MassChallenge

Innovation
Collaboration
Impact

John Harthorne john@masschallenge.org

Akhil Nigam akhil@masschallenge.org

David Constantine david@masschallenge.org

DRAFT

June 2010
MassChallenge judging process, round 2

In-person pitches
• ~300 teams invited to pitch (~70%)
• Panels consist of 3-5 general experts (not industry specific)
• Investors
• Principals or Partners at VC firms
• Angel investors
• Lawyers
• Partners at Law firms
• Entrepreneurs / executives
• Experienced business experts
• Each team gets 20 min
• 10 min to present
• 10 min for Q&A
• (10 min for judging and transition)
• Rating system same as for round 1
• 7 sections, all equally weighted except impact 2x weight
• Judges have no prior knowledge about your team – blank slate
MassChallenge, Harthorne, Nigam & Constantine 1
Many of you have asked for advice …
here you go …

MAIN DISCLAIMER
I am not a judge.
I do not influence judging.
My advice could be COMPLETELY incorrect.
You control your own destiny.
Make decisions wisely.

SECONDARY DISCLAIMER …
My wife had a baby last Thursday so I’ve been a
little busy lately ...

MassChallenge, Harthorne, Nigam & Constantine 2

John’s thoughts on pitching … NOT authoritative

Some thoughts
•  There is no one correct way to pitch, e.g.
•  Try to cover all sections
•  Focus only on areas of strength
•  Focus only on areas of weakness
•  We are seeking high-impact startups
•  Sell your vision ! describe outcomes
•  Sell your viability ! describe inertia
•  Prepare for Q&A
•  Demonstrate in-depth knowledge of your technology,
market, competitors and customers – prep for Q&A
•  Why should an objective outsider believe you are
launching a viable, high-impact startup?

MassChallenge, Harthorne, Nigam & Constantine 3

 www.masschallenge.org
contact@masschallenge.org

MassChallenge Judging Criteria

Solution and Technology (10%): Rating of 1-10
• Is the technology / solution feasible? Is this still a science project?
• Does the technology / solution provides a clear benefit over the solutions
that exist in the market today?
• Does the team have a clear product roadmap strategy?

Industry and Competitors (10%): Rating of 1-10

• Is the entrant targeting a large market?
• Does the team understand the industry structure, value chain and its place in
the value chain?
• Has the entrant outlined a feasible partnership strategy (if needed) with
different players in the value chain?
• Does the team have a realistic view of existing and future competitors and its
competitive advantage or how one can be built over time?

Customer Needs and Acquisition/Sales and Marketing (10%):

Rating of 1-10
• Does the team understand customer pain points? Is the problem critical for
the customer (high marks) or just nice to have (low marks)?
• Does the team have existing customers or customer feedback?
• Can the team articulate a unique and clear value proposition for the
customer?
• Does the team understand the buying behavior and sales process?
• Can the idea scale in a capital efficient way (Sales model)

Business Model and Financials (10%): Rating of 1-10

• Does the team have a realistic model for potential revenue streams and
business model?
• Has the team valid assumptions regarding pricing, breakeven volumes,
margins and other key financial attributes?
• Does the team have a realistic view on capital required to hit major
milestones? Are these feasible targets?

MassChallenge, Inc. P.O. Box 426155, Cambridge, MA 02142

 www.masschallenge.org
contact@masschallenge.org

Team (10%): Rating of 1-10

• Is the ideal team in place for this idea or requirements outlined for the ideal
team including Board of Advisors and Directors?
• Has the team progressed and validated its idea with external people in the
most important aspects of their business?
• Is there compelling reason to believe that this team can pull it off as opposed
to others in the space?
• In person pitches only – Do you believe that the founding team can build
this startup?

Legal and Regulatory (10%): Rating of 1-10

• Does the team have a clear strategy in regards to creating and managing its
IP assets? (if applicable)
• Are there major legal hurdles / potential regulatory problems to implement
this idea?

