Sunday 19 November 2017

The importance of not being boring when you pitch

Dylan Collins

I spent a day and a half last week deep in East Los Angeles watching the future of robotics.

The DARPA Robot Challenge is a showcase of some of the top robot teams from around the planet.

It was a decidedly mixed crowd: the robotics enthusiasts, a curious general public, a range of military officials and a small number of investors.

When you think about the future of robotics, you probably imagine Optimus Prime, Terminator and possibly Ultron. Sophisticated, powerful and quite intimidating.

This was not that.

It turns out that the future of robotics looks uncannily like a very drunk human stumbling home from a night out and repeatedly falling on their face while attempting to complete the most basic of tasks excruciatingly slowly.

As a spectator event, it should have been an utter disaster. And yet I watched a robot attempt to turn a door handle for almost 45 minutes and I was on the edge of my seat with excitement for every second of it.

In an inspired move, the organisers had hired professional sports commentators and multiple giant screens to whip up excitement at every inch (literally) of movement.

It reinforced the point that while getting your narrative right for any pitch is critical, being able to genuinely excite your audience can be transformational.

Richard Branson and Ted Turner remain the archetypes for this but Elon Musk's contribution to the artform is not insignificant (how many other electric cars, private spaceflight or solar energy companies can you name?).

In the right setting, humans can get excited about extremely mundane things.

Of all that which Silicon Valley has achieved, I think its ability to create cheerleaders for the inherently dull stands above everything else. We get inexplicably excited about storage (Dropbox), messaging (Slack), notes (Evernote) and payments (Stripe).

These are companies operating in purely commodity industries and it makes as much sense for us to start retweeting the company which makes door hinges. Yet, we see these startups as The most important companies on the planet which will change everything.

Boring is not an excuse if you want to scale.

Unsurprisingly, the conference also got me thinking about human limitations. How many times have founders walked out of investor meetings frustrated by rejection on the basis that 'your market's just too small for a venture-backed company'?

A false positive is when you see an indicator that is incorrectly interpreted as a positive factor. A false negative is, unsurprisingly, the opposite. A lot of investors miss market opportunities through false negatives: by getting too focused on the current market size without appreciating the potential growth.

In their defence, humans are innately bad at estimating (and projecting) large sizes. Walking around the robotics conference seeing clunky, vaguely humanoid robots falling over themselves as they navigated a perfectly flat surface, it's easy to laugh at suggestions this could be a trillion-dollar market. Given a twenty-year horizon, I'm not sure that's quite so crazy.

Investors (and particularly investors in VC funds) need to remember that by definition, the best returns will come from sectors which are under-developed.

Founders need to remember that this false negative behaviour from investors is actually normal (and indeed, human) and find ways to address it.

While not every startup can wheel in a professional sports commentator, it's certainly an atmosphere to aim for.

There's prevailing wisdom that the next biggest company ten years from now hasn't been started yet.

I'd accept that.

But I'd probably also add the fact that when that same trillion-dollar company is started, it'll (initially at least) probably get ignored by virtually every investor too.

Make sure you stay exciting.

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