Nuts and Bolts of the Executive Summary and the Pitch

Joe Hadzima
(MIT S.B., M.S. in Management; J.D. Harvard Law)

Senior Lecturer, MIT Sloan School of Management President and Co-Founder, IPVision, Inc. Founding Judge of MIT $10K/50K/100K Chairman Emeritus MIT Enterprise Forum jgh@mit.edu

2011-2012, Joseph G. Hadzima, Jr. All Rights Reserved

Presented at GIST in Jakarta Indonesia April 2012

Nuts and Bolts of Executive Summary and Pitch

A Peek Inside the MIT 100K Judging Process

What Judges Look For:
From the $100K Website: What do the judges look for in a plan? The judges look at many different issues when
evaluating executive summaries and business plans, including: Is the business opportunity as presented both highly attractive and clearly realistic? Is the business defensible from competitors? What is the business model? What comparisons are there to past success stories that indicate this venture will succeed? What is the amount of up-front capital investment required? Do the market and financial projections demonstrate that the team understands its business? How long will it take from the current stage of development to bring this to market? Can this venture achieve a leadership position in its market? Has the team gone out to the market already to test its ideas? Who will be the first customer(s)?
2

Joe Hadzima April 2012

A Peek Inside the Judging Process

Nuts and Bolts of Executive Summary and Pitch

What Judges Look For (continued)

What do the judges look for in a plan?

The judges look at many different issues when evaluating executive summaries and business plans, including:

Is the team of sufficient breadth, balance and quality to make its ideas happen? Will the ego of the founder(s) get in the way of success? Is the team focused on its target market? What is the expected time and amount of pay-off to investors? Is the reader familiar with and interested in the given market space? Is the plan clear and well-written? Does the team have the necessary communications skills to present a compelling story? What roles will the team members play in the venture? Are the team members dedicated to the venture and their roles in the group? Does the team have a clear plan for spending the investment money it receives? Why is this business going to be around and a real world winner in 5 years?
3

Joe Hadzima April 2012

How Investors Think:

Nuts and Bolts of Executive Summary and Pitch

What are the 2 Basic Investor/Human Emotions that You Have to Understand? FEAR That you will lose the money GREED That they will miss the deal of the
century
4

Joe Hadzima April 2012

Nuts and Bolts of Executive Summary and Pitch

The Executive Summary

Joe Hadzima April 2012

What is an Executive Summary?

Nuts and Bolts of Executive Summary and Pitch

It is the First Thing Investors/Judges Read It is a Resume for your Full Plan Goal is to get the Interview to Give the Pitch What Do Judges/Investors Really Look For? The 3 Whys Why This?
Why Now? Why This Team?

The 4th Why:

Why Wont This Work/Succeed?
Joe Hadzima April 2012

BUSINESS PLAN BASICS

Nuts and Bolts of Executive Summary and Pitch

The Business Plan - A SUPPORTED VISION

Mission/Vision Statement 1 paragraph Elevator Speech 30 seconds Executive Summary 2-5 pages PowerPoint Presentation 10slides/20minutes/30pt

Full Business Plan

20-30 pages

Competitive Analysis

Technology

Sales and Distribution

Financial Projections

Intellectual Property

Market Analysis

Detailed Support/Foundation

Joe Hadzima April 2012

Team

The Executive Summary

Nuts and Bolts of Executive Summary and Pitch

An Executive Summary is
NOT an introduction NOT a preface NOT a random collection of highlights

An Executive Summary IS the Business Plan in miniature

Joe Hadzima April 2012

The Executive Summary

Nuts and Bolts of Executive Summary and Pitch

Size
Two pages (preferable) to five pages (max)

The Executive Summary must be

Logical Clear Interesting/Exciting

The Executive Summary is like a RESUME

If it gets the readers attention, the rest gets read The Elevator Speech is to the Exec Summary as the Exec Summary is to the Full Plan
9

Joe Hadzima April 2012

The Executive Summary

Nuts and Bolts of Executive Summary and Pitch

The Executive Summary tells

What the Market/Opportunity is How Big Is It or Will It Be? Who You Are What your strategy/vision is What you are doing and/or propose to do How many $$$$ do you need and what will you do with them What your SUSTAINABLE COMPETITIVE ADVANTAGE is When the reader is finished he or she should be able to tell someone what you are up to.

