Matt Eventoff

Breaking news….If you are a startup pursuing funding, you have more in common with a politician or athlete caught behaving badly then you might think.

A politician caught misbehaving, an athlete photographed doing something he or she shouldn’t be doing, or a celebrity who finds that one heated moment has turned into tabloid fodder for weeks on end all have one thing in common – how they communicate will likely determine whether the incident is a speed bump or a career ender.

So what does this have to do with entrepreneurs pursuing VC funding? Everything!

Crisis communications is usually identified as the effort to protect and defend an individual, organization or corporation’s reputation when crisis strikes and public confidence in the individual or organization is shaken or thrown into question.

Entrepreneurs often face the same situation every day while trying to raise capital.  The crisis is always the same – a lack of funding puts the entire startup in danger – no funding, no operating budget, key personnel pack up and head for greener pastures, and the startup is in a lot of trouble (to say the least).  So what is a startup to do? Pitch (communicate with) VC’s to raise the capital to end the crisis – crisis communications!

“Crisis” Communications Lessons for Entrepreneurs

1. Have a Central Message – The images are very clear…the “repentant” politician standing at the dais, wife at this side, as he stumbles through a very awkward and very longwinded statement that says twenty different things, which means he has said — Nothing!

The value of having a message can not be overstated.  As I said in an earlier column, if you are pursuing funding, you must be able to identify how you will deliver a return on that investment, profits, and you must be able to do this in a manner that is clear, consistent, and easy to comprehend – remember, you are asking people to invest at a time when investing, no matter the size of the VC firm, is a scary thing to do. Why should the VC invest in your company? The risk to the VC is obvious, and the potential reward may or may not be as well. What mitigates that risk and gets the company across the finish line?

2. It is not about YOU – The athlete accused of using banned substances often forgets that it is not about him – it is about the fan that has placed his or her trust in loyalty in the athlete and now feels betrayed. The point of view the athlete takes often determines whether he is forgiven or the loyalty is gone forever.

As much as your pitch may be about your company, it really isn’t – it is about the VC that you’re are pitching too, his or her investment, and what that investment in your company will mean to the VC in terms of opportunity cost, time, energy, effort and ultimately the ROI. 

3. Be Open – Like investigative reporters, VC’s are (usually) very adept at plying their trade, and that means that, when crisis strikes (or you need funding), just like the reporter, the VC will probably know what the hot button issues are and where to look.  Be open – hiding information, trying to gloss over or bury a problem will do more harm than good.  If there is bad news, it will get out – get it out on your terms. What you don’t say says a lot.

4. Body Language Matters – An apology given with a smirk, or with arms crossed and a hostile look (don’t laugh, I’ve seen it) is always recognized, and the result is never good.  In that same vein, looking down the entire pitch, speaking toward your shoes, shuffling in your pockets, fidgeting, bouncing back and forth on each foot (very common) always sends a message.  Is body language the major difference maker for a pitch – of course not.  Does it matter – of course it does – it sends a message.

5. Words Matter – When a major crisis strikes a Fortune 50 company, every word uttered by the CEO and/or spokesperson is analyzed – every word, the choice of language, terminology is a potential landmine, as a poor choice of words could be a devastating blow to a leader (see Big 3 testimony a year ago). When pitching a VC, think about it – you are asking for millions of dollars – do you think your word choice might matter?

6. Practice and Prepare – I can not overstate the importance of practicing and preparing.  The road of busted startups is littered with great ideas and great leaders who failed to prepare for the pitch and didn’t receive the funding.

7. Every “Crisis” is an Opportunity – Every crisis provides an opportunity to for a leader to show his or her true character, and can sometimes lead to that leader becoming even more popular going forward, based on how the crisis was handled.  Every pitch affords an entrepreneur to do the same.

Gerry Storch, former night news, sports and business editor of USA Today, and now editor of a new combination of blog/book called Ourblook, recently interviewed me regarding social media, journalism and the future of online communication:

You work with corporate execs, politicians and other leaders in public speaking … what to say and how to say it. How do social media such as Facebook, Twitter, texting, etc. figure into this?

ME: Social media are an integral part of communicating today, and will evolve. The single biggest question I hear, whether from a political or business leader, centers on “I want to use social media like Obama.”

My first question: “What’s your message and why would someone who doesn’t know you, live in your district, or use your product care?” Herein lies the fundamental secret to effectively using social media to communicate as a legal, business, nonprofit, academic or political leader … just as in public speaking and presenting, you MUST have a clear, compelling message, or social media won’t work for you .. it just won’t be an effective medium.

