10x Your Elevator Pitch With 4 Words
We’ve been thinking about elevator pitches all wrong. I can’t memorize your elevator pitch. Neither can anyone else.
Read More
We’ve been thinking about elevator pitches all wrong. I can’t memorize your elevator pitch. Neither can anyone else.
Read MoreWe’ve been thinking about elevator pitches all wrong.
I can’t memorize your elevator pitch. Neither can your mom, the other companies in the building, or your customers.
Yet we are all going to try to explain what you do!
We may even talk you up to friends and try to send business your way.
Your company elevator pitch is like a game of Telephone. You tell someone, they repeat it to the next person, and so on.
This repeats 10 times until you hear from a stranger that there’s an awesome new company that makes technology for purple ducks who drive space cars. And it’s your company!
So what happens?
It’s hard to remember and summarize a thing. Especially if you don’t spend all day, every day explaining it. Especially if there’s complexity, nuance, or fancy jargon words.
So here’s my challenge (a request really — help me easily share your company!) to all the elevator pitchers…
Can you explain your company in 4 words or less?
In case my Telephone game example didn’t resonate, here are 3 ways a short phrase pitch can help your business.
I probably say, “Do you know CompanyXYZ, they do <4 word phrase>?” 50 times per day.
Your mom says, “My child does <4 word phrase>,” 100 times per day.
If you don’t give us that 4 word phrase, we’re going to make up our own. (And it won’t be pretty!)
If someone asks what do you do, give them an “ah-ha” moment as quickly as possible.
A 3 minute explanation is weird, hard to follow, and comes across as sloppy at best, unintelligent at worst.
One sign of intelligence is communicating complex ideas in simple ways.
What would you rather have — someone’s eyes glazing over or a curious follow up question?
With a short overview phrase, your audience can quickly assess if they want to know more or want to move on to a different topic. If you “force” a long winded explanation, it’s a missed opportunity for connection.
The best 4 word pitches are a memorable, understandable overview phrase of what you do.
It will not be complete. It will feel WAY simplified to you as the founder (“we do so much more!”). But people will easily remember it and that’s important.
You’re striving for:
It can (and will) evolve over time.
Feel free to test out different variations to see when people have an “ah-ha” moment vs. blank stare.
It’s also a great thought exercise and forcing function.
Do you understand who you are and what you do? Are you focused or trying to be too broad?
Here’s the thing — if you can’t come up with a 4 word description (as the expert of the business), how is someone else going to?
How do you come up with a 4 word pitch?
Tune in next week, where we talk through 5 strategies for finding your 4 words and give examples of real life companies that crush it!
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What makes it easy for you to remember a company pitch or description? Have you found that shorter explanations work better or do you disagree??
Looking for your first investors but not sure where to start? Here’s 6 options that you may not be thinking of.
Read MoreLooking for your first investors but not sure where to start?
If you’re looking for traditional venture investment, I encourage you to:
This works well when you’re in B2B SaaS, you know the tech industry, and you were born (or learned!) to sell dreams.
But what if you’re not in tech, too early for most investors, new to the fundraising world, or your business isn’t sexy to traditional investors (e.g. smaller market, high inventory, tighter margins)??
(NOTE: Do not despair if your business isn’t “VC sexy”! Real life success stories below!)
Here’s the question I ask when someone is thinking about capital:
Who has money that cares about this problem???
(ALSO NOTE: If the answer is “no one,” find a new idea! 😂)
Let’s go through a few examples…
Do you have any high net worth customers that might want to invest in your business?
Current customers are fantastic investors because they:
An Atlanta-based founder with a brick-and-mortar consumer business (who was nervous about fundraising!) reached out to her customers. She learned that one of her customers was a professional investor. They filled the full $2M round.
Who will be your customer once your solution is in the world? Are they business owners or high net worth individuals? Could they be investors?
Future customers are fantastic investors because they:
A company in the food tech space had restaurant owners participate in their first round of fundraising. Even at relatively small amounts of investment ($5,000-$20,000), these restauranteurs were key to growth and learning. They were the first users of the product, a great proof point for traditional investors, and provided capital!
Are there any well-known individuals who have been directly impacted by the problem you’re tackling?
