Pick your favorite tactics for persuasive pitching

Posted on Sep 5, 2011 - 2:00 PM PST

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Mixergy researcher, Terry Hayes, carefully pulled out the top tips from Oren Klaff’s interview on how to pitch.

Terry & I are experimenting with a way to make the ideas in Mixergy interviews more accessible to you. (You can give us feedback on this experiment here.)

About Oren Klaff

Oren Klaff has raised over $400 million from investors and institutions in the last five years. He is the auther of a new book called Pitch Anything and the current Director of Capital Markets for Intersection Capital, an investment bank.

Oren’s persuasion techniques are so powerful that his book, Pitch Anything, belongs on the bookshelf next to Cialdini’s Influence and Strauss’ The Game.

  • http://mixergy.com Andrew Warner

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  • http://Twitter.com/TCHayes Terry C Hayes

    Establish your company as the prize; don’t let the capital be staged as the prize

    One of Oren’s top lessons is to understand the importance of a term he calls “prizing.”

    “This issue is called, prizing. So, when you walk into a private equity firm, a venture firm, an individual investor, they view themselves as the prize. And they view you as there to perform for them… I call them garden gnomes–stone-faced garden gnomes. They sit there as if you’re the court jester, you’re going to put on your suspenders, your little clown nose, and ride around on a little tricycle and when you make them smile. They’ll lean back and smile as if they’re the king with the scepter to reward you with some kind of capital injection. That is not the frame that is useful for you as the investor. Any time that we go in with the frame of the capital is the prize to be won by our performance we fail. What we developed is this concept of prizing, and the basis of prizing is that capital is a commodity. It is available anywhere. It’s the ultimate commodity.”

    As an example, he offers the following outline of a potential meeting: “Here’s our exit strategy. Here’s our pro forma. Here’s the team that can execute, and here’s the valuation, and here’s the timing on the round. And by the way, Mr. Investor, what we’d like to know at this point since we’ve taken the time to show you our deal is how you are as an investor. What do you invest in? How do you act when the chips are down? If you could just spend a few minutes explaining to us why you’d be a good person to choose to come into our deal and then sit back. That is prizing. It is we’re the prize, we have the deal… This is the central issue. You’ve got to view yourself as the prize and the investor as the commodity.”

  • http://Twitter.com/TCHayes Terry C Hayes

    Assert yourself at the meeting’s opening

    Oren explains how to assert yourself early without causing problems:
    “Every single venture meeting or private equity meeting you walk into will start like this: ‘Hey guys, thanks for coming in. We thought we’d spend a few minutes to tell you about ourselves as a firm and our history and a little bit about our partners.’ So, what you want to do is cut that off immediately and say, “Hey, look, why don’t we get started on pitching our deal? OK, then you can tell us about yourselves in context of what we have.” And if you do that strong, they’ll let you do that.

    So, that does some wonderful things. First of all, it preserves time…You have about 20 minutes of attention in a room…You have 20 minutes to accomplish what we call “wanting”. OK, 20 minutes. That’s about the span of human attention. If you burn up 10 minutes listening to them burn energy and tell you about themselves, then now you have 10 minutes … of attention span from them and to create wanting. So, when you walk in that room, they’re going to say, ‘Hey, we’ll tell you about ourselves, then you guys can get started.’ You say, ‘No. Why don’t we get started.’”

  • http://Twitter.com/TCHayes Terry C Hayes

    Understand the difference between selling and pitching

    Pitching is a fast paced yes or no situation that takes place all at once, while selling occurs over a longer period of time; the two techniques should be approached appropriately: 

    “So, selling is when you have multiple opportunities and touch points and get to work with the buyer. So, I don’t want to pick on paper salesmen, but because the office will do it. So, you may go in as a paper salesman and say, “Hey, we have this great 50% cotton blend. How about getting a couple of pallets?” And they may say, “Hmm, you know it sounds good, but we still have the 25 percent. Let’s maybe next month come back and let’s talk about it.” That is not how pitching works. Anytime I’ve gone into pitch a deal and will get a yes or no, they never go, “Hey, you know it sounds pretty good. I wonder if maybe you could come back next month and pitch it again, when we’ve used up the capital that we have. Or we have some more …” It’s binary, yes or no. So, when you pitch, it’s very high stakes. There’s high consequences and it’s binary. When you’re selling, you can do all that kind of rapport relationships.”

