[An AngelList study about the top companies being referenced by startups in their one-line pitching. VisionMobile Sales Operation Manager, Chris Eleftheriadis, shares his insights on how nowadays startups communicate their value proposition to investors]
Startups are abundant today – addressing every imaginable user need, and often in unconventional ways. Many of today’s startups, from e-commerce to healthcare, are combining many “business patterns” – social, mobile, media, marketplaces, gamification, reputation systems, and many more. And there lies the challenge: how do you communicate your startup’s value proposition in a one-line elevator pitch? Very often your elevator pitch will determine if you can get a meeting with an investor, or the number of positives from a partner onboarding campaign. This challenge of crafting a short, memorable, meaningful one-line elevator pitch has led startups to use more creative techniques such as referring or comparing to established startup success stories. Call it LinkedIn for X, AirBnB for Y, eBay for Z.
As part of our research into ecosystems we asked ourselves an unusual question – Which are the most popular companies that startups are using as a reference or a meme in order to describe what they do? This question led us to some very interesting insights that we wanted to share in this article.
We crawled AngelList, the go-to-site for tracking startup activity, to answer this question. To our surprise, we found so many relevant examples of referenced pitching that lead to notable patterns on how innovation is understood and communicated.
The most referenced companies
In our research of AngelList startups we identified more than 60 companies referenced by more than 1700 startups in their one-line pitches. The top 10 of those companies are already culture memes: they account for an impressive 46% of all startup references on Angelist.
Linkedin tops the leaderboard with about 113 references identified with Pinterest and eBay following closely behind with 105 and 103 references. The top 10 is made up of Facebook, Yelp, Instagram, Groupon, Airbnb, Youtube and Amazon.
We’ve also created a cool visualisation with the top companies being referred – as well as the startups who are using them to define themselves. Take a look!
The Top 9 types of referenced pitching
1. Common. The most common of referenced pitching can be drilled down to 3 similar formats: – X for Y: Yammer for Education. – X meets Y: Yelp meets Hipster meets Foursquare: – The X of Y: The Pinterest of online dating
2. Funny (ironic). Very effective especially in its sarcastic form: – Facebook for the dead. – Instagram for basketball junkies. – Think “Netflix for Grandma” + “Help, I’ve fallen and I cant get up”. – Yelp for medical marijuana.
2.1. Funny (compound). Combining two or more companies: – If YouTube and Twitter made ridiculously good-looking babies. – If Pandora and Facebook had a baby, it would be… – LinkedIn and match.com had a baby who went to law school.
3. But better. In short “we’re doing same thing as them but better” – it’s kind of ironic but I guess it could work with some investors: – Better than Amazon” customer experience for any Brand. – LinkedIn on Steroids. – Search engine that beats Kayak.com’s fares by up to 80%. – VEVO/YouTube/Spotify/Pandora/MobileRoadie/OurStage – but better.
4. Equation. Plain mathematics – can’t be wrong! – (Google x Facebook x Amazon) + (Universal Reviews) – Ebay+Soundcloud= … – FLIMBY=Yammer+Delicious+Gotomeeting+more – Instagram + Trips = …
5. Explanatory. It’s like if the common type was a little bit more precise: – A Spotify with Pandora on top. – Solving the Enterprise Dropbox problem. – Think TripAdvisor but instead of reviewing a hotel you review your street. – What Open table is for restaurants we are for sports venues!
6. For nonprofits. This can be any type of description but explicitly for nonprofits: – Kickstarter on Steroids, tailored for nonprofits – Marriage of Salesforce, WordPress, Constant Contact, Ebay for Nonprofits – Spotify for Donors & Nonprofits – Yammer for Nonprofits
7. Crash collusion. It’s that unpredictable result when you mix things: – Blends Facebook, Pinterest, Google & Twitter creating world’s 1st social shopping network. – SurveyMonkey+LinkedIn+Facebook mashed together. – Think Flipboard and Hootsuite In One.
8. Regional. Same activity as the referenced company but focused on a specific region – in short pure copycats. – Yelp for Brazil. – GetTaxi for Southeast Asia & Middle East. – Kickstarter of the Arab world. – Russian LinkedIn.
9. User groups. Again, same activity but targeting only specific user groups. – TripAdvisor meets 1 million+ airline flight crew. – eHarmony.com for Gays and Lesbians. – Pinterest for MEN. – TripAdvisor for Muslim-friendly hotels.
Referenced pitching is a double-edged sword. On one hand, it makes it clear to explain your value proposition and implies a sense of accomplishment. On the other hand, is it really safer to go with the flow and define your startup in terms of another, successful business or separate yourself from the crowd?
What emerges from this research is that 18 out of 20 most referenced startups practice a multi-sided platform model. These are marketplaces connecting disparate user groups (e.g. OpenTable connecting restaurants with restaurant-goers, LinkedIn connecting professionals with HR recruiters), running affiliate programs (e.g. Amazon), or exposing business assets to developers via APIs whether short-head (e.g. Spotify apps) or long tail (e.g. Twilio). With 95% of referenced startups being marketplaces, the mechanisms for creating and capturing value in today’s digital world are governed by what we call ecosystem economics. Today’s innovation lies more in business models than technology.
– Chris (@abyssnet)