So you think you’re ready for a pivot
The relationship between a founder and their startup is a unique one — we’re less rational and more emotional when we make decisions concerning our “baby”. We made it from nothing, built it up with sweat equity, do everything in our means to make this thing grow, and wait to see what happens. So when things aren’t going the way you need them to, you’ll do whatever you need to do to breathe life back into your creation.
Last summer, we found our business in this predicament. Our revenue was consistently correlated to marketing spend, which to us indicated that it was unsustainable and there was low product/market fit, and we knew that lack of fit was the most commonly cited reason for why startups failed.
We ran a series of experiments to see if we could move the needle in a more sustainable way with our current core business model -
1) Change the consumer interaction point: we rolled out a consumer facing app to streamline payment and bookings. Learned that on-boarding people onto an app for a service they already use is WAY harder than it seems, and there’s a real risk of losing customers if done incorrectly.
2) Offer a new flavor of the product: we tested delivering our product via a different operational flow. Our customers were intrigued, but it didn’t take since it didn’t deliver a big enough value proposition to the customer to make it worth the change.
3) Go after a new customer segment: we went after corporate employees that have remote policies and commuter college students. We learned that we didn’t have the right amenity profile to make it worth their time or money.
4) Try new promotional methods: To increase awareness and trial of our service, we tested pop-up events. While this brought in dozens of new faces who thought our service was cool, we realized we were going after a customer segment where “stickiness” would be an unrealistic expectation.
None of our major experiments with our original business model worked, and we knew that if we wanted to keep going we would need a true pivot and not just experimentations off our original idea. We had a few ideas we wanted to test that were parallel to our current idea, that solved similar issues but in a completely different way. We decided to sprint test these pivots in 2–3 week tranches, with minimal investment but with hyper focus, to see if we could get any indication from our customers or market that we were on the right path.
When we tested our now current business model, the results were shocking. Not only were people responding with interest to our straight up cold emails, but people actually starting inquiring about our product and we even sold business. We continued testing, ramping up this model and ramping down our old model gradually, to see if this was sustainable.
As the ramp up continued, we realized that a B2C to B2B pivot would require an overhaul of our current operating practices, how we talked about ourselves, and and a completely new set of customers. We didn’t have the exuberance of first time founders in the first year of their business — we were tired, and the pivot seemed daunting. We had to have serious conversations between ourselves if we wanted to essentially start from ground zero again. There were morale dips, exhaustion, and a lot of times we questioned if we were beating a dead horse.
We officially shed our old business model at the end of December 2019 and went full force with our B2B pivot January 1st, 2020. While we still have the general ups and downs starting a company, the amount we learned with our old business model and through the process of experimenting and then full on pivoting the company has proven to be invaluable — we aren’t really starting from ground zero, we feel more like veterans taking on a new challenge. This also gave us legitimacy when we talk to potential customers, partners, advisers, and investors.
We didn’t figure out all this stuff on our own either — we relied on conversations with other founders that had exited, closed down, or were still in the process to talk. We realized we weren’t alone in these challenges, and through these discussions we were able to leverage our peer’s lessons and make them work for us. If you’re thinking about pivoting, reach out to your founder network. There are also great case studies out there of successful pivots and companies that failed to pivot, like Twitter (success) or Kodak (failed because they didn’t try).
