How to Avoid Premature Evacuation
“Pivot” is on track to become the most over-used word in start-up linguistics. You knew we were in trouble when it was immortalized earlier this year in a New Yorker cartoon. Picture an elegant couple in a fancy restaurant. The woman says, “Henry, I’m not really leaving you. I’m just going to pivot to another man.”
Pivots may be trendy, but my fear is that they’re way too trendy--and therein lies the danger for start-ups. For the unitiated, a pivot is defined as a significant change to a component of your start-up’s business model, such as moving from paid to freemium, or from direct to channel sales, for example. The scary part of the trend: Too many entrepreneurs are viewing pivots as an achievement. So, they rush to achieve, which often results in “premature evacuation,” or abandoning a solid business model based on far too little legitimate customer feedback.
Here are a few examples from recent conversations with start-ups:
- In Bogota, an elegant and impassioned founder abandoned her clever mobile app business idea after three interviews with customers. Why three and not 33 or 53? Who know what she’d have learned from interview four, 24, or 44?
- Two teams in my MBA class pivoted dramatically before the fourth of 12 classes in a semester. Now I’m a great teacher, but their willingness to abandon interesting ideas was downright scary.
- “We couldn’t get any customers to talk to us, so clearly we had a bad idea and pivoted,” said one group that clearly had nary an entrepreneur among ’em.
Pivoting is powerful, indeed, and should always be a consideration. But it should be based on thorough, consistent customer feedback, not a few or even a few dozen comments. Often the best pivots emerge from intense customer feeback--tens or scores of interviews, not a handful. One credible excuse I heard not long ago: “Google just entered our market bigtime.” OK, start-up vs. megabillion-user behemoth. I’d pivot(or hide under my desk), too.
Often, advisors, investors (if any), and mentors can help make the, er, pivotal decision. They have a far broader range of experience, and often have “pattern matching” skills that help them separate fact from fiction in terms of market opportunity, feedback, and exogenous factors like regulatory or technology shifts. That’s why my co-writer and fellow Inc.com contributor Steve Blank encourages start-ups to embrace outside advisors and mentors in an advisory board from the very first days.
Instead of pulling a pivot, sometimes it makes sense to divot, or dig in (a golf term for digging your club into the grass rather than the ball). First of all, there are lots of things other than the product iself that you can change in your business model for great business impact. Ning, for example, went from a consumer focus to a corporate focus for “private social networks.” Groupon’s legendary pivot from social action to discount spray tans and massages made only a minor tweak to its value proposition of getting groups of people together to do things.
Whether you’re pivoting or divoting, the key driver of your next step is product/market fit: clear signals from a definable customer segment that indicate passionate excitement about your value proposition. It’s clearly not time to “dig in” in these two examples I saw recently:
- “We get 500 signups a month but haven’t seen any revenue yet.”
- “This year we added 500 customers to our free service.”
There are no rules telling you when it’s time to pivot or when to “divot,” or as card players say “when to hold ’em, and when to fold ’em.”
Try these asking yourself the following questions the next time you’re analyzing your start-up’s traction:
1. Are you seeing a continually increasing number of new purchases, sign-ups, activations, or whatever? Does it increase almost every day or month?
2. Are you gaining active, engaged users who come back again and again, or one-time tryers whose session durations get shorter and shorter?
3. Is your site, app, or product getting exciting, increasing virality? Do most (that’s most, not a few) of your new sign-ups or customers rush to tell their friends, and do the friends engage?
Before you pivot--or divot--let your customers tell you how truly excited they are to do business with you.
If they are excited, dig in with your core business model somewhat, and use customer discovery tactics to make them even more excited by tuning and enhancing other elements of your business model.
If they’re not excited, be sure you’ve talked to enough customers face to face (we define “enough” as at least 50, usually per customer segment) before abandoning ship in a premature evacuation.
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