Trying to get healthier can be very difficult, especially if we’re eating or drinking a lot of stuff that we don’t even understand the ingredients. When Kara Goldin, founder and CEO of Hint Inc., saw an ingredient in her Diet Coke that went on her list of things to eliminate from her diet, she lost over twenty pounds two and a half weeks later after exchanging Diet Coke for plain water. That led her to create Hint which is unsweetened fruit-infused water. Kara says by eliminating a product that was calling itself “diet,” she actually ended up losing weight and got healthier.
Money is one of the most difficult things to pitch for, and understanding how to raise capital is Oren Klaff’s expertise. Oren is Director of Capital Markets at investment bank Intersection Capital where he manages its capital-raising platform. Applying his pioneering approaches to raising capital and incorporating neuroscience into the capital markets programs, Oren has supervised the placement of over $500 million of investor capital from high net-worth individuals and financial institutions. Oren shares his strategies for pitching and raising capital and talks about his bestselling book, Pitch Anything: An Innovative Method for Presenting, Persuading, and Winning the Deal.
We have a great show because we have Kara Goldin and Oren Klaff here. Kara is the Founder and CEO of Hint. She has flavored water that they make. She’s on every Forbes list, every lists out there of being a top entrepreneur and she’s a keynote speaker. I’m very interested to talk to her. Oren Klaff, you have to have seen him on everything. Managing Director of Intersection Capital, he has lots of tips on ways to communicate in leadership and sales and he’s really an interesting guy.
Listen to the podcast here:
Creating A Healthier Option with Kara Goldin
I am here with Kara Goldin, who is the Founder and CEO of Hint, the San Francisco-based company which produces the leading unsweetened flavored water. Kara has been named among Fortune’s most powerful women entrepreneurs and Forbes’ 40 Women To Watch Over 40. The Huffington Post lists her as one of the six disrupters in business alongside Steve jobs and Mark Zuckerberg. That’s quite a list to belong. It’s nice to have you here, Kara.
Thank you so much.
I’ve had a lot of people from Forbes on the show. I worked with Steve when I was at the Forbes School of Business. It’s hard to get on these lists and I’m sure that must have been quite an honor to see that you’re getting on all these lists. I was looking up your backstory as I was drinking my Diet Coke. I totally relate to why you wanted to create Hint because I hate drinking them, but what are your options? I have to admit I haven’t tried Hint yet but it is on my list. I’m going to the store. I want to hear your backstory a little bit of what led to your interest in creating Hint.
I was trying to get healthier. I was in between jobs and I was looking at a lot of different opportunities after I’d been at AOL and I love tech and I thought, “While I’m doing that, I think a lot of other people decided that this is no better time than to start losing some of the weight that I was trying to lose.” Overall my energy levels were low too and I thought, “I’m going to start a workout regime and also start to buy healthier and better for your foods.” While I was doing that, I realized that I was eating a lot of stuff that I didn’t even understand the ingredients and drinking as well.
Diet soda, Diet Coke in particular was something that I was drinking a lot of every single day and never realized how much I was drinking. Sometimes it was in the form of a fountain machine that you fill up your own cup. Sometimes it was in a can. When I saw an ingredient list in my Diet Coke that went on my list of things that I was going to eliminate from my diet to see if it would change anything and in my health, when I did that, two and a half weeks later, after exchanging Diet Coke for plain water, I saw that I lost over twenty pounds.
I was trying to lose pretty significant weight. I didn’t think I was going to lose it overnight, but I had almost 50 pounds that I was carrying. As my girlfriend said to me, “You wear your weight well. I can’t believe you have that much to lose.” I didn’t weigh that in college and I had had a bunch of kids, it was holding onto me and I did that. Then after losing twenty pounds, I thought like, “That’s exciting.” The key thing that I did was switched from diet soda, to plain water and it felt like that the key thing was that I was I’m never a water drinker, which is why I drink diet soda. I somehow convinced myself that diet soda actually had water in it somewhere, so it was fine. After continuing to drink water for a few weeks, I was getting healthier and healthier.
One day, I decided to slice up some fruit and throw it in water. Then I realized that that’s what I needed. I needed to taste. Then I looked in the stores for this product and all kinds of stores. I went to the 7-Elevens well as the healthier and better for you stores, like Whole Foods, then the conventional grocery stores like the Safeway. While there were some that had carbonated with fruit flavors in it, the key thing was the Stillwater versions were filled with something at that time it was NutraSweet or sugar or something else. I wanted to eliminate sweet from my diet as much as possible and that wasn’t there.
One day while I was shopping in Whole Foods, I discussed my need for this product with one of the guys stocking the shelves and he had pointed to another product that you may be familiar with, Vitaminwater. I went over the list of ingredients with him of Vitaminwater and I said, “The problem with these products is that vitamin is getting people like me to buy it or diet or any of these buzzwords.” The challenges is by eliminating a product that was calling itself diet, I ended up losing weight and got healthier.
