Attract Investors and Customers With Beautiful Storytelling
Product/market fit changed my drone startup’s narrative and got angel investors knocking.
For two years I struggled to raise capital for my tech startup.
My slides were beautiful and my stage presence was good.
But no matter how many conferences, pitch events, and demo days I attended, I couldn’t get that term sheet.
Dozens of versions.
Hundreds of people.
As an entrepreneur, you’ve heard it often. You pitch your startup to investors who then respond with, “you need to tell me a story.” Yet, this request is so vague it only complicates the very challenge that investor is trying to resolve: to help you articulate your business model from your customer’s perspective.
This was the challenge for me as well.
I couldn’t get funding for my company because I hadn’t found the right market fit for my product, and therefore had a difficult time articulating why customers would be interested in our solution.
Before & After
Here’s how my pitch sounded when I first started out:
“We manufacture UAVs that carry more than a 1:1 power density ratio. Due to a patent-pending design, we’re 4x more powerful than any other vehicle out there. And we can use our drones in every industry but we have focused on package delivery. Our customers will be the likes of Amazon.”
It focuses only on the product.
It confuses you with technical jargon.
And it doesn’t explain a use for the drone.
But then we found our customers. My pitch improved, keeping investors on the edges of their seats every time I delivered it:
“I’ve dedicated my life to introducing technology that helps protect the people who risk their lives to protect ours. To pursue that vision, I started Skylift Global. We help first responders save time, money, and lives by delivering their supplies during emergencies with our heavy lift drones.”
I then spend at least another minute or two depicting the customer’s pain point (i.e. logistics) before even introducing our solution (i.e. drones).
Here’s the pitch I delivered for Skylift, which is now a Caltech company:
Start With “Why”
“People don’t buy what you do, they buy why you do it.” — Simon Sinek
Simon Sinek’s concept of understanding your why was an early influence on me.
When we didn’t have a customer, Simon’s evaluation of Apple’s product demos gave me a specific example on product positioning. Although he helped me understand how to shape my message, it took actual work with customers to have the content and context to develop a full story.
My narrative changed.
The intro went from the what (“we have a product we could sell to Amazon”) to the why (“we believe we can help the world be a safer place”).
As a result, my personal why changed.
By the way, it’s ok to change your life narrative from what you originally thought it was. I was at war with my integrity. I thought it was wrong to bring up my late father or other things that inspired me to launch a company, because the inspirations weren’t apparent to me at the time of launch. But it’s all just a lens. Unseen things in your past affect your decisions and behaviors in the present. Drawing inspiration from them does not make you dishonest.
The more I worked with the first responders who helped protect our families, the more I fell in love with them. And the more I learned.
“How” Means Fit
I learned about their challenges.
The how part of the narrative describes the steps your startup takes to resolve those challenges for your customer. It’s the part that creates fit.
I define product-market fit as people being so excited about your product that they buy it and they promote it. It’s something you can create, measure, and optimize.
Our startup got that fit by proactively asking firefighters, “if we could move anything for you during wildfire suppression, what would you want us to move?” Almost every firefighter told us the same thing.
Once we knew what needed to be moved, we could analyze how that was being done currently.
Then we analyzed why the current way of moving hose packs was such a problem.
Once we learned that moving hose packs drained firefighters of their time and energy, we began to calculate it.
Then we explored other limiting factors to firefighter logistics caused by operations, communications, and regulations.
Once we determined how alternative delivery methods looked, we began to calculate how much they impacted the performance of the firefighters.
Notice, we didn’t rush the product.
Also notice, we didn’t talk about budgets.
When we quantifiably substantiated the need for a logistics solution, we had our second piece of the narrative. If the why was the problem the customer faced, then the how explained the impact of an alternative solution.
In every pitch I delivered, by the time I finished telling crowds the why and how, inevitably someone’s hand would go up.
“So, what’s your product?”
“What” Needs Proof
Now you can introduce your solution, but only briefly.
It’s important for you to focus on the impact your product has on solving the customer problem. Investors will ask you questions like “how is your product uniquely qualified to do that” or “why can’t we just use [another solution / competitor]?”
These are great questions because they let you focus on your story.
Normally, unseasoned and unprepared entrepreneurs would provide product-centric answers. Of course you need to help your audience understand your product. But such entrepreneurs stop there or they get too technical.
When investors ask what your product is, they’re asking you to tell them your competitive advantage from the customer’s perspective.
And they’re looking for proof. Do the financials show growth?
Would more than 40% of your customers be “very disappointed” if they couldn’t use your product anymore?
This last question I’m posing to you comes from
Sean Ellis’ survey, which posits 40% as the magic number to determine if you’ve unlocked product/market fit. Here’s an amazing article by Rahul Vohra explaining how the study is applied using leading indicators in business.
It’s helpful for entrepreneurs to get storytelling tips from Hollywood, but you don’t need to be Quentin Tarantino to compel investors to the edge of their seats. In fact, some of the most boring businesses have the most exciting returns. It sounds easy to say that you just need a cohesive story, but it’s actually more complex than that.
You need product/market fit.