Examples:
A deep-tech startup in the cancer prevention space raised pre-seed funding from individuals directly impacted by cancer. These individuals were passionate about finding solutions with the means to support the work. They could write early checks that are too “risky” for traditional investors but essential to long term solutions.
With more support for entrepreneurship than ever before, there’s thousands of programs offering capital and resources.
When you ask, “Who has money that cares about this problem?,” the answer may be a nonprofit, an industry-specific accelerator, or an investment firm with a special mandate.
Examples:
An Atlanta-based fashion company went through Macy’s The Workshop and got a contract with Macy’s (along with great press coverage, connections, and a chance to win $100k in a pitch competition)!
Strategic investors and corporate venture teams aren’t usually the first check but they can be a great option to explore if they care about your problem.
Too early for a strategic investor?
Get all the deets from this first-hand account on successfully raising from strategic investors!
While they might not care about your problem, they care about YOU!
Who in your circle may want to support your entrepreneurial journey?
Examples:
A successful consumer products founder in the Southeast got her first check from her hometown congregation minister.
Another founder in the Southeast got her seed round from a local “Garden Club” of high net worth women who loved supporting a founder but had never been asked.
Creativity is an essential trait of entrepreneurship.
Use your creativity to think outside the box when it comes to fundraising, especially if it’s a challenging economic environment or you’re not in a “typical” VC market.
What other strategies have you used for early fundraising? What’s the best story you’ve heard about someone’s first check? Any other non-traditional sources of funding to share?
"Structured Procrastination" changed my life!
Read MoreHi, my name is Kathryn and I procrastinate.
Hopefully, right now, you’re thinking, No way. You deliver the O’Daily to my inbox every week on time.
But you also might be thinking, This does seem thrown together so that checks out. 😂😳
I used to hate my procrastination. I would be insanely jealous of my college friends who would be done with papers on TUESDAY for a Friday deadline. 🤯🤯🤯
I would sit down at my laptop on Tuesday night, committed to getting it done.
Four hours of Facebook later (it was still cool, okay?), I would head to bed with barely an outline.
Then I read this amazing essay by John Perry on “Structured Procrastination” that changed everything.
tl;dr — expect your procrastination. use it to your advantage.
But…you didn’t get #1 done?!?
No problem.
Schedule a meeting, tell someone you will have it by a certain date, hire a coach, make an accountability pod, sign up for a pitch competition, whatever will feel “real” and create pressure on your to-do list.
I am an Upholder/Obliger. So I *KNOW* that I keep my commitments to others. When something is important, I promise someone I will do it.
I use calendar blocks to help me visualize the actual time I have to complete a task or project. A Thursday deadline becomes urgent on Monday when I clearly see I’m booked with meetings on Tuesday and Wednesday.
You might be asking, but Kathryn, how could you train for Ironmans as a procrastinator???
Or maybe you’re thinking, how the hell can I build a big ass company — a 10 year endeavor — when I procrastinate??
Here’s what’s worked for me — set up systems that make it easy to do the right thing.
I didn’t think of Ironman training as “I’m going to do this really hard thing today and then repeat it every day until forever.”
I met my friends for a bike ride. I went to Masters Swim practice. I did what my coach wrote in the training plan.
A lot of it was “show up” and then let habit (and peer pressure!) carry you.
Same can be true for startups and company-building.
Here are common accountability mechanisms:
Some of these naturally occur, some will be cultivated as you grow, and some you may want to add intentionally today!
I’m such a sophisticated procrastinator that I keep a 3 item to-do list.
Let me explain.
I never put “clean the car” on my to-do list.
I know myself well enough to trust that I will suddenly, urgently need to vacuum the car 15 minutes before we leave for a road trip.
Don’t force that gnarly chore on a laid back family weekend.
Same with wiping down ceiling fans, cleaning out photos, updating old blog posts, and whatever other crappy task I *should* do but just can’t make myself at the moment.
All the anti-procrastinators right now:
But Kathryn — it feels so good to get your stuff done instead of having it hang over you!
Allow me to offer a different perspective.
I like the guilt.
When you read a blog when you *should* be replying to emails, it’s so much more indulgent and enjoyable!
