Nuts and Bolts
of
the Executive Summary and the Pitch
Joe Hadzima
(MIT S.B., M.S. in Management; J.D. Harvard Law)
Senior Lecturer, MIT Sloan School of Management
President and Co-Founder, IPVision, Inc.
Founding Judge of MIT $10K/50K/100K – Chairman Emeritus MIT Enterprise Forum
[email protected]
© 2011, Joseph G. Hadzima, Jr. All Rights Reserved
Presented at GIST in Istanbul, Turkey December 3, 2011
Nuts and
Bolts of
Executive
Summary
and Pitch
A Peek Inside the MIT 100K
Judging Process
What Judges Look For:
From the $100K Website:
•What do the judges look for in a plan? The judges look at many different issues when
evaluating executive summaries and business plans, including:
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Joe Hadzima
Dec 3, 2011
Is the business opportunity as presented both highly attractive and clearly realistic?
Is the business defensible from competitors?
What is the business model?
What comparisons are there to past success stories that indicate this venture will succeed?
What is the amount of up-front capital investment required?
Do the market and financial projections demonstrate that the team understands its business?
How long will it take from the current stage of development to bring this to market?
Can this venture achieve a leadership position in its market?
Has the team gone out to the market already to test its ideas?
Who will be the first customer(s)?
2
A Peek Inside the Judging Process
Nuts and
Bolts of
Executive
Summary
and Pitch
What Judges Look For (cont)
• What do the judges look for in a plan?
The judges look at many different issues when
evaluating executive summaries and business plans, including:
•
•
•
•
•
•
•
•
•
•
•
Joe Hadzima
Dec 3, 2011
Is the team of sufficient breadth, balance and quality to make its ideas happen?
Will the ego of the founder(s) get in the way of success?
Is the team focused on its target market?
What is the expected time and amount of pay-off to investors?
Is the reader familiar with and interested in the given market space?
Is the plan clear and well-written?
Does the team have the necessary communications skills to present a compelling story?
What roles will the team members play in the venture?
Are the team members dedicated to the venture and their roles in the group?
Does the team have a clear plan for spending the investment money it receives?
Why is this business going to be around and a real world winner in 5 years?
3
BUSINESS PLAN BASICS
Nuts and
Bolts of
Executive
Summary
and Pitch
• The Business Plan - A SUPPORTED VISION
Mission/Vision Statement 1 paragraph
Elevator Speech 30 seconds
Executive Summary 2-5 pages
PowerPoint Presentation
10slides/20minutes/30pt
Full Business Plan
Joe Hadzima
Dec 3, 2011
Team
Sales and
Distribution
Competitive
Analysis
Market
Analysis
Intellectual
Property
Technology
Financial
Projections
20-30 pages
Detailed
Support/Foundation
4
How Investors’ Think:
Nuts and
Bolts of
Executive
Summary
and Pitch
Joe Hadzima
Dec 3, 2011
What are the 2 Basic
Investor/Human Emotions that You
Have to Understand?
• FEAR
• That you will lose the money
• GREED
• That they will miss the deal of
the century
5
Nuts and
Bolts of
Executive
Summary
and Pitch
Joe Hadzima
Dec 3, 2011
The Executive Summary
6
What is an Executive Summary?
Nuts and
Bolts of
Executive
Summary
and Pitch
• It is the First Thing Investors/Judges Read
• It is a “Resume” for your Full Plan
• Goal is to get the “Interview” to Give the Pitch
• What Do Judges/Investors Really Look For?
• The “3 Whys”
• Why This?
• Why Now?
• Why This Team?
• The 4th Why:
• Why Won’t This Work/Succeed?
Joe Hadzima
Dec 3, 2011
7
The Executive Summary
Nuts and
Bolts of
Executive
Summary
and Pitch
• An Executive Summary is
– NOT an introduction
– NOT a preface
– NOT a random collection of highlights
• An Executive Summary IS the Business
Plan in miniature
Joe Hadzima
Dec 3, 2011
8
The Executive Summary
Nuts and
Bolts of
Executive
Summary
and Pitch
• Size
– Two pages (preferable) to five pages (max)
• The Executive Summary must be
– Logical
– Clear
– Interesting/Exciting
• The Executive Summary is like a RESUME
Joe Hadzima
Dec 3, 2011
– If it gets the reader’s attention, the rest gets
read
– The Elevator Speech is to the Exec Summary
as the Exec Summary is to the Full Plan
9
The Executive Summary
Nuts and
Bolts of
Executive
Summary
and Pitch
Joe Hadzima
Dec 3, 2011
• The Executive Summary tells
– What the Market/Opportunity is
» How Big Is It or Will It Be?
