Deciding to Pivot your Startup
This was originally posted on WXR Fund Blog, cross-posted with permission.
Recently, the WXR team hosted a virtual seminar for our current cohort of founders. The seminar featured three seasoned entrepreneurs who discussed the ins and outs of pivoting a business. Here are some highlights of the invaluable insight they shared.
Deciding to Pivot
All of our panelists agreed that a pivot is a dramatic change in the course of one’s business, not just a minor shift in strategy. As Dave Parker, author of 6 Month Startup and Venture Partner at Seven Peaks Ventures put it, “I think the thing about pivots is that it’s not just a change in your strategy, it’s [something like] we used to be in the airplane business…but now we sell tires.”
Anna Steffeney, CEO & Founder of LeaveLogic, realized it was time to pivot after listening to her early customers: “I realized after we had about 100 users or so that I had a vitamin, not a pain pill. The way I knew I had a vitamin was that people, after signing up, would tell me, ‘This is nice to have, but I really struggle with understanding with what my employer offers’…When you start hearing those key words and understand that there’s friction…then I would dive in and say – are we really in the pain-solving business or are we providing vitamins that are nice to have?”
Listen to Customers
Steffeney ultimately pivoted the business from business-to-consumer (B2C) to business-to-business (B2B), and led it through a successful exit. Along the way, she set milestones to test her hypotheses about how the market would respond to ensure she didn’t waste time chasing the wrong assumption. She says “I recommend in the pivot discovery process to do lots of market analysis. Put gating factors in place.”
Alistair Shepherd of Saberr echoed Steffeney’s advice about listening to customers. He emphasized how important it is to engage early customers and create buy-in. “I’ve found that our customers are equally interested in helping us solve the problems….when we were very honest with some of our early customers and asked them to come on this journey with us and help us to help them, they were very enthusiastic.”
Shepherd also engaged his team in the pivoting process. He explained that, “We had a series of conversations internally to discuss what is the problem that we want to solve, what excites us?”
Focus on the Problem
The problem vs. product distinction was a key theme that ran throughout our discussion. As Parker adeptly advised, “Focus on the problem you’re solving, not on the product. The challenge with some of us in being product people is that we fall in love with the product, and we’re looking for a place to deploy the product. That’s way different than finding a problem and then pivoting the product around the problem you’re trying to solve. If it genuinely is a problem, then the product is going to change over time and modify around the problem, but the problem is not going to pivot around your product.”
Engage Key Stakeholders
Another major theme was actively engaging all key stakeholders. Shepherd summarized, “The biggest thing for us was including other people in that pivot story. It’s not on me to lead the charge, it’s on me to help everyone else come to the same conclusion.”
Parker agreed and added that “Building a startup is an isolating experience…part of what you have to realize is that you’re not the smartest person in the room about all topics. Your investors are for you, not against you, as well as your employees…your team wants to be part of the solution and your investors want to be part of the solution, invite them in to help.”
In regard to investors, Steffeney spoke to the need to communicate and collaborate effectively: “One thing is working with investors, another thing is telling investors. I’ve found that telling investors doesn’t always work. You need to work with investors and help them come to their own conclusions at times. That’s more powerful than saying I know best, can you hand me more money.”
Build Data-driven Product Roadmap
Finally, our panelists agreed that it’s important to build a product roadmap driven by market data that fits into a broader vision for the company. Parker pointed out that, “There’s a difference between what you are at launch and what you are at scale…customers want to know what you are today. What can the buy today…If you can back it down to what am I going to be at launch, who are my customers at launch, what is my featureset, and how am I going to monetize it.”
The WXR team and founders appreciate the time Steffeney, Parker, and Shepherd took to share their expertise, and we hope the broader WXR community also benefits from their insight. We’ll continue to share summaries of future seminars here, so stay tuned!