Overall Impact (20%): Rating of 1-10

We are looking for transformative businesses
• Does this startup have the potential to impact markets and society in a
meaningful way?
• Does this startup represent a viable investee or grantee for capital providers?
• Do you think this team can benefit from MassChallenge?

Endorsements (10%)
Elevator Pitch Rating (10%)

Written Feedback:
Your feedback must be at least 160 characters.
Please list the top 3 feedback points for this team. For example:
• What are the three biggest risks for this team
• What are the critical milestones that you would like to see the entrant
achieve in the next three months?

MassChallenge, Inc. P.O. Box 426155, Cambridge, MA 02142

 Life’s a Pitch

6.976
The Founder’s Journey
K. Zolot

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 1

 Zolot’s Law of Three Nines

9 seconds gut feel

90 seconds elevator pitch
9 minutes gist of the
presentation

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 2

 After the First 9 Minutes

25 minutes concise
presentation
45 min. full presentation
90 min. the whole story w Q&A

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 3

 What We’re Going to Talk About

•  Social dynamics of pitching.

•  The presentation itself.
•  “Talking in headlines”

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 4

 Headlines

RIVAL SAYS HE IS READY FOR RUNOFF WITH KARZAI!

MATCHES WELCOME WHERE SMOKERS AREN’T!

YAHOO’S PROFIT TRIPPLE DESPITE SALES DECLINES!

A NEW ELECTRONIC READER, THE NOOK, ENTERS

THE MARKET!

BALOON SAGA DEVOLVES INTO FISTFIGHTS!

MALDEN MAYOR DEFENDS SECRET MAILINGS!

SOX KICK AROUND IDEA OF SOCCER AT FENWAY

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 5

 More Headlines

SOMETHING WENT WRONG IN PLANE CRASH,

EXPERTS SAY !

DOCTOR TESTIFIES IN HORSE SUIT!

DRUNK GETS NINE MONTHS IN VIOLIN CASE

6.976 “The Founder’s Journey” With ! 2010toCopyright

thanks Heidi Neck,–Babson
K. Zolot, MIT
College! 6
 Your Audience
You’ll use this pitch for:
‒  investors
‒  key hires/co-founders
‒  creditors/suppliers
‒  possible partner companies
‒  early customer prospects
‒  visits to 6.078 next year as
a guest speaker

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 7

 Goals of Presenting

•  Show (quickly) that you understand who

the customer is and why he/she’s buying.
•  Introduce the team
•  Answer questions, show that you can
think on your feet.
•  Be on stage: show teamwork, urgency,
charisma, generate excitement

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 8

 The time dimension

Discuss milestones you’ve

already reached, and those
you’ll need to hit. Show
awareness of an action plan
and schedule, risks,
dependencies (good and bad).

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 9

 Knowing/Preparing Your Audience

•  If coming in via an “advocate”,

use him/her.
•  If coming in cold, be conscious
of interactions that lead to the
meeting.
•  Know what they know about you
before your arrival: what holes
in the story are they looking to
see if you can fill?
•  Arrive with a positive new
development.
6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 10
 Do's and Don’ts continued
•  Bring hard-copy, but don’t hand it
out before you begin, don’t send it
in advance.
•  Don’t try a demo or use special A/V
•  Be prepared for A/V problems,
bungling something you’re trying to
say, or a hostile or a dead
audience.
•  Know the computer that’s
projecting.
•  Look at the room, understand light,
glare, lines-of-sight.
6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 11
 Do’s and Don’ts continued...
•  Don’t read from slides. Have minimal
text on slides. Do as I say, not as I
do.
•  “Mute” the screen between topics.
•  Use PPT as conclusion.
•  Number the pages.
•  Skip the bland table of contents, use
the exec summary for this.

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 12

 Do’s and Don’ts continued...

•  Use light text on dark

background for presentation,
negative for hand-outs.
•  Make graphics crisp and
reflective of good news, but
not flashy or over-produced.