What I said to him is that, “Why isn’t there products that encourage people to drink water that find water boring?” He said, “That’s interesting.” At this point, I went home and decided I’d start playing around on the internet a little bit and trying to see not only was anyone doing it that I wasn’t aware of, but also how would I do it potentially. I was still looking for another job. I never thought of this as, “I’m going to sit down and go start a company.” Initially, even the first few months of getting it into after we launched the company, the product, people were saying to me, “That’s exciting that you started this new company.” I’m like, “Company? It’s a product. It’s not a company. It’s fun.”
I was having such a good time with that. I was giving a talk and getting deeper into this topic that I was at a point in my career with AOL that I had risen pretty fast and enjoyed doing what I was doing and disrupting at the Internet back in the early days. Building out a pretty big team and being pretty successful. What I didn’t want to do was necessarily be the smartest one in the room anymore. It’s exhausting. I’ve talked to other executives about this. You walk into a room and you’re always the one that people are looking at for direction and advice. It’s a badge to some extent, where you get excited about it, but then I thought, “I want to be the student. I want to go and learn something else and it was difficult for me,” at least where I was sitting to be learning at the pace that I needed to.
Back in the early days of the internet, we were learning and learning. We had no book in front of us to say this is the way that it’s got to be. Suddenly, I’m at a point where I’ve got a team of 200 people and everybody’s got their marching orders and going and doing it. I wouldn’t have even realized it when I left AOL, but I was at a point where I wanted to learn more. When I saw this whole new world around beverages and how I had figured out how to get myself to drink water than it was exciting for me. I was learning something new every single day and everything from how to make this product to what the market was. All of those pieces were incredibly energizing to learn about.
It’s a fascinating backstory and you were the vice president of shopping and eCommerce partnerships at AOL and you already helped lead the growth of it startup to a $1 billion enterprise when you were there. You had this strong background. A lot of people want to start a company, they don’t have the knowledge you had. I’m interested in the products. To be honest with you, I haven’t tried that. I’d like to drink water. In the morning, I like to have a little flavor too.
I was always looking for the same thing. I found the same thing. I stopped looking because they all had all the same stuff in it. I’m thinking, “I don’t want that.” I was looking at some of them, the watermelon appealed to me. It’s the fizz is sometimes that I liked, but then they make it tastes like Alka Seltzer sometimes or that they’re not sweet enough or they you don’t want this stuff that’s in that makes it sweet in Diet Coke. Do you have caffeine? Do you have fizz? Do you have some of that? Is it plain water? I’m curious about your product.
When we launched, it was the still water version and then a few years later, what I realized is that when I would talk to people, including in my own household, there were some people that still loved drinking water and they identified themselves as being water drinkers, but they liked the carbonation or said like they needed the carbonation, especially if they were giving up soda that they found that like the carbonation was the piece that was what they enjoyed above and beyond the taste. They felt like they needed the bubbles.
In my own home my husband was drinking Hint and he was pouring Hint through the soda stream or Seltzer machines in order to create bubbles. Finally, we thought, “We should do that and sell that because typically in a household, most households have one person that wants that.” We came out with Hint Fizz. A lot of carbonated beverages that call themselves water actually have sodium in it too. You mentioned Alka Seltzer, not all of them, but a lot of sodium in it. A lot of times people will say that there’s almost like this aftertaste to it. Typically, it is the sodium that’s in it combined with the fruit flavorings.
Then a few years ago, we decided, “Let’s go and launch the caffeinated version of this product.” We had had a lot of people say to us, “I want to give up the soda or the coffee, but then we need some caffeine.” Then we found a source of caffeine that’s actually green coffee bean extract. The problem with caffeine typically is it’s very bitter. That’s the reason why people add a sweetener to it because the bitter taste is something that is not so appealing to people. This form of caffeine doesn’t have that much bitterness to it. We decided to do that. We don’t have a carbonated version of the Hint Kick yet, but we definitely want it and we’ll be doing that soon.
It was interesting to see all this stuff that you’ve done. I can relate to your story why you wanted the product. I went around the store is doing the same thing. I was a pharmaceutical rep for a long time and you have to go through with FDA and different things with food. How hard was it to bring a product like that to market?
We launched an entirely new category but beverages an incredibly competitive category. I didn’t grow up in the food and beverage industry or graduate from college knowing that I wanted to be a beverage executive or any of those things. I had no idea of all of the things that were involved in actually getting a product to market. I would say that I not only had a great product that Whole Foods took in which I think is 0.001% chance that happens for entrepreneurs. I’ve been out speaking before and entrepreneurs will raise their hand and they’ll be like, “I’ve tried to get our product into Whole Foods so many times and it’s not that easy.” I do think that there was a little bit of luck and right time involved in that process. I had no idea the games that are played by big food companies and soda companies and frankly like the grandfather deals that are in place with some of the large grocery chains like the Kroger’s and the Safeway, the Publix of the world that have been.
They’ve been taking real estate funds, I call them for space on shelves. Maybe I heard that along the way that it was slotting fees. I hadn’t been in that industry, but I think that the challenge for a new and healthier for you brand is that you don’t have $60 million to write a check to Kroger to get any space. The challenge is I always tell entrepreneurs who reach out to me that you have to be very careful when you get in too. Let’s say you’re going to be surrounded by outside of the beverage company and you’ve got lots of different crackers that have multiple skews that are maybe the same skews.