Joe Hadzima April 2012

10

The Executive Summary

Nuts and Bolts of Executive Summary and Pitch

Ideally: The Executive Summary Should Contain:

Description of the Business Concept and the Business The Opportunity and Strategy The Target Market and Projections The Competitive Advantages The Economics, Profitability and Harvest Potential The Team

Joe Hadzima April 2012

11

EXECUTIVE SUMMARY: ELECTRONIC COMPONENTS, INC. EXECUTIVE SUMMARY: PEOPLE EXPRESS

The Eastern seaboard of the United States is ripe for the entry of a new, superefficient, low-cost air carrier to provide quick, reliable inter-city air transportation. Such an entity would bring to the Northeast the same benefits that have accrued to other areas of the United States. Chief among these are: Frequent jet commuter service between major cities Prices competitive with private automobiles Fulfillment of the congressional goals in enacting the Airline Deregulation Act of 1978 to have better service at lower fares. The new company will be able to achieve these goals for the following reasons: Aggressive, innovative management that has been tested in the field and been on the leading edge of innovation in air transportation marketing and systems Equipment and facilities designed specifically for the low-cost production of air transportation Manpower selected, trained, and motivated to be efficient and profit oriented New systems to be applied to the entire business of air transportation to minimize investment in manpower and machines All of these, when applied to the new entity, will result in considerable economies vis--vis existing air carriers. 40 years of regulation have created an industry heavily unionized with tremendous inefficiencies The economics of a new entity should be at least 30%-40% better per seat mile than the current trunks. Other new carriers such as Southwest or Air Florida have shown a consistent ability to compete on a price basis and earn extraordinary returns The current political, economic, and regulatory climate is ideal for the proposal herein envisioned. The Northeast is waiting for someone to bring it what the rest of the nation already has: low air fares. Electronic Components, Inc. is a start up company that will make a variety of electronic components, beginning with a new type of aluminum-based capacitor. This unique product, coupled with excessive demand for capacitor devices, will provide us with an ample share of the capacitor market and numerous opportunities for expansion into related electronic components. The founders are dedicated and determined to make the venture a successful and profitable entity. Technical expertise is provided by James F. Lynch, who has been involved in designing capacitors for 11 years. He obtained a Bachelor of Science degree in electronic engineering from the Massachusetts Institute of Technology. Technology for capacitors is changing rapidly. Electronic Components, Inc. has an opportunity to capitalize on a major technological change by getting off to a quick start and expanding quickly. This proposal pertains to two additional phases of required financing. The first phase, consisting of about $150,000 for pilot plant start-up, has been completed from the personal funds of the principals. The remaining financing is for the following: Phase Two: Obtain $750,000 capital for: Hiring and training production personnel; Purchasing additional equipment necessary productivity; Develop the market; Complete the sales rep network; Explore new markets.

for

appropriate

Phase Three: Increase Production and Sales Computerize manufacturing to triple output with minimal increase in labor; Begin exporting; Expand new marketing activity. Financing will be used to purchase manufacturing equipment, hire the necessary employees, and develop new markets. In addition, management intends to spend between 10% and 20% of revenues on research and development of new products. The electronic component field offers attractive opportunities for fast sales and profit growth. Already, demand exceeds supply in the capacitor area as well in other related areas.

Excerpted from: Gumpert, David E., How to Really Create A Successful Business Plan, INC Publishing, 1990

EXECUTIVE SUMMARY: ELECTRONIC COMPONENTS, INC.

