I recently met with an entrepreneur who's been working on--and investing his own money in--an idea he's passionate about. He's been at it for more than twelve months, and the business is not yet fundable by outside investors.
The problem? It's a consumer product in a noisy space, and it still doesn't have much traction. This worries me profoundly. It's clear that he needs to make a change.
I reminded him of the obvious: His time and savings are important assets. I asked him to think about how he was investing these resources and come up with concrete steps that would lead him to progress in a short period of time.
If you're in a similar situation, here are three realities for you to ponder as you decide how to proceed:
- You never get the time back that you are spending. Are you spending your precious time on something that will produce world impact or deliver multigenerational wealth?
- Are you spending every dollar wisely and with impact? Being thoughtful about how you spend is another incredible resource, and you need to know that you are handling it well.
- How is your team holding up? Are they fired up, and ready to go out swinging? Silicon Valley is filled with temptation for talented employees, so it's crucial to know how committed your people are.
Given those truths, there are three questions you need to answer:
1. Should you keep on trucking?
All entrepreneurs hit hard times and tough choices. Many survive precisely because they stay with the same idea.
Ben Silbermann made incremental changes to improve Pinterest, but kept the vision and didn't pivot from the idea of a social bulletin board. Marc Benioff evolved Salesforce by bringing popular consumer trends to the enterprise, and never pivoted away from his idea of making software easier, more accessible, and more democratic for businesses.
Before you completely change course, consider other correctional steps to take--like tweaking a product, increasing marketing activities, or ramping up sales spend.
2. Should you think about a pivot?
Some great entrepreneurs have executed a "big pivot," changing everything about the product. Instagram, which started as Burbn, a mobile social check-in app with game features, saw that the photo-sharing feature was where the majority of its user engagement came from and pivoted to deliver on that before launch.
When I invested in Meteor, it was only a few weeks after they had pivoted from building a travel guide for iPad. They realized that they were again re-creating front-end syncing technology that they had already built twice before, and they decided to focus on that instead.
Despite the success stories, pivots are not always the obvious next step or a guaranteed route to success. I would only suggest pivoting if you have a great team and a great idea to chase.
3. Should you shut it down?
Sometimes, there are no more steps you can take and the most responsible solution is to call it quits--because you're burning time and cash and there's little hope left that you can make something magical happen.
What's your next move? The answers to the following questions should give you some clarity and guide you to the right next move:
- How long do you have to live? How much cash do you have to continue pursuing your dream? Can you raise more money based on the traction you have?
- Is there traction at all? Are you building something that people like? How certain are you that this will be a winnable market? Are you early? Late? Is your timing off?
- Can you do something that has much more relevance? Have you developed any new insights that demonstrate that you should be chasing something else, ideally something you and your team have seen is a clear need? If you can: Is your team the right one to execute on this idea?
- How do you want to treat those who have invested in you when you are unsure of where you want to go? Are you able to provide a return to shareholders rather than just burn through the cash?
- Most importantly: What are you prepared to take on? A pivot means starting all over again--fundraising, recruiting, hyping what you've built. If that prospect doesn't fire you up, it may be time to look elsewhere.
When you're at this crossroads, it's time to dig deep, and decide whether you need to make some tweaks (modifications), execute a pivot, or shut things down. Amazon founder Jeff Bezos calls this "investigate everything" process the "regret-minimization framework."
Bezos encourages his teams to explore all the plausible possibilities--spending extra time to determine if the idea is worth it, rather than having regrets about giving up too early or not diving deep enough. Reflect, make up your mind, and get going.