It creates a visual image for the consumer that they almost can’t see you if you’ve only got one skew. You get lost on the shelf. Things like that, I didn’t realize. We went into Target ages and ages ago with one or two skews and we were out of there in two months because we didn’t sell. I would never go into a location knowing what I know with like less than five skews because you can’t build a visual presence for the consumer. The grocery buyers aren’t good tell you that.
How would you find that out? Was there a way than trial and error? Are they sharing that on the internet?
That’s probably like a whole other topic. Somebody was asking me in another talk that I was giving the other day that, “What was the biggest challenge.” I wouldn’t even say it was a challenge, it was a fact going from tech to food and beverage or CPG in general. I felt like with tech and maybe it’s because tech is like a slightly less-baked industry. Where tech is about in my mind, creating things that whether they do or not, as you could argue, but it’s to make things better. In some way, whether it’s a computer or phone or service. That’s the mindset. You’re never saying, “That’s impossible,” in any of your meetings that you’re walking into. It’s about, “We don’t have the right people in the room,” or “The technology isn’t there yet,” but nobody’s vocabulary is that’s, “That’s impossible.” It’s, “We haven’t figured it out yet.” It’s almost like a puzzle.
When I came over to food and beverage, people always ask me, “Did you have a network of people that you look for? How did you get this information?” It was tough. It wasn’t written anywhere. There are no books out there that explained all of these things. Then when I would actually go to trade shows, there was this very competitive feeling that I got from a lot of these other companies that were almost, “We had to do it, so you have to do it too.” The big food companies half the time, they might have a product that they own, but they might be owned by Conagra or Kellogg. I would talk to the people that would be working the booth there and they’d be like, “How did you get into Safeway?”
They don’t know because those deals are done at such a higher level, where it’s like a real estate deal and they’re product managers and they’re slotted into the company allotted spots. The whole thing was different. In many ways, although it frankly sucked that I had to go and figure this stuff out. I felt like every day I’d get up and, ” This is surprising. Why is this so?” I kept thinking, “I’m not doing something right because this can’t be this hard or it has to be something, and I would never find it.” Along the way I would keep trying and keep trying and keep trying. That’s the biggest thing.
I’m writing about curiosity and obviously if we can increase our level of curiosity could lead to innovation. It seems that so many people make us reinvent the wheel because they don’t want to share, you have power, if you will, “I had to do it, you have to do it.” I see that a lot. That’s why I think it’s great that you talk about this. You’re an active speaker, writer. You’re a member of C200 and SFA and I’m looking at all these things. You also have the Kara Network. I’m interested what that is and I know you have your podcast, Unstoppable. Do you use these platforms to share, obviously, are you sharing it on the show which helps people? What do you do in these networks and on your podcast? Can you address that?
The Kara Network was started out of I’d have conversations with people whether they were established entrepreneurs in their own field. Maybe there were entrepreneurs that had challenges that they were trying to work out on their own. Finally, I would then leave the meeting and maybe go back into my office and tell people. I wouldn’t share everything, but I’d share that was interesting what she was talking about. Before having this big job, she was fired from this other job and not sharing what wouldn’t be okay to share but more of a, “Look at her now,” kind of thing. I decided it would be great and very helpful to other people if I started videotaping those meetings and sometimes audio taping those meetings as well. That’s how it started. The first ten episodes of our podcast, which is Unstoppable with Kara Goldin, was the focus on health. I started to frankly do my own research around not only diet such as Whole30, which is amazing and we’re partnered with those guys.
I would, for example, try and find out why certain research hadn’t been done on Stevia and that I had been hearing doctors talk about it. Then I would call up a doctor and talk to them about it and get his perspective and learn that oftentimes doctors can actually they are part of studies involved. It’s up to their hospital to actually release those studies and unfortunately a lot of those hospitals also get a lot of funding for wings of their hospital from pharmaceutical companies who actually don’t want that information to come out.
One of our talks was about that. For me, it’s curiosity and exploring, but I decided it would be if I’m going to have those conversations with people and obviously I’d ask ahead of time and we can interview them and tape them. It’s stuff that I’m curious about. I read constantly, and I’m always networking with people too to try and learn more. I’ve always been somebody that has been curious, but also wanting to be informed. Understanding why things are not maybe happening in certain ways and I would say that I’m typically a very positive person and always trying to move things forward. I also want to be educated about why things aren’t moving forward. There are a lot of other things that I do. In addition to my day job to try to move the needle, especially when I feel like I understand where the roadblocks are.
For example, we were in Washington trying to argue to change the federal school lunch program and meeting with seven different senators to try and get bottled water to be a part of the federal school lunch programs. Unfortunately, the federal school lunch program, much to my surprise, was written by the USDA, the dairy association. If a school, not public schools, but if any school receives federal funding, like the Catholic schools. For example, if they’re offering any kind of subsidy for kids to actually go to that school, then oftentimes they’re taking federal money to allow kids to get an education at a Catholic school. Once they do that, that triggers them to have to follow the federal school lunch program, which says that a kid in K through eight is allowed to have milk orange juice or tap water.
