A few years ago, I was on a panel at the Princeton Club in New York. The subject was “best practices in raising assets.”  At some point in the meeting, I said to a roomful of hedge fund managers that we should all take a consultative approach to selling our strategies, a suggestion that made the audience bristle. To remind you, the consultative approach suggests the best salespeople uncover the customer’s business problem through effective questioning, diagnose causes and consequences, and recommend solutions that will take away the pain.

But, as I was told, in raising assets for alternative investment strategies, this approach may not work, and in fact could be irrelevant. The problem potential investors have is patently obvious: they want to increase return and lower risk. And, I was told, they will almost certainly refuse to tell you anything about their portfolio of investments, thereby cutting off the possibility of you conducting an empathetic discussion about their business needs.

If this is the case, and I understand it usually is, then our best hope is to tell our story well and respond to their questions with candor. How can we do this so that we increase the likelihood that we can raise sufficient assets in the required time frame?

The Investor’s Point of View

One way is to reconsider asset raising from the investor’s point of view. At the core of the decision to hire a manager is the question of risk. While the investor will certainly have rational business concerns about your track record, performance, team turnover, etc., they might also be concerned about personal risk. After all, the decision they make will reflect on their judgment, and they may be rewarded for the performance of the manager they hire. This is especially true for large institutional investors, where lack of trust can cause them to delay their decision or prevent them from responding favorably.

So in a sense, we are back to a consultative approach to asset raising. The investor has a problem – he is full of skepticism, distrust, and fear. When we meet with him, it is our job to overcome these obstacles and persuade him that we are capable of meeting both his rational business needs and his personal emotional needs for security.

Persuasion

There are two ways to persuade people. The first is by using conventional rhetoric, which is what most executives are trained in. It’s an intellectual process – you build your case by giving statistics and facts and quotes from authorities. It’s what we do with our pitch books. But there are two problems with rhetoric. First, the people you’re talking to have their own set of authorities, statistics, and experiences. While you’re trying to persuade them, they are arguing with you in their heads. They’re questioning your selection and arrangement of the numbers. They’re comparing you to the six other firms they’ve been talking to. And second, if you do succeed in persuading them, you’ve done so only on an intellectual basis. That’s not good enough, because people are not inspired by reason alone.

The other way to persuade people, and ultimately a much more powerful way, is by uniting your strategy with an emotion. The best way to do that is by telling a compelling story – about yourself, your strategy, the founding of your fund, and all the obstacles you’ve overcome, and continue to overcome, as you strive to serve the needs of your investors.

In a story, you not only weave a lot of information into the telling but you also arouse your listener’s emotions and energy. The story you tell about your approach can communicate who you are, where you come from, where you’re going, what you believe, all in a vivid way that will enable your listeners to connect with you.

Persuading with a story is hard. Any intelligent person can sit down and make lists. A standard recitation of the fund’s history, staff, approach and accomplishments may be traditional, but your audience might very well find it repetitive and indistinguishable from hundreds of others they’ve experienced. It takes rationality but little creativity to design an argument using conventional rhetoric.

However, it demands vivid insight and storytelling skill to present an idea that packs enough emotional power to be memorable. If you can harness imagination and the principles of a well-told story, then you get people to truly listen, nod their heads and reach across the table to shake your hand, rather than sitting there slouching toward indifference as you round up the usual facts and figures.

Telling the Story Face-to-Face

The interesting thing is whatever you do in a face-to-face meeting with potential investors, you and your strategy become a story. While they’re listening, they’re telling themselves a story about you. When you leave, they tell others the story of your meeting. You become a story, filed away in their library of experiences.

Cognitive psychologists describe how the human mind, in its attempt to understand and remember, assembles the bits and pieces of experience into a story, beginning with a personal desire, a life objective, and then portraying the struggle against the forces that block that desire. Stories are how we remember; we tend to forget lists and bullet points.

