Hi
In this session
we are going to understand investors
in terms of what they are looking for
We are startups
And startups need to meet and pitch our ideas to investors
So, it is very important for us to know
what they are thinking about
and what they are responding to the startups
I am going to divide two sub-sessions in this lecture
The first session is about a lecture in practice
So, more specifically,
what are investors actually looking at,
how they react, what they react to,
and what they like
Something like that
In the second session,
we will gather some scholarly papers
that understand investors
And we will review the research together
It will be very beneficial for us
to understand investors throughout some researches
So, let's begin with Michael Siebel's lectures
at Standford University
Michael Siebel
He was the CEO of Y Combinator
Y Combinator is a renowned accelerator in the world
So we will be back
after watching the short lecture by Michael Siebel
Let's watch it together
How was Michael Siebel's lecture?
In my opinion, his lecture was really great
And I think it is very insightful
Basically, his idea is to
introduce your ideas to investors
in a short, concise, and central way
It is very important
Because we should practice like this
Why?
Because simply, investors need it
Michael Siebel is export investor
and export entrepreneur
Here is a short movie clip
where Nikola Tesla introduced
alternative current idea to the investors
Let's take a look at it together
It will be very fun
So, did you finish watching Nikola Tesla's demonstration?
How was it?
Nikola Tesla came to America from Europe
He was one of the geniuses
who worked in Thomas Edison's laboratory
But he quit his job
because he was against the Edison's idea of direct current
As you can see in the movie,
he simply demonstrated his idea in front of the investors
Actually, we don't know much about the technology
But rather than talking about technology,
he simply shows how his idea works
Throughout what?
Throughout spinning egg
Do you remember that?
Actually, his simple demonstration allowed investors to understand
his concept immediately and intuitively
Please keep that in your mind about the intuitive understanding
Because the key to success of your idea pitch
is about intuitive understanding of investors
Next, we are going to look at the Steve Jobs' presentation
He is Steve Jobs
He's the king of the presentation
You can see the big difference from his presentation
Let's take a look together
How about his presentation?
To be honest with you,
I was really surprised when he took the iPod Nano
out of his pocket from his jeans
He's a genius, right?
And his simple demonstration
was much better than a hundred words
So, that's why so many people love Steve Jobs' presentation
We should copy and practice his presentation style
Next, look at this picture
Three men came into the hall
These guys are presenting their idea
in front of the Shark Tank
So, let's take a look at the pitch of the HyConn
from the Shark Tank episode
This episode is my all-time favorite
Let's watch together
It will be very fun
How about the presentation?
I think that the presentation itself is so great
I could see right away
what the situation was and what the idea was
So, did he get the enough funding
from the investors right away by his presentation?
What do you think?
It's good? It's bad?
They are in or they are out?
Let's watch the remaining video clip together
This is the remaining video clip
Let's watch together
Right, market it is
We can understand that investors definitely like a big market
At first, HyConn targeted the local government-based fire station
But targeting government side is not easy
And the size of the market itself, they're very small
So, that's why the investors didn't like HyConn idea first
But, if he showed some kind of technology inside this product,
the investors would understand
this technology can be applied to the big market,
which is just ordinary household market
It could be very big
So, this big market can attract investors' attention
So, the second important component
when you pitch your idea to the investors
You have to show how big your target market is
Your market should be great
Let's look at this picture
This picture is the Sequoia Capital's logo
Sequoia Capital is one of the big venture capital companies in the world
Sequoia Capital has put up
a structured pitch deck online
so that anyone can download it by going to their website
Here are the key questions that Sequoia Capital gave us
The first one is Company Purpose
When you pitch your idea to investors,
you mention about your company's purpose
Second, the Problem of consumers
Third, Solution of your businesses
Four, Why now?
Five, Market Potential
Six, any Competitors
Seven, the Business Model
In other words, how to make money
Eight, your Team
Nine, your financial, projection
And ten, your vision
In my opinion
Among 10 components that Sequoia Capital gave us,
those three components, red marked, are very important
The first one is Problem
When you pitch your idea to investors,
you show how critical the consumer's problems are
Second important thing is your solution
So, how to solve this problem, and what is your solution
So, your solution could be your businesses
Another important component would be
Business model
We already mentioned about the business model
So, the business model is about the blueprint of your businesses
Also, business model introduces us
how to make money
So, the investors are very curious
and very interested in your way
how to make money throughout your business model
So, please prepare
your problem of your consumers, your company's solution,
and your business model about how to make money
Another important thing is
investors expect structured flow of the presentation
So, please do not create your own way
about the presentation
About the pitch of your idea
Please follow the structured way
Let me summarize
When you pitch your business idea in front of the investors,
please remember
Good pitch could be
something that provides
intuitive understanding for your investors
Second, you target to a big market
Third, you'd better follow standard
Pitch deck suggested by Sequoia Capital
Please remember those three components
Let's move on
This is a real-world example
I prepared the early-stage Airbnb's real pitch deck
This is the real pitch deck
You can get the idea from Airbnb's early-stage pitch deck
So, the founders of Airbnb introduced
the problem of consumers first
They identified three major problems
The first problem for the consumer at that time
was the price
Price is an important concern for the travelers
Second problem was,
there is a hotel,
but hotels were disconnected from the local culture
That could be one of the problem
Then, the last problem was
there's no easy way
to book a room close to the local area
So, those three are major problems for the travelers
Great, right?