  • http://Twitter.com/TCHayes Terry C Hayes

    Focus on the big idea; capture your company’s essence in a narrative arc

    “So the big idea is something that we end up spending a week or more developing, and you tell it in about 45 seconds. When you tell people about the big idea it should trigger emotional response, like, wow. It’s got to be insightful… The Big Idea captures the essence in a narrative arc. The market, who you are, the bigness of the deal. . . it’s all of that, captured in a very quick introduction to the deal. When I see pitchers come to me — I sit on the intake board of a hedge fund — it is always missing. They come in, entrepreneurs and guys seeking capital, breaking their deal down into pieces, but without the greater narrative about what’s going on.”

    Oren then provided an example of how to develop the big idea from a recent pitch he was involved in:

    “We recently were asked to pitch a deal for an airport expansion in southern California. They were pitching it the same old way — leases, lease rates, the cost of land, everything like that. We stepped back and said ‘Hey look, here’s the big idea. In this county of California, the major international airport is a single-runway airport. It will be at total capacity within three years. Every slot coming into this airport has got to be dedicated to commercial traffic. Any private jet coming in has to go somewhere else.’ So, the Big Idea was: If you don’t have any landing capacity for private jets, the air space in this county is completely full, and the traffic has to go to other counties. That, in essence, is the narrative arc for the deal. Then you can go into lease rates, and problem solutions, and cost of property.”

  • http://Twitter.com/TCHayes Terry C Hayes

    Create tension and novelty to hold your audience’s attention; don’t be needy

    “The number one thing I see is supplicating and neediness. That is a part of prizing. Well, we have to be nice to these people because they have the money and they can decide to give it to us, right? But in fact when you supplicate and you’re over-nice, it’s boring, all right? That ties into this concept of attention. When you’re boring, you’re span of attention shrinks. The concept of attention is so important…

    So the big question is, well, how do I create tension and stop being so nice, right? I think an actionable method is very easy. You can just say something like, ‘hmm, I don’t know if I’d get along with you’ ‘You guys seem to be very analytical and focused on IP. I’m not sure we would get along together.’ That is an indication that there are consequences in the next 5-30 seconds of the conversation, right? Now, how do you save that situation, right? There’s got to be a push and a pull to that so you might say, and I did this yesterday, “you guys really focused on where’s you’re IP, where’s your IP in the deal, where’s the IP? What do you have that’s proprietary? Say ‘Look, I’m not sure that we would get along with you guys. Is this an impasse? You seem really focused on intellectual property and it might be that we would just not get along together because we have qualitative aspects to this deal. And then they sit back a little bit, and they say, ‘But you know what? This might be a perfect relationship because you guys really know intellectual property and drive for having that something proprietary, and we might actually work really well together.’ And so that is push-pull and the creation of tension…

    When you’re direct, forthright, not supplicating, and pushing people away and saying ‘we don’t need it’ is when they rush in and say, ‘Hey, no, we want to dog pile’ (we call it dog pile), ‘we want to dog pile on the deal and we’re ready to go!’”

  • http://Twitter.com/TCHayes Terry C Hayes

    Don’t perform unnecessary tasks that VCs ask you to do

    “I’ll tell you a little situation quickly. I came into a deal, and they were going back and forth with these long e-mails with their one potential lead investor – $10 million round. I mean, paragraphs: what if we do this, liquidation preferences, what’s the timing of the close, we need to see the customer documents, more intellectual property!

