Is this a pivot, an enhancement, a new product, or am I starting a totally new company?
A lot of moments of my entrepreneurial venture are seared into my brain. Some big: The first big sale that I made, the first time a farmer used my product, closing my first equity round of funding. Some small.
One of the small ones was seeing someone I had previously interviewed for a role, and the first question he asked was if I had pivoted. It seemed an odd conversational jumping off point, and when I asked what prompted the question, he responded “Well, isn’t that what start-ups do?”
He was, to be clear, not a typical start-up guy. He was in the sustainable ag space, so painting with such broad strokes can be forgiven. And, to be fair, he wasn’t wrong. Start-ups do pivot. A lot. Probably too much, in my opinion. This blog post isn’t about whether pivots are good, bad, or otherwise - like most things, in depends on context. This blog post is about distinguishing between a pivot and something much more consequential for your company, like an entirely new anchor product or starting an entirely different company. Knowing the difference will help you plan and navigate the changes more strategically, and, hopefully, set you up for more success.
What is a pivot?
You would be hard-pressed to find a person less interested in sports than I am. I’m typically loath to make sports references to explain business concepts, but there is one that is so apt, it’s hard to find a better analogy.
Pivoting in basketball is a situation in which the player has the ball in their hand, they keep one foot firmly planted, while the other one swings around to find an optimal position. The player is not in fact, running haphazardly and chaotically down the court, waving the ball around to see which of their teammates is most interested in it, kicking their legs out akimbo to touch anything that comes their way. The key is, that firmly planted foot.
In a start-up, our player’s ball is the product. You’re looking for an opportunity to get it into the basket or make a sale, and there are different variables or positions for shooting from that will be instrumental in helping you do so. Those variables include the audience you’re targeting, the messaging you’re using, how you’re positioned against competition or alternatives in the market, and the resources you have to go-to-market.
So, the analogy isn’t perfect, because our player only has two legs, and our business obviously has more variables, but the concept holds - that one or more variables remains the same, while a limited number are changed. And, and this is important, if your anchor product changes - or the basketball itself - you’re doing much more than pivoting. You’re likely in new-anchor-product or even new company territory.
What does it look like to launch a whole new anchor product or, in essence, start a new company? It doesn’t usually happen in one go…
So, what does a true pivot look like? One of my favorite and most successful examples comes from a dear friend of mine, Tish Scolnik, Founder and CEO of GRIT. Tish started GRIT, a company that makes off-road wheelchairs, with the idea of helping people in developing countries, where paved roads and infrastructure are rare, to be more mobile. However, she came to realize that there was a large domestic market here in the states: Athletes, ex-military, and other adventurous souls who need a wheelchair for mobility, and want it to be able to take them on unpaved-road adventures. Although the product has been enhanced and adapted for this new market over the years, the initial change to her business was largely in the audience she was addressing; the product - an all-terrain wheelchair - remained largely the same, as did its core positioning - enabling off-road mobility via a wheelchair. That “leg” remained fixed, while the leg searching for an optimal position - a new audience - pivoted.
And, what does it look like to launch a whole new anchor product or, in essence, start a new company? It doesn’t usually happen in one go, and it isn’t necessarily all that obvious. When I’ve seen it happen, it was usually some product development that started small to grease the wheels of a sale, and, as time wore on, that small product development started to eclipse the main product, until more and more of the company’s resources were being poured into a non-core initiative, and no one knew what they were building, for whom, or how to make money off of it.
If you’re not picking up on my tone, this is a terrible place to be, and management/board/decision makers need to right the ship ASAP.
I’ve seen this happen more times than I care to think about. One example of this comes from early, early on in my career. I was working for a mobile payments start-up in the mid-aughts. Pre-iPhone, pre-Android, when flip phones and grainy photos were all the rage. It was so far ahead of its time, but a cool concept, nonetheless.
The problem was getting retailers to sign onto accept - and pay for - this service. The company decided to offer credit card processing services, in addition to mobile payments, in order to make the latter more attractive. Then, they went even further, by offering more favorable terms on credit card processing than a standard processor, or than we were paying ourselves. Yes, we were paying for credit card processing, turning around and selling it cheaper, to get in the door with mobile payments circa 2005. Suddenly, product development, marketing, and sales resources were focused on credit-card processing features, and our mobile payments product languished. Unused and unloved. Management eventually caught on, but that was a really hard anchor to untether from. Customers got used to the favorable credit card processing terms, sales got used to the pitch, product and engineering had to re-focus on a pie-in-the-sky product vs. one with known customers, needs, and core functionality. It was tough.
We had, effectively, become a different company without ever really deciding to do so. And the result was that all of the company’s focus and resources were poured into something that we never intended to become good at. We were focused on selling $1.00 for $.90 and thinking that we were gaining traction.
And, that’s the thing. Traction feels good and companies gravitate towards it, even if, as in this case, it doesn’t serve their long term goals.
What if you’re doing more than a pivot?
So, what is the point? Be clear-eyed about changes and pivots that you’re making and especially where you’re pouring company resources and focus. Look at your product roadmap and where your teams are spending most of their time - if it’s not on your core initiative, your north star, the reason that investors poured a bunch of money into you - then you have a bunch of work to do and quickly:
Figure out what new thing you’re selling, to whom, and how they’re going to pay for it. You have to do all of your initial market sizing and go-to-market strategy research for this new thing you’re selling ASAP. What was true for your previous product isn’t necessarily true for the new one.
Decide which product you’re going to market with. Please don’t try to do both. You don’t have the resources, your team doesn’t have the bandwidth, and you will end up with two mediocre offerings in market, a deeply confused and frustrated team, and a lot of lost time and capital.
If you HAVE to do this. If your soul will be crushed by pulling either of these products out of market, I have a post coming on Capsule teams and how to pull this off.
Do the planning and resourcing to figure out how to bring your chosen product to market, have a clear understanding of what success looks like, gather your team to share any changes and answer all their questions, and commit to the next course of action. Commit to yourself that you won’t change this course of action before a pre-determined trigger (sales traction, time elapsed, change in market conditions, etc.)
The key here is to be decisive and in control on every decision you make for your company. Don’t let the decisions happen to you.