Why PRODUCT DEMO is a secret weapon of every single startup

These days, startup founders spend a lot of time thinking about how to pitch investors. The problem is not simple—investors get pitched a lot, and most startups are either too early or don't think that making their pitch stand out really matters.

The problem is that most founders just pitch with words.The founders spend time constructing elaborate narratives and lengthy decks. In the noise of words and the sea of pitch decks, founders often forget that the most powerful tool in their arsenal is their product demo. Nothing can convey founder passion, knowledge, and excitement about what they are building as well as an awesome demo.

Show, Don't Tell

It's said that a picture is worth 1,000 words. Instead of TALKING about your product and your business, as the founder, you should SHOW your product and business. By showing the product, and getting to the product demo quickly, you can make the conversation a lot more concrete. The details, nuances, and choices you made around the product become instantly obvious.

Show Your PRODUCT OBSESSION

At Techstars, we gravitate toward the founders who are product obsessed. The same is true for most, if not all, early-stage investors. Why? Because at an early stage the business doesn't have a ton of revenues or customers, and investors tend to pay a lot more attention to the founders themselves.

Product-obsessed founders never stop talking about their products. Why they made certain choices, why the customers would love it, what else is on the roadmap, how it differs and how it is better from what else is out there, why they think this MVP is good, or more often, not good enough. Founders who talk about their products non-stop stand out and draw investors to their business.

Establish Credibility

The product obsession isn't just about the product. When a founder is product obsessed, he or she is also very likely credible. You simply can't talk about the product, or lose yourself in details, choices, and nuances without understanding what you are building and understanding the space.

The best founders use the product to also talk about the market and the opportunity. By explaining WHY certain product choices are made, and HOW the founder thinks about the product, the founder also can communicate how their product is different from the  competition and paint an accurate picture of the future. The best product demos weave in competition and markets.

Explain Defensibility

The demo is also a great opportunity to talk about defensibility. As the founder walks through the features and choices, it is natural to say things like, "As we interact with the users we get their data. Over time, we get more and more data, and our system gets smarter. Over time, we benefit from data network effects."

During the demo, you can also talk about unique choices you made on the back end, algorithms you implemented, infrastructure choices you made, etc. All of that in aggregate adds to your credibility and also, in turn, paints the picture of defensibility.

Talk about your Roadmap and Vision

The end of the product demo is a natural place to talk about what is next. Investors love it when you talk about your 6-12 month roadmap, and where you see the company in the next 3, 5, or even 10 years.

If your demo is awesome, you've now scored credibility points, and can talk about the future more confidently. The investor is much more likely to believe in you and your vision if you show them an amazing demo first. Once investors can SEE what you can do, along with what you DID ALREADY, they are are ready to hear what is next, and they're more likely to trust you to paint the picture of the future.

The Lean-in Experience of a Product Demo

There is something else that's magical about the demos—the lean-in experience. Great demos pull in, they make people pay attention, ask questions, and establish a collaborative environment between the founder and investor.It is the little details—the design, the flows, the user experience that makes investors get closer to the product. It is through this lean-in experience that the founder and investor can start building the trust and start building a relationship.

How to Make a Product Demo

The secret behind great demos is that they are clear, rehearsed, and engaging and have a build up. You can't just show up and wing a demo. Instead, you need to think it through and really prepare. What to show matters just as much as what not to show.Effective demos are clear and engaging. Founders walk through key features from the perspective of the user, and highlight the benefits.

Watch this demo from Techstars 2015 company Sailo—an online marketplace for boat rentals (the demo starts at the 2 minute mark).

Great demos also have a build up, and may have a reveal—something unexpected and cool that the the audience may not anticipate. Here is the demo from Techstars 2015 company LiveLike that has the reveal in the end (the demo starts at 1 min 40 sec mark).

How to Make a Pre-Product Demo

What if you don't have your product fully ready yet, how do you make a great demo? You create a presentation that's a combination of slides, videos, and sketches of what the product will be like. You show the demo of how the product will work when it is done.

This is way more powerful than just talking about the product. Making a demo of the future product makes the conversation a lot more concrete and makes investors believe that you've thought through the details.Watch how Ryan from Hailon Displays (Techstars '17) gives a demo of his future product (the product demo starts 57 seconds in).

How to Make a Non-Product Demo

But what if you don't even have a simple product you can demo? What if the product is a complex process or even a service? Similar to the previous example, come up with a combination of slides and video to illustrate how the process works.In this video below, Sean Warner from Grubbly Farms explains how they use waste to feed fly larva and create a protein-based food source for fish and chicken stock (demo starts at the 1 minute mark).

Take the time to craft an awesome product demo and it will pay off. Your employees, customers, investors—everyone will be a lot more clear and lot more excited about what you are doing. Make an awesome product demo a big part of every single pitch you give.