Stop your pitching

Recently over at REbound we had yet another experience where we were told that we needed to make a <5 minute pitch. I have written about this idiotic carry-over from the tech world a few times, but I wanted to take this opportunity to dedicate a full post to the topic.

Now, its important early on to define what I mean by pitch because some people call any presentation a pitch, and that is confusing.  To us, a pitch means a short <30min presentation that is given explicitly so that investors (or members of the public unlucky enough to be subjected to it) can make a quick up or down decision on weather they want to hear more. The idea being that these people are so busy being bombarded with other pitches, that you have to make your idea stick with a grand slam 3 minute pitch. 

For the savvy cleantech entrepreneur, pitches are rather benign. It takes a lot of time, but eventually you will make a pitch presentation that is sufficiently impressive to get you to a longer meeting. At REbound we have dedicated a huge amount of time to our pitch and the way people are first introduced to our system. We have learned through many failed attempts, that people just don't want to learn about a technology in a pitch. They want to know what you are replacing, how much better your system is, and how big the market is for the thing you are replacing. It is very clear that a "proper" pitch has almost no technical discussion.

For random strangers with only conversational interest, a pitch is great, but there is no reason why investors should be relying on this device. It is literally an investor's job to find start-ups that can deliver an acceptable ROI and invest in them. In an area like cleantech where the idea is actually quite important, the pitch blinds the investor right off the bat. By completely ignoring the technology during the pitch, investors rely only on the team and market to make their initial down-selections. 

In cleantech, its just too easy to make these categories look really good. The markets are always convincing because they are established, large, and well researched. As for team, the number of successful startups that existed from 1995-2002 have created a huge number of bored ex-CEOs. The only criterial that could be genuinely judged is the technology, and that is being ignored. 

Again, to the entrepreneur this is not really an issue, it's our job to make the technology work. Any problems not highlighted in the pitch are going to come to the surface one day or another and it will be our job to fix them. But the investor should be railing against the use of pitches. If they really only have 5 minutes per idea (which, in itself is incredibly offensive) then require 5 minute technical pitches. Or a 5 minute list of all the technical issues that they know of. Good engineers know the problems with their systems, ask them!

The failure of the pitching system is not something I am predicting. It has already happened. Everyone acknowledges that, over the last 10 years, investments in Cleantech have utterly failed in spite of the tremendous momentum that they received from the likes of Kohsla and Kleiner. I don't believe it was a lack of good ideas that led to this failure, but a failure of the broader system by wich the ideas that did get funding were choosen. The failure of the pitching system is evident in the broader failure of Cleantech investments. 

Not convinced pitching is wrong for Cleantech? Here are just a few more specific and anecdotal examples of the failure of pitching I have observed first hand:

1. A company being invited as an example pitch giver to a prestigious national conference with an idea that clearly violated the first law of thermodynamics.

2. A company being awarded a fantastical sum of money at a pitch competition after claiming that their technology, which they were licensing, would easily increase the efficiency of equipment past theoretical limits. 

3. An investor confiding in me after a pitch that they would never want anything to do with the company that had just pitched because their stated efficiency was so much lower then more traditional equipment; not understanding the Carnot implications of operating at 100C vs 500C. 

Now, there is much to be said about the business of investors and the huge volume of deals which they must decide on. It is certainly a tricky situation that requires a way to judge start-ups quickly. However, it is hard to feel too much sympathy as it is, after all, their job. They are getting paid (much more then any entrepreneur) to make smart decisions, and the system that they are forcing us all into is not working. 

There is, however, some good news. There are time tested ways of picking good investments in highly technical fields, the government has been doing it with their grant programs for 100 years and they are actually quite a bit better then VCs at picking good companies. Is the grant selection process perfect? No, but at least it gives some credit to the fact that the technical challenges in these industries have hard limits and real unbreakable laws governing them. 

We need to put the breaks on pitch mania and supplant it with a new system that values technical merit at least as much as team and market. We are far from this ideal, but the incentive is there. The markets really are huge and ready to be eaten up by new, well chosen technologies.