    So I came into the CEO and he’s crafting a four-paragraph response e-mail of a hundred e-mails. And I say, ‘Bob, can I just send this e-mail?’ He’s like, ‘Yeah, sure – can you edit this?’ So I control-A, delete everything, type in, ‘I don’t understand. Are you in or out.’ And I hit send, and he’s going, ‘Nooo!’ Fifteen minutes later, ‘We drop all our requirements, we’re ready to go.’ We’re in on a phone call. I don’t understand – are you in or out? That’s when you stop supplicating, you’re no longer needy, and that’s when you will raise the money, when you can behave like that in every circumstance.”

  • http://Twitter.com/TCHayes Terry C Hayes

    Develop these techniques for benefits in all area of your life (not just pitching!)

    When his book is compared with Neil Strauss’ The Game, Oren notes that the same concepts discussed in both books apply in all areas of life: 

    “[Human attraction theory] works for capital, it works for friends, it works for women or men. Attraction theory is a human, and capital raising is a human task – there’s no automating of it, right? Even if you look at Angel List or that kind of thing, it all just boils down to that capital raising is a human element, and you need attraction theory.”

  • http://Twitter.com/TCHayes Terry C Hayes

    Don’t let yourself be easily compared to anything that already exists

    Differentiation is extremely important to getting past your audience’s initial “Have I seen this before?” filter:

    “What’s critical here is understanding humans as pattern-making entities. We seek to make patterns out of everything. Our mind is always looking, hey, what is this like that I already know, right? And when the brain determines, ‘I know what this is,’ it can check out and go, ‘I can deal with this on auto-pilot, let me work on survival-level things’…

    The whole time they’re listening to you, they’re going, ‘What does this look like that I already know?’ The second they find it, they’re gone. They’re planning their vacation, planning their next deal, deciding what the workout is going to be, worrying about what work they haven’t done . . .”

  • http://Twitter.com/TCHayes Terry C Hayes

    Develop your technique by practicing outside of the board room

    Oren discussed the process of learning and practicing his techniques, suggesting the benefits of making it into a game in order to keep things fun and interesting:

    “We try and name everything that we encounter. Then we can go back and call it something and deal with it…

    The first thing is you learn the language of doing this. What is framing? What is frame control? What is prizing? What’s a beta trap look like? What’s alpha behavior? You learn kind of the 19 or 20 words that frame this art form.

    Then you can talk about every situation in those terms, and you can kind of with your buddies say, all right, and we do this, all right, I’m not going to fall into the beta trap in the lobby. We’re going to be alpha immediately. Let’s run two push pull loops within the first 2 minutes. I’m going to time constrain this to 19 minutes. We’re going to qualify them back, at the end of that we’re going to prize all the way from minute 20 to minute 25. Then we’re going to run two intrigue loops, and leave mid sentence. That’s how we’ll talk about playing this.

    Then it becomes, when you learn to talk about social situations, and business social situations in this language, you can plan out what you’re going to do with a friend. And then it truly becomes game. We leave every single meeting high fiving ‘that worked [perfectly].’

    So have fun, make it a game, learn the lexicon of the business, and [use] time constraints.”

  • http://Twitter.com/TCHayes Terry C Hayes

    Don’t immediately transition from problem identification to your solution; create intrigue

    “This is what I’ve come up with. You create a narrative that goes like this. Put a man in the jungle. Have the beast attack him. Have him run for the edge of the jungle, but he doesn’t get out. So, as long as you hold him at the edge of the jungle, where the beast can still catch him and he is not yet free, you have intrigue. What is going to happen? If you can create the metaphor in your own deal of, hey, we’re in the jungle of this market. The competition, the customers, the venture capital-somethings are the beast that attack. Right? We have a solution, but, so to the degree you have not solved it for the investor, is the degree you’ve got intrigue. All right? So it’s really, if you go from problem to your solution too quickly you have not created intrigue.