Unfortunately, tap water is a utility. Schools can’t guarantee that the tap water running into schools is clean because it’s out of their control. I’m saying that, “If that’s the case, then why are we actually allowing kids to have not orange juice and milk but also bottled water or a product like Hint?” We had great meetings with seven different senators in Washington a couple of weeks ago. We’re not only trying to get this law changed, but also trying to get the snack program, which is like vending machines. They go into schools. We’re trying to get those updated as well to those that can allow schools to have bottled water in them. We’re trying to get that language also to say flavored water without any type of sugar or sweetener in it because it’s crazy. Here these schools have orange juice but they’re not allowing a product like ours which is way healthier than giving our kids orange juice all day long.
It’s one thing for you to have a small four, six-ounce glass of orange juice in the morning. You could argue that it’s not good, but let’s say it is, that that’s good. The fact that these kids are having orange juice in multiple points throughout the day or that as an option is not so good. The number of kids that are bouncing off the wall, I believe from some sweet. Then the first thing that we’re doing is saying they’re not a good student, maybe they should be medicated, versus actually looking at the diet.
As a beverage company, that’s my point is that we’re not just trying to sell consumer stuff, we actually have a purpose and we’re trying to make a difference. I think that that’s what I love. As I mentioned we launched a sunscreen a couple years ago. We applied for an FDA approval of the sunscreen idea that I had which came out of if I had skin cancer on my nose and I had the skin cancer removed and that started wondering what kind of sunscreen should I wear. I start doing some research on mineral based sunscreens. I didn’t like the feel of it and sometimes it was too white.
I started looking at how much we’re absorbing anything that we’re putting on our skin and I didn’t like what the research that I was reading. Then I started looking at chemical-based sunscreens, which in my mind was a no-no. Then I started realizing that water’s a chemical too. Lots of things are chemicals. It’s the point is to reduce bad chemicals. I ran across an ingredient that I didn’t like very much called oxybenzone. I started asking the question, “Do we need oxybenzone in our sunscreens?” Then realized that I didn’t think we did. I started making my own at home and that used our byproduct from our water, the fruit, to actually scent the sunscreens because I didn’t understand what the attraction was of unscented sunscreen. I thought I want something that smells good. Two years later we’ve got the FDA approval. Mary Claire, Allure, people have all said it’s one of the best sunscreens on the market.
I’ll have to tell him, my husband’s a plastic surgeon. He’ll be very fascinated in all that you do. He’s a real health addict and everything that you do is fascinating. I wish we could have had more time because I had so many things I’d love to talk to you about, but next time. Can you share how people can find out more of how do you want them to look for your information and how can they find you?
Go to DrinkHint.com and you can get any of our products on our site there. We’re also available on Amazon as well as many stores including Whole Foods, Target, Sprouts, lots of stores across the country. It’s very exciting. We’re doing something great and have the consumer in mind and health in mind doing it.
Kara, thank you so much for being on the show.
You are welcome.
Understanding How To Raise Capital with Oren Klaff
I am here with Oren Klaff who is the Director of Capital Markets and investment bank Intersection Capital where he manages its capital raising platform. Since 2005, Oren has since grown from history to approximately $2 billion in aggregate trading volume across a diversified portfolio of companies and transactions. He is responsible for business development and product development and oversees the firm’s flagship product and velocity method appropriate finance. It is so nice to have you here, Oren.
I didn’t know that my professional career was so boring. I’m trying to get a hot tub time machine go back with ski instructors.
This doesn’t sound boring to me. You supervise the placement over $500 million of Investor Capital. I’m looking at this. You’re the number one best-selling author of Pitch Anything: An Innovative Method for Presenting, Persuading, and Winning the DeaI. You’ve done a lot of very interesting things.
Pitch Anything is a good book. I knew it was successful when it came out in two different dialects of Chinese and made me feel important.
I knew it was quite a book. Many people are talking about your book and your work. I think in case there’s somebody who isn’t aware of you who, which would be hard to find. Could you give some background to say how you got into understanding how to raise capital and incorporating neuroscience and all the stuff you do? What is your background?
I had a software company in which we had 70 people. We were cresting through $8 million in revenue and by all measures it was quite a success. We stomped down on the accelerator a little too fast and we needed capital. We were growing faster than we were building and literally the company to the point where we needed investor capital in 30 days. Can you grow in that pace? It fell to me to go out and raise money.
I went out and I talked to investors, I talked to private equity groups, I talked to IPO banks and everybody loved the firm, but I didn’t understand how to raise money. At the end of the day we ended up downsizing the firm. It became something amazing, it became something very small. I was wounded by the inability to go get money from the markets. For the next five or six years I worked as an analyst. I went from a CEO who forced labor, the Bataan death march, mining coal in the basement of an investment bank to learn how money works.
I came out of there. Money is one of the most difficult things to pitch for. It’s a commodity. If you’re selling vacuum cleaners, if you’re selling ball bearings, if you’re selling more likely services, SAS software, training, large physical products, shipping, logistics, med tech, medical services, fintech. I guarantee you, it’s not as hard as raising money. Raising money is the ultimate form of selling. I’ve learned the basement of an investment bank how money works.
