Silicon Valley’s longest serving CEO talks about the three tough things to do when pitching your company.
If you don’t do these, don’t bother the investors.
Guy Smith: Hello everybody and welcome to another episode of the Tough Things First podcast. And this is one of our specials. We’re doing this periodically. We are talking with Ray Zinn, the longest serving CEO in Silicon Valley. And we’re getting from him the top three tough things that a business leader needs to consider for a particular business episode that they’re facing. And what we’re going to do today is going to be so choice for the people in Silicon Valley, all the founders, all the co-founders, all the startup aficionados. It’s the tough top three things to consider when you’re pitching your company. And I was in Silicon Valley for over 22 years, I’ve been on both sides of the table pitching and hearing pitches and I’ve got to tell you, after all this time, a lot of people in Silicon Valley still don’t get it right. I have personally turned down, probably I’m going to say about 75 different presentations simply because the people weren’t even prepared to give a presentation, which of course gave me no faith that they could run a company.
So first let’s welcome on Ray Zinn. Hello Ray, how art thou?
Ray Zinn: We art very good, Guy, thank you. It’s a beautiful day here and I’m just glad to be with you.
Guy Smith: Oh, I’m always glad to be with you. It’s educational in ways that I can not begin to explain. So let’s jump into this pitching your company, which is kind of like a national pastime in Silicon Valley and expanding nationally as we begin to see how entrepreneurial centers are kind of erupting in various places around the country. So what are the top three tough things that a founder needs to consider when they’re pitching their company?
Ray Zinn: Well, the message should be very clear. In other words, if you can’t get your message across within the first minute or two, you’re probably going to lose your audience. And so that’s one of the first thing is to have that mission statement so clear and so precise that they immediately understand what it is that you’re doing and when and where you’re headed.
Guy Smith: I’d like to amplify on that just a little bit. I’ve spent most of my time in marketing and one of the things I coach people on is that you need to distill your elevator pitch until you get it to a point where it’s perfectly understandable in 15 seconds or less.
Ray Zinn: Absolutely. And you just got to be presentable, you got to be believable, you got to speak articulately. If you’re from a foreign country and you have an accent, make sure you get it practiced so that accent is minimized. Because you got to understand that you want your pitch to be easily understood. If they’re trying to decipher what you’re saying, they’re going to miss completely the message that you’re trying to present. Make sure that you’re articulate, you’re dressed properly, you’re enthusiastic, you’re more interested in them as opposed to yourself. And of course, don’t be nervous. Be very sure of yourself but don’t come across cocky. So there’s a difference between being cocky and sure. Sure, you’re confident, but you don’t sound, you don’t brag it, you don’t have a bragging type of inflexuals type of statements and comments. You’re just straightforward, but you’re enthusiastic and you have a proper voice as you present your mission.
Guy Smith: I think that’s one of the things which used to trouble me about a lot of the pitches I heard was that you could tell that these founders had in their heart, if not actually in their head, some sort of idea as to their business vision, where they saw this grand culmination eventually leading and they were completely inarticulate in explaining it to other people.
Ray Zinn: I watch Shark Tank, I love that program, because I learn a lot. And you’ll always note that when the presenters come in, the entrepreneur comes in, they immediately say I’m seeking X number of dollars for a certain percentage of my company. So they’re there going right to the bottom line. Here is the bottom line. They start there, okay? Because that immediately sets the stage as to what the expectation is for everything that follows. So, if you say, “Here’s what I want, here’s where I’m starting.” Yesterday when I was meeting with these company individuals that wanted an investment, they never, in the two hours that I was with them, two hours when you imagine that, Guy. Two hours and never said what they wanted, they just kept talking and talking and talking and talking and talking. They lost me within the first minute of the conversation. There was no enthusiasm, they were just bragging and philosophizing, and I mean, it was not clear at all as to where they were headed. So start out by saying, “Here’s what the expectation is. Here’s what I want now I’ll tell you now why I want that.” Okay, so here’s what I want and now I’ll tell you why I want it.
Guy Smith: Being concise is I think very impressive, especially when you’re dealing with business people and experienced investors. Because they don’t mind getting to the point. And if you can get them to the point very quickly, you almost immediately buy some sort of a believability that you’re speaking in their terms, their language, their tempo.
Ray Zinn: Yeah, so you want to start out by here’s what I want and here’s what we’re all about and here’s why you should go ahead and invest in my company. So start out that way. Here’s what I want and here’s what we’re all about and here’s why you should do it.
Guy Smith: So the first tough thing was that their mission must be easily understood and understood very quickly. What’s the next tough thing that you think people need to pay attention to and then pitching their company?
Ray Zinn: Don’t use flip charts. Don’t use a canned PowerPoint. You want them to focus on you, not on your PowerPoint or your presentation, your written materials. You want them to focus on you. Do you ever watch Shark Tank you’ll know they never even use slides. They maybe have examples or some talking points that they can point to, maybe a picture of the objects that they’re building or some way they can demonstrate it, maybe handing copies of the product to the person, to the investor. But don’t use a canned PowerPoint presentation where they’re focusing on that rather than on you as a person.
Guy Smith: It goes back to the old adage, that power corrupts and PowerPoint corrupts absolutely. Yeah, and I’ve seen that when I’ve been listening to slide decks. People lean on PowerPoint as a way of compensating for their stage fright, their ability to articulate things. And given that the average pitch session in Silicon Valley keeps you to three minutes, PowerPoint almost seems like it’s a way of wasting some of that precious time, that three minutes that you have, to put a lasso around the investor’s heart and make them believe what you believe.
