My startup "pivoted" earlier this year, and everyone on our team is pumped. As a direct result, we raised almost $2 million from top-notch venture capitalists and angel investors, and we're moving fast in an exciting direction as the company builds a product that addresses a huge pain for a lot of businesses.
I love the result of our pivot. I also love the idea of pivoting. But I have a problem with the word "pivot." The action sounds surgical, near-instant, and tidy. The actual experience is nothing like that.
Instead, our pivot was more like a weeks-long trudge through a fog of confusion that took lots of hard work and hard choices to emerge from. But that experience helped solidify our confidence and grit as a business team.
Here is what pivoting a startup really feels like.
It was around Thanksgiving last year when it began to look like the numbers from our consumer beta launch weren't growing like they should. Our press coverage was phenomenal, customer feedback was awesome, and our initial growth efforts were fairly effective, but it was clear that few key things weren't quite working.
I'm the customary Thanksgiving chef—my family said the meal was great, maybe the best yet. Me personally? Well, I remember it tasted vaguely of something. Turkey, maybe.
That's because I was preoccupied by the possibility of spending two years and a couple hundred thousand dollars of friends’ and family's money on a startup that would earn only $500 in revenue. My incredibly supportive wife was starting to ask questions that showed she was entertaining the notion that I had in fact wasted all that for nothing. I felt ready to quit. I dreaded explaining it all to my kids.
After the holiday, our team decided to increase our focus on revenue generation. We had one big revenue-generating experiment in the works that rolled out in mid-December, but it sputtered immediately. In a flurry of creative activity, we came up with four more quick customer experiments we could run. They would be promising if they succeeded, and nails in the coffin if they didn't. And one by one, the nails were driven home.
But they taught us something—and just in time. Ironically, it turned out that our product worked too well. We’d planned to become a marketplace for services to help people with life decisions, starting with life coaching, but after using the product to think through their decisions, most people felt they didn’t need any more help. We’d innovated ourselves out of a business model.
That is how you know you are pivoting. You spend a couple months ready to quit, pounding the last nails in the coffin, and feeling absurd while you do it. And it's only once they're driven in that they suddenly seem like your saving grace.
One afternoon just before New Year's, I looked at the numbers one last time, and it leaped out at me. We’d half-heartedly included business decisions alongside life decisions in our app's list of services—more for completeness than anything else. Even though few people used Cloverpop to help them make business decisions, we had nearly a thousand data points. And those thousand managers making business decisions were more enthusiastic than any other deciders in our enormous data set.
That was a tiny little spark of hope, but I was in no mood to be seduced by optimism. So we set out to extinguish it, just to be sure. With cash reserves dwindling, we ran one last experiment with managers and executives facing business decisions. It was a tough. It wasn’t designed to make things look good. It was designed to avoid more fog, more pain and absurdity.
It was a Friday afternoon. I figured that experiment would be the last meaningful thing I would do as CEO. So I gave up, and clicked send. By Monday, 80 managers and executives had used our prototype on their most pressing business decisions. They loved it, and we knew we had something.
We had pitches scheduled with two great VCs that week. We faced a hard decision: Should we just keep plowing forward, presenting a weak model to investors, or were we really going to pivot? Luckily, we’d built a prototype for just those sorts of decisions, so we used it and decided to change direction. At that point we went from running a "consumer play" to building a B2B, SaaS decision tool for managers and teams.
We pivoted. And it paid off almost immediately.
Our previous dozen VC meetings in the weeks before the holidays were painful flops. The next two meetings were fun and engaging discussions, and within a couple of months, both resulted in investments.
And both investors said the same thing: It wasn't necessarily our change in direction that won them over, although we're all very excited about our new mission. It was the discipline we’d shown—first in driving hard for the winning basket with the seconds ticking down, and then pivoting away from a trap in order to pass out for a new play. Slam dunk.
They could see that we’d thoughtfully faced the facts, then gone for it wholeheartedly.
So here’s the thing: Pivots aren’t about a quick, clean shift in direction. Doing that doesn’t create value or demonstrate potential all on its own. The confusion and pain they cause are real, and it's playing through those experiences that prove your judgment and your company's mettle.
In other words, pivoting proves your team can handle the truth. You can handle the truth, right?
Erik Larson is an award-winning product and marketing leader who's on a quest to make decisions at work less painful and more right. Before founding Cloverpop, he led several successful new SaaS and enterprise businesses at Macromedia and Adobe. Follow him on Twitter at @erikdlarson.