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For first time entrepreneurs, it's the toughest.
Because first time entrepreneurs oftentimes don't recognize the signs
that a pivot needs to be made, and will stick with things too long.
Or alternatively, which is the art of this,
they think that they need to respond too quickly.
I think the key thing is setting up a lot of experiments.
Setting hypothesis up.
Finding ways to testing them.
If you have an internet business,
you can sometimes actually test them to make changes on your website.
If you don't have an internet-type business and you have something that has
a longer development cycle, do a lot of market research.
Set up experiments AB, experiments where you can get real data.
So the key, really, I think there, is setting a hypothesis, creating a set of
experiments, going forward with the experiments, analyzing the data in
an objective manner, and doing it in a way that is based on real customer feedback,
either through product or through really good market research.
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It's both, because you have to look at the analytics.
If you can have objective data, that helps a lot.
But a lot of times, if you think about Steve Jobs.
Steve Jobs did not make his decisions based on a lot of analytics.
He was making it based on gut and
based on a true understanding of what the customer would want if it only existed.
And so in those situations, sometimes you just have to stick with it for a while.
But even so, there, they're still ways of testing to make sure that
your product concept and your market is correct.
And I think particularly on the market side, that's the easiest to test.
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When you're pivoting, there's really three ways you can pivot.
You can pivot on the product, say gee, we don't have the right product here,
we have the right market, we have the right team.
You can pivot on the market, and say, gee, we have a good product,
we have a good team, but we just didn't pick the right market,
we didn't pick the right customer base, or maybe we're just early into an area, and
the area hasn't developed and is mature enough for our particular product.
Or you can say I've got the product right, I've got the the customer right,
but my team isn't correct.
Usually in startups, more often than not, it's the customer and
the market where you need to pivot on.
Because if you pivot on the product, that's a huge restart for a company.
That's almost like let's just throw this out and
we're going to try a whole nother technology.
That can take years.
Usually the founding team, the investors, it's very hard to change out.
It's sounds like an easy thing, but it's not.
The easiest thing usually to pivot on is to try to find another application.
And if you look at most of the companies that have been successful in pivoting,
they usually pivot along the axis of the market and the customer, not so
much on the axis of the technology and the team.
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There's a lot of aspects to that,
because there's a lot of people you have to bring along to make a pivot successful.
You have to bring your investors along.
You need to bring your board along.
You need to bring your employees along.
And companies that have done very good at it.
First of all, they prepare ahead of time.
Is they think about,
gee we're in a start up, we're not going to get everything right initially.
We're going to have a lot of bumps on the road.
They plan in terms of telling their investors, is we need to raise enough so
we have time for experimentation.
That if our first customer base doesn't work out, we have time to do the success.
People tell their boards about that.
They also tell the employees as you need into the mission of the company,
you need to buy into the overall vision.
The specific implementation in terms of the customer,
in terms of even the product, may change overtime.
So I think the most important thing is to prepare people ahead of time.
And then, when you make the change, I think the hardest part isn't so
much changing directions strategically, it's really the people issues.
And particularly,
what do you do with people who may no longer fit with your business?
As if you've hired somebody who may be an expert in consumer packaged goods, and
now, our company is going to go focus on financial services.
You need to find a way of re-purposing those people, or to, basically,
if you need to let them go, is to do it in a way that doesn't send the signal
to the rest of the organization that may happen to them as well.
It's a very difficult issue to work through.
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The ones that people are familiar with now is Twitter's a very good example.
Netflix's a very good example, very different model than what they have.
You could even say Apple has been.
Actually a GSB professor here performed a very successful Andy Rachleff,
with Wealth Front, which started off as Ka-Ching.
You know which, and they've now basically morphed that business into something doing
personal wealth management.
Very different than the initial topic.
The industry that I'm in is the biotech industry.
And you don't think of the biotech industry as one of pivot.
Very long science, very long development time.
But, the most, eighty percent of the companies
that have been successful in our industry, major successes,
are successful in something very different than their original idea.
Which is probably you know one of the largest biotech companies out there,
originally did chicken growth hormone.
Genentech, which has been the pioneer in the industry,
started off doing industrial chemicals.
And they recognized early on they had fabulous technology bases, but
they were doing the wrong market application and pivoted.
It's much harder in a technology company than it is
necessarily an Internet software company.
Just as important.
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Really at the early stage, it's how do I learn what my best market is,
what my best application is, and really achieving product market fit.
So if you set your objective, in the first year or first year and half, as
I want to learn where my best application is, how to tailor my product to that.
All these things that you might call failure, are really just learnings and
actually are contributing to the intellectual success,
intellectual based and the eventual success of the company, and
that's not failure at all that's success.
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