New Delhi -°C
Today in New Delhi, India

Oct 22, 2019-Tuesday
-°C

Humidity
-

Wind
-

Select city

Metro cities - Delhi, Mumbai, Chennai, Kolkata

Other cities - Noida, Gurgaon, Bengaluru, Hyderabad, Bhopal , Chandigarh , Dehradun, Indore, Jaipur, Lucknow, Patna, Ranchi

Tuesday, Oct 22, 2019

Startup Saturday: A billion $$$ turns on a dime: Need to understand ‘p’ word

The startup universe is littered with words, acronyms and linguistic re-reboots. Today, we take a pivot to take a deep dive into, well, the word “pivot”; and why it can make or break a startup

pune Updated: Oct 12, 2019 15:22 IST
Namita Shibad
Namita Shibad
Hindustan Times, Pune
The startup universe thrives on informality - in dress code (CEO in a hoodie) and lingo. We liberally dip into the vocabulary of entrepreneurship born out of technology in this space. (Image for representational purpose)
The startup universe thrives on informality - in dress code (CEO in a hoodie) and lingo. We liberally dip into the vocabulary of entrepreneurship born out of technology in this space. (Image for representational purpose)(HT/PHOTO)
         

The startup universe is littered with words (’gram), acronyms (DAU) and linguistic re-reboots (unicorn) that convey a very specific meaning. Rather than take a sentence, or a paragraph to draw out the picture, one word or acronym says it all. Also, the startup universe thrives on informality - in dress code (CEO in a hoodie) and lingo.

We liberally dip into the vocabulary of entrepreneurship born out of technology in this space. Today, we take a pivot to take a deep dive into, well, the word “pivot”; and why it can make or break a startup.

Oxford dictionary

Pivot (noun)

the central point, pin, or shaft on which a mechanism turns or oscillates.

Pivot (verb)

turn on or as if on a pivot.

Startup lingo

Pivot (verb) A shift in business strategy or a new approach regarding a product, based on direct or indirect market feedback; and/or regulatory financial and environment aspects.

The universe (of startups, i.e.) is evolving, always

Piyush Surana of Tomorrow Capital is venture capitalist who, if anyone, has more money in the game in terms of advising, encouraging and tracking pivots. Tomorrow Capital is a $100 million fund based out of Mumbai focused on consumer businesses. As a Series A/pre-series fund, the first check is typically $1-3 million, for businesses that are already revenue positive. Surana used to be in leadership roles at Uber,Ola and Zomato. This is the “investor” view.

Piyush Surana, founder, Tomorrow Capital. Tomorrow Capital is a $100 million fund based out of Mumbai focused on consumer businesses.
Piyush Surana, founder, Tomorrow Capital. Tomorrow Capital is a $100 million fund based out of Mumbai focused on consumer businesses. ( HT/PHOTO )

As early-stage businesses go to market and meet their first potential customer they may uncover more about the product, consumer, business or even the environment and regulatory aspects that may cause them to shift their business strategy or test a new approach regarding their product or business model. Such a shift in the business is called a pivot in startup.

Pivot to survive

If the business model, product or service you started is not accepted by the market, a startup has little option but to pivot in order to survive. This may mean that often the product you finally take to market is very different from what you started with. Sometimes a change in the market itself may cause such a pivot – for example, change in regulations by RBI has caused many fintech businesses to evolve in the last 18-24 months. Similarly, as data becomes cheaper a lot of businesses that were earlier not possible are not expanding rapidly (such as online content). One of the things we ask our investors to do is talk a lot to your customers and understand their needs – that will always help you make the right product and business decisions.

... or not?

Pivots can be a very small change (such as changing the way you do KYC), to an entire change in business model (such as selling movies online instead of through physical stores). The problem is timing it right. All businesses take a certain amount of time, effort and persistence to build – making a pivot at the wrong time may seem easier than fighting it out in the market, but it may be the wrong thing to do. For example, it is very easy to mistake a “selling problem” or a “business problem” with a “product problem” in the early stages, and then pivot to change your product, rather than make your sales channel more efficient.

VeeCee view

All startups pivot in some form or other in the initial stages – it’s hard to crack a product-market fit without iterations. As an investor you need to guide this choice for the right reasons.

Unicorn pivots

Slack

In 2011, Tiny Speck launched a game called Glitch and after an unsuccessful run, the company decided that the product was not viable in 2012.

However, the internal communications platform Tiny Speck had created to communicate between US and Canadian offices turned out to be the real opportunity.

The messaging app Slack officially launched in 2014 and became a unicorn ($1B+ valuation) the same year.

Four years later, Slack has 8 million daily active users and is valued at more than $7B.

Slack’s IPO, however, has spectacularly under-performed in a year when the clear investor pivot is away from valuation towards that good, old Indian business value - net profit.

Instagram

Began as Burbn, a check-in app that included gaming elements from Mafia Wars, and a photo element as well.

Realising that such a cluttered app would lead to decreasing popularity, creators stripped the app of all its functionality except photos, and now...

YouTube

Started as an online dating service where users were supposed to upload short videos describing their ideal partner.