And then,
they introduced their own solution
How to solve this problem
They suggested their solution
Their solution was
That's why we created a website platform
where users can rent out their space to host travelers
in order to save the money for the travelers
Great
And in order to make additional income for the host
Lastly, in order to share the culture together
between host and the travelers
It is great
So good idea
But the investors may ask one big question
Is there any market?
So, the founder of Airbnb just showed
the alternative market already exists
Look at the Couchsurfing.com
Couchsurfing.com is an online website
to connect the host and the travelers
Then, travelers make a reservation
for the host's vacant room
And then, the host provides
relatively cheap couch or bed to the travelers
How many people already use the Couchsurfing.com?
660,000 travelers and hosts
already have used Couchsurfing.com
What about Craigslist?
The Craigslist is the online platform
that connects sellers and buyers
If you go to the Craigslist,
so many people already try to rent out their room
and so many people want a room
So, how many people use the Craigslist
for the temporary housing?
If you go to the Craigslist,
there are 50,000 temporary housing listings per week
Per week in America
So, the founders showed this number to the investors
Investors, although we don't have
any structured website for the Airbnb
But in the market,
so many people already use
the very similar and alternative website
This could be a market
The market already exists
We will use this market
It's a great point
How big the market size is
So they demonstrate market size
For example,
entire trips booked is 2 billion
2 billion trips are already booked
And 560 million
is budget and online booking
And out of 560 million,
84 million booking would be
cheap trip or Airbnb type trip
So, we will target to the 84 million for the deals
It's great
So that's why we created a product
Which is this simple website
To search by city,
consumers can review the listing,
and consumers can book it very simply
This is a three-step and three-click booking system
It's a great product
Our business model is
We take just 10% commission on each transaction
So we target to the 84 million transaction
Million deal
We focused on just 10%
Just 10% commission out of this transaction
How much is it?
We estimate to have $2.1 billion as revenue
This is our plan
It's a great plan
This is our strategy to penetrate to the market
First strategy is
We will reach out to some event
Because in this event,
so many travelers join in
and so many hosts can join in
So that's why we will focus on event
Also, we will make a partnership
with other existing travel websites
such as Orbitz.com or Kayak
Also, we will make a specialized link
throughout Craigslist
So we will attract the consumer
who already use Craiglist temporary housing
So we will target to how much?
50,000 temporary housing a week
So we will target to
the Craiglist's temporary housing listing
It's a great strategy to how to reach out the market
So the founder analyzed the market situation already
and they introduced their position in the market
Look at this graph
There's an offline transaction and online transaction
On the Y-axis,
there is Expensive at the bottom
and very cheap at the top
The Airbnb can be located upper right side
which is online transaction
and also very cheap options
So the Airbnb could be there
This is a competitive position
So from this plan,
Airbnb can gain competitive advantage
We will be first place to the market
and consumers can use our service very easy
And there are many profiles
We will provide a profile
What about the design and brand?
We have a great design website
This is our team
Our team consists of three people
Joe Gebbia, PR
Brian Chesky is a designer and does business development
Nathan, he's a developer
The media press already covered our story
Because our story is very unique and interesting
Also, we have many good feedback from the users
who already used our service
For example
Airbnb is great
I found something in my price range,
and that is what really enabled me
to come to the conference
It's a complete success
It is easy to use, and it made me money
Why is this great?
Because, I think she's a host
Lastly, the Airbnb founders
showed their financial projection
They said that
We are looking for 12 months financing
to reach out 80,000 transactions on Airbnb
This is a great plan
Have you noticed that
they follow standardized pitch deck?
From the problem, solution,
and some kind of idea
or competitors and markets
They introduced their team like that
They exactly followed standard pitch deck component
So please keep that in your mind
Investors expect you to
give some idea
that they understand intuitively and immediately
Also, they expect you to target bigger market
Finally, they expect you to follow standardized pitch deck
Thank you for listening to this session