generation services, and a few months after I left, the sale to IAC was complete. There was never a doubt that a liquidity event would occur.

Even, when I put on the day long seminar for Mobius portfolio companies, ServiceMagic was looked at as a clear winner. We had become the beast everyone feared.

Fear: The fear that had crippled both Kozmo and MyPersonal did not exist at ServiceMagic. The only real fear I felt was a clear understanding that as soon as I stopped showing value, I would be fired. For me, it was the best kind of fear to have. For many others, it was seen as draconian.

Here’s an example. When I started at ServiceMagic, there was a sales rep class of thirty every week. I would do part of the training every Thursday. For eight potential sales reps.

It has changed drastically since then, but the concept of value hasnt.

The startups that I speak to now have a mixture of faith and fear. Since many are early in their life cycle, fear dominates. The couple that have really impressed me have ultimate faith in themselves and their idea. They are easy to spot. There is little talk of their competitors; they dont talk about creating a market, or operating in a niche; they are the first or second comment on TechCrunch when they or a competitor are mentioned.

Mostly, they are calm and operate as if there is urgency without emergency. These are the hallmarks of a successful startup, where their faith is greater than their fear.