Ray Zinn: One of the big mistakes that entrepreneurs make when they’re making their presentation is they think that the more detailed and the more explanatory than it is, the more people are going to believe what they’re saying. Just the opposite is true, okay? If they can’t get right off the bat what you’re talking about, you’re going to lose them anyway. So by just you continuing on with your big explanation and long presentation, nothing more than discourages them.
Guy Smith: Oh, I see, so that’s number two. First one was the mission has to be clearly understood very quickly. Don’t use a slide deck. What’s the third tough thing that these founders need to consider when pitching their company?
Ray Zinn: Well, they got to look at what the expectation is. The big mistake that most companies make is is they make wild, exaggerated projections as to what their company can do. And people look for more realistic. They already don’t believe big numbers to begin with. So make sure your numbers are very conservative, they represent honestly, and clearly what the potential of your company is. What you say is going to come back to haunt you. So don’t exaggerate your business. Number one, they’re not going to believe you to begin with and so now they think that everybody exaggerates. What you don’t want to come across as somebody who’s huffing and puffing their business.
Guy Smith: I hate to say this, but when I was listening to pitches, one of the horrible things that I would do is I would see an entrepreneur and they would talk to me about the market opportunity. And it would always be billions of dollars globally, blah, blah, blah. And I would say, “Okay, what part of that is your realistic addressable market for the first two years?” And if they hesitated more than three seconds or couldn’t give me a solid answer in five seconds, I wrote them off immediately. Because they had not done their homework. They were giving me the exaggeration not the realistic expectations.
Ray Zinn: Yeah, you just get eye contact with them and then keep them so that you come across as engaging and believable. If you’re not believable, you’re already going to lose them. Like yesterday, when I met with these guys, I could tell within the first nanosecond that these guys are not believable.
Guy Smith: Right, right. And believability is kind of everything in terms of pitching. I mean, you’re going up against hardcore business people, serious investors, folks who need to understand what the risk and reward opportunity trade offs are. And if you remotely smell not believable, not credible, the gut instinct takes over at that point. And it doesn’t matter what the rest of your pitch and presentation are. If they don’t believe you, they’re not going to believe anything else you say during the whole presentation.
Ray Zinn: Exactly.
Guy Smith: Yeah. All right, so before we recap for your audience sake, I do want to brag about your two books. Tough Things First, which I think is arguably the best business manifesto I’ve ever read. Like a lot of people, I read business books pretty voraciously. I put it right up there on the shelf, right next to Lou Gerstner’s Elephants Can Dance. I think those two things need to be required reading by anybody who’s thinking about getting into business. Because they tell you how to view your business realistically and operate it on a realistic basis. And I know that goes counter to a lot of Silicon Valley pie in the sky cloud ballast thinking, but if you treat your business realistically, it’s going to survive the ages.
The other book, which people don’t know as well as Tough Things First is called the Zen of Zinn. That’s Z-E-N of Z-I-N-N, clever little title. But it’s a fun book is what it is. It’s a lot of Ray’s observations about business, about life, about community, about government, et cetera, et cetera, and how all these things intermesh. And I think that’s one thing a lot of business leaders don’t always take in full stride is that all of these cogs in the machine have to work together. The moment that one of those cogs breaks, then the whole machine breaks. And you have to pay attention to all these different parts and how they work together in order to have a happy, harmonious and profitable business.
Ray Zinn: So Zen of Zinn is really the motivational one, the one that keeps you inspired and optimistic, whereas the tough things first is the how to book. So, they go together. I mean, one is just a how to keep you inspired and motivated and which is Zen of Zinn and then Tough Things First is you’re how to book. It’s your go to bible, as you would, on how to run a company.
Guy Smith: Well, and that was the interesting thing about Zen of Zinn, because it’s all written in very short, little, discreet musings. And my M.O. with that was I would pick up the book every day, I would read about three or four of these inserts and then I would put the book away until the next day. And it was, I think, specifically designed that way. So your wisdom could be absorbed in small little chunks over an extended period of time and kind of be more fulfilling that way instead of trying to suck it all in at once.
Ray Zinn: Well, they’re in categories, too, so you can always go to a particular category and say, “I need help here, here or there.” And so you don’t have to read it kind of front to back, like you would Zen of Zinn, I mean, like you would Tough Things First, excuse me. But you can just look at a category, okay, I need help in this particular area because it is broken into topical sections.
Guy Smith: Yeah and I think that’s valuable to people as well because people have different priorities or centers of gravity in terms of what they need in order to achieve their next level. And this gives them a way to do that. So let’s recap the top tough things that an entrepreneur needs to consider when pitching their company. The first one that I heard, looking at my varied notes here, is that the mission of the company or the mission of the entrepreneur needs to be understood clearly and within a very short amount of time. The second, which I heard was skip the slide deck if you can, because you want the investors in the audience to focus on you and your passion and your mission and your involvement instead of getting distracted by little bullet point details on the slide deck. And the third was keep it realistic. The moment you start exaggerating anything, especially the market potential, then you’re going to lose credibility with the investor. And once you lose credibility, there’s no hope whatsoever.
Ray Zinn: Exactly. You got them. One, two, three, boom, boom, boom.
Guy Smith: Fantastic. All right, well thank you, Ray. I do appreciate this. It’s marvelous to be with you every time I get the opportunity and I hope your audience is writing notes furiously as we go through these top three Tough Things First episodes, because I think if you get the basics, right, you have so much better of a chance of succeeding and you are giving them really the hardcore basics in a nutshell.
Ray Zinn: As I listened to those three, I capitalize them like this. The first is to keep it short. The second is to keep it smart and the third is to keep it realistic.
Guy Smith: There we go.
Ray Zinn: Short, smart, realistic.
Guy Smith: Okay, well, there’s your lessons for today, audience and tune in again next week for a different episode of Tough Things First. And thank you again, Ray. I do appreciate your time.
Ray Zinn: Thank you, Guy.