Finding your Startup's Real Raison D'etre
Headquartered in Bengaluru, Venture Factory brings proven factory concepts like cell-manufacturing efficiency, 6-sigma quality and just-in-time inventory to the exciting world of technology startups.
So you have started up? That's great! You probably know that about 90 percent of startups will not make it. What does it take to remain in the game? Sometimes, you need some metamorphosing and finding a real pivot for your company, and this may not be what you started with.
Here are some Indian startups that have successfully pivoted to emerge re-energized and more successful.
· Snapdeal - Founders Rohit Bansal and Kunal Bahl originally launched 'Jasper' to help retailers get rid of excess inventory through discount coupons. But they soon moved to an e-commerce platform in 2012.
· OYO rooms - Oravel Stay was to be India's answer to home-sharing portal Airbnb but it was soon decided to move to an online aggregator for standard budget rooms.
· Red Bus - Phanindra Sama formed Pilani Soft Labs Pvt Ltd in 2006 with two friends to create automation software BOSS, which would aggregate inventory for bus operators. They soon moved to a B2C model that worked better for the business.
· MakemyTrip - Founder Deep Kalra and co-founder Rajesh Magow launched Makemy Trip as an online travel portal focused on US-based NRIs. This was transformed later to grow into India's largest OTA today.
So does your company need a pivot? Evaluate your startup and reflect on the problem you are attempting to solve. To arrive at an answer you need to ask the right questions. Here is a quick checklist:
Have you failed enough?
Failing early and fast is one lesson all startups can take from Silicon Valley successes. The point is to fail as fast and cheap as possible. Getting feedback from your customers before you go to market will not cost you a launch. Getting customers to use a prototype and getting their feedback is invaluable. An early pivot is exponentially cheaper than a late one - this is something that has enabled us at Venture Factory to test out multiple businesses early on in the journey of all our startups, without burning a hole in our pockets.
Has your Growth Come to a Standstill?
You have probably given your product enough time and it may not be working out. A plateau in your growth is a good sign you need a pivot. If your current competitor's growth is also stagnating, then you should take it as a definite indication that your product needs to be pivoted, assuming that the market does exist.
Unviable Unit Economics
If you can identify a significantly bigger opportunity which can result in profitable unit economics, then you must pivot quickly to capitalize on it. While you look at developing something potentially bigger, at the heart of it you may want to retain the core of your original product. One of Venture Factory's startups was primarily focused on a customer segment that was not working out to be viable from a unit economics standpoint. However, at the same time, another smaller customer segment was proving out to be more viable and scalable. The company's efforts, after a thorough analysis, were redirected to focus on this other segment and this has proved beneficial to the company in the long run.
Is There a Need in the Market?
Customers' needs are dynamic. The statistics, data and click-through rates may tell you one thing, but you need to know the pulse of your target audience, know what is important to them, what they care about, and how your product fits into their world. When you can visualize your consumers using your product, you'll have an intuitive sense for when it's time to pivot. Sometimes, startups raise enough capital that enables them to shift their energies into new products that may be completely different from the older ones. The only remaining assets you are building on are your money reserves and the existing team. But most startups don't have that kind of freedom. So it is vital to see if there is a need that your company can unearth and if your pivot is going to result in a much more profitable vertical.
Is the Restructuring Worth It?
What is your exit plan if your new product does not work out? This is a great time to reevaluate your goals and objectives, and recall why you started off in the first place. This will help you gauge the metrics as to when it is your company will have 'arrived'. If this introspection leads to a sustainable growth and a long-term vision, then you must absolutely pivot.
Mostly, numbers alone will not help and there are no set answers. Go with your gut and back it with plenty of good, old-fashioned logic. During the course of your startup journey, your team is your biggest strength. Keep them in the loop and take them along as you chart the course. If you find yourself in uncertain territory, or if you find your experiment did not work, there is always new learning to be taken from the experience, and start afresh. Go forth and pivot again!