I’m going to treat myself. I stole this time! How luxurious to read the O’Daily.
If I’m already at Inbox Zero, I tend to meander aimlessly around Slack or LinkedIn. No productive learning or stolen moments of fun.
LAME.
It reminds me of the meeting cancelation paradox:
Instead of guilt, embrace the joy of procrastinating!
Repeat after me:
”I work well to deadline.”
”I know I’ll get it done when it matters.”
”I love using my procrastination to be productive and have fun.”
”I don’t beat myself up for procrastinating, I revel in it!”
I spend a lot of time (practicing how to get better at) saying no:
Procrastination is a secret, subconscious way to say no.
You say no when you have to. Because you ran out of time to do only the most important things!
It’s also a great way to say no to perfectionism and yes to shipping!
You may want 20 hours to perfect your slide deck but if you only have 2 hours, you figure out a way.
It’s not perfect but it’s live in the world which is 100x more important than perfect, especially at startups!
So how the heck to I get my blog out every week?
STEP 1: I tell my wonderful readers that I will email them on Tues. They are counting on me!!! (My Obliger tendency believes this. Reality is irrelevant. 😂)
STEP 2: I schedule a calendar block and stick to it — no meeting creep!
STEP 3: **where the magic happens** I include time in my calendar block for Inbox Zero and other random productive tasks to make the most of my structured procrastination!
What tips or strategies do you use to avoid or leverage your procrastination??
Are your customers mad at you? Congratulations!!!!!! You have built something that people want and care about. Here's what to do with upset customers and why they're future champions!
Read MoreAre your customers mad at you?
Congratulations!!!!!!
You have built something that:
It’s the first step to product market fit!
“Quiet quitting” is the most dangerous activity possible to a company.
I’m not talking about employees (though that’s not good either).
I’m talking about customers who leave without telling you.
Customers “quiet quitting” means:
Why would this happen?
When you have your first upset customer, follow these 3 steps:
1. Totally stress out. It’s a normal, visceral reaction. If you care, you will immediately have some level of “OMG” panic even if it’s a split second.
2. Remind yourself it’s a good thing. Then you’ll think about this post and realize it’s a CELEBRATORY EVENT!
Someone really cares about this product and the problem we’re trying to solve!
3. Respond to the customer ASAP. You may or may not be able to fix it but a quick response and willingness to listen will make a huge impact.
For a quick overview of what to do when customers are upset, here’s a Customer Service 101 Training Deck (customizable to your company) from our Customer Success Starter Pack.
Your upset customer, assuming they’re a reasonable human with a valid complaint, is a terrific prospect for a future advocate and source of referrals!
How To Make A Customer Love You:
1. Respond quickly.
2. Listen deeply.
3. Give updates about your plan of action.
4. Solve the issue or incorporate the feedback.
5. Make an advocate for life!
You’d be surprised how rarely companies follow those simple steps and what an impact it can have on customer loyalty.
So when you have your first angry customer, not only is a moment of celebration, it’s also a great time to practice your turn-them-into-a-future-champion workflow!
What have you learned from angry customers? Did you have any counter-intuitive signs of success or progress?
Last week, I got to dive deep on a favorite topic —> building BIG companies! We talked about: what “big” means, why it matters, how you actually do it, and — the 2 secrets that make all the difference!
Read MoreLast week, I got to dive deep on a favorite topic at Women + Tech in the Atlanta Tech Village —> building BIG companies!
We talked about:
Here’s the FULL SLIDE DECK with a bulleted summary below.
The only thing missing are my awesome jokes (LOLZ) and the great audience questions.
You have to be in-person for those! 😂
P.S. Women do tons of hard stuff all the time!
BIG Market Examples: aging in place (and more here), robotics, creator economy, healthy fast food, carbon tracking
Spoiler Alert: You can learn tech or find a co-founder! Many tech founders and CEOs are not engineers.
They seem wildly confident but even the most successful founders have doubts.
They do it anyway.
So can you!
What other advice do you have for building big???
If you attended, what was your favorite takeaway? Any that I didn’t mention in the recap?
