Chapter 8: Pivot (or Perservere) Flashcards
What is a tough decision an entrepreneur needs to make in a start-up?
Wether to Pivot or persevere
What is a Pivot?
A structured correction designed to test a new fundamental hypothesis about the product, strategy, and “engine of growth”.
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What happens if you don’t Pivot when you have to?
You become stuck and you don’t get andy real progress.
It doesn’t mean your start-up goes under, but it can mean that it comes to a state where it’s impossible to grow anymore.
Why can it be tough to Pivot?
Because when you have invested resources into a product, it’s hard to throw away.
But remember that the product you need to pivot from was necessary to measure customer behavior.
How did David get Validated Learning with Votizen?
He used an MVP to test and measure customer behavior and that helped him to go in the direction customer wanted the product to go.
The big difference between simply asking people and measuring their behaviors is people often don’t know how they would react if they owned the MVP.
What should we also consider in David’s story?
How he accelerated the BML process in his business.
First, it took 8 months, then 4 months, then 3 months, then 1.
Explain the Burn rate in TLS
The burn rate in the Lean world is not for how long a start-up can live before running out of money, but how many pivots it can make before running out of money.
Therefore, the way to extend the runway in a startup is to get validated learning faster and at lower cost.
What business proves that “customers don’t know what they want”
A brain surgeon started a social network where you only could be connected with 50 people at a time. The startup received critical feedback from the public, but measuring customer behavior it was actually positive.
Explain: “Pivot or persevere meeting”
The “pivot or persevere” meetings frequency should be between once every few weeks and once every few months. However, it is up to the individual startup to decide.
Pivot or persevere meetings should involve the product development team and business leadership teams.
The product development team must report on its product optimization efforts over time, and the business team must report their conversations with customers.
The reason that is likely to get you to pivot too late.
Vanity metrics - Metrics that give you false confidence that you are on your path toward success.
A lack of clear hypothesis - You launch a product and you don’t know what you are testing
entrepreneurs are scared to pivot too ealy “What if my idea gets great in the next customer segment?” - This is rarely true.
BONUS: remember the alternative to pivot too late is bankruptcy.
A good trick can be to define what failure is, for your company and when it’s time to pivot.
Eventually set goals and if you not reach them, then you know it’s time to pivot.
What is a “Zoom in Pivot”?
It’s when customers like a feature in your business. You now pivot to mainly focus on this feature in your business.
Example: A startup called “Justin.TV” was built so users could stream anything to an audience but found out users primarily used it to stream gaming. They pivoted to Twitch.
What is a “Zoom out Pivot”?
This is when your customers ain’t excited about the features of your product. You then Pivot to add even more features based on your validated learning.
What is a “Customer segment pivot”?
You have the right product, but you’re solving it for the wrong people. You then pivot to another target customer.
This can happen when you delete your early adopter user base and expand to mainstream users, who have different preferences.
What is a “Customer Need Pivot”?
This is when you know your customers well and you not solving a very important problem for them. You pivot to target a new need to your target customer. This may lead to an entirely new product.
Example: Potbelly Sandwich stores was originally a furniture shop that sold sandwiches to get traffic. They found out that people were more interested in the sandwich and pivoted to a sandwich business.
What is a “Platform Pivot”?
This can work in two directions.
You have an application but you realize you instead become a platform on which others can build their own products and applications. Or, you have a platform, but you realize you’d instead create a dedicated application that directly solves the end-user’s needs.
