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Analogies Fuel a Great Pitch

When Andrew Scheuermann was raising a seed round for his startup in 2016, he pitched at the online demo day at the Stanford StartX accelerator. Arch Systems was aiming to build standardized, configurable hardware that would free Internet of Things (IoT) companies from having to design hardware and instead focus their efforts on the software component of their businesses—which is typically the faster, more scalable, and potentially more lucrative side of their business.

It was a great idea, but Andrew knew that the problem, and solution, were a bit wonky, and apt to get lost in the sea of demo day pitches.

His solution to this dilemma is a master class in making a potentially complicated, boring business come alive. Watch the Arch Systems seed round pitch and let’s break it down:

He starts with a pithy tagline of his business: “Making hardware lean for the industrial Internet of Things.” That’s certainly accurate, and it signals to the audience what industry he’s in. But it’s also dry, and he knows it.

So he immediately asks his audience to imagine that they had invested in Uber. That certainly feels nice, and gets everyone’s attention. He then goes on to describe how Uber was enabled—in fact, solely made possible by—the ubiquity of mobile phones. Without cellphones, the Uber concept is as great as ever, but without the hardware in place it becomes almost impossible to realize. That, he says, is the analogous situation in the IoT industry today: Unrealized Ubers everywhere.

The Uber analogy isn’t perfect, but it’s not intended to withstand careful analysis. It’s there to provide the audience an easy entry point to Andrew’s story, a frame onto which they can hang the additional information he’s going to provide. There’s a reason the cliché Hollywood pitch is something like this: “We’re going to make Jaws, but in the desert!”

Andrew then pivots to another powerful device: providing intriguing insight that has a very self-serving conclusion. There’s an implied “Did you know…?” or “have you ever thought of this subject from this angle?” and it not only makes the audience feel smart, it allows them to justify why this startup is so interesting. Here, Andrew describes how every computing era has been enabled by a hardware manufacturer, from IBM mainframes to Apple smartphones. In this framing, a company like Arch feels inevitable. It’s essentially another analogy, framed through a historical lens.

Then he dives into why no one else has built a company like Arch yet, which leads, finally, to the introduction of his product—well over halfway through the pitch. He then leads the audience through quick highlights of initial traction and the team.

The purpose of an initial pitch is not to get investment—no one writes a check after a short pitch. The goal is to get a meeting. So if your pitch is smart, intriguing, and savvy, even the people who might think that your industry is outside of their sweet spot might decide to have a meeting anyhow.

Did it work? “We had incredible response,” Andrew says, adding that the pitch generated 38 meetings and that they closed an oversubscribed round shortly thereafter.

Looking back on this pitch 6 years later, Andrew notes that Arch has pivoted based on market realities and raised several more rounds of funding as it focuses on both hardware and software.

“The market pain I was describing was real,” Andrew says of his 2016 pitch, but his industrial customers wanted an entire outsourced solution, not just a hardware designer. “This led us to pivot and ‘become’ one of the device-to-cloud solution providers that we sought to enable with hardware modules before.”

“Our early story is part of who we are, and gave us the resources and time to listen and pivot to the market need,” Andrew says. “My crystal ball is often imperfect, but the pitch enabled the great company we are building now.”