I’ve participated in more Demo Day events than I can remember. These events have been sponsored by community organizations, education institutions, companies, investment groups, not-for-profit organizations, government agencies, and even churches. In 2015, President Barack Obama presided over the first-ever White House Demo Day. This occurrence cemented the status of Demo Day as a bonafide cultural phenomenon.
What is Demo Day?
Demo Day is an event at which aspiring or actual entrepreneurs “pitch” their business opportunity to an audience of community members, colleagues, supporters, and potential investors. Demo Day events have become commonplace in the U.S. and around the world as individuals have looked to innovation and entrepreneurship to achieve fame and fortune, and as communities seek to encourage entrepreneurship in order to foster economic growth. The Demo Day phenomenon has been supercharged by stories of entrepreneurs who have “hit it big,” by popular entertainment programs like Shark Tank, and by technology breakthroughs that make exciting and lucrative new businesses possible. Some Demo Day events have given rise to companies that have become household names.
My own feelings about Demo Day events are decidedly mixed. When I was a young aspiring entrepreneur, I held my business ideas very close to the vest. One of my earliest business efforts failed miserably because I didn’t even show it to potential customers until it was too late. When I hit upon the business opportunity that ultimately yielded success, the last thing I wanted to do was to share it with a bunch of (mostly white and well-financed) strangers. I shared the idea with my eventual co-founders and potential customers, and that was it.
I started, built, and sold my business long before Demo Day was a “thing,” so you might conclude that I’m biased, and you might not be wrong. However, not every great business idea needs to be broadcast. Most startups don’t need (or qualify for) venture capital. Most startups need to gain traction (or at least validity) with potential customers before seeking outside investment. Many companies who play their cards right never need external investment. Many of these companies rely on the “four F’s” for startup funds: Friends, Family, Founders, and Fools. I have personal experience with this, as I have served as each of the “F’s” at one time or another.
Counterpoint: Yes, I started my business a long time ago. It was the same era when grown people would have seemed crazy if they donned shorts and sneakers and went running down the street for no reason. Now its a pretty common activity called “running,” and a pretty driven entrepreneur built a multi-billion dollar business (Nike) facilitating that cultural change. So times have definitely changed.
Keeping an Open Mind
Notwithstanding my own experiences, biases, and general skepticism, I try to keep an open mind – or at least an academic mind- about Demo Day. I’ve organized Demo Day events for my U-M entrepreneurship classes, for the Urban Entrepreneurship Initiative, for the Detroit Urban Launchpad, and more. I know these events, when done well, can inspire, motivate, connect, teach, facilitate, and finance aspiring entrepreneurs. However, when they’re not done well, they can waste valuable resources and time, discourage entrepreneurs, misdirect their limited energy, and co-opt their efforts. Why the disparity in outcomes?
Here’s why. Demo Day event objectives vary widely, and are often unclear to audiences, participants, judges and organizers. On top of this, entrepreneurial knowledge, experience, and motivation of those who organize and judge Demo Day events vary widely. Audience composition, expectations, and engagement may or may not match the event objectives. These factors all contribute to the wide variation in Demo Day effectiveness.
Demo Day Objectives
Let’s consider organizers’ objectives in establishing a Demo Day event. Here are some of the main ones that come to mind, roughly sorted from most to least noble:
- support aspiring entrepreneurs and facilitate their success
- educate aspiring entrepreneurs and community members
- build a connected entrepreneurship “ecosystem”
- facilitate investment
- burnish organizer’s reputation and community “cred”
- entertain, for fun and/or profit
- “mine” for ideas and business opportunities
The above Demo Day objectives are not mutually exclusive, but all parties should understand them. Sometimes the objectives are clear, as in the case of an established entrepreneurship accelerator like Y-Combinator. Entrepreneurs pitch to an engaged audience of entrepreneurs and investment professionals to get investment dollars and professional advice. Pretty clear. Or like Shark Tank – basically a reality show where aspiring entrepreneurs pitch to celebrity entrepreneur/investors, and the whole thing serves to entertain a mass audience. Also clear. Whatever the Demo Day objectives are, the organizer should own them, communicate them, and align the program with them.
Organization and Judging
Now, let’s consider organization and judging. Who determined the design of the Demo Day event? Did the design incorporate input from experienced entrepreneurs, other Demo Day organizers, and entrepreneur ecosystem members? Did the organizer make the judging criteria and scoring rubric available in advance? Does the judging panel include at least some actual entrepreneurs? How do judges determine the winners? How much time and effort do they devote to the judging activity? Do they document their scoring and rationale and provide feedback to all participants?
Too many times I’ve witnessed Demo Day events where the answers to the above questions were unsatisfactory. For example, winners often don’t understand why they won, and losers don’t understand why they lost. If an objective is to build a strong entrepreneur ecosystem, feedback is more important than trophies. Bottom line – organizations that don’t engage real entrepreneurial expertise have great difficulty producing an effective Demo Day.
Finally, consider the audience. If the objective is to build and strengthen an ecosystem, the audience should contain a cross section of people from that ecosystem. On the other hand, if entertainment is the primary objective, audience enthusiasm and engagement are important. Great snacks (and in the right setting, adult beverages) can be very helpful! Asking the audience to pick a “people’s choice” can be a great way to engage folks, but it can also be terribly demotivating for the entrepreneur if the audience isn’t somewhat knowledgeable.
If I were starting my entrepreneurship journey today, I think I’d still have mixed feelings about Demo Day. My biggest concern is that many of these events foster a belief that the first thing an entrepreneur should do after coming up with an idea is to seek external funding. Most of the time, in my opinion, their time and energy would be better spent engaging potential customers and other marketplace players. The engagement should be more about listening and probing than presentation. This kind of engagement yields the most important kind of feedback, and it doesn’t cost much to obtain. Most successful companies have never presented at a Demo Day event.
On the other hand, I do honestly feel that Demo Day can be a positive force for entrepreneurs, organizations, and communities, if a) the event objectives are clear to all, b) the event organization and judging reflects input from the community and from actual entrepreneurs, c) the judging criteria and scoring rubric are clear and documented, and d) the judges provide clear and honest feedback to all participants.
If you had a Demo Day experience that stood out in some way – it was fantastic or it sucked – feel free to relate the experience below. The objective of this request is entertainment 🙂