Entrepreneurs live and die by the quality of their elevator pitch. You’ve probably already experienced this fact personally as you’ve watched the reaction from people who’ve heard your business idea.
The concept of the elevator pitch is borne from the idea that if you met an investor on an elevator and only had 30 seconds to pitch your business, what would it sound like? In fact, 30 seconds is about as much attention as you are going to get from an investor to begin with, so thinking in that time frame makes a lot of sense.
The formula for the perfect elevator pitch involves three ingredients – the problem, the solution, and the market size.
Every great company starts by solving an important problem. The more accurately you articulate the problem, the more valuable the solution will be.
Think about how NetFlix.com solved the problem of having to go to the video store in order to rent a movie. No one enjoyed having to travel back and forth to the video store for a rental, nor did they appreciate paying late fees.
NetFlix solved the problem of never having to visit a video store to rent a movie and never having to pay late fees again. It was a real problem that everyone could identify with (much to the chagrin of the once-almighty Blockbuster).
With only the problem in hand, our elevator pitch would start like this:
"Going to the video store is a pain. People don't like traveling back and forth just to rent a movie and they hate paying late fees even more."
What's important about this explanation of the problem is that everyone can relate to the problem. The more relatable the problem, the more likely you are to get someone's attention. Think about ways to modify your “problem” so that anyone you meet can easily understand it. It’s more important that the problem is relatable than complicated.
Now let's find a solution.
Once you've articulated the problem your next step is to think about how your solution fixes that problem beautifully.
Sticking with our NetFlix example, here’s how we might articulate our solution:
"NetFlix provides customers with a huge selection of movies that they can order right to their doorstep and never have to pay a single late fee for."
Notice how the solution ties directly back to the pain points of the problem, namely the fact that you don't have to leave your house and you don't have to pay late fees. A good solution is a direct reflection of the problem.
As a side note, a solution with no problem preceding it is a lot less valuable. Take a second look at the solution for NetFlix above without the problem before it, and think about how much less exciting that solution is without understanding the problem that it solves. This is particularly important when describing business concepts that people don’t readily relate to.
The Market Size
Solving the problem beautifully is nice and all, but if the market size of the problem isn't big enough, you're not likely get investors very excited.
The market size explains just how big and widespread the market is, which implies how big of a company you can build by solving that problem. Investors want to know you're solving a painful problem in a giant market. If you can combine those two factors, you'll generate a lot more interest.
Watch what happens when we reduce the size of NetFlix's market size by just adding a few words to the problem:
"Going to the video store to rent the movie Fletch is a pain. People don't like traveling back and forth just to rent Fletch and they hate paying late fees even more."
We haven't even explained the solution yet and already you're probably thinking "How big of a business could you build on helping people rent Fletch? I mean hey, it's a good movie, and probably a seminal work by Chevy Chase, but c'mon!"
Now let's try that again, only this time we'll use a real market size:
"For over 50 million Americans, going to the video store is a pain. People don't like traveling back and forth just to rent a movie and they hate paying late fees even more."
Notice how with just a small modification we gave you a real good indication of how big this problem really is. 50 million Americans represent a lot of dollars spent. Even if you don't entirely understand the problem, you can certainly understand that 50 million people probably add up to a pretty big market opportunity.
Picking the right market size is about identifying a portion of the market that is likely to buy your product. It's not everyone that's ever seen a movie, it's everyone that is currently renting movies. Maybe it's less than that if some percentage of those consumers don't use the Internet.
You don't need to have the world's largest market, but be mindful of going after a market that is obviously too small (like the people renting Fletch) for fear of turning people away before they even have the opportunity to hear you out.
Put it Together, then Pare it Down
Now we've got a nice understanding of the problem, solution and market size. The next step is to distill that explanation down to an easy-to-remember bite-sized sound bite that still covers all the bases.
Let's try a shorter version:
"NetFlix helps over 50 million Americans avoid driving to the video store by delivering movies directly to their doorstep without ever paying late fees."
In one sentence we've tackled the market size, problem, and solution in a way people can easily remember. Most importantly, in a way you can remember when you're explaining what you do a million times over.
In many cases, you'll be lucky if you get just enough time to get this one message across, so refining the message is key. Don't worry about getting it right the first time. Pitch it a few times to strangers, get some reactions and modify. It takes some practice.
The Tag Line
Distilling the Elevator Pitch down to one sentence isn't always enough. You'll often need something that's just a few words in order to arm others with an easy explanation of your company.
You'll personally remember that 50 million Americans have a movie rental problem and that you help people avoid late fees. No one else will. Investors won't remember more than the general concept. Your advisors who mention you at cocktail parties won't be able to recite your beautiful pitch. You need a tag line.
The tag line is an explanation of what you do without the details. It's how people reference you before getting into the pitch. It's how you probably remember most of the products you use today.
Here's a Tag Line for Netflix:
"Mail Order DVD Rentals"
Notice how simple that is? That's the point. In just four words it explains what NetFlix does, without going into the details of the problem it solves or how big that problem may be.
Take some time and really refine your tag line. Put it on your website, your business card, and all of your collateral items. You're building a brand after all, and your tag line is what makes that brand memorable.
Your elevator pitch may be one of the single most important tools you use to communicate your brilliant idea to the world. Most great pitches you hear, like famous advertising slogans, are the result of countless hours spent refining, gathering input and refining some more.
The key to getting it right is to test it often. Give the pitch to anyone who will listen. The changes you’ll need to make will quickly become obvious when you keep getting asked the same questions.
A well-rehearsed and smooth pitch will open all kinds of doors for you. It’s well worth the investment.