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 13

 Do’s and Don’ts continued...
•  Rehearse with friends (possibly your
advocate).
•  Be aware of what’s on the screen
during breaks, Q&A.
•  Don’t overlook “pre-meeting” and
“post-meeting” interactions and
socialization.
•  Don’t leave just because you’re at
the end of the presentation.

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 14

 Pitching Do’s and Don’ts
•  Use humor or try to cut through the
invisible wall, but be careful, and
don’t sound like a used car
salesman.
•  Have a role for all the people you
bring.
•  Don’t bring a half-relevant “grey-
hair”.

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 15

 Do’s and Don’ts continued...
•  Make no unsubstantiated claims
wrong: “our drug will sail through the FDA”
right: “we’re well poised for the FDA process, as our
scientists have 40 years combined experience
getting drugs approved”
•  Don’t exaggerate or use dramatic
language
wrong: “this market’s taking off like wildfire”
right: “Most analysts agree that the market will grow
85% per year for the next five years” (and have
the sources)
•  Brag about each other, but factually …
wrong: “Now I would like to introduce our awesome CTO
who’s going to rock your world”
right: “We’re really thrilled to have a CTO who was a
Fulbright Scholar, and just sold his last company
for $20 billion”

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 16

 Book...

S. I. Hayakawa,
Language in Thought and
Action

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 17

 Do’s and Don’ts continued

•  Be ready for a barrage of questions,

attempts to throw off your flow.
•  Know how to deal with a “drill down”
guy.
•  Cite believable sources.
•  Anticipate questions and discuss
before asked: “One question you
might have…. is how quickly is the
Linux market growing?”
•  Know how to say “I don’t know”
gracefully.
•  Don’t say “it depends”.

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 18

 Show Excitement but Not Hype
•  Remember the advice to make no
unsubstantiated claims.
•  Confidence without ego.
•  Start with conservative statements
(you are building trust and
believability).
•  Show realistic expectations, while
dangling the possibility of a grand
slam win.
•  Show ability to plan for
contingencies.

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 19

 Know Who’s in the Room
•  Don’t underestimate a so-called
“junior” member of the team.
•  Maybe the person you’re talking to...
‒  is going to do the checking-up on you
‒  wants to take you under his/her wing
‒  is going to object just to sound opinionated,
vs one who has a legit objection
‒  might have a similar deal brewing
‒  got burned on something similar a few years ago
‒  has good relevant experience in your field
‒  has thoroughly checked into you before the
meeting and knows all about your business
‒  just stumbled out of bed and has no idea who
you are and why he/she’s in the meeting

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 20

 Reveal Secret Sauce?
•  NDAs
•  Black Boxing
•  “Why is this better”?
•  Understand IP law
•  Track record, credibility
•  First mover
•  “Cheaper to buy us”

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 21

 The PowerPoint Pitch
Three sections:
1.  First 2 or 3 slides: executive
summary, key points
2.  ~15 more slides: details and
further discussion
3.  Appendix: supporting research,
Q&A

Be prepared to jump around,

change order

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 22

 Don’t Waste the Time of Your
Audience...
… with dumb mission statements,
lectures about how we’re
evolving into an information-
based society, or a venting of
your aspirations to contribute
to humanity.

Get into it right away: first

few minutes are key.

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 23

 Get Into Tactics...
•  Show predilection for action.
•  Show list of prospects, or early
adopters. Large, growth market.
•  Show an understanding of the
customer’s problems.
•  Described technology-based
differentiation, “secret sauce”,
discuss patents/barriers
(defensible, sustainable).
•  Fiscal restraint.

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 24

 Boring Summary Slide
15.390 New Enterprises, Anderson/Zolot

Agenda

•  Team
•  Market
•  Technology
•  Capitalization plan

! 2009 Copyright – K. Zolot, MIT 25

 Better Summary Slide
15.390 New Enterprises, Anderson/Zolot

Overview
Proven team lead by former X of Y, scientific advisory board with
head of X from Y!