Electronic Components, Inc. is a start up company that will make a variety of electronic components, beginning with a new type of aluminum-based capacitor. This unique product, coupled with excessive demand for capacitor devices, will provide us with an ample share of the capacitor market and numerous opportunities for expansion into related electronic components. The founders are dedicated and determined to make the venture a successful and profitable entity. Technical expertise is provided by James F. Lynch, who has been involved in designing capacitors for 11 years. He obtained a Bachelor of Science degree in electronic engineering from the Massachusetts Institute of Technology. Technology for capacitors is changing rapidly. Electronic Components, Inc. has an opportunity to capitalize on a major technological change by getting off to a quick start and expanding quickly. This proposal pertains to two additional phases of required financing. The first phase, consisting of about $150,000 for pilot plant start-up, has been completed from the personal funds of the principals. The remaining financing is for the following: Phase Two: Obtain $750,000 capital for: Hiring and training production personnel; Purchasing additional equipment necessary productivity; Develop the market; Complete the sales rep network; Explore new markets.

for

appropriate

Phase Three: Increase Production and Sales Computerize manufacturing to triple output with minimal increase in labor;

EXECUTIVE SUMMARY: PEOPLE EXPRESS

The Eastern seaboard of the United States is ripe for the entry of a new, superefficient, low-cost air carrier to provide quick, reliable inter-city air transportation. Such an entity would bring to the Northeast the same benefits that have accrued to other areas of the United States. Chief among these are: Frequent jet commuter service between major cities Prices competitive with private automobiles Fulfillment of the congressional goals in enacting the Airline Deregulation Act of 1978 to have better service at lower fares. The new company will be able to achieve these goals for the following reasons: Aggressive, innovative management that has been tested in the field and been on the leading edge of innovation in air transportation marketing and systems Equipment and facilities designed specifically for the low-cost production of air transportation Manpower selected, trained, and motivated to be efficient and profit oriented New systems to be applied to the entire business of air transportation to minimize investment in manpower and machines All of these, when applied to the new entity, will result in considerable economies vis--vis existing air carriers.

EXECUTIVE SUMMARY: ELECTRONIC COMPONENTS, INC. EXECUTIVE SUMMARY: PEOPLE EXPRESS

The Eastern seaboard of the United States is ripe for the entry of a new, superefficient, low-cost air carrier to provide quick, reliable inter-city air transportation. Such an entity would bring to the Northeast the same benefits that have accrued to other areas of the United States. Chief among these are: Frequent jet commuter service between major cities Prices competitive with private automobiles Fulfillment of the congressional goals in enacting the Airline Deregulation Act of 1978 to have better service at lower fares. The new company will be able to achieve these goals for the following reasons: Aggressive, innovative management that has been tested in the field and been on the leading edge of innovation in air transportation marketing and systems Equipment and facilities designed specifically for the low-cost production of air transportation Manpower selected, trained, and motivated to be efficient and profit oriented New systems to be applied to the entire business of air transportation to minimize investment in manpower and machines All of these, when applied to the new entity, will result in considerable economies vis--vis existing air carriers. 40 years of regulation have created an industry heavily unionized with tremendous inefficiencies The economics of a new entity should be at least 30%-40% better per seat mile than the current trunks. Other new carriers such as Southwest or Air Florida have shown a consistent ability to compete on a price basis and earn extraordinary returns The current political, economic, and regulatory climate is ideal for the proposal herein envisioned. The Northeast is waiting for someone to bring it what the rest of the nation already has: low air fares. Electronic Components, Inc. is a start up company that will make a variety of electronic components, beginning with a new type of aluminum-based capacitor. This unique product, coupled with excessive demand for capacitor devices, will provide us with an ample share of the capacitor market and numerous opportunities for expansion into related electronic components. The founders are dedicated and determined to make the venture a successful and profitable entity. Technical expertise is provided by James F. Lynch, who has been involved in designing capacitors for 11 years. He obtained a Bachelor of Science degree in electronic engineering from the Massachusetts Institute of Technology. Technology for capacitors is changing rapidly. Electronic Components, Inc. has an opportunity to capitalize on a major technological change by getting off to a quick start and expanding quickly. This proposal pertains to two additional phases of required financing. The first phase, consisting of about $150,000 for pilot plant start-up, has been completed from the personal funds of the principals. The remaining financing is for the following: Phase Two: Obtain $750,000 capital for: Hiring and training production personnel; Purchasing additional equipment necessary productivity; Develop the market; Complete the sales rep network; Explore new markets.

