In this video, Y Combinator CEO Michael Seibel explains the fundamental differences between investor pitches and customer pitches. He illustrates how the approach, language, and interests differ depending on the target audience (investors vs. customers), and why founders must prepare "two distinct pitches," using real examples. The core takeaway is that a single pitch cannot persuade both groups.
1. It Starts with the Difference in What Investors and Customers Care About
The video begins with Michael Seibel identifying "the most common mistake founders make."
"Customers know the problem well and have a strong interest in the solution. Investors, on the other hand, don't experience the problem themselves and are only interested in whether the solution can build a large company."
In short, customers focus on "how will you solve my problem right now," while investors only look at "how big can this business get." Because of this, using the same pitch for both groups commonly leads to failure.
2. Customer Pitch: Industry Jargon, Tailored Solutions, and 'Listening'
When approaching customers, the following principles are important.
- Use industry terminology and language unique to that group (jargon) to build trust.
- Encourage the customer to describe their own problem.
"Let the customer do more of the talking."
- Show as quickly as possible how your solution benefits 'this specific customer.'
Customer pitches are primarily used in:
- Sales calls
- Homepage front page
- FAQ (Frequently Asked Questions)
- User interviews
"Much of it needs to be in language that actually connects with the customer's reality."
3. Investor Pitch: 'Plain Language,' No Marketing Speak, Analogical Examples
The approach to investors is completely different.
"When pitching to investors, you should assume they don't know anything about the problem itself."
Two important points here:
- Industry jargon should actually be avoided
"Jargon can actually hurt you. Make sure to speak in simple language."
- Eliminate marketing language and 'hype'
"World's first, one-of-a-kind -- these are all 'marketing language.' Investors are trying to filter out the substance."
An intuitive example using Google's pitch is provided.
"Imagine pitching Google. 'Google organizes the world's information' -- this means nothing to an investor. 'Google is a new kind of search engine. Users type what they're curious about on our site, press enter, and get an ordered list of relevant sites. The order is determined by how many other websites link to each site.' When you explain it this way, investors instantly get it."
Investor pitches should be very direct, specific, and understandable at a glance even to someone not working in the industry.
4. Where Does Each Pitch Apply?
Customer pitches are used at the various real-world touchpoints mentioned earlier (sales, homepage, etc.). On the other hand:
"Investor pitches are typically used only in pitch decks. If you put an investor pitch on your homepage or approach customers with investor pitch language, it's almost certainly the wrong choice."
Unless your startup's product is a service like Yelp or Uber where investors and customers overlap, you should clearly separate the language and content of both pitches.
5. Key Questions Investors and Customers Want Answered
What Investors Actually Want to Hear -- 6 Things
- What does your company do? (As simply as possible)
- Current stage (Idea, in development, launched, growing -- which stage?)
- Market size (Total addressable market -- how big is the market you're targeting?)
- Revenue model (How will you charge customers?)
- Differentiation (What market insight do you have that competitors don't?)
- Team capabilities (Does the founding team have the ability to actually build this product?)
What Customers Want to Know
- What are the actual features?
- How easy is onboarding (trying it for the first time)?
- How does the pricing apply to me?
- Will it really solve my problem?
- Specific screenshots or demos
"Conversations with customers go into detailed features, screenshots, and live demos. Conversations with investors center on business points, market size, customer numbers, and core logic."
There are exceptions -- for mass-market consumer products (e.g., food delivery apps, large-scale games), the two pitches may overlap somewhat. But for most founders, separating the two languages is closer to the "right answer."
6. The Confusion YC Has Actually Seen Among Founders
YC openly acknowledges that early-stage founders often get confused about this pitch distinction.
"Founders often try to combine both pitches into one. But through consistent practice, they eventually realize that preparing two separate pitches is more productive."
7. Summary: Two Groups, Two Perspectives, Prepare Two Pitches
The video concludes as follows:
"Customer pitches and investor pitches are completely different. Investors approach with the motivation of 'can this company grow big,' Customers approach with the motivation of 'will this solve my problem exactly.' Because of this difference, two separate pitch strategies are essential. Even if your company is at a very early stage, you need to focus on this."
In Closing
Michael Seibel clearly explained that customized pitches capable of persuading both investors and customers are the starting point for startup success. Remember the message that preparing the right pitch for the right audience using 'simple language' and 'specific examples' is an essential task for every entrepreneur