Pivoting
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Real life examples of how business did course corrections, tweaked business models
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What are the best personal career pivots that you've ever heard?

What are the best personal career pivots that you've ever heard? | Pivoting | Scoop.it
Answer (1 of 9): Kurt Warner - grocery store bagger to Super Bowl winning QB Harrison Ford - carpenter to Han Solo/Indiana Jones Jesus - carpenter to messiah...
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The Curse of Too Much (Venture) Money

The Curse of Too Much (Venture) Money | Pivoting | Scoop.it
It was supposed to be a Facebook killer. Mobile, social, and photos? Those are the kind of trends that drive cool billion-dollar valuations. In other words, the kind of trends that get venture capitalists to hand over blank checks. Okay, not exactly blank. But close enough. For the startup Color, it was $41 million, a record-setting pre-launch figure -- and from blue blood firms Sequoia and Bain Capital, no less. It was a perfect storm of hype.

And then they actually released their app.

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Vision versus hallucination — founders and pivots « The Berkeley Blog

Vision versus hallucination — founders and pivots « The Berkeley Blog | Pivoting | Scoop.it

Find a brainstorm buddy


Finally, I suggested that he find someone he respects on his advisory board, who he was comfortable brainstorming with and would tell him when he has a bad idea.

Yuri sat quietly for awhile. I wasn’t sure he had heard a thing I said, until he said “Wait 72 hours? I can do that. Now can I call you when I have a hot new idea?

Lessons learned

Founders are great at seeing things others don’t – at times it’s a vision, most often it’s a hallucination
Founders want immediate action – often they call it a pivot
A Pivot should not be an excuse for a lack of a coherent strategy or a lack of impulse control
Disconnect your insights from you mouth for 72-hours
If you can unilaterally overrule your co-founders there are no brakes on you
Your board members are not your brainstorm buddies-find others you trust

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What's the best pivot in business you've ever heard?

What's the best pivot in business you've ever heard? | Pivoting | Scoop.it


In alphabetical order, here are some of the pivots mentioned in the answers:
Berkshire Hathaway: Textiles → Private equity
BMW: Aircraft engines → Vehicles
Chegg: College classifieds → Textbook Rentals
EMC: Furniture → Enterprise Data Storage
Flickr: MMORPG → Web photo sharing
Google: Enterprise search → Web search (actually Enterprise search → Advertising)
IBM: Punched card equipment → Computers → IT Consulting
Mannesmann: Steel pipes → Cellular network carrier
Nintendo: Playing cards → Video games
Nokia: Rubber boots → Cell phones
Paypal: PDA payments → Email/web payments
Philips: Light bulbs → Various electronics
Pixar: Animation tools → Animated movies
Sony: Rice cookers → Various electronics
Suzuki: Looms → Vehicles
WPP Group: Wire shopping baskets → Communications services
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Too Many Pivots, Too Little Passion

Too Many Pivots, Too Little Passion | Pivoting | Scoop.it

Although there’s a persuasive consensus among these four books—they use the same buzzwords and refer to the same companies (primarily Dropbox, the cloud-based storage firm) as role models—the advice can be tough to swallow.

 

Much of the strategy they offer doesn’t transfer very well outside the world of tech start-ups: Daily testing and tweaking may work for a website or an app, which can be modified by coding changes, but not for traditional manufactured goods.

 

None of the Y Combinator or Lean Startup companies seem destined to change the world (or, significantly, employ many people); instead of being “built to last,” these firms seem “built to be acquired by Google.”

 

And rightly or wrongly, civilians also tend to view successful company builders as people who conceive and obsess over a brilliant insight and slog forward in the face of skepticism by staying committed to a deeply held conviction that the world needs their product or service. In contrast, the people in these books seem most interested in simply starting a company—any company—and their willingness to hopscotch between wildly different ideas can seem flighty or promiscuous. No less than Mark Zuckerberg expressed this view at a Y Combinator event, chiding the crowd: “You’ve decided you want to start a company, but you don’t know what you’re passionate about yet.”

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Start.Stop.Start

Start.Stop.Start | Pivoting | Scoop.it

Spot the error
Making some big mistakes was part of the learning process for entrepreneur Mrigank Tripathi who founded VoiceTap Technologies, a firm focused on mobile-education. It was conceptualised as a career counselling portal for students who could call in and speak to the experts. The revenue, it was assumed, would come from the calls made by students. As it turned out, the revenue share was skewed in favour of the telecom operator. The figure was huge — 70 per cent or more depending on the operator. Says Tripathi, “When you have to work with telecom partners in a model where the revenue share is skewed in favour of the operator you know you need volumes to tide over. If that does not happen, it means limited money to sustain business and even limited funds for future innovation,” he explains.

