Thursday, April 24, 2008

Describe your business in 7 words (or less)

UPDATED: Wed 5/7/08 2 PM PT

The scenario I like to give entrepreneurs is
a) You are stuck in elevator with Bill Gates or Melinda Gates, who's in a conversation.
b) Can you give Bill/Melinda your business card with "7 words" on the back, and attract their attention?

What will make Bill/Melinda?
1) Ask you for a 15-sec pitch
2) Then ask you for a 60-sec description
3) ...and for a few minutes off the elevator
4) ...and lunch the next week

Your chances of getting LOTS of FREE ADVICE from people who charge $1,000+/hr....is much better when they don't feel like they have to "do work" in order to help you; e.g.

[in 5 seconds] "My idea is X. Can you help connect me with Person-Y and Organization-Z? No, sorry to bother you."

Practice this 5 second approach at networking events.

---------------------------------------------
*** MULTIPLE SETS of 7 WORDS ***
---------------------------------------------

The "7 words" may depend on who you're pitching -
Stakeholders, Stockholders, Customers, VCs, Funders, Tech, Media, Bloggers, Possible employees, Possible Business Associates, Family, Public

It's a combination of marketing & technology showing insight into your products & insight into your audience (Customers, Possible Employees, etc...)

In the new Twitter world, pitch your stuff in 140 chars (including someone's Twitter address and some other words), so concise marketing is key.

For techies, perhaps a 15-sec YouTube!

---------------------------------------------------------
*** Faster Top-down approach to Business Plans: ***
---------------------------------------------------------

1) 7-words
2) Executive Summary - 1 paragraph
3) 1-Page with Marketing Plan, Tech Overview, Financials, Market Analysis, and anything important.

Oh yeah. I'm going to read the 1 page in 5-10 seconds. Good visual layout. Both your strengths and your WEAKNESSES (I want to know if I and my network are a good fit for your problems...)

...then you can use the traditional 2-10-100+ page business plans. A traditional business plan helps me see that an amateur businessperson can cover the bases. What impresses more is someone who can distill the important DISTINGUISHING features into 1 or 2 pages. If that's present, business plans always change.

Inc 500's study showed that businesses who stick to their business plans actually fail at a FASTER rate!

This exercise is not mine. It's a personal variation of one I learned when first working in Venture Capital in the 1990s.

When you're pitching me (or any VC or possible advisor/mentor), don't make me feel like I'm going to the dentist.

Ideally, I'd like to be very relaxed, and truly interested in what you're saying.

If you've lost me after 15 seconds, it's going to be tough to hear a convoluted 15-min idea.

P.S. It can take months & years to get the 7 words...so don't get discouraged!

- Mitchell Tsai (Harvard '86) - CEO, Spiritual Business Companions : FriendFeed, LinkedIn, Facebook

2 comments:

russell.thomas said...

Yes, the "7 words" is the idea end result. I wonder if you could post a blog entry on how to get there, given that most entrepreneurs start with a murky notion of their business idea.

For example, I've heard some suggest that you should go through many long drafts, and progressively cut down and summarize. Other people seem to iterate only with short phrases until something catches. Still others take existing business ideas/phrases and apply them in a new context. Finally, there is the "gift from above" where the phrase just appears one day.

What do you recommend?

Mitchell Tsai said...

Talking with others (especially knowledgable people, but even just a spouse).

Asking them what catches their ear. Even if you spend 2 min describing something, they will probably summarize in a few sentences.

Also, practice.

I often try out pitches at networking events. To see which ones catch people's attention. And which are "ho, hum".

I look for the "gotcha" ones, where people's eyes light up, and they badger me with questions.