Pitch Anything is the lessons from knowing how to walk into a room knowing not anything about you, not caring, saying, “I can’t remember what’s your name. No, we didn’t look at the material,” and starting from that point. In twenty minutes they go in, “I love this. You’re awesome. Let’s move forward. What our next steps?” What do you do in those twenty minutes to go from, “Who are you?” to “I love this?” How do we move forward? That was Pitch Anything is about. In my mind, in somebody else’s mind it could be totally different, but that’s what I think it is.
What I’ve got from what you said all was impressive and very interesting. What is still sticking in my head is that you worked as an analyst and you’re all personality and I cannot see you sitting in a room working as an analyst. Was that hard on you?
Let me tell you what it was like, it was horrible. I had ten times more money than any other analysts. I was ten years older. It was like back to school. Like a guy gets out of the military and decided to go back and get an undergrad degree and he’s in there with 21-year-olds and they’re talking about drinking and partying and what fraternity. He had to go home. He’s got a family with two kids in a pickup truck. It was very much that scene, where I didn’t belong there from a socioeconomic in a life standpoint. I was a CEO of a company with 70 people, but from a meeting, to learn the skill set, I toughed it out.
Sometimes you have to get the foundational things to be good at something else and even though it probably wasn’t your favorite way to learn it all, it obviously has given you some background that has been helpful to you. You have come up with quite a bit of helpful information for people. I don’t even know where to start first. I want to start first with you talking about squirrel theory and how you integrate it into your new book, A User’s Guide to Power. Can you tell me a little bit about what you did with that and what’s a squirrel theory?
If you think about a squirrel. What happens is he’s at the side of the road and on the other side of the road he smells a bag of potato chips. That is novelty, it is attraction, and it is desire. He runs over there, but he’s in a foreign territory. He’s in an area is not familiar with, sticks his little chips in the bag crinkles. That noise scares him because he’s already in hyper-vigilance. He scrounged back across the road right out of fear. Thinking about the potato chips, “That wasn’t so bad.” Creeps across the road and that’s why they run back and forth and back and forth and back and forth. This is what happens when you offer people super high novelty, super high attraction. They come over to see what all the excitement and the benefits and the, and the newness is, but they’re also scared and hyper-vigilant because it’s not what they usually buy is.
Think about toothpaste. There is a new toothpaste that can whiten your teeth in 24 hours. Usually it’s done by the doctor over six months, with laser and equipment. I’m excited to see how it make my teeth for $9. I run over and see it, but I’m hyper-nervous about it because it doesn’t sound normal, but it sounds very exciting. It scares me, and I go away, but then I continued thinking about it and eventually I become exhausted. Squirrel theory is about offering too much to attract them over what you have, but not being able to hold their attention there because they’re hyper-vigilant and very nervous.
Many people in this millennial group sell things by accentuating the hyper-excitedness, newness, and super human results that are possible by using this amazing, great product which attracts people, but can’t fulfill on that attraction. Squirrel theory then rolls into plain vanilla. If you work in money, nobody wants things that are stacked with risks, the newest things ever, the most exciting thing you ever hear about or hear about are fine. They want things that are pretty much plain vanilla, like the things I already have, but a little bit better. Squirrel theory and plain vanilla or two things that will help you understand how to attract somebody over to what you have talked to them about it and hold their attention, not scare them away and shift them from what they’re using into what you have.
It’s interesting because I worked in sales for decades and I created a brand publishing course when I worked in the MBA program at Forbes. All this stuff you’re talking about is all the stuff that we talked about in the sales and marketing classes that I teach in other areas. You want to under-promise and over-deliver. How does that tie into that? Are people over-promising?
I think what happened if you tied it into pitch or presentation, when people come in to make a pitch, give a presentation, get somebody’s attention, because normally they’re winging it. They use all their best stuff at the beginning. “We won Microsoft’s Number One Vendor Award. We reached our 10,000th customer. We have 7,000 customers more than our nearest competitor and we raised $50 million from Oracle.” I’ll see things start like that. “What’s the problem? It’s exciting.” That’s everything you have. What are you going to talk about the next twenty minutes? We’re in San Diego and I think maybe five or six years ago, a barge on 4th of July is an hour-long fireworks show. Maybe you heard about this, all the fireworks went off in 60 seconds. We want to want to take this over into sexual innuendo.
This is what most people do is they take all the fireworks that should be going off sequentially during the course of twenty minutes and blow those up in the first two minutes. It’s too much novelty, it’s too much attraction, and you’re using your best material. I tell our clients you can’t start with that, and they go, “We’re Microsoft’s number one vendor. They announced it.” We’re going to finish with that it’s called the grand finale. We’re going to start with ideas that are in the stakes. We’re going to make this a win-lose situation. We’re going to talk about ideas instead of talking about ourselves and we’re going to say ultimately winter is coming. Change is descending upon us in our industry, and those people who aren’t probably prepared are going to metaphorically freeze to death.
Guys who are prepared, who have save up pelt and weatherized their buildings and stopped fighting with her neighbors and focused on winter, they’re going to do well in the changed environment. That’s the start of a presentation and we can save the fireworks for when they’re appropriate. If you think about it, what we want to do is open up with some ideas and then give some objective. It might be boring, it might not be extended to organize the objective facts about what it is you have in context of a problem. Until somebody understands that the problem you solve is very difficult to solve, that they aren’t going to believe that what you do is hard.