– Who You Are
– What your strategy/vision is
» What you are doing and/or propose to do
– How many $$$$ do you need and what will you do
with them
– What your SUSTAINABLE COMPETITIVE
ADVANTAGE is
• When the reader is finished he or she should be able to
tell someone what you are up to.
10
The Executive Summary
Nuts and
Bolts of
Executive
Summary
and Pitch
Joe Hadzima
Dec 3, 2011
• Ideally: The Executive Summary Should
Contain:
– Description of the Business Concept and the
Business
– The Opportunity and Strategy
– The Target Market and Projections
– The Competitive Advantages
– The Economics, Profitability and Harvest Potential
– The Team
11
EXECUTIVE SUMMARY: ELECTRONIC COMPONENTS, INC.
EXECUTIVE SUMMARY: PEOPLE EXPRESS
The Eastern seaboard of the United States is ripe for the entry of a new,
superefficient, low-cost air carrier to provide quick, reliable inter-city air
transportation. Such an entity would bring to the Northeast the same benefits that
have accrued to other areas of the United States. Chief among these are:
• Frequent jet commuter service between major cities
• Prices competitive with private automobiles
• Fulfillment of the congressional goals in enacting the Airline Deregulation
Act of 1978 to have better service at lower fares.
The new company will be able to achieve these goals for the following reasons:
• Aggressive, innovative management that has been tested in the field and
been on the leading edge of innovation in air transportation marketing
and systems
• Equipment and facilities designed specifically for the low-cost production
of air transportation
• Manpower selected, trained, and motivated to be efficient and profit
oriented
• New systems to be applied to the entire business of air transportation to
minimize investment in manpower and machines
All of these, when applied to the new entity, will result in considerable economies
vis-à-vis existing air carriers.
• 40 years of regulation have created an industry heavily unionized with
tremendous inefficiencies
• The economics of a new entity should be at least 30%-40% better per seat
mile than the current trunks.
• Other new carriers such as Southwest or Air Florida have shown a
consistent ability to compete on a price basis and earn extraordinary
returns
• The current political, economic, and regulatory climate is ideal for the
proposal herein envisioned.
• The Northeast is waiting for someone to bring it what the rest of the
nation already has: low air fares.
Excerpted from: Gumpert, David E., How to Really Create A Successful Business Plan, INC
Publishing, 1990
Electronic Components, Inc. is a start up company that will make a variety of
electronic components, beginning with a new type of aluminum-based capacitor.
This unique product, coupled with excessive demand for capacitor devices, will
provide us with an ample share of the capacitor market and numerous opportunities
for expansion into related electronic components.
The founders are dedicated and determined to make the venture a successful
and profitable entity. Technical expertise is provided by James F. Lynch, who has
been involved in designing capacitors for 11 years. He obtained a Bachelor of
Science degree in electronic engineering from the Massachusetts Institute of
Technology.
Technology for capacitors is changing rapidly. Electronic Components, Inc.
has an opportunity to capitalize on a major technological change by getting off to a
quick start and expanding quickly.
This proposal pertains to two additional phases of required financing. The
first phase, consisting of about $150,000 for pilot plant start-up, has been completed
from the personal funds of the principals.
The remaining financing is for the
following:
Phase Two: Obtain $750,000 capital for:
• Hiring and training production personnel;
• Purchasing additional equipment necessary
productivity;
• Develop the market;
• Complete the sales rep network;
• Explore new markets.
for
appropriate
Phase Three: Increase Production and Sales
• Computerize manufacturing to triple output with minimal increase in
labor;
• Begin exporting;
• Expand new marketing activity.
Financing will be used to purchase manufacturing equipment, hire the
necessary employees, and develop new markets. In addition, management intends
to spend between 10% and 20% of revenues on research and development of new
products.
The electronic component field offers attractive opportunities for fast sales
and profit growth. Already, demand exceeds supply in the capacitor area as well in
other related areas.
EXECUTIVE SUMMARY: ELECTRONIC COMPONENTS, INC.
Electronic Components, Inc. is a start up company that will make a variety of
electronic components, beginning with a new type of aluminum-based capacitor.
This unique product, coupled with excessive demand for capacitor devices, will
provide us with an ample share of the capacitor market and numerous opportunities
for expansion into related electronic components.
The founders are dedicated and determined to make the venture a successful
and profitable entity. Technical expertise is provided by James F. Lynch, who has
been involved in designing capacitors for 11 years. He obtained a Bachelor of
Science degree in electronic engineering from the Massachusetts Institute of
Technology.
Technology for capacitors is changing rapidly. Electronic Components, Inc.
has an opportunity to capitalize on a major technological change by getting off to a
quick start and expanding quickly.
