Thoughts on startups by investors that
fund them & entrepreneurs that run them

Warning: Half a Truth is Three Times a Lie

Entrepreneurs: think of yourself in a pitch situation. You’re talking to a small collection of people you don’t know. They’re taking notes. You’re talking and showing slides from your pitch deck.

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I think you assume that on any subject you cover, there is at least one person sitting quietly watching you who knows a whole lot about that subject. Which means that a single half truth can sink an entire pitch.

I’ve seen this happen far too often. After the pitch is done, the pitchers exit, one of the investors still in the room points out a half truth. For example, somebody who knows about physical product distribution points out that the plan to get into channels ignores the power of the key distributors who feed the retail chains. For example, the conversion rate projection is way too high, or pay-per-click estimate way too low. For example, marketing costs as percent of revenue are about a fifth of the industry average. For example, competitive comparisons that have bad information in them.

What reminded me of this today was this piece on buying friends in Facebook. How do you look if you hinge one of your pitch points on success in Facebook against the background of spreading knowledge about way to manufacture that particular statistic. Which is also true of Twitter followers, with different techniques and even software packages to increase the number.

So how do you handle interruptions, and specific questions, when you’re pitching? What happens when somebody challenges you on a specific point? My suggestion is: Whatever you do, don’t pretend you know when you’re guessing. Ideally, break your assumptions down into their component pieces, explain where they came from, and be open to suggestions at that moment.

The worst option is to hide a guess with bravado and the face of certainty. Reasonable doubts are okay, assumptions are even better.

Written by Tim Berry

user Tim Berry Founder,
PaloAltoSoftware

Tim is the founder of Palo Alto Software and bplans.com, the co-founder of Borland International, and the official business planning coach at Entrepreneur.com. He has been called the "Obi-wan Kenobe of business planning" and "The Father of Business Planning." He is a serial author of books and software on business planning.

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[youtube http://www.youtube.com/watch?v=lzDBrMisLm0?wmode=opaque&autoplay=1&autohide=1&iv_load_policy=3&enablejsapi=1]

Comments

One thought on “Warning: Half a Truth is Three Times a Lie”

  1. Tim,

    The Twitter analogy struck me because I often see the tweets about getting the ten thousand followers, etc., and in response my thought is always the same, “I want to look back and feel good that I established my followers in an honorable way”.

    I think the same applies in the situation you introduce in this piece – yes the goal of business is to make the sale and all that, but if someone makes the wrong kind of sale they are in the position of a used car salesperson who just sold someone a lemon. You will go home with a little extra in your pocket that night but you will not have added any value to anyone, and have little to justifiably feel a true sense of accomplishment.

    Coming from the finance side of things, it is so much more important to lay out your information correctly and if you lack the facts say so. Disinformation, misinformation and plain old wrong information are far more damaging than I need to get more information.