What separates a good pitch from a great pitch?
We look for energy, and that’s really important and one of the biggest problems, because that’s the difference between good and great. Somebody can give a solid pitch with great data — but without passion, I don’t see someone who’s going to be able to fundraise, who’s going to be able to inspire a team, and be able to communicate the value and the excellence of a product. That comes from founders that have that energy and that passion, commitment, and confidence. Sheer determination. When you look at a founder you look at two things: are they unstoppable, and are they curious?
What tips you off to that when you’re listening to the first pitch?
Within five seconds, someone comes in the room, they look you in the eye, they shake your hand, and you know they’re game. Or, they look down at the floor, they mumble their words, they lack confidence, they’re scared. You can be scared, but have confidence. Because the best pitches, they’ve been people who have come in, been nervous, started a pitch, and then had to say: “Can I start again?” Be a Weeble. You wobble, but don’t fall down for long.
After you look at the entrepreneur, what do you look for in an early-stage company?
I look for a product that is a product — not a function. A lot of companies feel like they have a product, but it’s actually a function of another existing company. It has to be a stand-alone. It’s also a must to know the competitive landscape. I never want to hear “we’re the only ones doing that” because that’s not possible. So, how are you better? How do you compliment where others would leave off? What is your differentiator? And the big question, at the very beginning, is the “why.” Why are you emotionally connected to the product? That should be the opening of a pitch. And then, why should a consumer be connected to a product? What’s your story and what’s the product’s story? In early-stage companies, we are really investing in the people, not the product. The product will evolve and often completely pivot. We need to invest in the smarts and determination that will navigate all waters for the next three to five years, at least.
What’s your advice for student entrepreneurs?
Students need experience. It’s not enough to hop out of bed one morning and say: “Time to start a company!” The number one thing you need to do is reach out to companies that you like, maybe in your neighborhood, or go online and offer your skills and expertise to help a startup build their company. I think, in the end, it’s really the experience, when people roll up their sleeves and get dirty in a company, that make them stellar entrepreneurs. Do they have operations experience, marketing experience, tech experience? Have they volunteered at nonprofits? “Do” first, then design.
Experience over classes — is that something that you would say has always been the case?
Yes, experience over classes for sure. I realize it’s a very Silicon Valley perspective, but I sit on the Innovation and Entrepreneurial Board for Fuqua [School of Business] at Duke, and I say the same thing to all of them. I say, I love the fact that you’re working on projects but that doesn’t necessity make them businesses. So, while you work on the project, look at the startup. Go reach out to some of the other Wharton alums. Find out what everybody is building in school and work on a number of efforts. If I were at Wharton, I’d be creating a site where you could list your skills and you could offer them to entrepreneurs in either the community, philanthropy, or within the school.
You’re passionate about helping women and their professional development. How can we better invest in women’s potential and success?
First, we need more women investors. We need more women in the pipeline. We need more women to start investing even tiny bits of money. And that’s another way students can get involved. I always say to students, go to a startup and say “I’d like to invest a few dollars and/or I’d like to work for free for whatever amount.”
There’s two things I always say to women entrepreneurs. One, know your numbers. And two, never lose control in any business environment. Men — especially in tech, but men in business — see women as drama. They always think women are going to lose their mind, break down in a hissy fit, start crying if you’re too tough on them, become overly emotional. I hear it all the time. So women, if you are in a situation in which you feel that you are being treated unfairly or you’re just so angry or so hurt, maintain your composure. The moment a woman loses her control, she loses her power, and the man wins.
How can men help women succeed, and how can men help female-led companies to get off to the right start?
There are a number of ways. I think it’s important to be able to assess a product through women’s eyes. Women bring a multitude of skills which men don’t have. This needs to be recognized and appreciated. I also think men need to be better listeners. They don’t always have to solve a woman’s problem. When a woman approaches with an issue, men automatically try to solve it — men need to learn to teach, rather than to solve.
What’s the question that entrepreneurs are rarely prepared to answer, but should be?
“Have you failed?” is one and “What are your values?” is the other. One of the things we talk a lot about is investing in values, not just in valuation. That’s the mantra of our fund. In our company [ Structure Capital ], we teach and instill values into the culture at the very beginning — values such as: integrity, accountability, gratitude, transparency, and humility — and that’s a big problem. I think that founders need to know their values and be able to cite at least a couple of them in a pitch, and speak to how they will instill them into the foundation of the company from the very beginning. How they’re going to build their culture is critical. Values are the foundation for 21st century companies.
Why do you think these two questions are often overlooked?
Everyone is so laser-focused on building the product that they miss two things. They miss building the culture and how to build a brand narrative. If you can’t distill and communicate the value props of your company succinctly, then you’re not going to be able to sell the product; if you can’t say it, you can’t sell it. A lot of the time, I find that entrepreneurs don’t think about the marketing, the brand narrative, and the messaging early enough. That is a very big problem.
How does your own entrepreneurial background inform your decisions as an investor?
It’s provided me humility. I know what I don’t know. When you have built as many companies as I have and failed as I have in a number of ways both personally and professionally, you create a tremendous amount of self-awareness. A lot of the problems I find with entrepreneurs is that they don’t know what they don’t know and they won’t go find out because they haven’t failed enough and are too cocky. I want confidence, I don’t want cocky. If someone is confident, they know they can rely on their own decisions and they also have the confidence to be aware that they need others to provide them intel. They don’t have to bully their answers into a boardroom; they can actually be open enough to realize that they need more help to get to a solution. Humility is a quiet ego, and being self-aware is a superpower.
— Mike Kaiser, Elis Pill, Gloria Yuen