YouTube original tagline: “Tune in, hook up”

Then, the pivot, after realising the potential in the idea of video content online

India’s pivot artist(e)s

Ola

Started as a phone-in car rental service with 4/6/8-hour bookings

Latched on to the tech wave at the right time to launch the first ride-sharing platform in India.

Zomato

Started as restaurant search and discovery platform

Pivoted to focus on food delivery business after ceding a lot of ground to Swiggy.

The pivot checklist

Listen to your customers and understand what they need – especially, what they are not saying

Once you have decided, move fast – do not allow confusion to seep into the organisation. Cue the poker vocab, go all in – you cannot hedge your bets

Make sure the pivot is related to what you have been building. A pivot should not try to grow oranges when you have sown corn

Make the decision for the right reason – analytics, data, insights are key

Pune pivot manta

Ankit Tanna, founder, Truein

Started as car pooling service but pivoted to provide a “wow experience” at reception desks

“Our company uses technology to improve the security check in and reception desk entries at large companies. When we started in October 2015 we were a car pooling service. We did get very good early traction there as we tied up with large organisations, but sustainability was a problem. To run it successfully over the long term we needed to offer the drivers of such private vehicles some rewards. Laws did not allow it. We pivoted. I would visit these same companies for my car pooling work and noticed that the security check was a tedious process. Our car-pooling tech had built some algorithms that could score people and build credibility for drivers. We could use the same algos for the security desk. We developed an AI algo to onboard people securely and even give them a scoring. As an example let’s say there is a person who always visits an office in the late hours, or on weekends. If at his first visit the person he wanted to meet rejected him then he will be flagged. His next visit will show up as a red flag.

Also we have a face reading technology along with our AI algos that can match a person’s face with his identity card. This has helped reduce the check-in time from six minutes earlier to 40 seconds now. Once a visitor passes through the security the LED screen at the reception will light up welcoming him with his name.

This pivoting in January 2017 from car-pooling to security and reception desk check-in has helped us hugely.

Ankit Tanna, founder, Truein
Ankit Tanna, founder, Truein ( Milind Saurkar/HT Photo )

Pivot impact

We now have 76 who are our customers

70% of our 76 customers who did not have a visitor system have upgraded to our technology

In February this year we raised an angel round of funding of US$ 120,000.

Renu Deshpande, co-founder, Meetroz (Share a Meal)

The app started as Share a Meal, that helped travelling professionals meet up and share a meal. Meetroz is a platform that connects professionals, in the flesh.

“A year ago I started as an app that helped traveling professionals share a meal. I felt that it would be a good idea to be able to share a meal in a new city with a person you get to know via an app. That way you won’t have to eat alone and also can save money spent on food that largely gets wasted when you eat alone.

“I was wrong. I realised that people were open to sharing a taxi ride, but not food. I saw at various conferences and events that people go to stalls and collect cards, but interaction was limited. I thought, why not use or app to provide more meaningful interactions between professionals.

If you are attending an auto exhibition and are interested in meeting people from say large auto companies or are looking to be mentored by the business head of such a company, how will you do it? This is possible now using our same Share A Meal app, albeit with a few changes. What it can do is get you to register via our app for an event. There you can see all the people attending and send requests to the people you want to meet.

Renu Deshpande, co-founder, Meetroz (Share a Meal)
Renu Deshpande, co-founder, Meetroz (Share a Meal) ( Milind Saurkar/HT Photo )

Pivot impact

We are in talks with various event organising companies to get them to onboard us. Once that happens this will greatly help us. We will become the Linkedin of the offline world

Renu is bootstrapped with an investment of Rs 20 lakh.

Azam Shaikh, founder, Tight The Nut (TTN)

Platform that provides vehicle servicing to customers without the hassle has now pivoted from a B-C model to B-B.

“There are several pain points in the vehicle servicing industry – customers could never be sure that the garage owners used genuine spare parts that they did all the work that they claimed to do and so on. So in July 2016 I launched TTN where I on-boarded 35 garages in the city and had 17 executives. A customer could go to our website and sign up for a service. My executives would go pick up the bike and take it to the garage in that area. He would stand by check every aspect, ensure that material was correct and then drive the bike back to the customer’s home or office.

This model could not allow me to grow because I needed 1.5 persons per garage and each executive could at most give me revenue of Rs 6,000 per day. I was being constrained by manpower. I pivoted. I realised that garage owners too faced problems. They were issues like managing their inventory, getting work during lean periods, lack of transparency and so on.

Why not I use my technology to provide ease of servicing to the garage owners? Using technology I could help them with their inventory management, send push messages to customers during lean periods, send reports of work done. This shift has helped my business tremendously.

The end customers? Well with our technology they can be more sure that their garage is doing the right job because s/he signs a report when submitting a car or bike to the customer. This means s/he has to stand by his word.”

Hindustantimes

Pivot impact

In the earlier model I made Rs 25 lakh turnover in one year, but the gross profit average was 30 %.

Now with my B-B model I have 1,700 garages and charge Rs 4,250 p.a. Our gross profit average is 75%.

I don’t need staff for delivery of he vehicles so I can grow easily, no constraints.

First Published: Oct 12, 2019 15:21 IST

top news