The Storytelling Blog

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Use the Power of Inference to Improve Your Pitch and Convince Your Investors

Sep 04, 2020

Inferences have a magical power that references can never quite embody. Hearing, “A dinosaur is coming!” is one thing. Seeing the plastic cup of water reverberate in the beverage console of a safari jeep to foreshadow the dreadful tyrannosaurus is quite another experience. Anticipation builds when envisioning the scrawny showdown shadow of a 6 o’clock silhouette crawling towards the dusty, sandaled feet of Goliath before the boy David emerges with five smooth stones. We don’t perceive our world and surroundings all at once. Scientifically, we take in our world through inferences, imagination, and impressions. And we do the same in business.

“Don’t tell me the moon is shining; show me the glint of light on broken glass.”
— Anton Chekhov

The Power of Synecdoche

You probably used synecdoche multiple times today without knowing it. You’ve said “glasses” to describe spectacles or “New York” for New York City. These are classic examples of synecdoche. It’s a figure of speech to identify: (a) The whole of something by its part, such as “White House” for the United States government or (b) A part by its whole, like “the world” for one’s neighborhood or country.

The power of synecdoche is in leveraging the ability to create shared meaning without referring to the actual object instantly. You’ve developed a mutual relationship with a person who understands the context of what you’re identifying. It especially rings true with consumer goods and branding. For example, Band-Aid is a trademark but is used as an all-encompassing identifier (a “whole”) to describe any adhesive bandage with gauze in the center (a “part”). The same goes for Kleenex and facial tissue. No one will typically correct you (unless they’re linguistically petty) because they know what you mean.

Gestalt’s Psychology: Synecdoche Applied to Design

Gestalt’s Psychology is the designer’s version of synecdoche. It has five principles that affect how the mind controls what the eye perceives:

  1. Proximity. Objects that are close together are more likely to be seen as a group.
  2. Similarity. Similar color, shape, texture of separate objects are seen as parts of a whole object.
  3. Closure. The mind tends to complete a hidden or incomplete shape, figure, or picture.
  4. Good Continuation. Lines and curves are “followed through” with the mind when objects are overlapped.
  5. Common Fate. The mind associates an object moving in the same direction at the same rate with a single stimulus.

In UX Design, we use Gestalt’s Principles quite often. If you weren’t sure if a specific button was associated with a particular function on an app or website, it’s because Gestalt wasn’t appropriately used or even considered. Similar to synecdoche, Gestalt creates a shared meaning with the design and its users. The best designs communicate a shared language with the user who intuitively knows what to do next. The same goes for business. When someone can see a part of what you do and can associate it with the entire company, then you’ve created a moment of shared meaning, vision, or value. It eventually translates into something tangible, like brand equity.

The Three I’s: Synecdoche Applied to Business

Imagine yourself pitching a startup idea to an investor. You might have five minutes, and you can’t give them the grand tour of your Google-vibed open office space. The difference between consideration and rejection is in the power of your inferences. If you can clearly define parts of your whole business to create shared meaning, value, and persuasive buy-in, you will win them over. But what business inferences should you choose?

TV shows like Shark Tank and The Profit typically have three qualities that investors helplessly draw towards like mosquitos to an electric bug zapper (okay, not all investors are blood-sucking, money-ogling vampires):

  1. The Idea. You must solve a legitimate problem.
  2. The Individual. You must be perceived as an honest, competent, and coachable person.
  3. The Ink. The business must be profitable.

“Be quick and clear, show you can execute and know your numbers.”
— Kevin O’Leary

The Idea

Your pitch may lack charisma, but if the idea is compelling, you still have a strong chance of winning your investors over. They’ll take a strong idea over a strong personality any day. The caveat is that you must be able to express this idea as clearly and quickly as possible. Here’s a simple structure that can get you started:

  1. What’s wrong?
  2. Why does it matter?
  3. How will you fix it?

The “Why?” question pulls your entire pitch together. It must be proven or strongly inferred that the market is suffering from this issue, whether investors know it or not. Your job is to corroborate enough data to make this point stick. However, if your “Fix it” has synecdoche power — meaning as soon as investors vividly see the solution in action, they say, “Yes! We can see why this is valuable!” then you’ve created shared value without having to describe much more of the whole business.

The Individual

Sometimes it’s not your idea — it’s you. You’re the problem that needs to be solved first before someone would ever consider buying into your startup. It’s less about your attitude and more about your character (which, inevitably informs your attitude). Ask yourself these three questions:

  1. Am I credible?
  2. Am I competent?
  3. Am I coachable?

Inflating numbers or downplaying issues to increase attraction is a red flag to the business savvy community. Many of these professionals are not just listening to your financials, but they’re studying your verbal and nonverbal communication. David C. Baker says that to become an expert in something, you must keep working in a similar niche long enough to see patterns emerge. It is the pattern recognition that creates intelligence. And using that intelligence to solve the common problems that are discovered within those patterns is what makes you an expert. After experiencing hundreds and thousands of pitches, making bad investments, and betting on good ones, you better believe they see the patterns of what makes someone believable, intelligent, and possessing the capacity to execute the business idea.

The Ink

For many of us, this is the hardest one: Knowing the numbers. The proverbial black ink on white paper. But it doesn’t have to be complicated. If I can fail almost every math class in high school and still pass the AP Calculus Exam; barely make it through Applied Statistics in college, and then ace my economics and financial classes as a Healthcare MBA student, then you better believe it is possible to know just enough numbers for a pitch while doing your due diligence on your personal time. Here are some of the basic numbers you’ll need to know (this is my oversimplified version):

  1. Size of the market. How much revenue has the market you’re playing in made?
  2. Gross margins. Your net sales revenue minus the cost of goods sold (COGS).
  3. Profitability. Your income vs. expenses and an assessment of your return on investment (ROI) based on investments in specific resources to do business.
  4. Simple growth rate. Divide your change in revenue (Year 1 minus Year 2) by Year 2 and multiply it by 100. (Year 1 is usually last year and Year 2 is typically this year)

I don’t know these by heart. Google helped me make it simple for you. And that’s part of doing business — you have to do the research. Even better, partner with someone who loves numbers and believes in what you’re doing.

Whether you’re pitching an idea or a design mockup, the power of inference through synecdoche and Gestalt can help create shared meaning, which allows you to focus more on why the business or design is valuable and less on trying to explain the company or design itself.


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