Survivor 8: Statistics on selling the sizzle and not the steak

I attended  Survivor 8, the Tech Coast Venture Network fast pitch competition last night, and I thought I’d give my thoughts in case you are considering attending a similar event in the future. In keeping with the 30-second format, I’ll give you my take away now – it is worth it if you have an extra $50 and a few hours of time. If your main goal is to win the advertised $25,000 prize, I wouldn’t bother.

How it works – you give a 30-second pitch, then 10 companies are called back to give a three-minute pitch and then three of them are called back for a ten-minute question and answer period with the judges. If you have not been to an event like this before, it is interesting to see the types of questions the judges ask.

The point I missed before going – and it was totally my fault – is that this is a competition for how well you pitch your product. Of the three finalists, it turned out at the Q & A stage that two of them had no actual product. Questions with one went like this:

“How have results been with your prototype?”

“We don’t have a prototype.”

“You don’t have a prototype?”

“Yes, we do have a prototype.”

then later,

“What have the results been in your lab?”

“We don’t have a lab. We are looking for lab space. However, we did a literature review and a study with 12 people in Spain found …”

No question, though, the three-minute pitch was terrific, before they got to questions about actual product.

A second finalist, when asked if their demo was an actual working product replied,

After we placed second in another start-up competition we put up a website to take pre-orders. We are negotiating now to bring in a team member who is a developer.

The people at my table found all of this highly amusing, since most of us had actual products, even if only in the beta stage. The person next to me laughed,

We didn’t realize you didn’t actually have to be able to build anything! Next year, we’re coming with an app that will bring about world peace.

I’m not faulting the Tech Coast Venture Network. They had advertised it as a pitch competition and that is  – sort of, what it was. I say “sort of” because I was confused by the third finalist and eventual winner – a good company, that did have a product and had put in $500,000 of their own money. As far as stage of development, they are about where we are with 7 Generation Games. However, I did not think their 30-second pitch was good at all, nor was their three-minute pitch all that impressive, so while it was very clear why they were selected among the three  finalists, how the three finalists were chosen was not as clear. I think (and I assumed this before I came so I was not upset) that more than the actual presentation is part of the judging.

This is the fourth open event I’ve attended where people pitched their companies. I pitched our company at this one and at one over a year ago when we were just beginning development on our first game. The other two, I just went as a spectator. This is admittedly a small sample, so take the following statistics with that in mind.

Of the four events, only one implied that the winner would receive an investment from the venture capital group sponsoring the event. The one last night gave a cash prize. The other two received meetings with venture capitalists.

• Of a combined 26 semi-finalists, none were black or Latino, although there were black and Latino founders at all of these events.
• None of the four winners were women.
• Of the two events that had semi-finalists (two went straight to finals, so I lumped them in the semi-finalists above), only last night’s event had any female-owned companies – there were two out of ten and neither made the finals. That was an improvement because the event I attended a couple of years ago had zero out of ten.
• While all but one of the finalists/ semi-finalists in the previous events were under 40, there were at least two companies in the Survivor 8 semi-finalists who were definitely over 40, including the eventual winner.
• With 120 companies presenting, your chances of winning the $25,000 prize are less than 1%.

Since between Maria and I, we probably took the equivalent of two days of our staff to prepare, was it worth it? In statistical terms 1/120 * $25,000 = $208  . Subtract the $50 for the dinner and your average cash value is $158, which is far less than I make in two days. I am sure many of those pitching spent more time than us preparing. The answer many people would give me is that if you don’t have the optimistic attitude that you’re going to win that you have no business being an entrepreneur, so my statistics don’t apply.

That’s not the reason I thought it was worth attending. It was an opportunity to meet people we might want to work with in the future, both as collaborators and investors. I was very interested in speaking with people from a few companies who are doing video editing, because I can foresee a need for that.

Events like these not only give the investors a chance to meet you, but also give you a chance to meet and get to know the investors a little bit. While I’ve met some perfectly nice people, and a couple have given me some very useful advice, there are also a few people I’ve decided would not be a good fit as investors for our company. Deciding to accept investment is a two-way street, and neither party should be making that decision without getting to know the other first.