The software venture that switched to a dog-walking service. The dating site that morphed to data storage. The e-commerce play that transformed itself to make board games. We’ve seen them all.
Actually, we’re lying. We just made them up. But you get the picture: There are times in the life of a startup – especially in its early life – when change is necessary.
“A startup is a temporary organization designed to search for a scalable and repeatable business model,” explains Steve Blank. “It’s the search for product-market fit. You don’t have a company until you can figure these things out.”
Blank is the author of “Four Steps to the Epiphany” and “The Startup Owner’s Manual.” He’s been around Silicon Valley since 1978 and has founded or worked with eight tech startups, four of which went public. He currently teaches entrepreneurship at Berkeley, Stanford and Columbia. (He’s also been known to write for ReadWriteWeb.)
In the wake of Instragram’s billion-dollar pivot, Blank talks about why the concept is crucial to the success of so many startups.
You can’t possibly be right
“A pivot is a substantive change to one or more business model components,” he says. “You start with all these guesses about your company: Who are the customers? What is the product? What is the channel? What is the revenue model? Etc. But there’s no way all your guesses are going to be right. Figuring out all these things on day one is computationally impossible. So if your guesses [cannot all be] right, how do startups succeed?”
By evolving. Guess, test and adjust. And the vast majority of entrepreneurs who are not Steve Jobs adhere to it. “In a few cases, you might be right to stick to your guns if you see something that others don’t,” Blank says. “In that case, you’re a visionary. But in most cases, you’re just hallucinating.”
For example, you build a Web app, you love it and assume other people will love it. But don’t go from there to production. First, find out if other people actually do love it.
“Translate your passion into hard numbers,” Blank says. Send emails to 100 friends and see how many like your product. If nobody likes it, the next question is, do you need to pivot?
“The answer for me is that a pivot is required when you’ve exhausted all your possibilities for minor changes. ‘We tried it in pink, we tried it in yellow… holy shit! They might just hate the product.’”
Pivot, but don’t flail
But keep in mind that a pivot takes a lot of thought and planning. “One thing young entrepreneurs do is confuse ‘I changed my mind today’ with the pivot,” Blank says. “If you’re doing a pivot a week, that just means you’re flailing.”
So follow these steps to startup success. Launch your company, pivot toward the mass market, get acquired and go shopping for a tropical island…Not so fast.
“When to pivot is still an art and will always be an art,” Blank says. “We can tell you the process and how to run tests. But it’s like teaching you how to paint. We can tell you about perspective, how to mix colors, but we can’t teach you how to paint The Last Supper.”