How to Pitch Steem

On pitching Steem to investors.

7 Questions

1. What do you do?
Start with the name what it does. For ex­am­ple “Steem is a social electronic currency that makes it easy to take stories, videos and other media and share them with friends and fam­ily.” There’s no need to set up the prob­lem, you can just get to the point.Too many peo­ple spend too much en­ergy try­ing to make their idea sound im­pres­sive. It’s ok to keep it sim­ple. Ac­tu­ally, it’s prefer­able. You want to ex­plain what you do in the sim­plest lan­guage pos­si­ble. This needs to be predi­gested. Your el­e­va­tor pitch should be like baby food.If you’re hav­ing trou­ble com­mu­ni­cat­ing your prod­uct sim­ply, walk­ing me through the user path can be an ef­fec­tive tac­tic. For ex­am­ple, “We’re Google. We build a web­site with a box in it. You can type any ques­tion into that box and we’ll show you web­sites that an­swer that ques­tion.”Walk­ing me through the user path helps avoid ex­pla­na­tions like, “We’re Google. We or­ga­nize the world’s in­for­ma­tion by in­dex­ing the web.” With that de­scrip­tion I’m lost.Your goal when an­swer­ing this ques­tion should not be to have me un­der­stand your whole busi­ness but rather make me in­ter­ested enough to ask fol­low-up ques­tions.

2. How big is the mar­ket?
There are two ways to get mar­ket size. If you’re en­ter­ing a pre-ex­ist­ing space (like small busi­ness bank­ing) you can re­search it. If you’re cre­at­ing a new prod­uct or space (like Slack), you can es­ti­mate the num­ber of cus­tomers that would want your prod­uct and ap­prox­i­mate how much you could charge them.For ex­am­ple: Bellabeat makes an ac­tiv­ity tracker for women. There are X women be­tween 14 and 45 in the US. The life­cy­cle of our ac­tiv­ity tracker is two years. Our mar­ket op­por­tu­nity in the US is Y.When you’re es­ti­mat­ing mar­ket size and what % you could own, there are two meth­ods: top down and bot­tom up. With the top down ap­proach you de­ter­mine the total mar­ket and es­ti­mate your po­ten­tial share of it. With bot­tom up you fig­ure out where com­pa­ra­ble prod­ucts are sold, how many of them are sold, and what % of those sales you could take. I pre­fer the bot­tom up method be­cause it helps you avoid a com­mon top down pit­fall, which is not nar­row­ing down the cus­tomer enough. In the ex­am­ple above that could mean as­sum­ing all women are in your mar­ket - no mat­ter their age or na­tion­al­ity.

3. What’s your progress?
What I’m try­ing to un­der­stand here is how fast you pro­duce work. What is the ratio be­tween what you’ve done and how long you’ve been work­ing on it?I want to feel im­pressed with how much you’ve done in the pe­riod of time you’ve had to do it. This can apply to a com­pany that’s one week old or ten years old.I also tend to value prod­uct de­vel­op­ment and cus­tomers first and other things such as fundrais­ing or biz dev deals a dis­tant sec­ond.

4. What’s your unique in­sight?
This is sim­i­lar to “What prob­lem are you solv­ing?” but the bar is higher. What I re­ally want to un­der­stand is what you know about the prob­lem that every­one else doesn’t. This is usu­ally de­rived from mul­ti­ple con­ver­sa­tions with cus­tomers, deep analy­sis of cur­rent prod­ucts in the space, and often per­sonal ex­pe­ri­ence.For ex­am­ple: Gmail. A unique in­sight was that the email inbox is a per­sonal data­base of com­mu­ni­ca­tion and doc­u­ments. Why would a user ever want to delete any­thing in their per­sonal data­base? Gmail gave peo­ple enough stor­age so they would never have to delete a con­ver­sa­tion. It’s not that peo­ple needed email. It al­ready ex­isted. And it’s not that peo­ple needed bet­ter email. That’s too vague. A unique in­sight is spe­cific and doesn’t con­tain com­pli­cated lan­guage.Be­tween your mar­ket and your unique in­sight, you have two op­por­tu­ni­ties to teach me some­thing. A startup’s unique in­sight often gives me more of an aha mo­ment than the ex­pla­na­tion of what the com­pany does.It’s worth not­ing that pas­sion doesn’t help here. Say­ing a bad unique in­sight force­fully makes you look worse, not bet­ter. For ex­am­ple, “Dude, email today is fuck­ing bro­ken.”

