Our 100th Episode! How to pivot your startup and why it’s important / shouldn’t get a bad rap.
DESCRIPTION
In this week’s pod, we celebrate our 100th episode! I want to acknowledge the work of our amazing podcast producer, Will Richardson who keeps this going. The main topic of discussion is pivoting in the context of startups and entrepreneurship. Phuong, Incubator Partner at Interplay, provides insights into the pros and cons of pivoting and how to approach it strategically. She emphasizes that pivoting is a natural part of the early stages of a business and suggests that founders should continually evaluate and make changes to optimize their product, customer base, business model, and positioning.
Phuong also offers guidance on recognizing the right time to pivot, such as when initial efforts are not yielding results or when external factors impact the business. We discuss the importance of receiving honest feedback, not settling for vague responses and emphasize the value of finding the right balance between pivoting and sticking with a failing idea.
Thank you to Phuong and to our listeners for celebrating our 100th episode!
Links:
MPD
Welcome everybody. I'm Mark Peter Davis, managing partner of interplay. I'm on a mission to help entrepreneurs advance society. And this podcast is definitively part of that effort. Uh, today we've got Phuong on the show. She's going to run down, um, some big thoughts about pivoting pros and cons, how to think about it and be strategic.
Very useful topic, uh, if you were anywhere in the pre series, a world as an entrepreneur, a must listen before we jump in though. Today is a birthday of sorts holiday. I don't know what it is, but it's our hundredth episode of the podcast. Um, I didn't think we'd go this long, but we did apparently. Uh, and I have pulled in the mysterious will Richardson, who has been producing this podcast and coaching me out of sucking totally into, I don't know, sucking mildly, uh, as a podcast guy, uh, for the last how long is it now?
How long we've been doing this 2 years? We launched January of 2021. So coming up. Yeah. Coming up on 3 years. And this is your first time kind of in front of the curtain first time in front of the camera, big, big, big moment, big anniversary moment here. And I gave him no warning for this. I'm like, yeah, you should be in this segment.
But yeah, no, we'll play a huge part in making this thing a reality. Um, I think every now and then make shout outs to him on the pod, but huge gratitude because this would not be what it is without him. So. Thank you. Will. I appreciate the shout out. Been quite a fun journey. Um, and thanks to everyone for listening.
I think, uh, for those who've been since day one, it's been, uh, you've heard a few different iterations and that's, uh, I think goes in line with a lot of the lessons we're given. So we're definitely trying to listen to ourselves a little bit and, uh, always down for feedback. So if anyone ever has thoughts, don't hesitate to reach out and, uh, share some stuff, but I'm excited to keep giving some content.
And for what it's worth, listening to yourself is super painful. So I highly recommend everyone else avoid podcasting. Okay, awesome. And without further ado, let's jump into Fong's session.
Did you really not prepare for today? No,
Phuong
I prepared.
MPD
Do you know what you're always prepared. That's your thing. Yes. That's your thing. You got like. I would never not be prepared. You like do your homework. Did you ever have the moment where you failed to like turn an essay in on time? Never. Don't be crazy.
I had that moment at Duke. I totally, uh, did not remember that the essay was due that day, and the guy called me to get up in front of the class and give a speech like about my topic. Cold sweat, you know, I was never that kind of student. I just flubbed. I don't know. So I had that moment. Did you kill it?
No, I turned bright red and broke a sweat and told him I wasn't ready.
Phuong
Well, that specifically never happened in real life, but I do have a recurring nightmare that I'm at Duke and it's mid semester and I've forgotten to go to, like, it's always a math class that I'd forgotten to go to, didn't do the homework, and was in danger of failing.
But by the way,
MPD
that's why it never happened because you have that anxiety, like, why are the survival?
Phuong
Yeah, it's pleasant. It's very pleasant. It actually
MPD
happened to me and I have the instinct. It's fucking crazy. Okay. Um, hello. Uh, let's get back on the rails here, right? We will be mad if we don't. All right, over to you.
What are we talking about? All
Phuong
right. So, um, today I've got a really interesting topic, like one, I'm, I'm actually working through with one of our, um, founders, uh, it's one that comes up a lot in the startup community, community, and often gets a bad rap. I'm going to talk about pivoting. So this is a term that causes a fair amount of concern when a founder says that they're pivoting.
And I mean, I guess you're not pivoting. If every single thing is going gangbusters, but you know, well, how often does that happen? And I guess if you're a later stage company and you're generating significant revenue and have a bigger team, a pivot can actually be concerning and cause a lot of anxiety.
But if you're earlier on, pivoting is not a big deal. Um, you know, you should be constantly testing and iterating on your business anyway. So pivoting is just changing your idea as you find out more about your market and your customer. So if you're not pivoting early on, you're probably not doing it right.
So when you're thinking about the aspects of your business, you should be evaluating and potentially pivoting on. Look at everything. As you're learning more about your business, always be looking for ways to optimize, one, your product. Are there ways to tweak your core offering and features to better address your customer needs?
Or two, your customer, even as you're testing out your product, you could find that it's better suited for a completely different customer or maybe a more specific niche of the segment you were already targeting. Uh, look at your business model. You might have to rethink your monetization strategies or your distribution channels.
Uh, for example, you might decide, decide that going from a subscription model to a freemium model could be more profitable, or from B two B to B two C. And then lastly, positioning. As you're figuring out what's working, you might want to change the way you're messaging, branding, or marketing your product to your customers.
Now, some pivots can be tweaks, right? Others can be pretty significant changes to your business, which is stressful. How do you know whether you should be making significant changes? I think simply if you've been working on something for a while, like months and months, you're not getting customers. It's probably time to reevaluate.
No, it's kind of surprising, but it's actually a lot better if something fails right away. It becomes super clear that it's time to pivot. You know, if you get some initial traction, like a few users or a customer here and there, then it's easy to fall into the trap of, well, maybe if I just keep working at it, it'll work.
And then the next thing, you know, it's a couple of years later and you're still working on the same thing and it's still not working. So let's talk about how you know, when to pivot. Um, again, if it's early on, you've been working on an idea for a few weeks and you decide that you hate working on it, or you realize you're not the right person to work on it then pivot.
Immediately, um, if you've been working on something for a while, like, you know, months, and it's just not happening, you're not getting users, you're not getting traction, you're getting negative feedback from your customers, or you have bad retention, probably time to reassess. And then, um, other reasons might have nothing to do with product market fit.
So, for example, you know, there's a change in market conditions. There's new competitors regulations or other market trends and make your cart strategy no longer viable, or you have bad financial results. So, even if you're getting and retaining customers, but you're burning through cash, and there's no clear sign of revenue growth or profitability on the horizon, you probably have to pivot to a more sustainable business model.
Or, um, if a new opportunity comes up, I see this happen all the time where a pivot is driven by finding new, more promising opportunities, either in your same industry or in adjacent markets. So this happens as you learn more about your business and is really a healthy part of growing a company. On the other hand, what's not ideal is pivoting because of your runway, but if you're running out of time or cash to pursue your current strategy, a pivot may be more efficient, uh, you know, use of your resources.
Um, so then, you know, overall founders should always be critical of their business. They should constantly be evaluating and finding new ways to change aspects of their ideas to make their business better. That's really what pivoting is in the early stages, right? It's making little changes based on what you're learning.
But while you're doing that, keep in mind there is such a thing as too much pivoting. Pivoting over and over again can have negative effects, right? It could cause founders to lose motivation and that could kill companies. But then on the other hand, some founders work on the same idea for years and don't change even though it's not working.
Don't do that either. Find a good balance like everything in life.
MPD
This is an excellent topic, um, and it is one of the hardest things when you're in the cockpit of a company to figure out, I want to throw in a thought, I think part of the problem with this is the branding, right? You kind of said this, like, if you call something pivoting, it's stigmatized, right?
Either, you know, it's like being proud of failure, right? That's a stigmatized thing that either you, you know, you barbell, you're extreme and you own it like a merit badge. Right. And that's kind of cool, or you kind of get your ass kicked by telling people you're pivoting because they think the company is a dog.
It's not going to work out. But if you don't call it pivoting, if you call it adapting, changing. Almost any other word that's not as branded. It's normal. So my general what you should be doing, right? You should be listening to customers and making moves. It's the same thing. I've said this before. I think on the podcast, but I tell people not when they're first starting day one, don't tell anyone you're starting a company.
Say you're running an experiment because when you're starting a company, you can fail and it's embarrassing. I've been there when you're running an experiment, getting a negative result that success. I realized that this is a dumb idea. I shouldn't do it because I did my experiment and it worked. So it's the same thing with pivoting.
I think you probably don't call it pivoting. I think you probably, um, emphasize that you're learning and adapting.
Phuong
Yeah. Taking advantage of a new opportunity or new learning. Totally.
MPD
There's one other thing that I think is really nuanced in this and very challenging that I've experienced personally.
I don't know if this holds true in other cultures, but in America, the sound of no is not clear when you're talking to customers. They don't always just say, no, this is a dumb idea. Even when they know it's a dumb idea. They say, Oh, this is really great. Let's stay in touch. Let's reconnect. That's what no sounds like.
What yes sounds like is awesome. Uh, where do I sign? How can I learn more? Can you talk to the people on my team? And as an entrepreneur, I didn't know what the sound of yes was for a long time. But once you hear it, you never go back. You start to realize everything else is no. So hopefully for the folks who haven't heard, yes, yet, if you're just hearing, no, it doesn't sound like a discernible, clear.
No, it sounds like, yeah, let's reconnect. Let's stay in touch. People just don't hurt your feelings, but if that's all you're getting, kill it, adapt, change.
Phuong
I think that's a great point. You know, you really have to figure out a way to get really honest feedback, whether it's from your beta users or potential customers, you know, people don't want to hurt your feelings and, you know, they're not gonna say this product sucks.
I would never, ever, ever use it. They'll say, yeah, it's okay. Right? And that's, that's a killer.
MPD
That's a no. That's a, this is terrible. If it's not, yes, it's terrible. Right. And you have to have that mindset. It doesn't mean you're gonna get Yes every time. But if you're not getting some yeses. Once I got product market fit in my first entrepreneurial venture, it was like a new world, right?
I felt, uh, a market pulling us into the market they were buying, they were telling us they wanted more. It's a completely different feeling. Then what is, uh, not a no, but a effectively a no where everyone's just like, yeah, so if you're not feeling the market pulling you rethink, save the time, don't wait for two years to figure it out.
You're wasting your time. That's why people say fail fast because your time is valuable and you're going to waste it working on something that isn't going to shake.
Phuong
Yeah. And then there's the opportunity costs on working on something that you, that has more probability for success or something that you just enjoy more and you're just kind of turning away at something that probably will never be anything.
MPD
Phuong you killed it. Once again, thanks for doing this. Thanks.
That's a huge segment. Really enjoy that topic. Um, probably worth a second listen if you're facing a pivot right now, just to get your head around it. Uh, again, big shout out to Will, who's been the backbone of building this podcast. Uh, but anyway, um, this would not be what it is without him. So, thank you all for listening, and huge high five, Will.
Alright, see you next week.