    So let me be super-specific on how to do this. You talk about the problem in the market. You talk about the solution in generic terms, not how you’ve solved it. You talk about the solution for generic terms. Now, there’s the intrigue of, okay, I see the problem. And I see how anybody could solve it, or some possible solutions, but how have you solved it? Why are you here? That right there is an intrigue pain. OK? Problem, generic solution, then start to get into your specific solution.”

  • http://Twitter.com/TCHayes Terry C Hayes

    Make your pitch in 20 minutes or less

    “If there’s one thing I can leave you with besides prizing, two things I can leave you with, initial pitches need to be 20 minutes long. Now the meeting might be an hour, an hour and a half. The pitch, 20 minutes. It is the span of human attention. Google it. We hired cognitive psychologists, we’ve worked with brain guys, a neuroscientist. It is the span of human attention. 20 minutes.”

  • http://Twitter.com/TCHayes Terry C Hayes

    Make your audience feel like they must reciprocate; deliver massive value early

    “When you first begin a social interaction, and pitches for capital are social interactions. You have got to add tons of value, all the value, up front. I developed this concept of value pipes. You imagine there’s a pipe between us through which value flows. When we first meet, I try and stuff so much value through that pipe, one way. What most people do is put a little bit of value through the pipe and expect a little bit to come back. It’s called social reciprocation. That’s what we’re wired to do. Ignore that instinct. When you have a value pipe, shove value as fast and as furious as you can through the pipe. Eventually, what will happen is the person will feel like, ‘Wow. I got so much out of this. I need to reciprocate.’ That point of reciprocation is the hook point. You’ll know it. You’ll know it when people stop asking analytical questions, stop asking deal-killer questions and they ask real, meaningful, discretionary questions that push the conversation forward and aren’t meant to cut you off at the knees or show you how smart they are or for them to push back on you, on your numbers.”

  • http://Twitter.com/TCHayes Terry C Hayes

    Be the one to end the conversation; show that your time is precious

    “Once you’re beyond that you go hey, guys this has been…once you’re beyond the hook point and the calibration, you know guys, this has been fantastic. Great first, second conversation. We have got to run to another meeting and we’ve got customers. I mean, it has to be true and authentic, but we have to go. Let’s work out some follow on steps. When you leave yourself, it is such as commanding signal, that you have a real deal and you have stuff to do and you’ve given your pitch.”

  • http://Twitter.com/TCHayes Terry C Hayes

    Use brain psychology to shape your presentation

    “The human mind, we think…there’s a big brain in there, doing all its stuff. But that’s not how it works. There’s three brains in there. There’s the old brain, the crocodile brain. And it’s focus is survival. There’s the mid-brain which understands social relationships. The policeman, the boss, I have to be good to you, my co-worker, I should be good to you, but I don’t have to, and my underlings, I can kick around like an old cat. Right? The mid-brain understands that. The neocortex, which everybody is familiar with, is the smart, analytical, linguistic, problem-solving, completely unemotional part of the human mind.

    And so those are the three parts. But what the interesting thing is, all messages, all human communication come in through the primitive brain. Because that’s the part that measures survival…

    You pitch from the neocortex to the crocodile brain. And the crocodile brain is focused on safety and survival…

    So, the crocodile brain, in many ways, is the CEO of the mind. Right? You got to get past those filters. Visual, fast, simple, high-contrast, easy. Then you can move it up to the neocortex and kind of get that interaction.”

  • http://Twitter.com/TCHayes Terry C Hayes

    Don’t talk about the numbers in your presentation, but explain their omission

    When Oren approaches the topic in a meeting, he tells them:
    “I promise you it’s in a binder. We would not have invested our time to come here with ginned up information. Let’s focus on the chemistry between us, whether you like us as a team, the product, and the market size. That’s what we can accomplish in the twenty minutes we have.”

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