You Have to Be Clear

It has to be a simple solution…It comes down to a human being issuing a purchase order for something that he or she understands to which I have to convince their managers and their peers to go buy.” This is what Doug Leone, former CEO of Sequoia, said on a recent podcast when asked about what he looks for in a winning investment. 

I recently spoke to a founder who had a great-looking deck, a credible team, and is operating in a huge market. The founder was clearly very smart and the technology sounded impressive. But the company was a quick pass for us, as the founder had one fatal flaw; despite multiple ways of asking, he couldn’t clearly explain what his business was actually doing. 

This is not an isolated incident. Founders, particularly those who are deeply involved in the technical details of their product, often become myopic, overlooking the broader narrative of their business. This is most common with technical founders who might revel in the intricate challenges they’ve overcome. They may have solved a really cool and intellectually challenging problem, but it’s only the 6th most important feature in a product where there are lots of competitors who have the first five. 

In my early days as an investor, encountering such a founder would lead me to question my own understanding. I wondered if the problem lay with me – was I simply not grasping the concept, or was the founder just operating on a plane of thought beyond me? But talking to some more experienced investors assuaged my worries. 

The responsibility to convey a complex business idea clearly and compellingly lies with the founder. No matter the sophistication of their product, if they can’t explain it succinctly, they will struggle to attract talent, investors, and customers at scale. The most effective founders have the ability to demystify complex ideas and generate broad enthusiasm, akin to Carl Sagan or Neil DeGrasse Tyson with astrophysics. 

If you are a founder, make sure that you have your pitch nailed before you go out to investors – you just can’t count on them giving you honest feedback here. Few investors will tell you “I don’t understand what you are doing” because they worry that they’ll look unintelligent. Here’s my suggestion for how to test yourself: give your elevator pitch to at least 3 people from outside of the tech world. Talk to your neighbors or some friends from other industries. See if they can really grasp what you are doing and why it matters after a short explanation. No matter how technical your product is, if you get blank stares or vague “that’s cool” responses, you still Yeah Yeah need to simplify.