Selling Customers > Selling Investors

I once asked my friend David to sit in as a guest judge during Pitch Night in my Stanford class on entrepreneurship. He has had a long and successful career as a Silicon Valley venture capitalist, and he’s one of the smartest guys I know. I knew the students would appreciate his input.

Indeed, they did. Each student gave their three-minute pitch, and David provided lots of helpful insights. He was very supportive and encouraging to each of them.

Yet, as we walked to our cars afterwards, I could tell David was troubled. “Their pitches were built around trying to impress investors, but the thing that impresses investors most is having actual paying customers,” David pointed out. “That’s the signal an investor is looking for, so that’s really where any entrepreneur should be focusing their efforts.”

This was a really good observation, and I began to think that maybe I should have given better guidance to the students. It’s easy to get caught up in the venture capital fantasy, especially here in Silicon Valley. My students often ask me questions like, “What sort of projected profit margin should I put in my slides in order to impress investors?” or, “What’s the CAC:LTV ratio that investors want to see?” 

This is an upside-down way of thinking about building a business. A founder really should think about creating a business that successfully delivers value to customers—a business with a sustainable economic model, a business that you will be passionate about running. That’s what impresses investors. 

So as you’re building your pitch deck, make sure your focus is on selling customers, not selling investors. By doing that, you will impress investors.