 

The problem was simple: call revenues was never going to be enough. Tripathi needed more money and figured there were two ways of raising it. By bringing in a new co-founder, who would, in turn, bring in both new cash and new ideas, and by tweaking the business model so as to introduce new sources of revenue. The first problem was solved by roping in Vivek Khandelwal, who is in-charge of new product development, product life-cycle management and managing alliances and relationships with partners. For the second, the company reckoned it had to increase the user base. VoiceTap did that by adding features like conference call facility and developing mobile apps complete with interactive videos, in-call note sharing etc right on the mobile devices. So, the scope of the offering increased—from offering consultation over phone it progressed to being an aggregator of educational content.

 

In the new model, the source of revenues wasn’t limited to students who called in; the firm was now earning a bigger share from the apps it developed and marketed.

Tripathi’s woes didn’t end by tweaking the business model though. A big mistake he made early on was to hire professionals keeping in mind ‘budgets’ and not capabilities. “Two of my issues—the source of investments and the source of revenue—were structural and had to be fixed first. It’s just like a new car—you can’t change the design once it’s in production. But the third issue I managed by going after the best guys and relentlessly recruiting,” responds Tripathi.

Today the company works with partners such as Airtel and Tata Docomo and harbors plans to break into international markets such as Africa.

 

 

Identify the customer
Brant Cooper and Patrick Vlaskovits, authors of The Lean Entrepreneur, write in their book, ‘Entrepreneurs carry market segments around in the back of their minds, relying on gut-feel to determine whether customers they are seeing are the “right” customers. The problem is when you’re chasing revenue any and all customers will seem like the right customer.’ In other words, you can’t be all things to all people, a lesson Kunal Sinha, founder, HealthcareMagic, a firm designed to help consumers make informed decisions about their healthcare needs, learnt the hard way. “Things did not work out as planned the first few months and we had to change the revenue model within the first few months of operation,” he says.

 

Initially, the founders saw their business as a lead generation tool for hospitals. In other words, the customer was the hospital and not the user traffic on its portal. “Soon, we realised this was not a revenue generating business model,” says Sinha.

 

Sinha and his team decided to change the business plan along way and started by charging for the answers being given to the health-queries asked to experts (doctors, specialists, psychologists etc) onboard. Sinha admits, “The concept was new in the country. Our biggest challenge was to get quality doctors on board to respond to queries. Initially we used our personal contacts reaching out to 10-15 doctors assuring them that they will get recognition and get paid if they come on board. It was a chicken-and-egg situation. We did not know if we should promote ourselves to visitors or have 100 doctors on the portal first.”

Things began to turn for the better once the initial batch of 10-15 doctors started responding on the site and visitors got their answers. Today, HealthcareMagic gets an average 60,000 visitors on its portal every day, gets about 400-500 health queries a day, patients are promised replies within 24 hours, and charges vary between Rs 150 and Rs 600 per case. The revenue model is based on revenue sharing, which means taking a percentage from doctor’s fee.

His advice? “Focus on profitability first and then increase the revenue. There is a tendency to spend money on online ads and see growth in the topline. We saw that as a big waste. We realise what we bring to the market is unique. It has not been tried before so we have to be conservative and grow organically,” says Sinha.

 

Threat to opportunity
Take iStream that was founded in 2007 as a video content aggregation service on the lines of Youtube and saw digital platforms like MSN India and DailyMotion as its ideal partners. “The company,” says founder & CEO Radhakrishnan Rama-chandran, “was born out of a desire to build a ‘cool’ consumer media brand.” The revenue, they reckoned, will flow from the advertising, as in the case of Youtube.

But while Youtube relies on user-generated content, Ramachandran and his team tried producing original content. They soon realised that the model wouldn’t work since the production costs were prohibitive. Reaching out to content generators and convincing them to share content for the digital medium turned out to be a humungous task.

The solution: “We built a digital studio that took the responsibility of digitising the entire partner content including their archives. This meant that content partners did not have to spend any money or bandwidth on digitising their content. Their risks were reduced,” says Ramachandran.

This, however, meant reworking the numbers all over again: the investment into the venture shot up — which was cobbled together by the original founders —but the team decided to go ahead because it was a way to secure the delivery pipeline. The founders invested Rs 30 lakh in the digital studio and added five employees. The whole initiative, born out of necessity, improved its revenue potential. Since the final content was generated by iStream, it had the liberty to place ads anywhere — as opposed to if and where the content owner wanted. iStream thus got to pocket the ad revenue instead of sharing it with the content partner.

Today, the company has close to 80 content partners and claims to have better understanding of what sort of content does well in the online space.

Why did the businessman in him feel the need to change the business model? “The Indian market presented some very interesting challenges—such as a whole range of languages and a wide range in the quality of internet connections. Unlike our bigger US-cousins, we are serving an audience that speaks many languages. Does that make our job more challenging? Yes, very much. Does that make it more exciting? An even bigger yes.”

The change in business plan worked for iStream.com, which managed to raise $5 million from the global private equity fund SAIF Partners, its first investment in the online video space.

Ramachandran, who has a bachelor’s degree in engineering from Mysore University, and a masters in communication and journalism from the University of Kerala, adds, “One of the most encouraging metrics for us has been our user engagement pattern. An average user watches over 17 minutes of content every month, which is comparable with the likes of Hulu in the US.”

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