How to pivot your business during lockdown

Recently I’ve been revisiting the launch and pivot process in my research, in an effort to help founders and innovators change strategic direction in their business. Here is an old piece I wrote that should give you concrete metrics to track your progress. These were specifically chosen to be relevant, independently of what budget is available (and thus hopefully make it more relevant nowadays.

VCs and startup investors often say they’re looking for hustle in early stage founders. But that feels vague. And honestly, on its own, it’s not particularly useful feedback. More of a sophisticated way to end a pitching session they don’t want to be hearing.

Until now.

There are a few leading indicators you can use to keep yourself accountable, and to make sure you actually are hustling (and you’re not falling for your own PR).

The following four operating metrics say a lot about an early stage startup’s chance for success.

Your riskiest assumptions are probably related to your prospects and customers. Establish empathy quickly with your target prospect, figure out what's valuable, and get your innovation into the market.

1. Number of pitches

A critical leading indicator metric of early stage success is how many pitches are you making each day (even if you aren’t trying to sell)? By “pitch”, I mean any attempt at asking someone for something, even if it’s just information. For example, this could mean approaching prospects for customer discovery or customer development interviews.

If you are making them, then you are learning more about your audience and iterating towards something that is likelier to work. Also, you are converting some people, which means that you can then continue to build on that as time goes on. This includes:

  • both outbound pitches, whether for sales or for customer interviews,
  • inbound marketing, such as free content you create which you need to put in front of your target audience.
  • advertising (impressions)

With inbound, unless if you already have an audience, usually requires some form of gatekeeper pitching or payment. You to pitch media owners, journalists, editors to get coverage. Or you create content and just pay for advertising.
And then pay attention to any response you get.

At some point after you’ve done this for a while, you’ll know what people want and how to reach them and roughly how to sell them. At that point do it yourself a little bit and then it makes sense to delegate it to a professional salesperson to improve your closing ratios (if you need one).

That’s actually a pretty good metric, because it’s a leading indicator for all learning. And learning is the #1 goal of startup, in order to stop being a startup, and to discover a business model which works.

Notice how I’m not really including the “number of failures” or “failing fast”. That’s repeated so often in tech circles it’s become hollow and meaningless. I think being able to deal with rejection is possibly more important than being able to deal with “failure”, certainly in the tech startup world. Because even in technology the most important decisions that affect your startup or are made by people (customers, prospective co-founders, prospective employees).

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To be fair, not every founder is a natural salesperson. But every serious founding team needs to be willing and able to face lots of rejection in order to go after their vision. In fact, the number of rejections a founder is willing to take is a good measure of how strongly they believe in their vision, product, or goal. If you have a goal you believe in, but you’re only willing to be rejected 10 times before you give up on it, you can easily end up being a genius in your own mind but giving up almost immediately once you start doing anything related to marketing.

2. Number of experiments

Another related metric is how many experiments are you running each week? If this is not at least 1, you are not going to get very far. Or other startups who are will run circles around you. Or you are trying to cram too much into one test, not really telling you anything useful.

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This is more of a product or operational metric. Basically, the more thorough and organized you are with this, the faster you will learn what you need to know. It never ceases to amaze me, how documenting my own hypothesis and metric before running an experiment is very useful, when interpreting the result. Because it’s so easy to twist the results into what you want them to mean.

Most of the major technical breakthroughs result from lots and lots of experiments. They explore an area or technology with a lot of unknowns, including “unknown unknowns”. That’s why they’re surprising for everyone outside the founding team. Here’s a breakdown of roughly the number of experiment trials required to create a certain type of invention, based on patent filings.

How to grow your new venture 10% week after week after week

One of the really “hard things” about the startup game is getting on a growth trajectory that grows exponentially. VCs debate how fast you should be growing on a weekly basis. But one thing about growth is clear. Instead of having the occasional bump in sales or growth, high growth startups are systematic in how they pursue their results. In particular, the heavy focus in this deep dive is on channel testing.

