How should I tailor my pitch when talking to customers?

When pitching to customers, use industry jargon to build credibility and encourage them to talk about their problems. Focus on demonstrating how your solution can personally help them as soon as possible.

Why should I avoid jargon in an investor pitch?

Investors may not be familiar with your specific industry or problem space. Jargon can confuse them and hinder their understanding of your business, whereas clear, simple language helps them grasp your value proposition quickly.

What kind of language should I use when pitching to investors?

Use simple, direct language that avoids marketing fluff. Focus on explaining what your company does in the simplest terms possible, making sure the core value is immediately understandable.

What key information do investors typically look for in a pitch?

Investors are interested in what you do (simply put), how far along you are (idea, launch, growth), the total addressable market, your business model, what you know about the market that others don't, and the capabilities of your team, especially the founders.

What aspects are customers more interested in compared to investors?

Customers care more about the product's functionality, the onboarding process, how pricing specifically applies to them, and whether it solves their individual problems. They are less concerned with market size or team founding capabilities.

Are there any exceptions to the rule of having separate pitches?

Yes, for mass-market consumer products, the investor pitch may resemble the customer pitch more closely. However, for most companies, especially those early-stage, having distinct customer and investor pitches is crucial for success.

Key Moments

How Pitching Investors is Different Than Pitching Customers - Michael Seibel

Y Combinator

Science & Technology5 min read7 min video

Mar 14, 2019|114,825 views|3,102|61

YC Y Combinator Michael Seibel Customer Pitch vs Investor Pitch Customer Pitch Investor Pitch Advice Essay Pitching Pitching Investors Sales Socialcam

Save to Pod

Key Moments

TL;DR

Investors want to know if you can build a big business, while customers only care if your product solves their specific problem, requiring two distinct pitches.

Key Insights

Customers are personally invested in solutions to problems they understand, fostering credibility through industry jargon and prolonged discussion about their issues.

Investors, unless pitching a mass-market consumer product they'd use, may not understand the problem and are deterred by jargon, prioritizing clear, fluff-free explanations of the business model.

A strong investor pitch typically addresses six key areas: what you do, your progress stage, market size, revenue model, unique market insights, and team capability for product execution.

Customer conversations delve into product functionality, onboarding, specific pricing applications, and how the solution addresses their individual pain points through demos and screenshots.

For most companies, especially those going through Y Combinator, it's crucial to develop separate pitches for investors and customers, as the motivations and information needs of each group differ significantly.

Founders often struggle to differentiate their pitches and require practice within the first month to convince them of the necessity of two distinct approaches to pitching.

Tailor your pitch: investors seek business potential, customers seek problem-solving

The fundamental difference between pitching to investors and customers lies in their core motivations. Customers are intimately familiar with the problem you aim to solve and are personally invested in your solution. Your pitch to them should build credibility using industry-specific jargon and encourage them to elaborate on their challenges, allowing you to demonstrate how your solution directly alleviates their pain points. This approach is effective for sales calls, website front pages, FAQs, and user interviews. Conversely, investors are primarily concerned with the potential for building a large, profitable company. Unless you are presenting a consumer product they are likely to use themselves, you must assume they do not fully understand the problem. Therefore, jargon is detrimental, and the pitch must be exceptionally clear and free of marketing fluff. A common mistake is using the same pitch for both audiences, which is rarely effective because their needs and interests diverge significantly.

Customer pitches leverage industry language and deep engagement

When engaging with customers, building rapport and credibility hinges on speaking their language. This means employing industry-specific jargon, allowing customers to dominate the conversation by discussing their problems, and quickly demonstrating how your solution offers personal benefits. The goal is to have them articulate their needs extensively, providing you with the context to tailor your response. This customer-centric approach is vital for sales interactions, website content, and user feedback sessions, ensuring the messaging resonates directly with their experiences and requirements.

Investor pitches demand clarity and focus on business viability

For investors, clarity is paramount. Avoid jargon, as it can create confusion rather than build credibility. Instead, focus on explaining your business in the simplest terms possible. Questions typically revolve around: what you do, how far along you are (idea, product development, launch, growth), the size of your total addressable market (TAM), your monetization strategy, your unique market insights compared to competitors, and the capability of your team to execute. These are the critical factors investors evaluate to assess the potential for a significant return on their investment. A pitch that is dense with industry terms or vague marketing language will likely fail to capture their interest or provide the necessary information for them to make an informed decision.