For instance, the traditional pitch follows a predictable pattern, and in fact, most funds will make more or less the same claims about their managers, strategies, processes, and teams. This is a safe approach, but not optimal. Instead, you want to display the struggle between expectation and reality in all its nastiness. Tell the truth, in other words.

Most companies and executives sweep the dirty laundry, the difficulties, the antagonists, the struggle under the carpet. They prefer to present a rosy and boring picture to the world. But as a storyteller, a blood and guts guy who’s out there every day running money for his clients, you want to position the problems in the foreground and then show how you’ve overcome them.

The typical positive, polished pitch doesn’t ring true. They know you’re not spotless. They know everyone slants their statements to make their company look good. Positive boilerplate actually works against you because it foments distrust among the people you’re trying to build trust with. When you tell the story of your struggles against real antagonists, your audience sees you as an exciting, dynamic person.

I was pretty upset with myself when I left the Princeton Club, thinking that I’d demonstrated a lack of understanding of the hedge fund market. But in the end, I think I was right. If you take a consultative approach to raising assets and look at the investor’s business and professional problems, you discover several things: (i) they see a lot of pitches that look and sound the same, (ii) they are skeptics, and rightly so, (iii) the decision to hire a manager represents both a business and personal risk.

In the end, given relative parity between your strategy and others, their decision is about you, the manager. You’re the tire they want to kick. If you dramatize the challenges you face, and tell stories about how you overcome them, you make yourself more real and increase the awareness of your alpha. And that should help you raise assets more efficiently.

Sims Wyeth & Co. provides public speaking courses, executive speech coaching, presentation skills training, voice and speech training, speech writing, and courses that address stage fright, body language, presentation strategy, and effective use of PowerPoint, all of which contribute to greater executive presence and personal impact.

I’m in Athens exploring the origins of public speaking.  I’ve always been fascinated by rhetoric, and I’ve finally pulled the trigger and launched myself back into the 5th century BC.

Because Athens was a democracy, they needed leaders who were capable of speaking to large crowds and convincing them to take action together.  It was a government that functioned by winning the assent of the governed, just like ours.  And public speaking was the primary tool of governing.

They had no radio, TV, advertising, whistle stops, bus tours, microphones, websites, email, or direct mail.  Just words in public places, strong voices, and passion for their city and their culture.

The Athenians believed that there were three keys to being a persuasive speaker.  The first they called ethos – the ethical appeal of the speaker.  We get our word ethical from the Greek.  If you are not perceived as trustworthy, you could not be persuasive.  David Brooks, the columnist for the New York Times, has said that Lincoln may be the only U.S. President who could qualify for beatification from the Catholic Church.  That’s ethical!

The second key to effective speaking, according to the Athenians, is pathos – the emotional appeal of the argument.  We get our word empathy from this Greek word.  The Greeks believed that people make decisions using both reason and emotion, and that any speech that does not connect emotionally with listeners will fail to move them.  Martin Luther King is a good example of someone in our own history who appealed emotionally to our national desire to live up to our own stated values.

Finally, logos – the logical appeal of the speech.  You have to be seen as an expert to be persuasive, smart, well-informed, and clear minded.  Of course you can be an expert without being trustworthy, and you can be trustworthy without being an expert.

For instance, Gary Hart, the former Senator from Colorado who self-destructed during his presidential campaign, is an example of someone who was seen as incredibly smart but lacking in the ability to connect with people emotionally.  Same with Governor Dukakis, who also ran for president.  Both of them were logos oriented individuals, meaning that they believed that just because they could prove something to be true, others would accept it.

The study of rhetoric, or persuasive speaking, indicates that logos arguments only go so far.  Without trust in the speaker, and with no emotional reason to believe, people are not likely to be persuaded.

Three very large ideas in one short blog, but they have huge practical (and tactical) implications for any speaker.

