181. The Power of Specificity

Allyson joins us to share her insights on providing specificity in the problem being solved.  A founder has to be able to convey the severity of the problem and the specific upside for solving it. Without both, investors know customers just won't buy.

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SpringTime Ventures seeds high-growth startups in healthcare, fintech & insurtech, and logistics & supply chain. We look for founders with domain expertise, forging a path with a truly transformative technology. We only invest in software-based businesses in the USA. We bring a people-focused approach, work quickly, and reach conviction independently. Our initial check size is $600k. You can learn more about us and our approach.     

Transcript

Rich 0:01

Here's another great piece from Allyson and her writings over at the VC Minute Substack. And of course you can subscribe to get Allyson's biweekly newsletter at vcminute.substack.com.

Allyson Plosko 0:13

Investors place a high value on founders. Being able to communicate key elements of their business because so much of a startup success, including hiring early employees and selling comes down to the founder, being able to simply articulate the vision. Simplicity though. It was only part of the equation for a successful pitch. Another key component is specificity. Simplicity without specificity usually leads to broad statements that are in theory, easy to grasp, but in reality, don't say anything at all. The first place a lack of specificity manifest is in the slide and overview that describes the problem the startup is solving. Too often, the problem is framed at such a general high level it seems like the company is boiling the ocean. But we all know a startup has to focus. Right? If a founder is lucky, an investor can piece together the more specific problem being solved once the founder gets to the solution part of the pitch. But not always. Plus this violates the "don't make me think" rule, refer to episode 27 for more on this. If the problem is teed up, well, an investor should have a sense of the solution and the target customer based on the description of the problem. The framing of the problem is critical because it helps an investor conceptualize how deep the pain is for customers. Understanding the value proposition and why customers will ultimately buy the product is one of the most critical parts of the pitch. The more generic, the problem statement, the harder it is for investors to conceptualize the pain and the potential purchasers return on investment aka the ROI. The ROI is a second critical area requiring specificity rather than overgeneralization. What does the customer get in exchange for using the product? More time? More money? How has this quantified? In the early days, it can be hard to identify a specific amount of money or time being saved. But investors like to see that founders have a keen understanding of how their product is going to add tangible value to customers. When pitching for investment, the burden is on the founder to effectively communicate that the problem their company is solving is truly a hair-on-fire problem. Buyers have finite resources and will prioritize spending on only the most urgent onerous challenges. A founder has to be able to convey the severity of the problem and the specific upside for solving it. Without both, investors know customers just won't buy.