Late last year, Aaron Batalion (one of the co-founders of Living Social, a Lightspeed Portfolio company) gave a talk about the many pivots that led Living Social to their current business of local deals.
(You can see the accompanying slides here).
I think this is a fascinating topic. I had dinner with some terrific entrepreneurs recently, including the CEOs of Slide, SayNow (videoegg), Triggit, all companies that made at least two major pivots before getting to where they ended up, and we discussed the topic of pivoting at some length. Here are my notes from the discussion:
- Pivoting has two components, knowing when to quit plan A, and taking on plan B. It's easy to pivot towards doing more of something that is working and users like. It's also easy to stop doing something that gets no traction. What's hard is stopping doing something that is just doing OK, but that is usually the right thing to do.
- Some entrepreneurs want to build companies, not products. They drive their satisfaction purely from the fact that they are making a lot of customers happy, regardless of what the product is. Removing the emotional investment in the original product, and relying on the data, makes pivoting much easier.
- Pivot fast. Once you've decided to make the change, run with it right away, and with commitment.
- It's easiest to pivot when your team is small.
- If your team is large, spend a lot of time over-communicating to employees and give them ways to share information about the pivot ... allow room for them to explore the new business
- Expect some employees to leave and don't try to save them—you want people who are excited by the new focus
- Most pivots are towards solving a smaller/easier problem or sub-problem of what people thought was the "real" problem. E.g. at Paypal and at Slide, the online demo of the product became the product. At VideoEgg/Say Media, one of the three parts of the problem became the sole focus.
- Throughout the life of the company you should be continuously looking at various paths, evaluating alternatives, testing the waters in different directions. You'll explore a lot of dead end paths along the way, but it is through always keeping several options open that you'll be able to adapt. It's unlikely that your first or second idea is right, so always keep your eye out for promising pivots.
Reprinted from lsvp.wordpress.com
Jeremy Liew is the Managing Director of Lightspeed Venture Partners. He invests primarily in the Internet and mobile sectors, with a particular interest in social media, commerce, gaming, financial and methods for increasing monetization. He joined Lightspeed in early 2006. Follow him on twitter @jeremysliew.