Every Monday we would look at our numbers from the previous week. We would compare them to our targets from the previous week. Our goal was 10% growth per week. Especially in the start, we had a heavy focus on testing. As fast as possible. Find what’s working, and what’s not working.

Let’s say we wanted to have 10 Captains registered that week, and we hit seven. We then discussed why this happened, and tried to analyze why. Was it something that we can influence? or something that we can’t? So, sometimes it would be like, “Oh, I was sad. I was sick. Or I wasn’t focused.”

If it was a problem in our control, and a channel was getting lower and lower results week on week for 4 weeks. We then decided we should try something else, since there was a clear pattern over time.

These numbers and discussions forced us to think about immediate results. You want to act upon things that give immediate results first. You don’t have time to think about, “Oh, what would happen if we did this or that?” Should we go do a road show? a conference or not?

A failed channel experiment

After going to conferences, we realized it’s a waste of time. For us. At that time. We didn’t get anything. If you’re building the right thing, you don’t need the conference to continue building things.

I’m still maybe a bit harsh on conferences. People who attend conferences usually want to chill in a half-work environment. Some people go to build up their ego.

This photo was taken during an education event in Brazil called Bett Educar.
Photographer: Marília Castelli | Source: Unsplash

The upside of conferences, though, is if there are potential clients or users attending. If somebody can benefit from what you’re doing is there–and it’s not just two people– then it might be worth it. Like ship captains, in our case. Or people that are interested in fishing. Then you can try to invest your time in it.

But even then, be careful. Let’s say you convert 10 Captains at a conference. That’s the same amount that we get from sending cold emails to Captains and calling them on the phone in one week. During that one week, you can sit in the office and work on this for 20% of your time. Then you are free to do other stuff with the rest of your time. During a conference, you’re running around. You are trying to meet people. And you need to prepare beforehand to know who’s attending. If you have time, you introduce yourself earlier. Basically, you need to measure and compare the benefits of using each channel.

Conferences do have a place. They help us to connect. They help us meet new and interesting people. So, I definitely recommend people attend conferences, as long as they have this perspective.

The 10x Game

Something I call the 10x game came from this idea of focusing on immediate results only. Often when you start, you start thinking about a lot of things. A lot of concerns. It’s easy to get distracted.

You even start thinking of problems that are not immediate problems. Or immediate tasks that you need to complete now. For example, you are trying to think of how to optimize the process for 1000 users, but you only have five. It’s just not the best use of your time at this moment.

Sure, you need to think about that in the future. But at the moment, park that idea. Put it aside. Because it sucks time from what matters now.

Here’s how the 10x Game works

1. Pull out a box of multicolored post its with your team

2. Calculate what order of magitude you want to start with. This sounds complicated but actually it’s really simple. Take the number of clients you currently have. And then figure out the next power of 10 from that number:

Let’s say you have 33 customers. Then 100 would be your next power of 10. If you have 0, just use 10 as a baseline.

3. Assuming that is your next milestone, what marketing channels do you think will help get you to that number? So if you don’t have any customers yet, how do you want to get your first 10 customers. Take your stack of post-its, choose a color and brainstorm at least 10 different ways you can reach your target customers.

4. Then, repeat for the next power of 10 using a different color, and repeat again.

5. Finally, loop back to your first set of ideas. Priortize them. You can do this using dot-voting or any other mechanism that works for you & your team.

This results in a lot of ideas, clearly prioritized in terms of what you need to do first. It give you the space to think big, but also helps you drill down into what needs to happen right now.

Same channel today, different results

When you have 10 Captains and you want to grow 10 more Captains next week, then maybe a conference is not the best way to go. Or a hundred Captains in the next two months. The conference was more useful for branding purposes. Just not relevant to the golden numbers at the time.

Now, FishingBooker goes to a lot of conferences as a brand. You want to position and build a strong brand. You want to be in people’s minds. Once you have a budget for that, it becomes an opportunity. I saw the team a couple of months ago. They were speaking at a Google conference about their experiences.