If no one is purchasing the product from your startup, significant modifications are required. But which adjustments?
Longtime New Stack contributor Emily Omier writes a monthly blog titled “Entrepreneurship for Engineers” in which she examines the issues faced by developers who want to provide tools for other developers and launch a company around their inventions. Your comments and suggestions for future pieces are always welcome.
Startups frequently change their sales strategy, communication strategy, and perhaps even product strategy. However, there are occasions when founders must execute a pivot that fundamentally changes what the business is all about.
According to Jon Nordmark, the co-founder and CEO of iterate.ai, an enterprise minimal code platform, the indication that your business needs to pivot is straightforward: “No one is purchasing your goods,”
If no one is purchasing your goods, something obviously needs to be altered. But as you go further, it can be difficult to pinpoint the precise reason why your product isn’t taking off.
There are many of moving pieces, according to Nordmark. “It’s difficult to pinpoint the issue.”
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In the end, you should pivot if your firm appears to be in trouble, especially if it appears at risk of running out of money. Do you alter your messaging while maintaining the same product, though? Or alter your sales and marketing strategies? Or drastically alter the goal of your entire business?
I discussed how to recognise the need for one, how to carry one out, and other topics with two business owners who have experience with that kind of pivot.
Tech problems
It was for a firm creating a video game engine that Ian Tien, CEO and co-founder of secure collaboration platform Mattermost, initially entered the startup accelerator Y Combinator. The issue was that while the technology performed admirably on the web and iOS, it performed poorly on low-end Android devices, which was a fatal defect for a gaming engine.
However, he discovered that several of the demo games his business created were well-liked. So the business changed into a game studio. But creating video games isn’t scalable; a whole corporation turned into a game studio. However, game development is not scaleable because it is mostly a hit-driven industry.
By the fourth and fifth game, Tien realised that the company needed to change course. “Our pivot came from a video game business to an enterprise software business,” the speaker claimed.
The current iteration of Mattermost was the third for the business, and both pivots were rather significant.
How Do You Get There?
In the instance of Mattermost, the team’s displeasure with its collaboration platform—which wasn’t just glitchy and prone to errors, but also wouldn’t let the team export its data—led to the current venture.
Enterprises began approaching the firm and requesting a more “enterprise-ready” version of Mattermost, one that was more scalable and with more security controls, as soon as the team launched Mattermost as an open source project.
“That pull from the market was a strong signal that there was something extraordinary to build here,” said Tien.
In the majority of successful pivots, there will be a push and a pull, a blatant indication that the previous business plan wasn’t working and clues that a different business would be more lucrative.
Getting Your Investors’ Support
Early investors and advisors supported Mattermost’s decision to change from a game studio to an enterprise software company. However, it isn’t always the case.
You need to convince your donors and board members to adapt sometimes, according to Nordmark.
When they invest, “a lot of times, you may not have product-market fit yet, it’s more of a theory,” the man stated. It becomes quite difficult to alter when you have to persuade your board that you were wrong.
When Turns Are Wrong
On the other hand, investor-driven pivots can occasionally result in brand dilution.
Nordmark launched eBags.com, a website that sold luggage, in 1998. He and his co-founders were able to benefit from their connections and industry knowledge when starting the new business.
But later, as a means of growth and in response to investor pressure, they began selling handbags, and later, shoes as well. This was somewhat of a pivot, but it made things very difficult because everything about selling shoes was different, from the vendors to the buying process.
After discovering the hard way that its competitive advantage was as a travel firm, not an accessory company, the team eventually returned to selling baggage.
Pivoting is difficult, but Nordmark and Tien agreed that every startup will probably make some sort of change, even if it’s not a major one.
“If your identity is based on the context of an early-stage startup in a specific space, that’s going to be a little precarious because you’re going to learn a lot through customer discovery and you’re going to change a lot,” said Tien.
This may occasionally require you to reevaluate the purpose of the voyage you’re currently travelling.
I’ve come to the realisation that my career isn’t really about open source, video games, or Microsoft Office, said Tien. “My career has really been about communities, whether that community is the Microsoft community and IT professionals, or video games and the social games we produced, or it’s open source and having communities of contributors build something really wonderful together.”