That’s what the beginning is about. It’s not to tell people how great you are because they don’t know no matter how great you are, they didn’t know that matters. What are the stakes? What is the problem you solve, and why can’t anybody solve that problem? Until those things are in their mind, there’s no need to set up fireworks and tell them how great everything you have is because they don’t know enough to care or understand. I’m not sure I answered your question.
What I found interesting about that, you remind me of the movie Scrooge. Do you ever see that with Bill Murray where he creates the show? He wanted it so scary that they would be afraid not to watch. You bring up a good point though, the question. If you don’t ask the questions, you don’t even know what you’re selling them.
I don’t talk that much about it in Pitching Anything but I see a lot of other people. Have you heard of this book, SPIN selling?
I haven’t read that one yet.
Good. Don’t read it.
Do or don’t? Why not?
Because the book says that the way to sell is by asking questions, and I understand. When somebody calls us and they say, “We shouldn’t talk to you about our company.” “What are you trying to do?” We’re trying to raise $25 million,” and “We’ll go for what?” We need some basic information, but nobody can do a phone call with you to talk about things they already know. They want to hear the things that you know. They want new insight, they want color, they want observations. They want to know what’s going to happen next in the industry. They want to know what you’re seeing. They want to put in content.
When you sit there and say, “How big is your business? How many people are your goals? What is your budget for the coming year? What solutions have you used before, approaches, problems, are you having? How much does it cost you now? How much would you like to save? It’s tedious and tiresome for a buyer to hear all these questions. Most of the stuff guy, Mr. Seller, you should know we’re on the internet, there’s a Wikipedia on it.
A lot of that it’s important for you to research, but you do want to have two-way communication. You can’t sell at them either.
You can have two-way communication. When is your wire coming in? You want a two-way communication, asking questions. I like to make statements to draw them in. When you ask a question, it is tedious, and they feel like they’re giving you information that you’re collecting to sell them. I’ll give you a perfect example of. What’s your budget for your podcast over the next twelve months? Truthfully what is it? Tell me because you’re not even sure what I sell might even sell you podcast editing services. Whatever you say your budget is, I’m going to quote you $1 less. Nobody likes to answer what’s your budget.
In the same way, nobody likes to answer, “What problems are you having right now?” in entirety because it’s a setup. The way to draw people from a project standpoint is to say, “We do a lot of this. By the way, you’re amazing in your business. You run a plumbing empire. You cannot ask me to so much as turn the nut on a pipe. I would break it and we would all drown, and it would flood. That’s not what we do.” However, we’ve worked with thousands of plumbing businesses on their financing. We probably know that business from a finance standpoint better than him.
You worked on your finances. You see one plumbing business to a very narrow lens. We have solved accounting, finance, and capital raising for plumbing businesses. The same problem a thousand times over. You’re coming up on a one solution from that. Let me tell you what we find. We find that it’s hard to get a chart of accounts because the accounts are moving so quickly. Receivables build up. You wake up one day, you know you’ve got over $1 million in receivables and you don’t have a proper CFO because these businesses aren’t set up, tend to attract CFOs and to hire an outsource firm. Is that about right? Is that what you’re experiencing?
That will make a potential buyer dive in to discussion and tell you all about his problems, his frustrations, once there’s context. If he feels he’s providing you all the information you need to then sell him, it would be resistant in giving it. Making contextual statements that the buyer will dive in on and share with you information to me, it’s probably most nuanced but critical skill set for making a buyer feel comfortable. I’m in with the seller knows what he’s doing.
I am interested in what your perspective on this. I agree with everything you’re saying. I’m in sales. It’s so challenging for people to trust the salesperson. The more you can show that you’ve done this, and I liked that you said that a lot, we’ve done this so many times, you’re dealing with this this one way. We’ve seen it from this perspective and that perspective and that’s what I think is important.
I would jump on that stuff, trust. Here’s why it’s a problem for presenters, exec salespeople. They go through multiple archetypes or versions of themselves in a very short period of time. Let’s say you’re sitting with a buyer for 30, 60 minutes. Who’s the version of you to show up? The nice guy looking for rapport. We see this rapport seeking activity. That’s a version of you, that guy or woman. Then you feel like you’ve got some social acceptance and they like you, and then you’re ready to jump.
People work on liking this talk about sports politics, weather, current events, vacations, for five, ten, fifteen minutes. The reason somebody talks about sports, weather, politics, vacation for fifteen minutes is they don’t feel it’s safe to start the presentation. Don’t feel like the other party likes them. They don’t feel totally accepted. Let’s say you’re good at it, four or five minutes into it, you’ve talked about geography and dead grandmas or whatever it is. You feel like you’re ready to go.
The next version of you to pop out is what I call the Sham Wow Guy. The guy who goes through all the amazing things about your product and your service. That’s more of the traditional sales guy and we feel like we have to do that because they got to know what it is we have and why those things are you shift from being the nice guy to the Sham Wow guy. Then there you go a little bit on that. Obviously been talking about features and what it is you have now you have to talk about the benefits, why they should get it, what’s good about it, what they’re going to get when they work with you, the ROI, the IRR, the improvement, the solving of problems.
