Contents in bullet points
Tools to describe and validate business ideas
Introduction to the Module
In This module you will learn how crucial it is to communicate in a short time your business idea and vision, and how you can simply validate it.
In the first unit you will learn what a pitch is, why it is so important for your business to have a strong High Concept Pitch and how to build a good one.
In the second unit it will be presented to you a tool, the Javelin Experiment Board, to validate ideas through experimentation.
1. First Unite: Pitch your startup
Pitch strategies matter. Entrepreneurs know that well. Do you? New entrepreneurs should be always prepared to pitch their ideas. You never know when an opportunity will emerge. To be more prepared, craft your pitches in advance, memorize them and be ready to put them into action when the right time comes.
Pitching is not simple at all. It has to show your business footprint, your vision and, if the situation makes it possible, the links between your startup business goals, organizational units, business functions and services and the degree to which it supports and contributes to make your business strategy feasible.
1.1 How to pitch?
The way you pitch investors, clients or other business partners depends, of course, on the specific situation. But which kind of pitches do you have to be prepared to present?
In your communication luggage you must always have prepared at least three different pitching plans. You never know when the right occasion will happen to you, nor how much time you have to convince people about the goodness of your idea and the strangeness of your business.
At least there are three pitches you must consider: the elevator pitch, the two/three sentence pitch, the high concept pitch.
A. The Elevator Pitch. The name says everything about it. It is a short description of an idea, product or company; it explains the concept in such a way that any listener can understand it in a short period of time. The time you can share with someone else waiting for the elevator and then taking it together from ground to, let say, the 9th floor of a building. This description - not necessarily a speech, but also a snapshot or a short video - typically explains who the thing is for, what it does, why it is needed, and how it will get done. An elevator pitch does not have to include all of these components, but it usually does at least explain what the idea, product, company, or person is and their value.
B. Two/Three Sentence Pitch. Well, also the second kind of pitch is self explanatory. This pitch must look as a spontaneous answer, but is far to really be so. You must be prepared to explain in the first sentence what you do: a full, yet brief summary of what your company does or provides. Then, in a second sentence you must set what you want to achieve and why you, your products and your services are different - and better - from your competitors. You need to communicate the unique value you bring to the world in just one sentence. Please donâ€™t make the mistake of being generic with this next sentence. If you are using the two sentence pitch, you want the other person to remember you and (if you do it right) make them wonder if they need what you do.
Anyway yes, you know how to count: this is a two sentence pitch. If you want to make it three, you can start with a hook sentence: the hook provides your audience information they can instantly understand, relate to, and create mental associations with. Itâ€™s crucial that the listener can quickly process your hook, otherwise instead of listening to your second sentence (the most valuable sentence) theyâ€™re distracted by trying to understand the first one.
The two/three sentence pitch can be used also as a start point for an elevator pitch: when youâ€™re crafting your elevator pitch, use this two/three sentences as the premise of your pitch, and if your elevator trip is longer than expected, letâ€™s continue your speech with a forth, fifth sixth sentenceâ€¦
C. The High Concept Pitch. The last tool you need (but not least) is a high concept pitch. The high concept pitch is the perfect tool for consumers and fans who are spreading the word about your company. It is a single sentence that distills your companyâ€™s vision. In other words, itâ€™s like a super-condensed elevator pitch.
Hollywood has used and perfected the art of the high concept pitch advertising its movies, but other simple examples of high concept pitch can be Dogster, that promotes itself as â€śFriendster for dogsâ€ť, and Bookswim describing itself as â€śNetflix for books.â€ť
1.2 Why are high concept pitches so critical?
Maybe you think that just one sentence canâ€™t really say anything interesting about your business. But underestimating the importance of a high concept pitch can be very risky. If you want to be remembered, your high concept pitch must be really effective!
First, high concept allows others (consumers, investors and the media) to instantly understand what your company does, investors use the pitch when they tell their partners about your company, and the press uses the pitch when they cover your company (which also allows their readers to quickly understand who you are and what you do).
Secondly, a high concept pitch offers some proof to potential investors that the business model makes sense. For example, an investor might think, â€śwell Friendster has been quite successful; so applying that same model to dogs also makes intuitive sense and should be successful.â€ť
Summarising: Building an effective high pitch concept is something of the paramount importance, especially for startups!
1.3 How to build an effective High Concept Pitch
â€śSummarize the companyâ€™s business on the back of a business cardâ€ť. This must be an effective High Concept Pitch according to SEQUOIA CAPITAL.
The High Concept Pitch must be able to concentrate just in one or two short sentences the problem and the solution you propose. Bad pitches go on and on about the product but if you can come up with a high concept idea, you increase your chances of success.