This proposal pertains to two additional phases of required financing. The
first phase, consisting of about $150,000 for pilot plant start-up, has been completed
from the personal funds of the principals.
The remaining financing is for the
following:
Phase Two: Obtain $750,000 capital for:
• Hiring and training production personnel;
• Purchasing additional equipment necessary
productivity;
• Develop the market;
• Complete the sales rep network;
• Explore new markets.
for
appropriate
Phase Three: Increase Production and Sales
• Computerize manufacturing to triple output with minimal increase in
labor;
EXECUTIVE SUMMARY: PEOPLE EXPRESS
The Eastern seaboard of the United States is ripe for the entry of a new,
superefficient, low-cost air carrier to provide quick, reliable inter-city air
transportation. Such an entity would bring to the Northeast the same benefits that
have accrued to other areas of the United States. Chief among these are:
• Frequent jet commuter service between major cities
• Prices competitive with private automobiles
• Fulfillment of the congressional goals in enacting the Airline Deregulation
Act of 1978 to have better service at lower fares.
The new company will be able to achieve these goals for the following reasons:
• Aggressive, innovative management that has been tested in the field and
been on the leading edge of innovation in air transportation marketing
and systems
• Equipment and facilities designed specifically for the low-cost production
of air transportation
• Manpower selected, trained, and motivated to be efficient and profit
oriented
• New systems to be applied to the entire business of air transportation to
minimize investment in manpower and machines
All of these, when applied to the new entity, will result in considerable economies
vis-à-vis existing air carriers.
Nuts and
Bolts of
Executive
Summary
and Pitch
Joe Hadzima
Dec 3, 2011
The Pitch
My Thanks to Stephen Pearse For the Inspiration for These Slides
15
The Pitch - Getting Money
Nuts and
Bolts of
Executive
Summary
and Pitch
• VC Noise
• Get Introduced
• Memorize Elevator Pitch
– For <target customers> who are dissatisfied with <current alternative>,<our
product> is a <new product category> that provides <key problem solving
opportunity>. Unlike a <competitive substitute>, we have assembled <key
whole product features>.*
• One Shot
• Induce “Greed”
* Geoffrey Moore, Crossing the Chasm
Joe Hadzima
Dec 3, 2011
16
The Pitch: KISS
Nuts and
Bolts of
Executive
Summary
and Pitch
Joe Hadzima
Dec 3, 2011
•
•
•
•
•
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•
*Really* Simple!
Hook
Target Audience
Lowest Common Denominator
Keep It Short (10slides/20minutes/30ptFont)
Pictures!
Answer detail/curveballs quickly
Passion! Engage! Confidence!
17
Basic Pitch Anatomy
Nuts and
Bolts of
Executive
Summary
and Pitch
Joe Hadzima
Dec 3, 2011
•
•
•
•
•
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•
•
Hook (Problem or Opportunity)
Your Solution
Market
Sales Strategy
Revenue Model/Business Model
Competition
Management Team
Financials
The Offer
18
The Hook
Nuts and
Bolts of
Executive
Summary
and Pitch
Joe Hadzima
Dec 3, 2011
• Pain or Huge Market Opportunity
– 7 Seconds
– “Imagine a safe rubber coating that conducts
electricity…”
– “Have you ever felt threatened?”
– “Our box is 10x smaller, faster, cheaper”
– “Do you get poor cell phone reception at home or
work?”
19
Nuts and
Bolts of
Executive
Summary
and Pitch
NO Geek Speak
• WRONG:
– Our technology is the first integrated and automatic book
scanner that will scan and digitize bound documents at a
speed of 1,200 PPM at a fraction of the cost of existing
solutions based on a disruptive digital imaging technology
initially developed at Bell Labs and protected by 12
patents.
• RIGHT:
– We enable sharing knowledge massively by
digitizing physical libraries at a very low cost.
Joe Hadzima
Dec 3, 2011
20
Focus of Pitch
Nuts and
Bolts of
Executive
Summary
and Pitch
• Customer Benefits NOT Tech Benefits
• Tech Benefits- **SO WHAT?**
–
–
–
–
Improved Network Utilization
Scalable, Adaptable
Secure integration
Seamless Integration
• Business Benefits- Pain Reduction!
– Increase Revenues by 60%
– 34% cost reduction in 12 months
Joe Hadzima
Dec 3, 2011
21
Style
Nuts and
Bolts of
Executive
Summary
and Pitch
Joe Hadzima
Dec 3, 2011
•
•
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•
•
•
Use best presenter
Have egghead in room
Give firm answers (or none)
Look at everyone in room
Do your homework
Pull Questions
22