Millennials: 10 Things Old Farts Won’t Tell You About Entrepreneurship (First of a series) | Peter Mehit
1. You’re not going to win the pitch contest – even if you win it
Shark Tank is great entertainment. It’s the perfect reality TV format. Entrepreneurs, fresh with enthusiasm and ideas vs. hostile moneyed elites tearing their dreams asunder for the entertainment of the viewing audience. America loves a good fight, and Shark Tank delivers the humiliation and put downs that make great television. But the link between it and actual reality is tenuous at best.
“But there are winners,” you protest, “Checks get written.”
Do they? We had the privilege of participating in an event where some of the contestants of Shark Tank came out to meet the faithful who were dreaming of following in their footsteps.
One who had received a check in the taping got a call the next day telling them not to cash it. Another, who had successfully started three businesses on his own before going on the show, had his positive ninety-minute encounter edited down to the six most embarrassing minutes around the only question he couldn’t answer. Another contestant turned down an offer that was so one sided it would have been equivalent to handing over the company.
To a person, they said the only thing that Shark Tank was valuable for was publicity. None of them liked the deals. Only one thought they were treated honestly on air. Their message: ‘Shark Tank is reality TV. They are looking for conflict or humiliation and they can edit the video to make it look like it happened, even if it didn’t.’
Needless to say, this is not what most of the event attendees wanted to hear.
Sadly, Shark Tank, which is to business what Real Housewives is to marriage, has become the template for how entrepreneurs and money should meet. Most angel investment groups have a pitch round at every event they hold. Groups that don’t even pretend to offer investment opportunities have pitch contests. (I think Arby’s is going to have a pitch contest on Tuesday nights. Smokehouse Brisket, here I come!)
Competitions can offer cash prizes ranging from $25 Starbucks gift cards up $25,000 or $50,000, although these larger prizes are becoming rare. There are some events that offer hundreds of thousands of dollars. But most events don’t offer meaningful prizes at all, let alone the opportunity to meet viable investors. Mostly the pitch competitions are used to boost event attendance. One tell is when the competition is open to anyone while the group hosting it has a very narrow investment focus.
When you ask why these pitch events are so ubiquitous, you’re usually told that the entrepreneur needs practice and they can get great insight into how to properly pitch a check writer when they finally find one.
The problem is, that’s why most of the entrepreneurs are in the room. They hope they will find the magic words that will help them win the funding lottery. They think this because the entrepreneur culture has been co-opted by the pitch as a short cut to investment.
Do you need to know how to pitch? Absolutely. Will a good pitch make the difference between funding and obscurity? Definitely. I have nothing against the many organizations and people who want to make you a better pitch person. As long as you understand that’s what 99.9% of pitch competitions are there to do and that you will make your own road to funding.
In the end it’s who you know. It’s who your friends are. They don’t have to be old friends, but they have to know you, trust you and believe you know what you’re doing. There is no short cut to trust. It takes time.
Instead of telling your story to strangers, start with friends. Find out who they know and who they can introduce you to. Take those new connections and sell them on your idea. Get them to open their contact list to get you to connections closer to the money. Lather, rinse, repeat. It’s just that simple and just that hard. Pitch fests, mixers and events are valuable as long as you see them as ways of meeting potential friends, not collecting a check.
As you are doing this, continue refining your business idea, creating prototypes and testing, in short, keep moving your idea toward launch as much as you can with the resources you have. Commitment impresses people more than words.
Overtime, two things are going to happen: 1.) You are going to really understand your business idea so that nobody is going to have tell you how to pitch it and 2.) You will have met enough people and gotten to know them that they help you as friends. When you’re finally making the money pitch, you’ll be doing it in front of a small group who already have an idea of who you are and are warm to you.
Contrast this with the idea of standing up in front of a room full of strangers and convincing them, in three minutes or less, of the value of the business idea that is still forming inside your head. Which do you think will work better?
Attend pitch contests. Get involved. It will help you develop a thick skin and you might actually get some helpful advice. Just understand that the most likely thing that is going to happen is you get experience, make contacts and you put yourself one step closer to the meeting where things will really happen.
written by: Peter Mehit