Startups are always focused on their next milestone. To the outside world, these are marked by relatively superficial, second-order accomplishments — the announcement of a funding round, the move to a new and bigger office, a wave of hiring, favorable press, or even a liquidity event.
The truly important milestones, however, involve the product trajectory — market identification, roadmap design, pilot customer usage, general release, subsequent feature and functionality rollouts, user adoption and growth. All other events flow from the evolution of the product.
Importantly, the consequence for an early-stage startup which fails to hit a product milestone is, quite often, fatal. Miss one and there is no more funding, no fancy office, no hiring, no p.r. victories, and certainly no profitable exit for investors.
So, with this in mind, there’s incredible time pressure for a startup to build and deliver a product. Time spent planning can feel like an eternity as you race both the competition and the clock. Take too long and either a competitor will beat you to market, or you’ll self-destruct once you run out of money.
At the same time, there’s a penalty for rushing, too. Any miscalculation of the market, product plan, or design incurs penalties as well.
Just how bad is it for a startup to head in the wrong direction?
In techspeak, the phenomenon of a wholesale course correction is described using the much-too-positive-sounding term of “pivot.” Pivoting actually doesn’t sound half bad: it connotes action, decisiveness, control. But, in reality, for startups with limited leeway in terms of the twin, related scarcities of time and money, it’s downright awful.
Pivoting is the only option after you’ve spent a healthy percentage of both of these precious resources planning and building a product, only to look up and realize that you’ve materially miscalculated.
Pivoting means that you’re falling back on Plan B — which you likely dismissed in the first place because it wasn’t as attractive as the course which you pursued, but are now abandoning.
The chance of success in these conditions is akin to an underdog stepping into the ring with Mike Tyson at his prime. The challenger’s path to success — carefully crafted after months of training and mental preparation — disappears in an instant. As Iron Mike eloquently described: “Everyone has a plan ‘till they get punched in the mouth.” Pivoting occurs in the moment just after the blow has landed and the mission suddenly becomes survival.
That said, it can work. My favorite pivot of all time is Soylent. Here’s its origin story from the company website:
Soylent™ is a pioneer in food technology, producing convenient, complete foods designed to provide maximum nutrition with minimal effort. CEO/Founder Rob Rhinehart and team developed Soylent after recognizing the need to expand access to quality nutrition by improving the food system through innovation.
The real story is far more interesting: a Y-Combinator alum, recognizing that his plan to penetrate the cell-phone tower market with a low-end product was doomed, used his dwindling funds to launch a synthetic food line whose name, incidentally, comes from a cannibalism reference in a dystopian 1973 science fiction movie.
Pivoting is not, by any stretch of the imagination, high-percentage baseball.
Fast vs. Deliberate
At Gain Compliance, based on a few, deep scars of rushing into markets in past lives, we have focused on remaining disciplined with regards to assessing market opportunities.
This is the tension of fast vs. deliberate — the desire to act, but only with the confidence that flows from a disciplined planning process. It is reminiscent of General Putnam’s admonishment to his troops when defending Bunker Hill: “Don’t fire until you see the whites of their eyes.” Resist the temptation to act quickly for a better result.
I started researching market opportunities in earnest in May. The first two ideas were discarded after a month of analysis, including primary research with industry experts. Since settling on the focus of data quality for insurance compliance reporting, we have continually refined and revised the product roadmap, and only really started building the product in earnest recently.
So, of the first six months, two thirds of the time has been entirely dedicated to market research. And, even now, we continue to spend considerable time and effort on customer discovery and planning. It can be painful to move deliberately. But it beats pivoting.