Looking to raise money? You can wow with your amazing revenue dolla—WHAT? Not much revenue yet??? You can still project confidence and financial savvy with these 4 strategies.
Read MoreLooking to raise money?
First, talk about The Money. Alllllll the money to be made in your market.
This includes having a believable TAM/SAM/SOM analysis.
Then you wow with your amazing revenue dolla—WHAT? Not much revenue yet???
Never fear.
You can still project confidence and financial savvy to win investors over.
Showcase a precise and specific understanding of your business numbers to show investors that you can:
It’s simple but it will set you apart!
Here are 4 strategies to showcase your business savvy regardless of your revenue!
Maybe you don’t have much revenue. Every business, no matter how small or early, has tons of business data.
IMPORTANT NOTE — this doesn’t work if you’re wishy-washy.
Saying, “uh, about, 100 or so calls per day” does not have the same effect as, “I averaged 82 calls per day in May.”
Also, you can’t just have these numbers on a slide. You have to KNOW THESE NUMBERS in your heart and mind.
Add them in when answering a question or describing a revenue projection.
It shows you understand that numbers, not just ideas or cool tech, drive a business.
Don’t have much of your own data? Wondering how to justify revenue projections or financial models?
POWER MOVE: Study publicly available financial data from companies like you.
Sources:
Then reference it frequently:
We assumed an x% conversion rate because that’s what LargeUnicorn saw in their first year.
OR
The average spend in this area from F500s is $1,512,000 per year, and that’s up from $1,279,000 in 2020.
OR
PublicCompany gets 42% of their customers from Instagram ads and another 17% from influencers so we’re planning to start with those two strategies.
Explain what tests you’ve run and the (numeric!) results.
Tests? What kind of tests?
Test results can be a helpful proxy for revenue or validate a strategy.
It gives investors confidence in your plan because it’s based on real world findings, not founder musings.
Make sure you talk about the specific numbers, dollars, conversion rates.
We did a waitlist sign up test. We spent $515 on ads, got 3,000 impressions, with 5% conversion rate. We called each person that signed up and connected with 17 of them. 9 of those committed to a paid beta test for $99/mo. So we spent $515 for $900 committed.
Don’t have amazing metrics like my made up test data? 😉 Even something like this can be great:
We’ve had 95 conversations with VPs of Engineering at mid-size tech companies. Of those, 37 agreed to a follow up meeting. In those follow ups, 9 said they would have budget to solve this problem.
This is where you combine #1-3 to show that you’re thinking deeply and (somewhat) realistically about the future of your business.
Similar to our TAM/SAM/SOM tip of “Show Your Work”, use your data, industry data, and test data to explain why you think you can do $1M in revenue by year 2 or why you can get your profit margin to 40% when you’re selling 10,000 units.
Based on our test campaign with a 10% response rate & 5 demos scheduled, competitors charging $1000/mo, and the growth of this market by 200% last year, we think 10 new customers in our first quarter and 50 customers at $50,000 MRR by end of year with one sales hire is realistic.
It may sound obvious but you’d be surprised how many folks don’t know the details behind their financial projections or business model.
Do this from a position of strength by citing your supporting data and highlighting what’s fact vs. educated guess.
Explaining it with confidence while acknowledging hypotheses or unknowns can be a powerful way to build trust.
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Even when you don’t have much revenue, you can still impress investors and show you’re going to build a strong, financially-sound business.
Talk about numbers, drop juicy data points, and walk through your strategy and thought process with specific dollars, conversion rates, and metrics!
What other strategies can early stage founders use to show off their business savvy??
I meet thousands of entrepreneurs every year. What’s the difference between a one-time meeting and a long term relationship? Here are 6 straight forward ways to build authentic relationships with an investor.
Read MoreI meet thousands of entrepreneurs every year. Some I stay in touch with. Some I don’t.
What’s the difference between a one-time meeting and a long term relationship?
Here are 6 straight forward ways to build authentic relationships with an investor or other strategic partner for the long term.
Going to start with the basics. Send a follow up email.
A simple “thanks for the time” means that:
And you’ll REALLY nail it if you:
It was great to connect today! I’ve already checked out the article you suggested and will see you at the next event at Atlanta Tech Village. Look forward to keeping you up to date with our progress. Do you mind if I add you to future company updates? Hope you have a great trip with the family next weekend!