for

appropriate

Phase Three: Increase Production and Sales Computerize manufacturing to triple output with minimal increase in labor; Begin exporting; Expand new marketing activity. Financing will be used to purchase manufacturing equipment, hire the necessary employees, and develop new markets. In addition, management intends to spend between 10% and 20% of revenues on research and development of new products. The electronic component field offers attractive opportunities for fast sales and profit growth. Already, demand exceeds supply in the capacitor area as well in other related areas.

Excerpted from: Gumpert, David E., How to Really Create A Successful Business Plan, INC Publishing, 1990

Nuts and Bolts of Executive Summary and Pitch

The Pitch

Joe Hadzima April 2012

My Thanks to Stephen Pearse For the Inspiration for These Slides

16

The Pitch - Getting Money

Nuts and Bolts of Executive Summary and Pitch

VC Noise Get Introduced Memorize Elevator Pitch

For <target customers> who are dissatisfied with <current alternative>,<our product> is a <new product category> that provides <key problem solving opportunity>. Unlike a <competitive substitute>, we have assembled <key whole product features>.*

One Shot Induce Greed

* Geoffrey Moore, Crossing the Chasm
Joe Hadzima April 2012

17

The Pitch: KISS

Nuts and Bolts of Executive Summary and Pitch

*Really* Simple! Hook Target Audience Lowest Common Denominator Keep It Short (10slides/20minutes/30ptFont) Pictures! Answer detail/curveballs quickly Passion! Engage! Confidence!
18

Joe Hadzima April 2012

The Hook
Nuts and Bolts of Executive Summary and Pitch

Pain or Huge Market Opportunity

7 Seconds Imagine a safe rubber coating that conducts electricity Have you ever felt threatened? Our box is 10x smaller, faster, cheaper Do you get poor cell phone reception at home or work?

Joe Hadzima April 2012

19

Nuts and Bolts of Executive Summary and Pitch

NO Geek Speak
WRONG:
Our technology is the first integrated and automatic book scanner that will scan and digitize bound documents at a speed of 1,200 PPM at a fraction of the cost of existing solutions based on a disruptive digital imaging technology initially developed at Bell Labs and protected by 12 patents.

RIGHT:
We enable sharing knowledge massively by digitizing physical libraries at a very low cost.
Joe Hadzima April 2012

20

Focus of Pitch
Nuts and Bolts of Executive Summary and Pitch

Customer Benefits NOT Tech Benefits Tech Benefits- **SO WHAT?**

Improved Network Utilization Scalable, Adaptable Secure integration Seamless Integration

Business Benefits- Pain Reduction!

Increase Revenues by 60% 34% cost reduction in 12 months
Joe Hadzima April 2012

21

Style
Nuts and Bolts of Executive Summary and Pitch

Use best presenter Have egghead in room Give firm answers (or none) Look at everyone in room Do your homework Pull Questions

Joe Hadzima April 2012

22

Basic Pitch Anatomy

Nuts and Bolts of Executive Summary and Pitch

Hook - Summary (Problem or Opportunity) Your Solution Business Model Technical Advantage Competition Sales & Marketing Strategy The Team Financials Road Map The Offer
23

Joe Hadzima April 2012

Slide 1 - Summary
Nuts and Bolts of Executive Summary and Pitch

Introduce the project Why is it important Timeline and key milestones Expected business & financial results Funding requested (total amount)

