Product Demos start much before the product has come into being. Startups would do well to follow Steve Blank’s customer development, in arriving at the definition of what the product would be. While most of the demos with prospective customers would be around the problem, the degree of pain, day-in-a-life of the end-user and the benefits of your proposed solution, a demo to prospective investors would be slightly different.
Judging from demos of 20+ companies from two accelerators I was part of, in the last week, it was clear that this is one area where startups/entrepreneurs have to do some work. As I was giving my inputs/feedback, I thought it would be useful if I created a template for a early-stage startup demo.
Notice that I am not saying it is “early-stage product demo”, with good reasons. As an early-stage startup, while you might have an incarnation of your product ready, it is bound to change. What you are selling at this stage is the vision, the understanding of the problem and your customer. You are also demonstrating your understanding of how you would convert this idea, product into a business.
So what should an ideal demo comprise of?
Demos can be done differently and depends on who does it. Rather than profess a particular way of doing a demo, I will give you some of the ingredients that go towards a great demo and hopefully help you meet your objectives.
We all are suckers for a Story
Almost always start with a story on why this world needs your product. A real-life personal story would make it that much more convincing. If you don’t have a personal story, the next best thing to do is to look for one during your Customer Development. Try and understand the day-in-a-life of a prospect, first without your product in it and imagine the same with your product in it. Have them imagine their world with your product in it and see if they can quantify the benefits. Having customers explain what it would do to their world carries more weight than your proclaiming that your product would change the world.
For good measure – recap the problem and the value proposition once more after the story, so it stays on top of the mind of the audience.
After having outlined the problem and the value of solving that problem, explain in brief how your product intends to solve it. Spare the audience the mind-numbing tech jargons and intricate technical details. Your incredible caching technology that blows the socks out of MemCache by doing some sophisticated hashing and compression might alienate some investors who might not be tech-savvy but might genuinely be interested in the problem you are solving. So don’t lose them with technology deep-dive and stick to the customer speak and only if pushed during Q&A get into technical details.
Who would make a good Customer
This is the opportunity for you to share how well you did your Customer Development or Product/Market fit. If you think and say – the entire world is your market – it might sound bad. All businesses start with a narrow focus. So highlight that fact and if you are very sure of how you would expand later, give them a glimpse of that. When talking about customers – clearly identify who uses the product and who pays for it. The investors are smart and can see the other opportunities, even if you did not mention.
How big is the opportunity?
It is common practice to quote Gartner’s “pull-it-out-of-thin-air” market sizing numbers to highlight the size of the market you are going after. Unless you are creating a product that is a SaaS version of on-premise software, there is no way Gartner projections work for you. They only, if ever, predict things for established markets (if you know their business model). Assuming you are disrupting a market with a solution that is meeting an unmet need, the projections of a market are, if anything, speculation. If you know anything about investors, there is a considerable distaste for such arbitrary market sizing numbers. It might even indicate your naivety. You should rather talk about up-sell opportunities and the segmentation you have done to arrive at the target market you are going after. It takes a couple of years of runtime for you to establish a good measure of Lifetime Value of customers.
Sales is the bane of all startups. Building product is easy. Identifying customers and getting your product into the hands of the customer and then charging them for it is the tough part. It is likely that you will get more questions in this area. So do your role-playing among your team on why something might work and why not – before you go to a demo. Remember the founding team members would be the first set of sales people for the company. Your first few sales will come through personal networks. That said, you need to demonstrate how you would scale. If your strategy is Freemium, then you will need to demonstrate your abilities around Inbound Marketing and Free-to-Paid conversion. If your strategy is channel, then you better have someone on your team who has done that successfully. Just realize, getting a channel strategy working is a mirage. It makes sense for both sides to partner but the results somehow elude.
What will it cost them ?
Talk about pricing, licensing model, implementation, who are you replacing (if you are), how sticky you think your product would be. If you are going with Freemium model, then outline the lifecycle of a customer and what will cause the conversion to a paid customer.
This is where you talk about the team. Why your are the most suitable to solve the problem you are trying to solve. All the highlights like ex-Google, ex-Facebook, ex-Oracle (being loyal to my ex-employer) go in here. Connecting your past job to the current problem would be very smart. While outsiders think outside the box, they are far and few. A Googler who worked on AdSense team would have more credibility doing a AdTech startup than someone from ERP world.
What are you seeking?
Teams often miss mentioning what they are seeking. “Ye Have not because Ye ask not”. Making the ask for the investment should be the objective of the investor demo. Even if not asked, I would go ahead and mention what you intend to do with that money. Hire the Marketing VP, three machine learning engineers, Hire that smart Facebook engineer etc. If the money is being spent on biz-dev/sales effort then give some indication.
How can people reach you?
Do make it easy for people to reach you. The more people that talk to you the better prospects for your company. Having a good website is imperative. Doing skimp on the website. Make sure you share your contact information or leave a card behind.
Granted that you will not have enough time to cover all these points in as much detail, but used this for preparation as things might come up during Q&A.
Here is a quick template for you to start planning your demo