5. What’s your busi­ness model?
There are two types of star­tups, those that know how they’ll make money and those that haven’t fig­ured it out yet. By and large, if you’re in the sec­ond cat­e­gory you’re going to ei­ther make money by grow­ing big and turn­ing on ad­ver­tis­ing or you’re going to copy the pre­dom­i­nant busi­ness model in your space. A small sub­set of com­pa­nies in the sec­ond cat­e­gory will pro­pose a new busi­ness model that makes sense given how you prod­uct changes the mar­ket–freemium is a good ex­am­ple of this.One mis­take I often used to make at Justin.tv was of­fer­ing a pot­pourri of busi­ness mod­els (vir­tual goods, prod­uct place­ment, chat ads, con­tests, etc..). I was em­bar­rassed to say Justin.tv would mon­e­tize with ad­ver­tis­ing when clearly that was the only an­swer. Own the sim­ple busi­ness model.

6. Who’s on your team?
I’m only in­ter­ested in a few things: How many founders? Is there a tech­ni­cal co-founder? How long have they known each other? Is every­one work­ing full time? What is the eq­uity split among the founders (hope­fully equal or close to equal)?If there’s an ex­tremely rel­e­vant cre­den­tial I also want to hear that. For ex­am­ple: You’re build­ing a rocket com­pany and you used to be the rocket sci­en­tist for SpaceX. Ba­si­cally, if you’re fo­cus­ing on a deeply com­plex or reg­u­lated space, hav­ing the ex­per­tise in house to plau­si­bly tackle those prob­lems is im­por­tant.You don’t need to men­tion your GPA or that you once worked at Google.

7. What do you want?
There’s no need to dance around the ask. If you want me to in­vest, ask. If you have a ques­tion, ask. Though to be clear, “What do you think?” is a bad ques­tion. “Do I have a good idea?” is an­other bad ques­tion.Make it easy for me to help you. I want to help you.

Im­prov­ing Your An­swers
Once you have an­swers to each of the seven ques­tions your chal­lenge is to make the an­swers as clear as pos­si­ble. To do that you need to elim­i­nate jar­gon, acronyms, mar­ket­ing speak, and any am­bigu­ous terms such as “plat­form”. Ba­si­cally, make it sound dumber than you think it should.One tac­tic you can try is what I call “The Email Test”. Write up a two sen­tence ex­pla­na­tion of what your startup does then email it to a smart friend. Ask them to ex­plain it back to you in dif­fer­ent words. If they ask any clar­i­fy­ing ques­tions, you need to re­vise your pitch. It’s im­por­tant to do this over email be­cause you can’t add ex­pla­na­tions as you would in con­ver­sa­tion.One thing we do dur­ing the YC batch that most peo­ple don’t re­al­ize is we help com­pa­nies with their two sen­tence pitch. The an­swer to the ques­tion “what do you do”? We work on it every group of­fice hours for the en­tire batch. It’s the linch­pin of a good demo day pre­sen­ta­tion. If that’s locked, writ­ing a good demo day pre­sen­ta­tion is easy.The real thing to re­mem­ber when edit­ing your an­swers is that you don’t need to sound cool. You need to be clear. Don’t try to have piz­zazz. You don’t want piz­zazz.

Con­clu­sion
I’m much more in­ter­ested in progress than ge­nius ideas. Most good ideas don’t look like good ideas the first time you see them so your abil­ity to show progress in your work and in­tel­lect in how you an­swer these ques­tions are two very pos­i­tive sig­nals. Once I un­der­stand what you’re work­ing on it’s all about mak­ing me be­lieve that it’s plau­si­ble that you can suc­ceed.

Rec­om­mended Re­sources
How to Start a Startup, Lec­ture 19Thanks to Jared Fried­man and Aaron Har­ris for read­ing drafts of this.Sign up for weekly re­caps of The Macro.Y COMBINATOR