The Art of Starting and... Pivoting

Welcome to my LinkedIn Newsletter to get your dose of entrepreneurial inspiration! I will share some intriguing facts, captivating stories, research insights, and ideas on entrepreneurship that I personally find fascinating and inspiring. Who knows, maybe it will also spark your curiosity!

It's a perfect time to start

In today’s dynamic world, approximately 137,000 startups emerge every day, equating to an average of 702 startups per country. To put it in perspective, this means that every day, one of every 10,00 individuals takes the bold step of launching a new venture.

However, the road to success is fraught with challenges. Statistics reveal that most of the startups face failure. The failure rate is distributed over time, with 20% failing within the first year, 50% within the following five years, and a staggering 65% within 10 years.

Despite these hurdles, there are standout success stories in the startup world. The highest-valued startup globally is Bytedance (China) with notable creations like TikTok under its umbrella. It is followed by Ant Group (China) and SpaceX (US). When examining the thriving sectors within the entrepreneurial ecosystem, software, financial services and IT dominate the landscape. In contrast, industries such as professional services, sales and marketing, and media and entertainment exhibit comparatively lower numbers of unicorns.

On a national level, Switzerland shines in the Global Entrepreneurship Monitor (GEM) National Entrepreneurship Context Index (NECI), securing the 8th position globally – this reflects a favorable environment for nurturing entrepreneurial spirit.

The right time to pivot

Spenser Skates and Curtis Liu, both MIT graduates and engineers, co-founded Amplitude after their earlier venture, Sonalight, a pioneering voice recognition company similar to Siri before Siri, initially garnered a lot of attention. Their remarkable presentation at Y Combinator in 2011 left a lasting impression as Skates casually placed his phone in his pocket, engaging in a seamless back-and-forth conversation with it. This captivating performance earned them a coveted spot in the program and a modest seed investment. Their app subsequently amassed 500,000 downloads.

Nonetheless, after almost a year of hard work, they began to realize that the technology behind Sonalight was not living up to expectations. Their struggles to sustain user engagement and provide sufficient utility led to a decision to shut down this app.

Not satisfied, the duo embarked on a month-long journey of exploration, seeking a problem that would align with their unique strengths, weaknesses, and interests.

Skates had always thought about how he could make a substantial impact on the world by leveraging and applying what he knew – such as his proficiency in software development.? This insight paved the way for their next venture.

Skates also observed a funny thing happens to engineers. A lot of people talk about starting a company and get excited about it, but very few of them actually decide to take that step. Most of them go to Google and get sucked in. They are risk-averse.

Skates and Liu didn’t shy away from taking the leap and embraced a solvable problem: developing their own in-house analytics and creating a distributed data store.

Determined to attain breakthrough success, they harnessed their analytics expertise, ultimately giving birth to Amplitude. Today, Amplitude is valued at $1.35 billion and has 2,300 corporate clients, a testament to their entrepreneurial resilience and innovative prowess.

Based on the interview with Skates for CNBC, published on September 18, 2023

What research says about pivoting

In the entrepreneurial world, startups often face a crucial dilemma: how to respond to negative feedback. This reaction can be a harbinger of change, pushing startups to adapt and go through "a business model pivoting."

At the heart of every startup is its business model - its hypotheses (or hope) for value creation. Business model experimentation is the process of testing all risky assumptions and, pivoting, when necessary. However, pivoting can be challenging, especially when it affects a startup's core value proposition.

Recent research by Burnell, Stevenson, and Fisher (2023) has shed light on this challenge. Founders resist pivoting their value propositions, often due to emotional attachment. However, the research also found hope in the form of factors that facilitate pivoting: entrepreneurial experience, mentoring, and team size. These elements broaden founders' horizons and make them more open to change.

In a nutshell, startup success hinges on the ability to adapt. Pivoting, especially with regards to value proposition, can be the key to thriving in the entrepreneurial world. With the right support and willingness to embrace change, startups can unlock their full potential and work their way to greatness.

When a corporate career is like an entrepreneurial journey

Last week I finished reading the book “Good Power”, written by former IBM CEO Ginni Rometty. Rometty's journey from a poor childhood to being the CEO of a Fortune 500 company has given her invaluable wisdom that she passes on to inspire us.

For example, Rometty emphasizes the importance of authenticity in storytelling and using her experiences to help others. She emphasizes the importance of the "how" in achieving meaningful change, stating that the process is as important as the outcome.

One of her key principles is to promote a "skills first" culture rather than focusing solely on degrees. This has become her global project even after leaving IBM.

She believes that "growth and comfort never coexist." She recounts a turning point in her career when she realized that embracing discomfort was necessary for personal and professional development. This realization led her to take on challenging roles that ultimately expanded her horizons.

Another valuable lesson Rometty teaches is the importance of asking for help, emphasizing that it is a sign of strength, not weakness. Leaders must be willing to ask for help when needed to find effective solutions.

In the book, Rometty notes that it is important to be a "velvet hammer," delivering tough ideas with respect and honesty. This approach promotes better conflict management and maintaining respectful relationships even in difficult situations.

Rometty encourages us to maintain resilience in the face of difficulty. She emphasizes that preparation (yes!) and curiosity are essential traits of successful leadership. In a world where gender equality in leadership positions is slowly being achieved, Rometty recognizes the importance of being a role model for women aspiring to leadership positions.

Check out her insightful interview for McKinsey.

So what?

This newsletter contains numerous thought-provoking ideas that can spark engaging discussions. For instance, why is the world witnessing such a proliferation of startups? And is this proliferation as extensive as it appears?

How can founders "sense" the right moment to pivot? And what strategies can they employ to overcome their emotional attachment to their "brainchild"?

To what extent do corporate careers enable individuals to realize their entrepreneurial potential?

How well do we truly comprehend our strengths and weaknesses?

If you're still seeking answers, consider taking this personality test; it might offer valuable insights.

What binds the stories featured in this newsletter is the enthusiasm of these individuals to challenge the status quo. They didn't merely observe. They took action.

It's never too late to get started. Look around you. What's annoying you? What are your friends complaining about? What are you complaining about? Start a problem diary! But not just for the sake of whining, of course! After a week, review your entries and write down possible solutions. This is an opportunity to not only identify issues but to actively seek solutions. Most likely, you will discover that YOU CAN take action and change the status quo, even today.

Until next time!