Chris Dixon has heard a lot of pitches. He’s cofounded companies that have yielded successful exits, including Hunch, which sold to eBay, and SiteAdvisor, acquired by McAfee. Through his investment company Founder Collective as well as personally, he’s made investments in companies like Pinterest, Kickstarter, Buzzfeed, and — for full disclosure — PandoDaily. Last November, Andreessen Horowitz snagged him from eBay to become a general partner for the firm. Last night at the Founder Showcase in Mountain View, CA, he shared a few gems about pitching.
Convey that you know a secret
Dixon says that there are “good ideas that look like good ideas, and good ideas that look like bad ideas.” The ones that clearly look like good ideas, big companies like Apple are probably already working on. “We’re in the business of all the things left over,” he says. He cites a few examples: Google doing search, despite coming into a crowded, difficult to monetize market. Bad idea. Or Airbnb allowing strangers to rent out rooms to strangers. Bad idea. But now, Google is Google and Airbnb is valued at some $2.5 billion.
The key was the founders knowing something no one else knew, Dixon says. That comes from knowing the problem better than anyone else, and knowing the tools to solve it better as well. That’s one reason some VCs are so keen on technical cofounders – because they know the capabilities of the tools so well.
It’s okay to be exasperated
But don’t fake it. And don’t be a jerk about it. But it’s a good sign if a founder has such conviction that there is a sense of bewilderment when a VC doesn’t understand the need for a product – as if to say, “I can’t believe you don’t get this!” It shows understanding of one of the basic principles of entrepreneurialism: I realized the world is wrong in this way, and this is what I’ve done about it. Be authentic, he says.
Don’t be in such a rush to explain the product
Dixon says that when he sits down with an entrepreneur, he usually likes to take 20 minutes to ask about the founder’s background, and how he or she came to the idea for the startup. Commonly, he or she will just try to go directly into an explanation or demo of the product and think, “Isn’t 20 minutes too long for this part of the interview?” No. This part is not frivolous.
Many of the best ideas come from an entrepreneur drawing from a unique life experience. He gave the example of working with terrible medical software for years, trying to solve the problem, then realizing you need to quit to devote yourself to solving the problem. It’s more impressive than, “Well, I was in this program, and I needed an idea by the end of the month,” Dixon says. Just as important as the product itself is the path the founder took to getting there.
Dixon will be our guest for PandoMonthly on May 16th in New York City. Tickets go on sale a week before the event.
[Image courtesy hackNY]