Pitch events, during which entrepreneurs have a short (typically four to eight minutes) period of time to present their business to an audience of potential investors, partners, and customers serve as a staple of the venture calendar. The exact value of the format for both entrepreneurs and investors is probably better served for another post, but at the very least the pitch events offer a convenient gathering place and an opportunity to see a variety of companies in a short period of time. Given our focus at Osage Venture Partners on enterprise software, these events often serve as our only exposure to companies in other sectors, such as consumer internet or life sciences, and I find the differences in how entrepreneurs craft their pitch interesting and potentially instructive for enterprise software companies looking to explain their business, either in a pitch format or during a longer investor meeting.
At an event a few weeks ago, one particular difference emerged in the pitches by enterprise software companies and consumer internet startups that went beyond the fact that the enterprise software companies had a revenue model involving more than “we’ll sell ads to our huge user base” (just kidding B2C companies). I think that enterprise software companies can learn a lot from their consumer-oriented compatriots by incorporating into their presentations a deeper understanding of the people who will be buying or using their product and the specific pain point that product addresses as those individuals attempt to do their jobs. Nearly every consumer pitch that I have seen starts the story with some variation on “Meet Joe. Joe has a problem with X” and weaves the experience Joe would have with the product or service throughout the presentation. The companies follow the age-old mantra of Know Your Customer, and do an excellent job bringing to life the reason a hypothetical customer would find enough value in the product to devote time and money to use it. A CEO here in Philadelphia does an excellent job, I think, of personalizing the problem his company solves to help investors (and, more importantly, customers and users) understand the value. The CEO begins his pitch by introducing Karen, a typical mother looking for deals to save her family money by clipping coupons who always finds herself frustrated at the point of sale because she has left those carefully curated coupons at home in the “bowl of shame” that we all have in some incarnation in our houses.
In my previous life doing marketing strategy consulting, this personification of the target customer represented the final, and most important, step in a marketing plan. We would help our clients first build market segmentations based on a combination of demographic and behavioral characteristics, and then create customer portraits for each of the target segments that attempted to bring to life the individual making the buying decision. Those portraits would tell a story of that buyer, giving her a name and picture, describing her background and daily life, her priorities and motivations, and the factors that would influence her purchasing. Our clients would embrace those stories and describe their customers using those names, with that deep customer understanding driving nearly every choice made about the product.
While enterprise software companies by definition sell to other businesses, rarely do their introductory materials acknowledge that within those businesses are individuals who ultimately sign the contract, individuals who should be understood with the same depth as a B2C company understands its consumers. Granted, the landscape is far more complex with an enterprise sale, with many different individuals involved in the final purchasing decision – but the best B2B companies must understand the profile of the individuals within that organizational influence map, and ensure their product design choices and sales and marketing messages reflect that understanding. Additionally, telling the story of those individuals – their current pain points, motivations, incentives, and how the product would influence their ability to do their job – can help investors, who rarely have the same level of domain expertise as the management team, better appreciate what the company’s product does and how it can deliver value. Too often I find that pitches from enterprise software companies focus too much on the product innovation or high level market dynamics and not enough on the most important question – will people buy the product? Inherent in that question is the fact that people, not monolithic corporations, make the buying decision. So, I hope that at the next pitch event I attend, I will get to hear more stories about the enterprise version of Joe, and enterprise software companies better demonstrate they really know their customers.