From EMMA to Make Your Path | Knowing when and how to pivot your startup
Here at Geovation Scotland, we support companies in land, property, and location technology during the early stages of their development. Founding a company is no easy task, especially in the digital world we live in, where technology is developing at a rate of noughts and making sure your startup has the competitive edge and is solving a real-world problem is paramount.
We asked Dr Cindy Regalado, co-founder of Make Your Path, to share her insights on pivoting a business.
When Cindy first joined the Geovation Scotland accelerator, she was working on EMMA. Now, Cindy has pivoted and is focussing on Make Your Path, a HealthTech with ambitions to make physical activity for health benefits easier to access and understand, through education, mapping of walking routes and connectivity to health professionals – especially for those with sedentary lives and jobs.
If you’re thinking about pivoting or wondering if you should pivot your startup idea, this blog can provide some insight into when to make the decision, and how to stay motivated throughout.
Pivoting your startup
Pivoting means changing your company’s original idea. This may happen after you’ve already had some initial traction or before you launch.
Pivoting should not be confused with the natural process that very early-stage startups go through, where there is continuous idea generation and idea iteration with a lot of refinement. Continuous iteration is an essential process that enables teams to truly learn in rapid succession, developing agility while refining their ideas.
To gain insights into what prompts a pivot, how to go about a pivot, and how to find your ground after a pivot, I drew from my own pivoting experience, and I also talked to some seasoned entrepreneurs and an investor.
Changing and adapting as an essential process for startups
I’ve learned that successful startups adapt their business strategy to respond to shifting trends.
These include changes in their industry or technology, or adapting to recognise and integrate customer demands and preferences. Changing and adapting is an essential process in a startup where founders take direct or indirect feedback to assess and change their value propositions and business model.
These changes can range from drastic, with a complete change of idea, to more practical shifts like a change in market segment.
Reasons to pivot
There are many reasons to pivot but, in my experience, and after speaking to other founders, the ones that have been crucial include:
- There is no traction
- The business is not financially viable
- Your heart’s not in it
- There isn’t a good founder fit
- External factors out of your control
If your current idea isn’t working (e.g. there is no adoption and retention after many months of feedback gathering and iterative testing), then you need to take time out to coldly assess why it is not working (more on this below). Time and cash are precious resources for a startup. Hence, working on the wrong idea not only burns cash, but it also takes time and energy away from other more viable ideas.
To quote from Strategyzer’s Value proposition design book, “to sustainably create value for your customer, you need to create value for your business, and to create value for your business, you need to create value for your customer”.
If you cannot generate enough revenue to drive your operations, you do not have a viable business. Another reason to pivot is if you realise that your idea requires an intensive injection of capital and years of development to get started. This will likely be a circular struggle because you usually require proof and validation to gain investment, which you will not get if you do not have validation.
Passion is necessary to help you succeed in building a startup. Passion is not the only thing that matters but you must have passion to fight through the setbacks and snags inherent in building a startup. So, if you do not get excited about working on your idea and your heart’s not in it, it may be a good reason to pivot to something that you feel more passionate about.
Having the skills and knowledge to work on an idea gives you a good head start. If you progress with your idea, and the more you learn about what is required to make it work, you feel you are not a good fit working on the idea, you might want to consider a pivot to something where you can bring a personal competitive advantage.
There will always be external factors affecting the work you do as a founder. However, it is a good reason to pivot if the success of your startup depends on those external factors taking off (e.g., regulation or technology such as wide-spread adoption of VR or crypto currency) and you have no control over their development and outcome.
Other examples of external factors include competition. In my case, after extensive analysis I realised that my competition had recently gained a substantial upper hand (a contract with the same national client I was looking to work with and substantial financial backing from an international investor).
Know when to pivot
The reasons to pivot listed above are not exhaustive, but if any of these apply to you, then you should consider pivoting. As previously stressed, iteration is an essential process for startups. The more you iterate, the more chances you have at finding a workable and sustainable value proposition. It also moves you closer to finding product-market-fit.
However, if after iterating and analysing the fit between your value proposition and your business model and if after stress testing the financial viability of your idea with numbers (see Value Proposition Design on how to do this) you then realise that you do not have a sustainable business and/or you cannot capitalise on your idea, you might consider pivoting.
After speaking to other entrepreneurs about pivoting it strikes me that they all say that “in your heart, as a founder, you just know deep down when it’s time to pivot” because you know all the ins and outs of your startup. It doesn’t make it any easier, though. Pivoting requires taking a hard and honest look at your business idea and putting personal sentiment to one side.
It also requires breaking down the idea into its components. This can include looking at what are the resources, expenses, channels, etc. that are a financial burden and assessing which of these can be stripped out. What you learn can then be used as the basis for your pivot.
How to pivot and stay motivated during the process
It can be very hard to pivot. For a founder that has invested so much time, effort, and love, it is hard to let go! I know – I’ve been there. Fear of failure can hold people back from seeking change. Pivoting might feel like failure and defeat and it can be quite terrifying to admit to the world that you’re no longer working on that thing you gave so much to. But pivoting is not the same as giving up. When you’ve taken the time to pick apart what wasn’t working and you own up to and embrace change, it is a sign of strength and humility.
As part of our Geovation Scotland accelerator programme we were supplied with a startup work plan. In addition to outlining our roadmap and assumptions, we were asked to think very hard about what the risks to our plan were and then list what alternatives we could explore if things went sideways. Having worked through these in advance (and with a cool head) was a great starting point to explore new ideas.
I have found that it is good practice to assess new ideas rigorously and to keep track of the learnings as you adapt and pivot. Value Proposition Design by Strategyzer covers the process of generating and testing ideas in detail but my main take away from practising it is that systematically documenting learnings pays off: this valuable information, when readily available, can help inform future design ideas. Best of all, it helps you to be more effective by focusing on evidence of what works.
Finally, when pivoting, reach out to your network. They will be a great source of information and motivation. As a word of caution,
- do consider whom you get feedback from: people tend to be polite and comforting, when what you need is honesty.
- Seek feedback from experts in your subject area.
- Don’t feel afraid to speak to them too early or that you might ‘burn bridges’ from presenting half-baked ideas.
- Be clear and explain where you are in your journey.
Most people will be very supportive and provide generous feedback. In summary, adaptation and shifts are commonplace and essential for startups. Being vigilant of trends and always seeking customer feedback will lead to the adjustments to reach validation and product-market-fit.
When a radical shift is needed, work through what did and didn’t work, and use that as a basis of a new cycle to ideate, prototype, test, gain lots of feedback (from customers and experts) and iterate until you find an idea that fits.