Every week several million viewers tune into the ABC show
Shark Tank.
And
every week hopeful entrepreneurs stand before a
panel of intimidating judges
and pitch their idea or business or product or service in the hopes that one of the
sharks will invest. Not only is it great entertainment, it sheds light (lots of lights,
in fact, a whole lighting crew’s worth of light) on the bridge-building challenge
entrepreneurs face.
Even in the made-for-television version, the struggle is real.
Dramatic music plays as we watch the hopeful entrepreneurs march down a
daunting hallway to face their fate: the opportunity of a lifetime or the end of a
dream.
The pitches often start the same. The entrepreneurs introduce themselves and
state the terms of the investment they seek. They briefly describe their product or
business and then, well, there are a couple of options.
An obvious choice is to talk math. Armed with the knowledge that investors
want to make money (and often nothing else), entrepreneurs seek ways to
convince investors that saying yes to this risk is a great idea. What better way to
persuade someone than with cold, hard facts? Logic is always the best policy.
Rely on numbers. Things like market size and conversion rates and ROI and
marginal cost. It’s reassuring for the entrepreneur and
sounds really official to
the decision makers.
I will stop there to say it’s important to have your numbers straight, but as
we learned in an earlier chapter, straight numbers are almost never enough.
What is the secret formula for getting a life-changing deal?
Telling a founder story seems to be at least a part of it.
In fact, in an analysis of season six of
Shark Tank
(smack-dab in the middle
of the show’s run), my team coded all 116 pitches based on our story criteria and
determined that 76.7 percent of the aired pitches told a story. Of those who did,
more received a deal than didn’t.
Perhaps part of the reason is, when it comes to a new product or idea, you’re
selling yourself as much as anything else.
Skeptic to Believer in One Story Flat
Although his pitch wasn’t broadcast on national television,
Brian Chesky and
Airbnb were swimming with their own sharks as they searched for someone to
grant them the funding they needed to launch what they suspected, what they
knew in their bones was an incredible company.
But no amount of math in the world was going to bridge the entrepreneur-
investor gap. There was an overwhelming
lack of confidence in the idea, and
investors just couldn’t see how it would all come together. With logic leading to
nothing but dead ends, the young company had no option but to turn to the
power of story to convince the investors they approached. The only person who
could tell that story was the founder. And the only story he had was himself.
Remember Jeff Jordan, the venture capitalist who was convinced Airbnb was
the worst idea he’d ever heard? He’ll stand by that claim but then add that after
hearing Chesky speak, he was sold.
5
When Jordan met with Chesky, he said, “I went
from complete skeptic to
complete believer in twenty-nine minutes.”
6
Why? Because Chesky is a
storyteller. “Every great founder can really tell a great story,” Jordan told
Business Insider.
“It’s one of the key things in a founder, that you can convince
people to believe.”
7
With one simple story, his founder story, Chesky demonstrated what Jordan
calls a founder/product fit. A story that illustrates the birth of an idea.
A story
that inherently says no other guy could have come across this idea at this time
and in this way.
As any
Shark Tank
fan will tell you, funding an idea is about more than the
idea itself. When it comes to making a bet on a company, investors are betting
on not just a figurative horse but a jockey. On someone with the passion to take
a company all the way to the top. Having and telling a founder story reassures
investors that the founder is genuine. It’s a story that generates faith beyond
numbers, answers questions without effort, and fills in any missing pieces of the
puzzle about where the founder has been, where the founder is going, and why
this founder is worth betting on.
Whether you’re in a Hollywood studio
making a pitch to celebrity
billionaires or in a Silicon Valley conference room, when you see the potential
investors’ eyes move from a stare to a laser-focused squint, it’s because they’re
having an unspoken conversation.
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