Addressable market of $x, CIO of P&G committed to beta

testing.!

Defensible technology, exclusive agreement in place, patents

awarded.!

Raising $x to get to product launch on x/x/07, then $z to get to

cash flow positive in x/x/09.!

! 2009 Copyright – K. Zolot, MIT 26

 After the First Slides

a few tried-and-true stunts...

(don’t use all these, or even

necessarily any of them, but
they will help give you some
ideas)

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 27

 1. “Box ‘em in”: "
(put everybody else in a bland category, you’re a new
exciting category):!
True next generation
Clunky Legacy stuff! Simple translators !! enterprise-class ultra-
scaling super-cool
breakthrough !!
competitor 1" competitor 3!
!competitor 2! competitor 4! us!"
competitor 5!

Food salting Water-bound Constant-

and manual ice Temp™
preserving solutions Refrigeration

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 28

 2. Inevitability
The Internet Infrastructure Build-Out!

Bandwidth! Content ! Transactions!

Routers
 Storage

Modems
 Hosting
 EGENERA
Broadband
 Broadcast

Optical Networks" Caching

Streaming"

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 29

 3. The Upper Right Quadrant
Good " competitor 1! You!!
technology!

competitor 2!

competitor 3!
IBM!
competitor 4!

Broken"
technology!
Point product! Comprehensive"
solution!

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 30

 4. The Features Checklist

Egenera ! ! ! ! ! ! ! !
Sun ≈ " " " " " " "
IBM ! " " " ! " " "
Windows " " " " " " " "
Other Linux " " " " " " ! !

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 31

 5. Industry Roadmap

Client
consolidation;
major new
First real app vendors
applications emerge 2005
appear; ISV
integration 2004
Fragmented
corporate IM 2003
client offerings
Consumer IM 2002 .NET deployment;
client app servers
2001
Early adopter IT
acceptance; build-
Consumer out infrastructure
IM
infiltration

(source: Chuck Digate, Applied Messaging)!

 6. The Pyramid

Ice shipments today $20b !

World ice market $80b !

All refrigeration $7 trillion !

and air
conditioning
applications Available untapped market

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 33

7. “The Wall of Logos”
Our Signed Beta Customers!
 8. Milestone Timeline $8m Rev
Capital Investments Year 2011!
V1 GA launch,
Revenue Milestones
Revenues!
Product Milestones

GA1.0!
Beta
Beta 0.9!
Launch of V2 $2m Revenue,
Alpha 0.8! Development! Year 2007!
0.7!
Beta Feedback,
Alpha Product in the Field, Product Development! Cash Flow
Mgmt Team Expands! Breakeven,Q4’10!
3 $100,000
purchase orders!
Series A, $4m Series B, $12m
for Prod. Launch for Growth and
& First Revenue! Profitability!

Q1’09 Q2’09 Q3’09 Q4’09 Q1’10 Q2’10 Q3’10 Q4’10!

Headcount: 5 7 10 15 22 30 45 70!
 9. Market Overview
Market Estimated Potential Applications Key Players
Market Size ($M)
Military $960–1,200 •  Night vision •  Raytheon
•  Missile detection •  Westcam
•  EFW
•  Lockheed Martin
•  Northrop Grumman
•  L3
•  DRS
•  BAE
•  FLIR
Security $150–300 •  Security surveillance •  Sensors unlimited
•  Terrorism •  FLIR
applications •  Redshift Systems
•  Others
Manufacturing $40–50 •  Inspection •  Sensors Unlimited
and Agriculture •  Quality control •  FLIR
•  Redshift Systems
•  Others

Source: Vladamir
6.976 “The Founder’s Journey” Bulovic’s
! 2010 “Slim
Copyright – K.Format Spectrometer” i-Team!
Zolot, MIT 36
 10. Margin analysis
Competition
Retail: $100
Us 15% margin
Retail: $85
40% margin

6.976 “The Founder’s Journey” ! 2010 Copyright – K. Zolot, MIT 37