A Huge Mistake Startups Make

Over the last few years, I’ve heard thousands of startup pitches for every type of product or service imaginable. There’s one huge mistake startups make when they present their products or services which can lead to issues down the road.

The mistake is explaining your company as, “we are the x of/for the y.” I understand why it’s done – it can help to make the explanation easier and more understandable. Heck I am guilty of thinking along the same lines at the startup I founded. It’s ok to think in these terms but they should never be spoken outside of the company.

Why is this pitch a mistake? Because it leads to questions that will be hard to answer without follow-up questions and/or the audience left wondering regarding your response. In addition, I would stay away from using the comparison explanation where the company in the comparison is a new (or unproven at that date) startup themselves!

Let me use a real world example which took place at the Disrupt conference this week. Y Combinator graduate Opzi was one of the selected companies to present their service at the conference (congrats!). The Opzi service aims to help bring visibility to knowledge within a corporation. As a side note, during my corporate life the area of knowledge management was one of the biggest challenges we had with our 70,000 employees so hats off to Opzi for working on a solution. Opzi was eventually selected as one of the finalists (bigger congrats!).

In both presentations, CEO Euwyn Poon used the following statement as the first 5 seconds of his pitch, “we’re building a Quora for the enterprise.” Why was this a mistake? The answer has nothing to do with Quora as a company.

First, in 10 seconds he put in everyone’s mind the following question, “if Opzi is the enterprise version of Quora, why can’t Quora build an enterprise version?” Second, and this relates to what I noted above, Quora is a new company themselves. Quora has been around for just over a year and while many people at Disrupt may have heard of the company, many others probably have not. So you could potentially be alienating your audience.

And there are also issues if you use the comparison with a large, well-established company. We’ve seen this happen where new search engines attempt to explain what they do by using Google and then the questioning from the audience or judges pushes the startup into a corner.

During the Q&A seesion, Digg founder Kevin Rose asked Poon, “the only thing that really scares me is you compared your service to Quora for the enterprise, why can’t Quora do Quora for the enterprise?” Poon then had to try to explain why and how Opzi is different and spend valuable time talking about how Quora is a consumer play. Rose then continued that other services like Google could also enter this space. Would Rose have asked these questions if the presentation opened differently? Maybe but perhaps Rose would have asked other questions that focused solely on Opzi.

I am excited to see how Opzi’s product and pitches evolve over time. The enterprise knowledge management space is due for disruption and there is definitely success to be had.

The solution to this issue is to present your company in such an easily understandable way that no comparisons are needed. Stand on your own and let the judges and/or audience create the comparisons in their mind. And since you have already thought of all the potential comparisons, be ready with a response as to why or how you do things differently than the company you are compared to and keep the focus on your startup.