My second question: “Do you have $750 million to spend?” That’s what the Obama campaign spent, very effectively, to spread its message. It wasn’t a Twitter and FB page put up in a vacuum; there were thousands of hours and millions of dollars behind creating an unbelievably successful social media program.

So my advice to leaders is the same advice I try to follow myself … put out fresh, compelling material, message it well, start with friends, customers, supporters, associates, etc. and slowly build a following. Make it easy to connect to you via your web site.  If you are running for office, put your social media info on your material … if a company owner, on your product packaging and advertising. Remember, social media complement what you do face to face, they do not replace it.

By extension, do you foresee much impact from social media in major news operations such as newspapers and TV news, or in the future of journalism generally?ME: I do, although I disagree with a number of my colleagues in that I believe major news operations will always have a fairly prominent place in our society. Major media bring legitimacy to a story, and that won’t change. What will change is reaction. Everyone has an opportunity, a real opportunity, to voice an opinion and express it in a very public way. However, mainstream media still matter.

Why? Sheer reach. Mainstream media still reach more individuals than any other single medium. So when a major national daily (the New York Times, Wall Street Journal , USA Today) runs an eye grabbing headline, the public pays attention. Statistics indicate that the reality is that for every five people who read a headline, on average only one reads the actual story and content.

The reality is that a political campaign will use a positive headline in a major daily in paid broadcast advertising over an endorsement from my blog, or any one of the millions of bloggers out there. The difference now is that a candidate’s “blogging army” of 2 or 20 or 200 can relentlessly comment, post and generate their own content and get it listed on Google news, Yahoo, Bing, etc.

Of the various social media, do you see any one in particular as having the greatest potential on the media or generally in society? Any that will fade?ME: I speak quite a bit in high schools and colleges, and when asked who tweets, uses Facebook, e-mails and texts, texting is always the hands-down winner both in popularity and number of students involved. Most use Facebook, and most use e-mail. Why does this matter? This is the generation that has literally grown up with the web, and I believe that their preferences will, to a large degree, determine what succeeds and what fades going forward.

I believe Facebook will have a long and prosperous life because it helps us connect to those we know and interact on a somewhat deeper level with acquaintances. Communication is not an announcement, it is a discussion. Facebook provides for that. Twitter does, too … however FB is much more personal and much more conversationally focused, and I believe those two traits really, really matter. The recent Twitter study saying that 10 percent of users account for over 90 percent of tweets is telling.

Do social media represent a dumbing down of America , a liberation of new possibilities, or both, or neither?ME: I believe they allow us to enter into conversations with people we might never have met, and find people who share common interests with us.

As with anything, I think there is a tendency to overgeneralize the effect of social media. Pick a position, yea or nay, pick a social media topic, and there are countless statistics either confirming or questioning the validity of that position. As an aside, I see this regularly with a statistic that is commonly referenced when discussing communication … the “7 percent, 38 percent, 55 percent rule.”

Prof. Mehrabian released a study nearly 40 years ago, and among the conclusions was that when determining the meaning of a message, 55 percent was based on body (or facial) language, 38 percent based on tone of voice, and only 7 percent based on words. Very powerful, and this is cited ad nauseam as “proof” that the words you use are not that critical. All well and good except for the fact that the statistics are taken out of context. Prof. Mehrabian was studying a very specific communication experience. Unfortunately, many people have assumed that words don’t matter.

What does this have to do with your question? As with anything, I don’t think there is a definitive answer … it depends on the individual and how he or she chooses to use social media.
Tennessee women’s basketball coach Pat Summit complained that players on the team bus were texting each other rather than speaking face to face. Your reaction?ME: Reality. I think this is one of the drawbacks of social media … when they are used to replace face to face communication rather than complement it when face to face communication is not possible. Being able to relate and communicate with another individual face to face will, more often than not, determine your ability to succeed.

What do I mean? You will rarely be awarded a raise via e-mail, win a congressional seat on Facebook alone, become CEO via a text message or acquire a company or major funding over a tweet. VC’s and bankers will always want to meet with you, as will a corporate board, voters, etc. Social media can certainly be extremely beneficial to all of these … however, face to face communication will always be crucial.

Elie Saidman, a friend and a very succesful entreprenuer, had a great post on his blog this morning that I not only found very interesting, but completely agree with.  Email’s impending death has been written about ad nauseum, and never seems to come.

Email has been, and in my opinion will continue to be, the dominant online communication medium of choice.  Here is Elie’s post: