I don’t know about you, but I’m getting tired of hearing about startups “pivoting” or the question, “When did you pivot?” VCs told me that virtually every startup ends up quite differently than their initial business plan indicated – back in the old days when startups actually had business plans. It was no big deal then and shouldn’t be now.
Rather than constantly pivoting in search of the holy grail of product/market fit, your venture may be better served be letting your customers pivot you.
The New York Times story WhatsApp Co-Founder Leaving Facebook Amid User Data Disputes by Sheera Frenkel and Cade Metz was the first time I learned about What’sApp’s history. A great illustration of customers driving a startup pivot:
Originally, the service was a way for people to tell friends and family whether they were available to text and talk. But it soon morphed into a general and free way of sending messages without the help of the services run by cellular network operators like Verizon and AT&T.
WhatsApp became enormously popular in countries where messaging services were expensive or where social networks like Facebook had not taken hold.
Notice how the author’s use the term “morphed” as the term for a customer-driven change in business direction compared to “pivot” which is a founder-driven change.
So what’s the lesson for founders here? First it’s all about the team. I recall a prominent VC telling me he would take an A team of founders with a mediocre business plan over a B team of founders with a great business plan. The A players will discover a new and better direction for the startup, whereas the B team will find ways to screw up a great business plan. Second, as Jeff Bezos has continually reiterated over the long life of Amazon, listen to your customers!
I often find that startups are very focused on raising money and getting intros to prospective investors and customers. After that their priority is getting out their MVP. Only rarely do startups put the customer first. I know – I’ve been a product first guy, which is why so many of my startup ideas failed to turn into viable businesses. So how do you go about listening to your customers. The are two basic modes: primary and secondary, just as there are in market research. Primary means getting out of the office and talking to customers or even cold calling from a valuable list, as MIT-related startups often do with the MIT alumni directory. And attending events where customers gather and making an effort to buttonhole them there or set up a time to talk.
The secondary mode of listening to your customer is one favored by nerds like myself or who aren’t comfortable talking to strangers – analytics. And today analytics are just a click away, like WordPress analytics for bloggers or Google analytics for web sites. Every program, app, web site, anything customer-facing should be instrumented for analytics from inception.
But there are many other ways to listen to customers – including my favorite, listening to non-customers. For everyone who downloads your app there may be a dozen who view the listing in iTunes or Google Play but don’t download it. And for everyone who downloads the app only a few may use more than once. Finding ways to capture the contact info of the window shoppers, those who look but don’t buy, they joy riders, will help you find what every sales person has to deal with in face-to -face customer interactions, otherwise known as sales calls: objections.
Every prospect will have some objections to your product: it’s too expensive, it’s too slow, it has a clunky UI, and on and on. Only if your value proposition is strong enough will prospects overcome their objections to become customers. So it’s vital for both sales and product development to seek out these objections. Don’t take “no” for an answer! Always ask “why” – why won’t you buy the product? When products don’t sell I often find founders who leap to the conclusion that their app is too expensive, or lacks certain features of competitors’ apps. Those who leap to conclusions are bound to fall and hurt themselves. So cherish those objections! If a prospect is interested enough to give you an objection they are showing engagement. The worst reaction a prospect can give you is “interesting” or “cool.” What you want is either a sale or to learn why they won’t buy. If you find a consensus amongst customers and prospects that they need feature X then and only then do you add that feature.
Letting the customers pivot you won’t necessarily turn you into the next WhatsApp, sold for $17 billion to Facebook. But it will help you learn. Rapid learning and adaptation are the two keys to survival in the Darwinian landscape of the startup world.