Here I am in the land of Pericles, Demosthenes, Socrates, Plato, and Aristotle – to name a few of the Greek superstars who thought long and hard about how to speak, govern and live.

Sims Wyeth & Co. provides public speaking courses, executive speech coaching, presentation skills training, voice and speech training, speech writing, and courses that address stage fright, body language, presentation strategy, and effective use of PowerPoint, all of which contribute to greater executive presence and personal impact.

I grabbed my Blackberry when I woke up this morning and saw that Bnet was promoting a webinar called How to Change Hearts, Minds, and Actions: Guy Kawasaki Speaks on Enchantment.

Guy Kawasaki, for those of you who don’t know, is a venture capitalist and an original thinker.  For instance, when people came to him with an idea for a business, he enforced the 10, 20, 30 rule:  No more than ten slides; no longer than twenty minutes; and no font smaller than 30.

Now he’s into enchantment, which is a game-changer.  Most of us are talking about persuasion, story, brain science, stickiness, and presence.  Suddenly we’re into the realm of the magical, the mystical, the enchanting!

It is a great word, one that has freshness and bite, so let’s run with it.  But it speaks of the oldest art of the public speaker, the rhetorician, the spellbinder, and rainmaker.  The ability to get an audience to believe, to see a new reality in the theater of their own minds, and to carry it with them into action.

You may be familiar with Bruno Bettelheim’s seminal work, The Uses of Enchantment, in which he writes about the power of folk and fairy tales.

Bettelheim suggested that traditional fairy tales, with the darkness of abandonment, death, witches, and injuries, allowed children to grapple with their fears in remote, symbolic terms.  If they could read and interpret these fairy tales in their own way, he believed, they would get a greater sense of meaning and purpose.  Bettelheim thought that by engaging with these socially-evolved stories, children would ge through emotional growth that would better prepare them for their own futures.

- Wikipedia, The Uses of Enchantment

We are enchanted by stories and by performances; by the artificial world of opera, sports, and theater.  Any story that doesn’t suspend our disbelief is a failure.  Good novels and movies are more vivid than real life.  They lodge in our minds forever.  And because they last, they have a chance to teach us how to behave, how to act.  The drama is so captivating, so enchanting, that we are penetrated by it – and instructed by it.

Combined with the wisdom of rhetoric, cognitive and social science, and the art of the theater, the spoken word can also be enchanting.  When we learn how to shape our arguments, structure language patterns to captivate the mind, be both conceptual and concrete, and perform like an actor, we can alter reality for our listeners.

Percy Bysshe Shelley said that poets are the unacknowledged legislators of the world.  I think what he meant to say is that great speakers and storytellers are the unacknowledged legislators of the world.

They are, in fact, the acknowledged leaders of countries, companies, and institutions, because they are the people who are able to tell the stories that shape their followers vision of the future, and their interpretation of the past.

And maybe even more importantly, the personal story of the leader – his or her biography – very often embodies the values held up by the institution he or she leads.  Think, “Obama,” a new kind of President.  Think: “Lincoln,” “Mandela,” “Thatcher,” “Reagan.”  Their personal stories represented the aspirations of their cultures.  They enchanted the electorate, not only by what they said, but also by what their lives said.

The bar has been raised.  Kawasaki has done it again – jumped out ahead of the conversation and elevated the discourse to urge us to a higher level.

It’s no longer persuasion and influence.  It is no longer presence or power.  And it certainly is no longer “presentation skills,” that mechanical, pedestrian phrase that fails to lend any magic to the art of speech – that is so 1980s.  No, the new word is enchantment.  Can we enchant our audiences?

Can you see it now?  A whole generation of MBA’s studying the art of suspending disbelief.

Sims Wyeth & Co. provides public speaking courses, executive speech coaching, presentation skills training, voice and speech training, speech writing, and courses that address stage fright, body language, presentation strategy, and effective use of PowerPoint, all of which contribute to greater executive presence and personal impact.