BOOM. 3 minute investment for a potential long term relationship.
I love an email update from a founder.
Send it (bcc) to everyone you want to stay in touch with.
Like a newsletter only way simpler. Bullets are great. No need to mess with graphics or fancy headers.
Paperstreet and Cabal are two tools I see that make an update easy.
Also — don’t worry too much about a regular cadence. Send an update when you can, when you have something to share or ask for. Everyone is too busy to keep track of when you sent the last one!
There are companies that I’ve met once but I’m on their update and feel like I know them. I’ve gotten a regular email from their founder and tracked their progress over months and years.
It’s like a blog, hitting your inbox every week. 😉
It may sound counter-intuitive but it’s better to ask for advice than act like you know it all.
People build more rapport and trust with people they help vs. people who have helped them.
BUT — it’s important to ask for advice in the right way!
A pretty common superpower of successful founders (in addition to testing hypotheses) is to be great at specific requests for advice or help.
Start practicing this skill now!
I notice and appreciate the folks who show up every time. I learn their names. I see them and wave. They stay top of mind.
Never underestimate the power of simply SHOWING UP regularly.
Once you see someone a few times, it’s easier to strike up a conversation. You feel as if you know them. You have more to talk about.
It’s the human version of the Marketing Rule of 7.
Also, anyone who hosts events regularly genuinely appreciates consistent attendees.
Here’s the key → make sure you say hi!
If you go to an event but no one knows you’re there, did it even count??? (Nope.)
I knew a great sales rep who used a variation of this tactic to build relationships with C-level folks.
Her approach:
By then, they’d recognize her name and feel like they must have met her somewhere before!
Now that I’m an experienced, world-renown blogger (LOLZ), I really understand this.
Everyone appreciates a shout out, a share, or a kind comment!
Do it on the socials or send them a direct note.
It’s also a great way to meet someone. They’ll recognize your name even if you haven’t met in person.
Even well-known folks, who have an empire of content or success, notice who regularly comments or amplifies their message.
Never underestimate the power of authenticity and being nice! It’s my favorite not-networking strategy.
Don’t try to be a certain type of founder or copy someone else. What works for them will be weird for you.
Even the most spreadsheet-focused investor appreciates a human connection and can spot a jerk, schmuck, or forcing it.
Are you a great storyteller? Do that. More of a listener than a talker? Fantastic.
There’s no “right” way to network. Be the best version of yourself and do what makes you shine.
CAVEAT: Everyone has imposter syndrome so just ignore that and lead with confidence. 😁💪
Founders — what other strategies have helped you build relationships with investors?
Investors — what strategies work best to build a relationship with you?
Do I know about podcasts? Absolutely not! That’s why Adam Walker, a great entrepreneur, podcaster, thinker, and writer, is joining us today as a guest blogger to share the ultimate how-to podcast guide.
Read MoreDo I know about podcasts?
Absolutely not!
That’s why Adam Walker, a great entrepreneur, podcaster, thinker, and writer, is joining us today as a guest blogger!
Adam and I have been trading productivity tips, book recs, and startup advice for years. I hope you love his energy, humor, and clarity of thought as much as I do.
You can subscribe to his fantastic Substack here and check out his podcasts, Tech Talk Y’all and Real Pink.
And, of course, check out the O’Daily guest post on Adam’s Substack! 😉
By Adam Walker
Starting a podcast is easier than you think and could be more valuable. But before I tell you how to start a podcast, let's discuss why.
Here are 3 quick reasons you might consider becoming a podcaster:
People hate cold calls (and cold emails), but most people love to get interviewed and share their knowledge. If you need to meet high-level people to get ahead, a podcast will get you those meetings.
You are an expert and want to share your knowledge, positioning yourself as a thought leader in your space.
This is the most underrated use of a podcast. A good podcast will produce a lot of original and interesting material, so why not take that material and create more marketing assets from it? One podcast episode can become up to 15 pieces of marketing content, like videos for YouTube, TikTok, and Instagram. Graphics for Facebook and LinkedIn. Or blog posts and transcripts for SEO on your website.
