Pivoting: When is it time to make a change?
Not all ideas work right away — most of the time, early-stage start-ups have to pivot. In the latest episode of The Early Stages Podcast by APX, host Søren talks to his guests about finding the right moment to change direction and how to deal with it.
In the eighth episode of the second season, Saskia Roelofs, investor at APX, joins Søren as co-host. Their guests are Julian Herzog, CEO and founder at Osterus, a market intelligence software for investors, and Kristof Szabo, CEO and co-founder of Colossyan, formerly known as Defudger — a platform to make easy AI Videos.
Pivoting is the process of finding product-market fits, as well as any type of change to business strategy. This can be generated by new insights, customer feedback analysis or pushed externally via market trends. “It’s almost mandatory to pivot, especially at the very early stages,” Saskia Roelofs explains. “You have to find the best way to meet demands. Startups pivot all the time, it’s no sign of failure or doing things incorrectly — it’s a process.”
Netflix, for example, used to mail DVDs to their customers. Twitter used to be a podcast platform, and YouTube once was for video dating. Julian Herzog and Kristof Szabo both eventually reached the realization that they need to pivot with their start-ups. Julian’s Osterus was originally designed for an intelligent HR recruiting environment. “We made a huge database of all universities in the world, not focusing on the rankings they have but what people study and where they end up going afterwards,” he explains. Then they built a technology to read CV pdfs and quickly realized that potential clients wanted to use it to aggregate public profiles of people and companies. Today, Osterus calls itself a ‘Swiss Army knife’ of Business analytics that uses sorting algorithms to filter through the most promising applications.
“When we told our investors that we had to pivot, they were very supportive — all were entrepreneurs and they all had to pivot at one point themselves, that was a relief,” says Julian. In his opinion, the market tells a start-up what to do. Kristof had a similar experience: Back in 2018, he wanted to use AI technology to detect deep fakes. Soon, their start-up, then called Defudger, had many interested parties from large media companies, but none of them were willing to pay for the service. At that time, the company had already started making its own videos featuring AI actors, which subsequently became Colossyan’s core business. “I still believe that our mission is the same, but we pivoted our focus, the output,” Kristof Szabo says. “It was a rational decision that was combined with some strong feelings in the team, but mostly with excitement rather than sadness.”
In Julian’s opinion, early-stage start-ups have to consider the height of the obstacle that is in the way to obtain the first sell. “You can always get lost in tweaking the idea instead of offering something to the market,” he says. After understanding that, it is all about validating that an idea can be monetized. “And you have to be honest with yourself,” Julian says. “Nobody likes to realize that they were wrong.” Kristof agrees that it can be an emotional process. “But we already saw that our indirect competitors were struggling with similar ideas, so it was the right decision.”
Watching other companies is a double-edged sword, all the speakers on the podcast concur. “Sometimes you see them go right past you and you ask yourself if you have enough traction and what you are doing wrong,” Julian says. “Just keep going and see what works and what doesn’t — you have to be aware and able to adapt.” Julian and Kristof both never seriously thought about quitting but rather looked at an idea from different angles.
Listen to the full episode for more insights and subscribe to our podcast series on your preferred podcast platform to listen to a new episode every other week. If you have feedback or topic ideas, send an email to soren@apx.vc or leave a comment on the episode through our social media channels. We hope you enjoy it!
Our podcast series “The Early Stages” discusses all the relevant questions for your “Startup-Journey” in 24 episodes. We touch on topics like hiring a team, brand building, fundraising, and leadership. In each episode, host Søren sits down with founders and an APX expert to discuss one stage of the company building process, sharing their personal experiences, learnings, and advice for other up-and-coming entrepreneurs.
