We've all heard and read dozens of stories of start-ups who pivoted one or more times because they were bleeding cash, under pressure from investors, flaming out, or all of the above. But can the ubiquitous pivot be used to actually navigate the inevitable non-linear route that start-ups take, and end up with a company that is built to last?
What has to be considered when starting out? What adjustments need to be made along the way? What remains your 'north star' throughout? As you start and grow your company, what are the strategies for avoiding outright failure and can strategic pivots be used to your advantage? To answer these questions, I talked to Sharat Sharan, CEO/co-founder of ON24, a leading marketing technology SaaS platform. Here is what he shared:
1) Get Comfortable Knowing You'll End Up In A Different Place
Without a doubt, it's an asset to be excited and passionate about the exact product or service you are developing and the specific company you are building. But far too often, first-time entrepreneurs become so singularly-focused, they cling to the belief that this is how their company will always be and this is what they will always be doing - simply because they love it so much. However, I can tell you from personal experience and from countless examples of successful start-ups, that this is true exactly zero percent of the time.
In 2000-2001, just like everyone else at the time, the world was staring down the face of one of the worst tech busts in history. Had Sharat not pivoted his 24-hour video news service into what was to become the very first version of the marketing webinar, he most certainly would have missed the opportunity to capture more than 30% of that market.
For further evidence, one needs to look no further than Google, who did extraordinarily well in dominating and creating the category of web search. But within a half dozen years, they began to branch out in ways that Larry and Sergey would not have imagined in the early days. In less than five years time, you will undoubtedly have forged a slightly different course, sold your company or gone public, started an entirely new venture or evolved your business into something you could never have imagined. Stay focused, but don't get too attached to where you are at this very moment.
2) Don't Pivot Right Off The Cliff
In the same vein, treat your information technology (IT) as your essential touchstone. Cling too tightly to it and you lose inertia and go nowhere, but pivot too much away from it and you risk destroying your core value. Strive to find the balance.
Imagine if you ran a coal business and you pivoted to producing wind turbines. While both are energy businesses, they share very little in terms of infrastructure, business model and employee skill set, and could cost you dearly.
An example of a sustainable pivot is Kabam - the mobile gaming startup. It began as Watercooler, a social network geared specifically to sports and TV fans. Soon, the company realized it was no match for behemoths Facebook and LinkedIn, so they made two significant pivots, all the while staying true to the company's base technology. The first took them into social video gaming, which spread like wildfire through Facebook, and the second took them into mobile gaming, which helped propel them toward an eventual $800 million sale late last year.
Had Sharat, at ON24, pivoted to something not tied to the core, like perhaps a social media platform, instead of the actual pivot he made - to a webcasting and webinar marketing platform for businesses - On24 would have most certainly not emerged from the 2000's successful.
3) Worry More About Your Customers Revenue Than Yours
I can almost guarantee that the number one thing your investors and CFO want you to focus on is your revenue. Of course, not overnight, but in the back of everyone's mind is, at some point, all of your product development and go-to-market efforts will yield revenue.
However, from my experience, if you apply a Marc Benioff model of focusing on your customer's revenue instead, success will always be in your corner. It makes no difference what type of business you are in - software applications or automotive parts or accounting services - your customers are buying your goods and services so they too can be successful.
ON24 could easy concentrate its attention on metrics like the nearly 2,000 customers, 120,000 live webinars annually or expanding reach of more than 20M business users annually. But what does Sharat primarily focus on? That one of his key enterprise customers, Microsoft, sees an average of 7.2% of its webinar attendees convert into actual buyers. Their success means my success. Period.
In order to not only survive, but also thrive a leader of a start-up has to walk a fine line between being flexible and knowing the core focus. They also have to focus on their customers revenue. Happy customers lead to a successful and growing business.