The Single Worst Pivot Idea
You’ve seen this before. A great technical team comes up with amazing technology. The original business model fails. They immediately start looking for another application.
Stop here. Can you already see what’s wrong in this scenario? It’s a typical “solution looking for a problem” case. It almost never works. Successful companies are based on great products that solve a significant problem.
When you’re starting with a solution instead of a problem, you will miss the biggest problems as it’s highly unlikely that your little technology just happens to solve one of them.
I know this too well.
I started Filmaster with consumer in mind. I thought people needed a personalized guide that would tell them what to watch from all the movies and TV series ever made. We’ve build an app where people rated movies. The app was smart enough to immediately recommend more stuff to watch based on your personal taste. 100k people signed up and actually used the site. However, after a few sessions with Google Analytics, we’ve noticed that only 5% of people were interested in personalized recommendations. The rest simply searched for a movie genre and made the decision based on general popularity and average rating. They didn’t need Filmaster for that. IMDB and Rotten Tomatoes did just fine.
We chose to ignore this insight. After all, what do they know? The technology works. We know it. We tested it. Those who tried the actual product (personalized recommendations) loved it. So we decided to focus on applying the technology in more apps.
We made a deal with Samsung and build an app for their Smarthub.
We bought into the hype of Google TV. It was 2012. Don’t judge us too harsh.
We went to broadcasters, owners of video platforms, cinemas and tried to sell them “recommendations as a service”. After months of selling, convincing, running proof-of-concepts, we managed to close a few deals, but customers weren’t too excited by the perspective of paying for something they could not easily test.
Desperate to keep the company cash-flow positive, as a last resort, we decided to talk to our customers and figure out their actual needs. It was a fascinating experience! They told us they did not care too much about their current clients(!). They cared a lot about new ones, though, and they struggled to reach out to them. So, we’ve built them a product they wanted — a Facebook app to drive more cinema consumption. It was so simple we almost felt offended. Anyone could build it, really! But they paid real dollars so we did not complain.
Still, we could not resist doing one thing — placing recommendations, the amazing technology we developed, at the end of the quiz. Even though, at this point, no one really cared.
Eventually we ended up selling to a San Francisco based startup that was better than us in figuring out their business model fast, but still needed our know-how and technology. But nobody knows what would have happened if we decided to do proper customer development early on.
I’m seeing the problem with pivoting the wrong way everywhere I look: image recognition startups, game engine startups, virtual reality startups, you name it! The issue of dumb pivoting exists because the majority of tech-focused companies are overly attached to the technology they developed. I have a simple advice. Get over it. Business is not about smart technology. It’s about solving big problems for customers. If you can’t do that, no technology will help.
So what can you do if you are in the described scenario, with great tech and a failed business? There seems to be only two ways out:
- Find a company that needs your tech / expertise and sell.
- Go to your customers, ask them what they need and build from scratch, ignoring what you have.
Good luck :)
If you’re reading this and it’s still before December 12th 2016, feel free to check out ReaktorX, a pre-accelerator for first-time founders that I started in Warsaw, Poland, to help entrepreneurs make smarter decisions than I did.