That version of you, I call the Sorcerer, spins the tale of all these amazing features and these social qualities that you have and your values and how good your customer services into an offer. It feels like I’m starting to be magical. The Sorcerer comes out; the sorcerer is nothing like the nice guy that was sitting around fifteen minutes ago. A totally different archetype, totally different personalities. Totally different language, totally different cadence. “This is good. By the way, if you buy our accounting software, you’re going to make a lot more money and that’s going to impress your wife more than going to want to make love you more often and you’re walking around the sun. Customers are going to know that your bank account is going to flow. You’re going to buy a house in Malibu and be tan. Your people are going to love you. You’d be able to retire early and then you’ll have enough time to write that Nobel Prize winning paper that is inside of you trying to get it.” That’s the way the Sorcerer talks.
When you’ve got all that and then you say, “What do you think?” that’s the angel. The angel, that’s all she does. She comes out and you’ve got a little halo. What do you think? Is it something you’d be interested in? Do you have any questions? It’s different from the Nice Guy, because it’s leading the siren of the angel. Then what’s most interesting to me, they go, “We don’t have budget this year and I’m collecting information and we can get this information. We will take a closer look at it.” The version of you, it’s at the end of the meeting, a version of you that comes out is the wolf sections to work on. That’s what’s been selling is about, get to objections once your objection comes out, 60 minutes, he’d come by everyone to leave the meeting’s over and you start packing all the reasons they can’t buy, wolf-like.
That’s why people don’t trust people is they’re morphing to the needs of that moment. If you’re the wolf then you’re the goddamn wolf at the beginning, in the middle, and the end. If you’re an angel and lots of people are angels that not necessarily me, but then you’re the angel at the beginning. Angel in the Middle, Angel in the end, these transitions from Angel to Wolf, from Nice Guy to Sorcerer. That is what causes trust to erode they don’t know who you are, you don’t stick to your guns. You’re inauthentic and if you’re inauthentic in a very short period of time, that’s where we don’t get trust.
That’s interesting because I think about with salespeople, I’m big on the other end, since I’ve been in sales for many years. I’m putting myself as a customer for a moment and you wait for them to turn into the Wolf because you know you’re not going to do it maybe in your mind and you’re like, “This is guys is going to be this.”
We can talk about this for hours, but now we’re coming back around to the beginning. Why you open up with a big idea, raise the stakes. You talk about ideas, not yourself because that communicate, “You’re in the hands of her professional. I know how to organize a pitch, which is a big idea. How the world is changing, what the problem is that we address, why that problem is hard to solve, what our solution is, how it works, what it is, the value proposition, the ROI and who’s on our team is going to execute. What are the assumptions? What’s the timeline?” That’s it.
Anything else not needed, maybe a demo. A couple of customer testimonials or use cases, but in most presentations, nothing else is needed, but that. When you communicate, “I’m a professional, I know how to take you through these things you need to know in the order that you need to know them.” Then that builds a huge amount of trust. If you communicate, “I’m like every other sales guy and you’ve seen this presentation before in one sense or another. I’m going to end up trying to overcome your objections 30 minutes from now,” that is depressing, exhausting, frustrating and unliked by most buyers.
You talk about frame control and I’m not sure what you mean by that. Does that have to do with what we’re talking about? I was looking at your word associations that you had here and how can a salesperson practice frame control and what are the steps? Are they difficult to remember?
Ultimately think about the frame, the social frame, the governing set of ideas, which is what a frame is. It’s the emotion, it’s the social hierarchy. It’s the information. The desires and the self-motivation of both people. In the conversation, that’s the frame. It packs all of that in. Most frames are on the salesperson, you’re the buyer. Because you have the money, you can decide to give her an agreement. “I have to perform for you. I have to show you what it is I have. I have to answer your questions. I have to be polite. If you’re rude or sending text or looking at your phone or looking away or not paying attention, I have to accept that this is a main frame.” You, the buyer, are the prize that I’m trying to win. I’m trying to win your attention, I’m trying to win your money, I’m trying to win your focus. That’s it. My sense is to the degree that you’re in that frame or you buy into it or you’re feeding it, you’re going to be a typical salesman and have low conversion rate, if any at all.
The correct frame is switched about a 100% on the prize that I’m selling, but you have to behave the buyer in a certain way in order for me to spend time with you, to show you what I have and in order for me to let you know the product, my services. That’s the correct frame, and you say, “What? It’s the job of a salesperson to chase buyers around and convince them to give you money for a product.” Absolutely not true because communicating with you is an amazing opportunity for the buyer. You’re the best ball bearings, accounting software, SAS, software, metal, whatever it is, you’d logistics government, whatever it is you do, it’s very likely if you’re reading this or reading pitch, anything, and you’re the best in the world at that thing.