Joe Hadzima April 2012

24

Slide 2 The Business Problem

Nuts and Bolts of Executive Summary and Pitch

State the problem in business terms

Business problems: production, cost, competitiveness, product, service, delivery etc

Define the market opportunity

No. buyers in the first 18-24 months, value in sales

Name/identify target customers

May be teams company partner or other customers

Why the customers care

Joe Hadzima April 2012

25

Slide 3 The Solution

Nuts and Bolts of Executive Summary and Pitch

How you solve the problem for the customers perspective The specific value in your proposition Specific benefits to the customer (non financial) Financial benefits (estimates) to the customer

Joe Hadzima April 2012

26

Slide 4 Business Model

Nuts and Bolts of Executive Summary and Pitch

How will money be made or saved?

How will the science team earn income? How will the company team earn income? What is the margin, profit, or savings?

Is the company-partner the end-user? Manufacturer? Seller? How will the product/service be delivered to the customer(s)?
Will the product/service be sold through other companies or directly to end-users? Product or service? Sold by contract?
Joe Hadzima April 2012

27

Slide 5 Technical Advantage

Nuts and Bolts of Executive Summary and Pitch

State the special or key aspect of technology in translated into common terms
What are the intellectual property plans (if any)? What stage of development is the technology currently in (again in common terms such as early, mid, late)? How much time and funding is needed to finish the technology?

THIS IS THE ONLY TECHNOLOGY SLIDE

Only the key technology element that relates directly to the key business advantage matters!
Joe Hadzima April 2012

28

Slide 6 - Competition
Nuts and Bolts of Executive Summary and Pitch

What alternatives exist to your solution?

Including do nothing (low risk, cost estimate)

Who else is trying to solve the problem?

Current competitors and substitutes How large/profitable are they? Are they ahead or behind? Matrix of features and value

NEVER SAY There is no competition

Joe Hadzima April 2012

29

Slide 7 Sales & Marketing

Nuts and Bolts of Executive Summary and Pitch

How will your team (or company partner) reach the customer? How long will each sale take to close (the sales cycle)? What is the role of 3rd party partners in marketing, distributing, and selling? Will you sell directly, through others, or both? How will your team inexpensively inform customers (promotion, advertising)?
By word of mouth, call them, advertise (where?, how much cost?)

Joe Hadzima April 2012

30

Slide 8 The Team

Nuts and Bolts of Executive Summary and Pitch

(Company team) Experience in the industry with customers, manufacturers, distributors, retailers (Science team) Experience in technology field Management and operations
Company team: production, delivery Science team: project management, technology development

Sales & marketing experience

Industry partners and resources

Outside partners needed

Okay if you dont have them yet; important to state gaps)
Joe Hadzima April 2012

31

Slide 9 - Financials
Nuts and Bolts of Executive Summary and Pitch

Simple budget table for project Simple budget table for marketing & sales (if applicable) Key metrics
People, revenues, gross profit (margin), expenses, number of customers, average selling price, etc.

When (how fast) will you spend and earn money?

Joe Hadzima April 2012

32

Slide 10 Road Map

Nuts and Bolts of Executive Summary and Pitch

(Where you have been and where you are going) Accomplishments to date Major accomplishments planned and when
Technology development Business (production, sales, marketing, distribution)

Joe Hadzima April 2012

33

Wrap Up Slide or Statement

Nuts and Bolts of Executive Summary and Pitch

Why This Why Now Why Our Team Thank You

Joe Hadzima April 2012

34

Nuts and Bolts of Executive Summary and Pitch

SESSION 1: BUSINESS PLAN BASICS The Business Plan - A SUPPORTED VISION

Mission Statement 1 paragraph Elevator Speech 30 seconds Executive Summary 2-5 pages PowerPoint Presentation 10-15 minutes

Full Business Plan

20-30 pages

Competitive Analysis

Technology

Sales and Distribution

Financial Projections

Intellectual Property

Market Analysis

Detailed Support/Foundation

Joe Hadzima April 2012

Team

35