In Investment, Opinion

2013-02-09 Murrayfield_0007Whenever I work with teams on their investor pitches, one of the things I try to work on is dealing with questions.  We’re all used to answering questions effectively in our day-to-day lives, and most of those questions arise in a very comfortable way.  Dealing with questions at a pitch is not so comfortable:

  • Questions from investors can appear quite confrontational
  • The questions may cover unfamiliar territory
  • The answers can be very complicated
  • Sometimes it can feel like the presentation is “over” after the last slide and my concentration slips

In spite of this, dealing with questions is one of the most important aspects of a pitch meeting.  It gives the team an opportunity to show how they think on their feet and communicate spontaneously.  It is also key to remember that only interested investors ask questions.  If they weren’t interested, they wouldn’t waste their breath.  They ask questions because they are interested enough to want to understand more.

I’ve heard (and given!) some terrible answers to questions, and I’ve also heard some really great ones.  I’d like to share the factors that I think make those answers different.

  • Assumptions
  • Need
  • Detail

Perhaps I can explain what I need using an example from my daily like.  Imagine my wife calls me and asks “What do you want for dinner tonight”.

  • There are some assumptions built into the question.  I know she is assuming that we’re eating together at home.
  • The need comes from her realisation that we don’t have a plan, and don’t have any food in the house.  She wants to know if she should buy something, and if so, what it is I might want.
  • There is an appropriate level of detail for a response that meets that underlying need – she needs a shopping list

Without understanding the Assumptions, Need and Detail (AND), I could easily get myself into a lot of trouble.

  • If I misunderstand the assumption and say “Lasagne”, then turn up at midnight having eaten out with friends in an Italian restaurant to find a burnt lasagne in the oven, I’m in trouble.
  • If I say “food” then I have provided a technically correct answer to the literal part of the question, but I haven’t helped her with the need to write her shopping list.  I’m in trouble.
  • I could misunderstand the level of detail needed and say “I’d like three pork and apple saussages with peas, frozen birds-eye ones, about 100g I think, and maybe 150g of mashed potatoes.  Charlotte potatoes, with a little butter, some milk and a pinch of pepper.  All served at 100 degrees C on one of our white square plates. Oh, and I think the oven needs cleaned, and please make sure there is no e-coli in the saussages because that could kill us.” .  I’m in trouble.

The mistakes listed above seem ridiculous, but yet these are exactly the mistakes I have made, and seen others make, that lead to terrible answers in a pitch.

There are also some types of question that cause me particular trouble, and merit individual mention…

  • I covered it” question asks about something which I already answered in the presentation.  I will be tempted to repeat what I said before, but that would fail to address the need – which is for a clearer explanation.
  • That makes no sense” questions embed an assumtions that are wrong – “How many shoes will your new type of fish need”.  I have to resist the temptation to be impatient with the questioners misunderstanding, and recognise that I didn’t communicate adequately.

In these cases I have to make sure I don’t accidentally answer the question I wanted to hear, or the question I think makes sense, while just adding to the confusion!

I also have to remind myself of options around the type of answer:

  • It’s OK to say “I don’t know – can I get back to you on that?”
  • For detail questions it is often OK to give a brief response and invite the questioner to come and talk in more detail afterwards
  • If I don’t understand the real meaning of the question, it’s OK to say so
  • If I want to answer a slightly different question, I must clearly explain the question I’m answering.

Any time I know I’m going to be facing questions, I try to remind myself that I shouldn’t start talking (other than to say “that’s a great question” to buy time!) until I’ve understood the AND for the question – the Assumptions embedded in it, the Needs of the questioner and the appropriate Detail for an answer.

I’d love to hear your tips on dealing with questions – feel free to join in below!

pingbacks / trackbacks

Leave a Comment