Pitching ideas

February 15, 2008

Pitching your ideas to investors is exciting. You have a few minutes to share your ideas, prototype or product. Your goal is to get them to want to know more about yourself and your story, and to convince them that both your people and ideas are worth investing in.

Assuming that you have a good team, presenting people is the easiest part. Pitching ideas, on the other hand, is much more difficult.

After presenting our latest and greatest adventure in technology to a couple of VCs, I can openly say that we did not succeed in pitching the idea. On one side, I hear excited customers telling me every single day how much more fun their job is, how much time and money I save them, and how they just could never go back to their previous ways of working. On the other side, I don’t hear much from these groups of investors. Bad sign!

Trying to come up with a model to describe the situation, I bumped into an article by Bill Buxton. In his article, Bill Buxton introduces a law that he calls Gradual Granularity Refinement Law. This law states that the granularity at which we distinguish meaningful differences gets finer the more our familiarity with a subject grows.

The GGR Law is about familiarity with a subject. If you are pitching an idea, and you have both a gut feeling plus feedback telling you that the idea is good, it probably is. If you managed to come up with a clever product or idea, it’s because you have enough familiarity with the problem to model things in a different way. You probably felt the pain and were brave enough to do something about it.

The GGR Law is also about granularity. Different groups of people may have felt the pain. But the more familiar you are with the problem, the easiest it is for you to distinguish meaningful differences, and therefore come up with clever solutions.

What does this really mean? You are familiar with a problem space, you have felt the pain, you have a good idea, and developed a good solution. You are making some money out of it, and you have a great team. Now you find yourself in a conference room pitching your idea to investors. How can it go wrong?

Unless you apply the same level of innovation and creativity to your pitch as you did to your problem solving, your story will just not be interesting enough for the people across the table. Why? Because it’s unlikely that they are as familiar with the problem space as you are. Your explanations may be good, and they may understand the concept at an intellectual level, but unless they understand it at a visceral level, they will just not want to know more about your idea.

I have an appointment with a very interesting group of investors in a couple of days. This particular group seems to be quite familiar with the problem space, unlike the previous ones. Plus, I now know what to do, so it should be fun.

Wish me luck! 😉