So here you are with some tips and tricks to write an HCP:
a. the pitch should be brief: one to two sentences; anything longer risks losing interest and impact.
b. HCP is an idea that appeals to the masses, original and ingenious; itâ€™s something listening to you think: â€śWhy didnâ€™t I think about it before?â€ť; itâ€™s something you need to make your idea easy to catalog. A good concept should be both unique and universal; whether you find a new idea, or whether it is an already known idea to which you give an original twist, what matters is that it is unique and universal, and everyone can relate to it.
c. the people should be able to understand whatâ€™s the problem youâ€™ll solve: to be brief and concise you can combine the building blocks by using analogy, synthesis, juxtaposition, combination, whatever.
d. the people must understand as you can solve their problem: you can use analogy, references; link your idea to business and formulas that most people are familiar with: the HCP must have mass commercial appeal.
e. exercise yourself with role-playing: put yourself in the shoes of your demanding customers or busy investor.
f. crowdsource: head to the field your pitching asking your friend and family.
g. Keep brainstorming until something clicks and you think: â€śWhy donâ€™t before?â€ť
Eventually, letâ€™s have a look at some examples, from business and from Hollywood, that can help you to put into practice these â€śrulesâ€ť.
Dogster: â€śFriendster for dogsâ€ť
Cisco: â€śWe network networksâ€ť
Sequoia: â€śThe entrepreneurs behind the entrepreneursâ€ť
Backdraft: â€śTop Gun in a firehouseâ€ť
Liar Liar: â€śa lawyer is forced to tell the truth for 24 hoursâ€ť
Hook: â€śwhat if Peter Pan grew up?â€ť
2. Second Unit: The Javelin Board
The Javelin Experiment Board is a concept developed by the Lean Startup approach. It is a tool to validate ideas through experimentation. It is easy to understand, gets you started quickly, it is fun, engaging and helps you to focus failures fast to succeed faster.
2.1 Purpose and functioning of the Javelin Board
The purpose of the Javelin Board for a startup is:
- customer Discovery (customer identification);
- define the problem-solution-fit;
- validation of the idea;
- optimal definition of the strategy.
It is a visual board that helps you turn your ideas into experiments by:
Defining hypothesis: Customer, Problem and Solution;
Identifying the riskiest assumptions to test: ones critical to the viability of the business and least amount of data available;
Define experimentation methods and success criteria (i.e. Interview, Pre-sell, Concierge);
Get out of the building and collect data;
Analyse results and learn: Focus on key learnings that will drive your next experiment
Take decision to pivot or persevere:
â€˘ Pivot, if results do not meet success criteria: change customer or problem hypothesis
â€˘ Persevere, if your results met or exceeded success criteria: brainstorm more risky assumptions and define more experiments
As a process board, the Javelin Board is a visual representation of your testing plan. By being able to visualize your current and future steps, you can make decisions regarding your productâ€™s or serviceâ€™s path faster.
The Javelin board is formed vertically by 2 parts: the left side and the right side. Remember to start on the left hand side (Brainstorming Area). Once you have your template, you can get it printed out or use it online.
The process that the Javelin Board follows boils down to three basic areas.
2.2 Left side: Brainstorming Area
The left part of the Javelin Board is that of brainstorming, in which all the various hypotheses to be tested can be listed through the post-its.
Hypothesis are broken down in three types:
Customer: Start with listing customer segments;
Focus first on understanding & validating customer and problem before going into solution because:
Every customer has a problem;
Every problem has a solution;
Not every solution has a problem;
Not every problem has a customer.
Summarized you need to define following:
Who is your customer? Be as specific as possible.
What is the problem? Phrase it from your customerâ€™s perspective.
Define the solution only after you have validated a problem worth solving.
List the assumptions that have to be true, for the hypothesis to be true.
2.3 Right side: Execute Area
The right part of the Javelin Board is the part of the execution, where the experiments will be carried out. Experiments are created by combining in various ways the hypotheses made in the previous point.
In this section we find:
Method & Success Criterion.
In this part of the graphic table, all the necessary tests are carried out to verify the theses made for each of the points analysed (client, problem, solution, riskier assumptions).
In the last line of the "success methods and criteria" scheme, the KPI (key performance indicators) must be established and monitored. These indicators are useful to verify if the initial hypotheses can be validated or not.
Examples of KPI can be: number of visitors to your website, conversion rate achieved, average numerical value of orders, etc.
2.4 Underside: Get out of the Building
The "Get out of the building" is located at the bottom and is the end piece of the table where the data that can be obtained by putting into practice with the tests carried out must be inserted.
This phase takes place by collecting and interpreting the data.The two points that make up this last phase of the Javelin Board are:
Result and Decision. It is necessary to establish whether the hypotheses can be validated or not according to the established criteria and methods;
Learning. Here we must propose the conclusions of the whole hypothesis and test process for each of the points. Remember that the goal to be successful is to respond to a real market need.