The buyer has a problem, the competition, or buys off Internet, it’s likely he’s going to have more problems and not get it fixed. As simply as possible, if you need a barbecue for a party and you go to Home Depot and you buy the cheapest one, for $299, that’s going to work for a few times and then jam up and rust. You haven’t solved the problem of being able to do barbecues for the next couple of years. When you buy the cheapest one for the immediate solution, that’s not necessarily a solution. If that buyer goes with your competition or get something off the internet or from China, he can go do that. If he spends time with you, he’s learning and getting the best advice, the best product and the best service in the world in order to get the best, he’s got to pay. He’s got to pay margin. He has to invest his time wisely. He has to pay. Basically, it’s to make you feel good and allow you to have a good time. Unless somebody pays me those things. Margin, attention makes me feel good about the time I’m spending together. I don’t allow them to have time with me.
I’m trying to think based on the pharmaceutical route for a long time as those guys value their time. The doctors, I should say, value their time. How do you get around somebody who doesn’t have a lot of time?
“Doc, I know you have probably 70 seconds. I have eight appointments myself and I’ll tell you, you think surgery is hard. Try disappointment. Anyway, I’ve got five minutes. Four minutes. We’re peers. In four minutes. I’m going to tell you everything you need to know. I won’t do it for you. I will get how you get these new pharmaceuticals to help your patients. Don’t do it for you. I’ll do it with you. You invest four minutes. I’ll invest four minutes. That’s eight minutes. If two of the best people, the medical business in greater Wichita Falls figure something out in eight minutes, that’s on them.” I don’t know anything about that business, but that’s how I would do it.
It was a challenge. I’ve worked in all kinds of sales, from lending through pharmaceuticals. They’re all so different, B2B versus B2C. It’s so challenging for people.
You come in with context that is the first step in frame control.
You’ve taught so many people had to pitch anything, but what is the User’s Guide to Power? I’d like to know more about that.
If you move from Pitch Anything, the User’s Guide to Power is about in every deal, power comes in. Power is floating around in other people’s hands. You need it, you want it, you get it, you lose it, it comes back, but it cannot be stored right when you get it, you either have to use it or lose it. In a business deal, you’ve got a buyer and he’s buying something for $5 million. You are the seller and they wire the $5 million to you and it hits your account. You have to pay all kinds of people, like you have to pay out $2 million to the reserves and the construction rehab, all the other people in the deal. I can tell you, anybody that’s got that $5 million and the power and they’ve been working on this deal for three months, six months, sometimes a year to $5 million comes into their hands. They immediately surged with power and they sit on it.
Everybody else is in a low-power position. “I feel it. I’m in control of $5 million. I’m going to sit on it to feel what it’s like to have it before I send it out.” Power does three things to human beings once they have it. It makes them lose focus, it makes them see people at a very superficial level, and it makes them take risk they wouldn’t normally take with a peer. This is the dynamics of power. That is so important to understand when somebody else is in the power position, has power over you, has a control to say yes or no, has the money you’re seeking it. Again, they have narrow fields or narrow lens, they see you superficially. They don’t listen very well, they don’t pay a lot of attention and they take extraordinary risks in the relationship with you. This is why it’s so important to understand how power works.
When does this come out?
I’ll tell you when this comes out, it comes out as soon as it’s done.
Your book comes out when mine does. That’s interesting.
It’s written and we’re in editing.
I’m sure a lot of people are going to want to find out how they can get your book and find out more. Can you share how people can find out more?
How do I get into the mind of a buyer? You chop open a buyer, there’s no mind, there’s no soul. Nothing in there but a brain. You can’t find the soul. They can’t find the mind. They look for it. What’s in there is a brain and information flows through the brain in a certain way. When you understand that flow of information, you understand how to get a buyer to want what it is you have. Anyway, jump over to PitchAnything.com. Put your name in there and we get you a lot of information. It supplements what we’ve talked about here. You’ll get a concise little write ups and what we talked about here. It’s a tremendous resource and people love it. It’s funny, I get emails from guys at Goldman Sachs and they go, “We love Pitch Anything. I want to remind you, we do this stuff every day. You didn’t invent it.” I’m not saying I invented it, I’m saying I wrote it down
I’m looking forward to your next book and thank you so much for being on the show.
I can’t wait to come out and share it with all my friends.
About Kara Goldin
Kara Goldin is the founder and CEO of Hint Inc., the San Francisco-based company which produces the leading unsweetened flavored water. Kara has been named among Fortune’s Most Powerful Women Entrepreneurs and Forbes’ 40 Women to Watch Over 40. The Huffington Post listed her as one of six disruptors in business, alongside Steve Jobs and Mark Zuckerberg.
About Oren Klaff
Oren Klaff is Director of Capital Markets at investment bank Intersection Capital, where he manages its capital-raising platform. Since 2005, Oren has since grown the firm history to approximately $2 billion in aggregate trade volume across a diversified portfolio of companies and transactions. He is responsible for business development and product development, and oversees the firm’s flagship product, the Velocity™ method of corporate finance. Applying his pioneering approaches to raising capital and incorporating neuroscience into the capital markets programs, Oren has supervised the placement of over $500 million of investor capital from high net-worth individuals and financial institutions. He is the #1 best-selling business author of the McGraw Hill publication Pitch Anything: An Innovative Method for Presenting, Persuading, and Winning the Deal.