Time is elastic: It seems to expand or contract according to some mysterious law that we don’t understand: At a red light, a minute takes FOREVER. (I know, I get stuck at them all the time as if a higher power is conspiring against me). But if you were starting up a company and looked to venture capitalist Rick Segal, of JLA Ventures, you’d find that a minute is probably not enough time.
In one of his blog posts, Segal describes a technique he uses to push startup founders to express themselves succinctly and competently. He calls it “The Stop Watch Test” and it works like this: Segal gets a stopwatch and then asks the founder to tell him in less than a minute what he or she does. The result is surprising: Segal reports from his unofficial “poll” that founders get it right only 35% of the time. [1]
Lesson learned for entrepreneurs? Talk fast and take out every other word.
No, of course that’s not the lesson learned! Instead, new entrepreneurs should create a well-crafted, compelling description of what they do and be able to deliver it flawlessly in less than 60 seconds. They need to cover the problem, solution, and where the money is.
And investors in early-stage businesses would do well to ask their prospective investments to perform a similar exercise: Pay attention to how the company is described by the owner/founder. Work with these prospects to fine-tune their “elevator pitch” so they can present to anyone, anywhere, without boring their audience, when asked what their new company does. Brevity, it seems, is more than just the soul of wit.
In a follow-up post, Segal talks about paying attention to how people describe their roles. Although he doesn’t intentionally draw a link between this post and the previous one, the connections are thought-provoking. In this post, Segal talks about how some of the more successful companies he’s worked with are able to tie their employee’s roles directly to a business result. [2]
Those are powerful tips! The stopwatch test will help you to know how well a founder understands what their marketplace wants and how focused they are; and the second tip will help you to know how efficient, results-focused, and even potentially profitable the startup could be.
So the next time you get a startup founder in your office, give them the stopwatch test and see how long it takes them to describe what their company does. Then ask what they do, along with any other key roles in their startup, and see if they’re able to tie each role to a business result.
Notes:
[1] The Stop Watch Test
[2] Geeks Linked to Business = Success
* For series, references are published in the last installment of the series.
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