Pivot to Take Off
Javed Karim, Steve Chen, and Chad Hurley started YouTube as a video dating site. It then pivoted to a site where people could upload their videos. That’s when the site took off. In about 20 months, it was sold to Google for $1.65 billion.
Sam Walton started as a small-town retailer in Arkansas. He started with a Ben Franklin store in Newport, AR and built a small chain. When the big-box store started in urban areas with leaders like Kmart and Target, Walton pivoted and started his big-box store in a small town. He went on to build a chain of big boxes in small towns and dominated rural America, before expanding to urban America to become the leading retailer in the world.
Bill Gates and Paul Allen started Microsoft writing software for computers. Gates dropped out of Harvard and started his company with Allen in New Mexico. Subsequently he moved to Seattle and pivoted when he bought the operating system that built his empire, licensed it to IBM in a landmark non-exclusive arrangement, and dominated PCs.
Gates did a subsequent pivot when the Internet arrived, and Netscape threatened his dominance. He embraced the Internet, launched Internet Explorer, and maintained Microsoft’s leadership.
Steve Jobs started Apple as a PC company with its own operating system. He built it into a leading company in the PC industry but was subsequently fired. When he returned to a flailing Apple that was about to fail, he stabilized it first. Then he pivoted the company to the iPod, a legal music download platform to beat Napster, developed the iPod, and started Apple on the road to becoming one of the world’s greatest companies.
Uber was started by Travis Kalanick as a way for people to rent limos. When many non-limo car owners offered their driving services, Kalanick wisely pivoted to allow anyone to drive anyone and made history.
The key lesson for all entrepreneurs, business owners and corporate managers – you may need to pivot your business if you want to grow on a new emerging trend.
Importantly, your first strategy may not be the right one, especially in an emerging industry. Flexibility is key until:
#1. You have found the right high-potential emerging trend for you. Unicorn-entrepreneurs did not start trends – they jumped on them as the trend was emerging and dominated it.
#2. You have found the right strategy on the emerging trend for you. The right strategy includes:
o The right initial product, like Jeff Bezos who picked books.
o The right target segment, like Sam Walton who picked rural America and Mark Zuckerberg who picked university students.
o The right direct competitors, like Steve Jobs who picked Napster that was allowing illegal downloads.
o The right sales strategy, like Michael Dell who grew with direct mail.
o The right test to make sure you can succeed and dominate your market – and do it with less.
#3. You have the right skills to execute your strategy on the emerging trend, which include:
o Startup skills to start the venture on an emerging trend.
o Launch skills takeoff without VC on the hazy emerging trend.
o Growth skills to beat your direct competitors and dominate the industry.
If you are starting your venture, be aware that your first plan may be a placeholder, and that you may have to pivot to succeed. If your existing business has become stagnant and stale, you may need to find an emerging trend to add new growth – and pivot.
Special Note for Corporate Venture Developers: Your product is unlikely to be the catalyst for a unicorn. Very few are, and they are mainly in the biotech or medical device areas. Most unicorns are developed based on the right strategy for an emerging trend. This might involve testing alternatives in the real world — not in a lab or in a “brainstorming” or “innovating” session.
MY TAKE: There are 3 key lessons:
#1. Stay flexible until you find your fulcrum to dominate your emerging trend.
#2. Find the fulcrum by testing various combinations of trend, product, market, and strategic group.
#3. Get the skills to test with limited capital.