How to Know If You Should Pivot Your Startup
(And How to Pull It Off)
In almost every batch of startups in an accelerator, inevitably one decides to pivot their business in a dramatic way.
For this batch, it was Showcase.
Showcase, led by CEO Amay Sheth, entered Techstars as a company seeking to reimagine the hiring process through asynchronous video interviews and video-based resumes. However, mid-way through the program, they decided to pivot their business away from hiring entirely. As someone who aspires to be a future entrepreneur, I wanted to know what signs Amay saw that told him he needed to pivot, and how exactly he went about doing it.
Why did Amay think he needed to pivot the business?
Showcase had customers who liked the product. The company was growing. But Amay still knew he had a problem.
Simply put, Showcase’s customer calls repeatedly ran into blockers. As Amay detailed for me, the company engaged a wide-variety of companies in their exploration calls — everything from a 20 person SMB, to a 200-employee mid-market, to a 750-employee enterprise — and they ran into similar sticking points no matter the size. Most often, these companies were already using competitor platforms (e.g.,Greenhouse or Lever) for basic applicant tracking, and they did not have tremendous desire to use another additional service. Worse yet, even at the enterprise level, where the ability-to-pay should theoretically be at its highest, they saw very small dollar amounts going towards improving the overall hiring process, which meant even a smaller subset of dollars were available for which Showcase could compete.
Amay admits that one of the mistakes he and his team made early on was having “happy ears” during customer discovery. “Happy ears” is a term often used at Techstars to describe the situation where an entrepreneur “hears what s/he wants to hear” in a conversation, even if that is not actually what’s being said (and, in fact, usually isn’t). Ultimately, the problem that Amay and team initially set out to solve was not sufficiently painful such that someone at an organization would be willing to upend all of their existing processes to get it fixed. This idea would manifest itself when Amay and team struggled to move leads through their sales funnel from “demo” to “pilot.” Prospects were willing to trial their product, but they were not willing to formally integrate it into their process.
Amay knew the company’s issues weren’t going away. As he told me, “we felt like we were on a slow march to the death, 300 style.” Smartly (and courageously), Amay decided the best move for the company would be to re-examine everything from first principles and essentially restart from scratch. The team figured, “Hey, we have all of this infrastructure around us, let’s maximize this opportunity and try to build something else.” So, after some painful phone calls to his existing customers notifying them that the business would no longer be providing a hiring platform, they decided to pivot.
How did Showcase pull off a very fast, pretty dramatic pivot?
The first thing they did was leverage their mentors to go back to the product-ideation drawing board (obviously, this was a key benefit of being in a program like Techstars already, and why it was so smart to make the tough decision while they still had the best possible access to all of Techstars’ resources). They talked through a wide-range of ideas and tried to optimize for ones that were the least intrusive to changing an existing process (given how this was one of their primary blockers last time).
They settled on tackling the problem of long-form video: namely, that watching really long videos (e.g., a 2-hour Zoom recording) is painful and unpleasant for the viewer, and, as a result, creates really high drop off rates for the video’s creator. With this idea in mind, Amay and team started drilling down on key questions. Which businesses pay for other types of similar software? How do these companies use video today? Who at the company manages this video content? How can we talk to them? This time, they’d enter the conversation without a product in-hand to avoid biasing the conversation and creating another “happy ears” situation. Additionally, Amay wanted to discern how high of a priority problems with long-form video content truly were.
The Showcase team explored multiple different verticals in parallel to identify where a product could theoretically see the most traction. Together with the other Techstars Associates, Amay and I canvased a wide-variety of user personas — from students to entrepreneurs to salespeople — to conduct these conversations, and we ultimately arrived at Customer Success personnel as the target demographic.
In short time, Amay and his team were able to identify a new target customer with unique pain points, build a new product from scratch to serve these needs, and begin selling. They quickly found themselves in a much more desirable market segment than their original company, one where there were more potential buyers with higher willingness to spend, and one where it didn’t require multiple stakeholders to adopt the product.
Results
As the program continued, Showcase 2.0 continued to catch their stride. They became one of the most talked about startups in our batch, and they caught the attention of numerous investors. I’m excited to see what the next few months look like for the company.
Shameless Plug
If you’re interested in transforming long boring videos into skimmable, chapterized (and, dare I say, watchable) content, check out Showcase at www.getshowcase.io