Ok, now let's talk about how to get started. Below is your quick start guide.
What is the topic? Who is the audience? Will you interview people or not?
Will you use your podcast to book meetings with the right people? Do you want to create all of your social media assets from your podcast? Do you want to build an audience? Ensure your goals are clear from the start so you can craft your podcast towards them.
I'll be honest; this is one of the hardest parts. You always feel like you need more time to record, but you have to make yourself start. Record an episode or two just to see how it goes. And give yourself permission to scrap through the first few episodes if needed.
I'll talk more about tools in a minute, but for now, know that editing a podcast is doable, and there are many tutorials on YouTube to help.
Even when the episode doesn't feel ready, you must publish it and get feedback. It's the only way to start and grow a podcast.
To start a podcast, you need less than you think. Below is a quick list of the basics to get you started.
If you will have a podcast with guests on it, the most important tool you need to make your life easier is Calendly. Calendly will let guests book their own recording time and send them emails with details about the recording.
You probably already have the recording software you need. If you are recording a solo show, you can use Garage Band, Quicktime, or any local program to capture audio.
If you are recording an interview show, Zoom works great, or if you want an upgrade, you can check out Riverside.fm.
You don't need to spend a lot here; just get started. I recommend starting with a good webcam (Anker PowerConf C302) and microphone (Samsung Q2U).
You can go up from there, but this will give you a solid starting point to create a great show.
Audacity is a free tool you can use to edit audio. My first podcast (Tech Talk Y'all) was edited on Audacity for years, and it was great. But if you want an upgrade that isn't too expensive, I strongly recommend using Reaper. Reaper can edit audio and video, and there are a lot of YouTube tutorials available to teach you how to use it.
Publishing a podcast is free with Spotify for Podcasters (formerly Anchor.fm). Through Spotify for Podcasters, you will be about to publish your show on Spotify, Apple Podcasts, Google Podcasts, and many other platforms.
Podcasts are popular for a reason. They communicate information quickly, are entertaining, and can act as the centerpiece for all your marketing content. There has never been a better time to start one, so if you are interested, give it a shot.
And, if after reading this article you still aren’t sure where to start, you can read a more in-depth post from me on this subject here. Or, schedule a time to have a podcasting chat with me here.
As a reminder, this post was written by O’Daily friend, Adam Walker. To read more of Adam’s work, be sure to subscribe to his Substack here, or visit his personal website here.
Thanks, Adam, for the amazing podcast overview and how-to guide!
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Other podcast advice to share?? If you’ve started a podcast, how did it go?
Did you like the guest post format? Who should we invite next?
I got first-hand, real world tips from a company that recently raised from strategic investors. Here is everything you wanted to know —and more — about the strategic investment process, directly from founders.
Read MoreWe recently talked about the absolute best way to pitch investors and how to dominate your market analysis during a pitch.
This was for venture investors (aka “VCs”).
Are you talking to strategic investors?
Take that previous advice and THROW IT AWAY.
I got first-hand, real world tips from a company that recently raised from strategic investors (or “Strategics” as we say in the biz).
Here is everything you wanted to know —and more — about the strategic investment process, directly from founders who successfully raised money.
Here’s a helpful fancy-pants overview.
The gist:
What’s in it for them?
(1) Less focus on the overall market size.
(2) More technical capabilities discussed.
(3) More focus on alignment and strategic advantage.
(4) Customize each slide deck.
(1) Their business.
Large companies will often invest, acquire, or partner to:
(2) Win-win outcomes.
(3) Avoiding acquisition by a competitor.
(4) EBITDA.
(1) Introduction and relationship building process takes longer with Strategics.
(2) More investment in “Proof of Technology.”
(3) More technical vetting.
(4) More in-person meetings.
(1) The deal can die at any level.
(2) General counsel can make investment documentation harder.
(3) Things take longer than expected.
Strategic investors can be incredible partners.
They have industry expertise, lots of customers, scalable systems and sales channels, and money to invest in new technologies.
They are a great option to consider when you’re fundraising.
Follow these tips to customize your approach and understand what matters most!
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Want more? How do you maximize your strategic relationship once you’ve partnered??
