In the next three minutes you can learn two valuable things:
- What an Entrepreneur-in-Residence does to help founders in a startup accelerator program; and
- How to use ‘anchoring’ (a kind of cognitive bias) to increase the impact of your storytelling and pitching.
To learn what an entrepreneur-in-residence does, you’ll have to watch this short video. To learn how to use anchoring, watch the short video first, and then read on for the explanation.
Telstra’s muru-D accelerator asked me to get the Showcase-D demo day crowd excited about the ten startup pitches they were about to see. Not an easy task: what could I say that wouldn’t be a spoiler for the founders themselves? How could I say something exciting about all of them in aggregate without saying anything specific about any individual company? Also, I’m a great pitch coach, but that doesn’t mean I’m always great at pitching!
Could I land a joke?
Showcase-D was held in August 2019, and one of the biggest news items in recent weeks had been the 50th anniversary of the Apollo 11 moon landing. One day I was talking with the founders in the cohort about how I’d seen the landings live on TV as a child, and they realised I was much older than they’d imagined.
How old was I? Very old! It turned out that Natalie Yan-Chatonsky and I, both entrepreneurs-in-residence in the program, had first worked together at Yahoo in the late 1990s before some of the founders at muru-D began primary school. That might draw a laugh. But making the audience laugh wasn’t going to leave them in the state of anticipation and excitement that I‘d been asked for. I decided to try my joke but I needed something more.
It had to be something about the pitches we were about to see, but it also couldn’t be about that.
I couldn’t tell the audience anything specific about what the startups had each achieved during the six month accelerator program, or I’d be stealing their thunder. Was there something I could talk about in aggregate, perhaps?
Then the solution popped suddenly into my head: most of the founders would talk about their own startup’s customer and revenue growth since the start of the program but none would talk about all the startups in aggregate.
I could prove that the muru-D accelerator program accelerated the startups in the program by showing how much progress they’d made on adding customers and growing revenue during the program.
Too much detail can introduce doubt
If I showed the audience a detailed monthly chart of customers and revenue between April and August, I knew the chart would be irregular, and it would raise more questions in their mind than we had time to anticipate and answer, which would take them further away from anticipation and excitement.
What if I took totals from just two months — April from near the beginning of the program and July from near the end of the program? Then there wouldn’t be enough detail to prompt questions, and I could rely on my audience’s minds to draw their own imaginary line between the smaller number in April and the larger number in July.
The cognitive bias trick
But the real impact came when it dawned on me that this was an ideal opportunity to take advantage of the cognitive bias of anchoring (sometimes also known as focalism).
I knew some experienced industry friends would be in the audience and they’d have some set assumptions about how much customer and revenue growth they’d expect to see from my cohort of startups. And I knew many in my audience would look to these experts for guidance — if some of them gasped or looked surprised, the rest of the audience would look much more surprised too.
I knew when I revealed the April customer and revenue growth totals, the experts in the audience would not be surprised; it would align with their expectations, and mentally, they’d being drawing their own conclusions about the July numbers.
So I played with their expectations (and helped the rest of the audience underestimate the July figures I was about to reveal) by suggesting what might be reasonable to expect in terms of customer growth (“would 10% be a good result? What about 50%? Is that even possible for ten busy startups in the fast pace of an accelerator program?”).
Anchoring bias would now ensure that subconsciously, most people in the audience would expect me to reveal an increase from April to July somewhere in the range of 10–50%.
I drove up the anticipation as I revealed the July customer number, using a line I would soon repeat for the July revenue number: “They did much, much better than that!”
With the audience expecting at most a 50% increase, and me hinting they’d done much better, I announced that they’d increased their customers by more than 200%. (I did make one mistake, I should have done that math for them and made sure they knew it was more than 200%).
I didn’t leave them in any doubt as to whether the July customer number was a remarkable result. Even though I could hear people begin to applaud as they began to realise that 2x growth in a few months was a good result, I made sure I set the anchor firmly in their minds by explicitly asking for their applause.
The mechanism was now set and the audience understood the game I was playing.
When I encouraged them to anchor themselves in what they imagined might be a ‘reasonable’ increase in revenue from April to July, they were in on the game. And that’s actually a good thing.
It’s OK when your audience knows how the story will end
Just like watching a murder mystery and knowing that the crime will be solved by the time the end credits roll, part of the fun of being the audience for a narrative is in being familiar with the narrative arc, with knowing how the story will probably end, but not how the storyteller will get us there.
Like a joke when part of what’s making you laugh is that you’re already beginning to guess what the punch line is, I repeated the same phrase I’d used when revealing the July customer number (“They did much, much better than that!”) so my audience knew one thing for sure: they were about to see what they now believed would be a truly remarkable July revenue number.
And it was.
The temptation, if this strategy works, is to stay longer on stage, and try to play the anchoring game with your audience again. But this is a dangerous strategy— fooled once by their own cognitive biases, your audience will demand 10x rather than 2x to continue to willingly play the game with you. And anyway, this wasn’t my show — it was time to introduce some remarkable stories from some amazing founders in the SYD6 2019 cohort of muru-D.