Pivot like a pro: Four tips that will help you get it right
So much has been said about pivots: Many entrepreneurs see a pivot as a personal failure, but in fact, it takes an extremely talented entrepreneur to do the right pivot at the right time. The difference between two good ideas is the team, and it takes a great team to be able to sense the market and be flexible enough to lead in a dynamic environment. Now, here are some thoughts on how to get it right.
All great startups usually start with a big vision and follow with an amazing team of believers, and then investors that follow the vision, and technology that actually does what the great team got it to do. At that point the main focus is to get the market to understand that their product is the next big thing, but customers aren’t always predictable and assumptions are just assumptions. So what happens when the market doesn’t keep up with expectations and the numbers don’t add up? Should an entrepreneur hang on to that vision at any cost? Don’t just keep refreshing that dashboard and hope for the market to come around, history has shown many examples that a flexible mindset and fierce attitude have created successful pivots that can change a company’s course.
Forter, the previous startup I worked at, emerged from an idea of some of the entrepreneurs, former Fraud Sciences employees, to automatically analyze behavioral data in order to personalize marketing activities. After a short period of time they realized that the same technology could also be applied to solve a much bigger problem in a less saturated market: to automatically and accurately prevent e-commerce fraud in real-time. The entrepreneurs pivoted — changed direction — and today, after securing $50M from Sequoia Capital, NEA and Scale Ventures, Forter is one of the most successful companies in its vertical, and its product is sold successfully to enterprise customers all over the world. PayPal, also one of my former employers, had also started from a product designed to transfer money between Palm Pilot devices, but the entrepreneurs realized that there is a much bigger need for online payment solutions, and based on that they built the giant payment company that was later sold to e-bay.
Pivoting is an important tool for entrepreneurs operating in today’s hyper-rapid environment. Even if you start with a product that has a perfect Product-Market fit, the market sometimes changes right under our noses, and successful entrepreneurs are those who know how to identify trends and changes, manage the situation, and communicate wisely and transparently with their employees, investors, and customers.
How will you know when its time to pivot and how to get it right? Here are some things to consider:
1. Your Basic Assumptions Are Just Assumptions: Challenge Them!
Sometimes we create such a convincing case for our investors, employees, and potential customers, that we treat it as a proven fact. But in many cases, these assumptions become irrelevant as a result of a change in the market, entry of new competitors and new solutions, or other factors that are not necessarily in your control. Treat your basic assumptions as a work in progress, and make it a habit to check them from time to time — track you competitors, use search engine and social network tools to measure trends, and conduct periodic conversations with the first customers who believed in you to check whether market sentiment has changed. Appoint someone in charge of giving a monthly/quarterly update on the “market pulse” for every assumption so you can always stay in the know.
At Forter we had a very open dialogue with our customers. Our bond with our first group of customers was so close that for years later whenever a competitor contacted them they would notify us about their offerings, we would have very open discussions around product needs, new ideas and more — those are the type of discussions that enable ongoing validation and fine-tuning of assumptions.
2. Data tells the story
You can argue with an investor or a consultant, but data doesn’t lie (assuming that you know how and what to measure). Sometimes, entrepreneurs are so in love with an idea and connected so strongly to a product that they refuse to let the facts confuse them.
Make sure that you are measuring the relevant parameters, and as you analyze your data keep an open mind without anticipating a specific result; Make sure that your data is reliable and use several sources to cross-check them, and don’t hesitate to respond to the results accordingly.
Reggie Bradford, SVP Startup Ecosystems and Accelerators at Oracle has led a successful pivot with his previous company, Vitrue, when he followed the data. Vitrue pivoted from a user-generated video platform to a social relationship management (SRM) platform because they followed the social media data. They believed social would explode in growth and transform how people get their information and communicate forever. And the data backed it up.
3. Treat Advice as Data Points
There are a lot of smart people out there and a lot of people who want to help you, but you have to know who to listen to. Treat a person’s opinion as one data point, and give a virtual score to each data point in your mind, based on the person’s background, the context in which the advice was given, the balance of the person’s interests, bias and other factors, and take that into consideration when thinking of pivoting.
Advice can open your mind to a new perspective, but it is your responsibility to analyze the information and manage the decision making process. Usually, people who are highly involved in the company and are directly affected by any change will be a source of good advice. For example, company employees are a valuable resource that is not always wisely utilized. Founders are frequently so busy with the company’s strategy and its investors that they lose their strong connections to individual customers. The employees, who are close to the product or are in close contact with customers, can provide valuable information — if they feel that someone is listening to their opinion, even if it contradicts the company’s basic assumptions.
4. Build partnerships early on
It may sound simple but it’s true: Partnerships can significantly help you with product validation. Partnerships will provide access to a broad customer base and to people within the company who work with this customer base, their experience can help you.
Although potential partners may pose greater demands than individual customers, many times these demands represent market trends that the partner has already identified, or are based on data that the partner has collected from its own customer base. Good design partners will let you build your product and give you real feedback from the market and from people who have extensive knowledge and expertise, and a good partnership also enhances your credibility in the market.
By: Noam Inbar, head of Oracle’s startup program, Tel Aviv, Israel
Originally posted here ( in Hebrew ): http://www.geektime.co.il/oracle-pivot/