According to software pioneer Mitch Kapor, 15 to 20 percent of companies have undergone radical transformations.
Entrepreneurs may start off thinking they have the next billion dollar idea, though once aired, these inspirations may fail to hold such promise in reality. To successfully launch a sustainable business with tangible growth prospects, founders may be forced to reevaluate their business propositions and reinvent themselves in accordance with more realistic market opportunities.
We don't shill.
Check out TNW's Hard Fork.
In a selective startup ecosystem, it is important that entrepreneurs remain connected to market trends and are capable of adapting to these indicators. Taking the leap to pivot a business is risky, but can also be the key to setting your business on a new trajectory and avoiding failure.
Here are the essential steps we took and the lessons we learned as a startup when executing our business pivot.
1. Reevaluate your product at all stages
We started off developing a peer-to-peer boat rental platform to provide boaters with access to great boats at a reasonable rate, which was a passion for me.
However, I quickly learned that creating a niche offering in what was already a niche market was not going to provide the scale I wanted to achieve with my business. Additionally, other peer-to-peer boat rental startups launched around the same time and what was already a small market began getting crowded.
It’s important that entrepreneurs accept that which they cannot change, and look to those areas where they can make a difference.
With Boatyard, I had a concept that I wanted to turn into a 100 million dollar business. However, as development progressed, it became evident to me that this was not going to happen with the business I was creating. I had to make the difficult decision to go back to the drawing-board.
2. Understand your audience and identify the demand
I had the vision to create a scalable business that serviced the needs of the larger recreational boating community. There were many dark days and sleepless nights while I tried to find my mission with Boatyard. There was only one way to identify the greatest need, so I headed down to the docks to talk to boaters.
Over and over, I heard the same pains I heard from the boat owners in our peer-to-peer business. Boaters didn’t have a reliable source for finding and ordering marine services. Until now, boaters were forced to use Google and Craigslist or rely on word-of-mouth – not knowing what to look for or how to choose the right marine professional for their job. It became clear that there was a dire need for an on-demand marketplace for recreational boating, and I knew that I could fill that demand and create a business.
Pivoting a business you worked incredibly hard to create can be terrifying for an entrepreneur. However, a good entrepreneur can’t stay married to an idea in the face of evidence that it’s not the right path. If your decision is based on solid market research and you know it is the right one for your business, it will be more exciting than scary.
3. Make sure you have a supportive network and strategic alliances
As the sole founder of Boatyard, I didn’t have a co-founder to persuade, but I did have the benefits of people with whom I could discuss my vision.
Boatyard was incubated with Venture Hive, and began life in partnership with Rokk3r Labs, a team of advisors and a supportive, unbiased network to pitch my thoughts. A startup is risky, so you need to be able to count on your team. Without this support and commitment it would have been infinitely harder to jump off that cliff.
Around this time, I made the seemingly reckless decision to grow my team. I wouldn’t recommend doing this during a pivot, but two incredibly smart and talented people suddenly became available. I hadn’t committed to the new business model yet, but I knew that whatever business I launched, I would need them on my team.
At this point we had lost funding and I was taking some large risks, but with hard work and a bit of luck the investment paid off. I asked my new Chief Creative Officer to create a mockup of a white labeled app for VanDutch, which ended up being the catalyst for a strategic partnership and an investment in Boatyard by VanDutch Yachts.
VanDutch valued the same qualities we were promoting – that of cutting edge technology in support of the boating and yachting community. Using our technology, we were able to create a mobile solution that provided VanDutch owners with on-demand yacht services. Through VanDutch we gained not only the capital to continue development but validation in the marketplace.
If you can find a partner with whom you can deliver mutual value, you are already halfway there. It is often easier than convincing an institutional investor, and you may end up with a more patient and strategic partner.
4. Rebrand, market and keep evolving
We’re big geeks for clean UI and UX. Design is critically important to us and we needed to rebrand from scratch. While some people told us we spent too much time on design for such an early stage company, our brand made us look mature to our early customers and prospective partners.
Marketing is a challenge for any startup. With few resources and no PR team, the only way to get your story out there is to start making noise yourself. We focused on creating useful and interesting content and pitched our product as a new company launch, and got ourselves on Product Hunt and Techcrunch Radio. We leveraged these wins to highlight our offering and were able to get our business off the ground.
Startups do have an advantage in that they have a small enough client-base that they can personally connect with customers and they’re agile enough to act quickly based on what they learn.
We created a “Whatever” button in our app – something that would allow our customers to request services outside of our primary offering and gave us great insight into the challenges boat owners faced. These requests allowed us to judge and measure the demand for different types of services and to adjust our strategy accordingly. Customer reviews at the end of each order gave further insight, enabling us to refine the platform further.
William Faulkner said, “In writing, you must kill your darlings.” This is true for entrepreneurship, as well. Passion is great, but being dogmatic can blind you to new opportunities.
A business cannot exist if there is no market for it. During a particularly dark period right before our pivot, JonVanhala, a trusted advisor, sent me a book with a dinosaur on the cover and the title “All My Friends Are Dead”. The message was clear. To avoid stagnation and failure you have to adapt, or else you risk becoming extinct.
Read next: 10 great tech company pivots