We’ll continue to add to this series with additional learnings from the front lines.
Deliver your best pitch ever with a rock-solid market analysis. Learn the 4 biggest pitfalls and how to avoid them with specific examples and #protips.
Read MoreGreat pitches talk about The Money.
We shared two amazing examples last week.
These pitches both opened with a TAM/SAM/SOM analysis.
(What the heck is TAM/SAM/SOM? Read this, this, this.)
This market analysis an assessment of how big your business could be, usually shared during pitch.
In other words — how big is the pie? how big can your cherry-filled dollar-filled slice be???
There’s two kinds of market analyses:
Guess which one is better?!?
(Did you say #1?🤞🤞🤞)
So why would someone end up with #2 and how can you improve to #1?
Here a 4 ways to crush your TAM/SAM/SOM — aka THE MONEY — analysis during a pitch!
A common mistake is picking the wrong Total Addressable Market.
It’s a big TAM but not aligned or believable.
If you’re building a new Segway, it’s a (really, really big) stretch to say that you’ll capture 10% of the global automotive sales ($3.6T).
But how many people are riding bikes, taking public transportation, or live within 3 miles of their office? What if 10% of them switched to your hot new Segway?
Now, that feels reasonable. I’m starting to believe.
VCs like big markets. So definitely showcase the biggest market possible for the TAM — if — it makes sense.
If it’s too much of a stretch, the whole analysis loses credibility.
Show your vision, think big, and also make the logic rock-solid.
#PROTIP
Is your market small now but will grow significantly over the next 3-5 years? Explain why and how. VCs love expanding markets.
If we get just 10% of all F500 to pay us $10,000/mo, we’ll have $6,000,000 ARR in Year 1!
The math is correct. The assumptions are a stretch.
Yes, you believe in your product and some companies (including yours!) will grow insanely fast.
But you’ve got to factor in:
Investors appreciate unwavering confidence but it’s important to show you understand potential challenges and have (at least somewhat) realistic expectations.
#PROTIP
If you have early indicators that you can outpace typical startup results and growth rates, by all means, highlight these!
Comparing your metrics to the early metrics of big companies in a similar market (e.g. in year 2, Salesforce had x dollars of ARR, and we’re already at y) is a nice way to do this.
Bringing it back to 4th Grade Math.
Walk through your thought process, assumptions, and data in each stage of TAM, SAM, SOM.
Founders often rush through this slide.
I’m not sure if it’s because it’s a “required” slide, they don’t want too many holes poked, or they assume investors already understand.
Here’s the thing.
If you’re building a B2B sales or marketing platform, I get it. 5 seconds and move on.
Anything else…spend at least a few moments walking through your thought process and data.
You may have picked the right TAM (#1) and done realistic math (#2) but if you don’t walk us through the math, we won’t know how you got the market size answer!
#PROTIP
Valeria Brenner of Thryft Ship does an amazing job of this here. The detail shows that she deeply understands her customer, product, and market.
You pick the right TAM.
You do realistic math.
You show your work.
…and the market isn’t worth billions.
This is okay!
There’s many amazing businesses in the world of all sizes.
Most VCs look for companies that could do $100M ARR within 10 years and be valued at $1B or more. This requires a really big market in the billions and even trillions.
But some of the most successful entrepreneurs never go the VC route. They self-fund, lean into a niche, or build a cash-flowing business from day 1.
There’s many ways to succeed, change the world, love your life, and make lots of money!
So, have an honest conversation with yourself.
Do you want to build a really big company? Do you want to raise from venture capital?
YES?
Do you want to solve the current problem that you are wildly passionate about?
YES?
#PROTIP
VCs run their own (more conservative) analysis of TAM/SAM/SOM. Want to rigorously vet your idea ahead of time? Use this fantastic chart from A Smart Bear.
Market size is key to understanding how big a business can get.
Every investor is thinking about market size and doing their own analysis while you’re pitching.
Help them see what you see by walking through a well-researched, believable, rock-solid TAM/SAM/SOM analysis!
What tools or tips do you have for market sizing or TAM/SAM/SOM slides? How do you keep the market analysis clear yet concise in a pitch?
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