How do you get somebody interested in investing in your startup? You pitch them the idea. Pitching skills are widely considered fundamental to basic entrepreneurship, and this skill is taught, evaluated and rewarded as part of almost any entrepreneurial education. But teaching pitching as a primary skill of entrepreneurship sets the wrong priorities for aspiring entrepreneurs. Startup ideas are best evaluated in writing, without the emotions created with a live performance.
If we want to produce more successful entrepreneurs, we must adopt a fast and effective test that evaluates all the things we know relate to entrepreneurial success: the entrepreneur, the idea and the support team. Here is a process that could simply and effectively replace the pitch for evaluating potential entrepreneurial leaders and their ideas: + Ask aspiring entrepreneurs to send in advance a written description – under 400 words – describing their idea, their team and why they expect to produce a good financial and/or social return. + Potential judges and/or investors read the summaries in advance and formulate three hypothetical situations that could occur in the development of the idea. Each entrepreneur and his or her supporting team are given 15 minutes to develop proposed solutions, responses or next steps to the three hypothetical situations. They are then given five minutes to present their responses.
This process evaluates, in a time-efficient manner, the entrepreneur’s leadership ability, the idea and the quality of the entrepreneur’s team – three things we know are critical entrepreneurial success factors. Some venture capitalists run a process similar to this, but they do not give the entrepreneur the hypothetical problems in advance; they just immediately interrupt the pitch by asking the entrepreneur what he or she would do in a particular situation. This variation tests the entrepreneur’s ability to think on his or her feet, but it tends to overlook the potential strengths and contributions of the introverts on the team. In general, coming up with and verbalizing ideas under pressure tests more for extroversion than it does for leadership. It’s time to ditch the pitch.
(Derek Lidow teaches entrepreneurship, innovation and creativity at Princeton. He is the founder and former CEO of iSuppli Corporation and the author of “Startup Leadership: How Savvy Entrepreneurs Turn Their Ideas Into Successful Enterprises.”)