Avoiding marketing fluff in investor communications

Investors have to filter out what they call 'marketing language' or 'fluff' – hyperbolic statements like 'we're building a platform' or 'this is the first thing ever done' – to understand the core of your business. These phrases don't convey concrete information about what you actually do or how you operate. For instance, pitching Google as 'organizes the world's information' is unhelpful to an investor unfamiliar with Google’s services. A better approach explains the mechanism: 'Google's a new type of search engine. You go to our website, type what you want, and we return a ranked list of websites that can help you, ranked by how other websites link to them.' This clear, descriptive method, even without jargon, helps investors grasp the product's function and value.

The anatomy of an effective investor pitch deck

An investor pitch is typically reserved for a pitch deck and should not be confused with public-facing materials like your website's front page, unless your product is consumer-oriented and you can assume the investor is also a user (e.g., Yelp, Uber). The six core questions an investor wants answered are: 1. What do you do? (in the simplest terms). 2. How far along are you? (idea, building, launched, growing). 3. How big is the market? 4. How do you plan to charge? 5. What unique insights do you have about the market? 6. Who is your team and can they build the product? These questions focus on the business's potential and execution capability, rather than the minute details of product usage.

Customer interactions focus on product specifics and user experience

In contrast to investor pitches, customer conversations dive deep into the practical aspects of the product. Customers are highly interested in the specifics of functionality, the onboarding process, how pricing directly impacts them, and precise solutions to their unique problems. This often involves showing screenshots, conducting live demos, and discussing implementation details. While investors might be interested in the number of potential customers, customers care about how the product can be purchased and used by them, right now, to solve their immediate issues. This granular focus is essential for validating product-market fit from the user's perspective.

Situational exceptions and the need for practice

While the distinction between investor and customer pitches is generally critical, there are exceptions. For mass-market consumer products, the investor pitch might indeed look more like a customer pitch, as investors might be users themselves. However, for most companies, particularly early-stage startups applying to programs like Y Combinator, maintaining separate pitches is paramount. Founders often struggle with this separation initially, needing persistent practice within their first month to internalize the necessity of tailoring their message to the distinct motivations and informational needs of each audience. The goal is to avoid a one-size-fits-all approach that attempts to satisfy both investor and customer simultaneously.

Mentioned in This Episode

●Companies

●Organizations

●People Referenced

Investor vs. Customer Pitch Cheat Sheet

Practical takeaways from this episode

Do This

Customer Pitch: Use industry jargon and language

Customer Pitch: Encourage the customer to speak about their problem

Customer Pitch: Focus on how the solution helps them personally

Investor Pitch: Assume they don't understand the problem, avoid jargon

Investor Pitch: Use simple, understandable language

Investor Pitch: Clearly state what you do, your progress, market size, business model, unique insights, and team capabilities

Investor Pitch: Focus on the business and market opportunity

Customer Pitch: Focus on functionality, onboarding, and specific problem-solving

Avoid This

Don't use the same pitch for both customers and investors

Don't use jargon with investors

Don't use overly flowery or marketing language with investors

Don't put your investor pitch on your website's front page (unless it's a mass-market consumer product)

Don't get bogged down in excessive product demos or screenshots in an investor conversation (unless it's a consumer product)

Common Questions

The main difference lies in audience motivation. Customers are personally invested in solving their specific problems, while investors are primarily interested in the potential for a big company and return on investment. This requires tailoring your pitch to each audience's unique interests.

Topics

Business & Entrepreneurship Venture Capital Investor Relations Customer Acquisition Founder Advice Sales Strategies Business Communication Career & Skills Startup Pitching

Mentioned in this video

Companies

Y Combinator

The organization Michael Seibel is a partner at, which helps founders practice and refine their pitches.

Google

Used as a primary example to illustrate how to craft a clear and understandable investor pitch versus a vague one.

Uber

Mentioned alongside Yelp as an example of a product where customer and user are the same, potentially blurring the lines between customer and investor pitches.

Yelp

Mentioned as an example of a product where customer and user are the same, potentially blurring the lines between customer and investor pitches.

People

Michael Seibel

Partner at Y Combinator and the speaker in the video, discussing the differences between investor and customer pitches.