Embracing the Pivot

The startup grind is often glorified, but make no mistake: IT. IS. HARD.

But it’s also part of what you sign up for if you’re crazy enough to want to be a founder, or join a founder on their mission to solve _______ (insert your choice of planetary-scale/species-wide ailment).

From finding a problem big enough to solve (the easy part - we’re generally not short of problems), figuring our how to solve it, convincing enough people to give you the resources you need to develop a solution, finally building something only to realise it’s not what people want or will pay you for (yet), spending more of the very limited resources you have to iterate, finally finding product-market-fit (huzzah!), realising all the skills you’ve painfully acquired up til now are kinda useless for the next “scale-up” phase, so you’re back to drinking from a fire-hose again, and so on…

One of the most apt descriptions of startups I’ve heard is a “temporary company” trying to find a long-term, viable, and sustainable version of itself. And given few startups are blessed with a smooth, neat linear growth path, it does mean that at some stage, your startup is going to need to pivot. Not iterate. Pivot. Into a new market, a new use case, even potentially a new product.

And that’s hard.

Why? It means letting go of a lot of things: the belief that you understood what your users wanted, customers you bent over backwards for, a product that you 100% believed in. Hardest of all, it also sometimes means letting go of your people. The same people who bought into your vision, who worked insanely hard to try and achieve the mission.

It’s one of the hardest parts of leading a startup, but can also be one of the most impactful actions a startup can take to build?itself a viable future.

When I joined the corporate venture Connected Freight, the previous CEO and Board had already taken the decision to pivot out from being a tech-enabled logistics operator, to becoming a pure-play SaaS provider. The last-mile optimisation tech CF had developed worked, but managing a full suite of logistics operations was just too hard, and we were bleeding cash at an unsustainable rate.

So we had to chart ourselves a new course.

This meant hitting the STOP ?? button on all existing operations, all existing customer relationships, and walking away from our primary source of revenue to re-design, and re-build software that was designed for one user (us), to a SaaS solution that could be used by hundreds - if not thousands - of potential customers, all with different workflows and operating models.

To try and replace those lost revenues, the team had earlier successfully pitched 3rd party consulting projects which kept revenues coming in, while also keeping a good portion of the tech team gainfully occupied.

But we were just treading water, doing work which strategically added nothing to our business, and instead ended up being a massive distraction. Crucially, it didn’t help us address our core mission. And so, several months in, I took the difficult decision to also fully shut down the consulting activities which housed our 2 largest revenue generating projects - effectively attempting a double pivot.

Painfully, that also meant laying off 60% of our workforce ??

What did that do for us?

Without the demands and distractions of very high-touch consulting projects, it meant ?? more focus on our core SaaS offer. Our Products and BD folk were fully focused ?? on getting our product into more users’ hands and generating a tonne of great user feedback, which in turn gave us the data we needed to ruthlessly prioritise the product backlog for Engineering to power through.

We were building, testing, and shipping updates every 14 days. Recurring revenues grew +50% ??, we expanded into 2 new countries, and a significantly smaller team meant our operating expenses came down dramatically. Overall net cash burn improved 65% in 12 months ??.

In response to a question about downsizing/restructuring a company, I recently heard a CEO say that he tried to live by the motto “be tough-minded, but kind-hearted”. In other words, don’t shy away from the hard calls, but also make sure you’re there to support those who invariably will be affected.

Sound advice indeed for founders out there who may be wondering if a pivot is just what their startup needs right now.