Startup Pivots: How we Iterated on 4 Ideas in 12 weeks
Pivoting when you have growing traction, is hard! But settling down on building a company with a weak Product Market Fit is the hardest.
At the time we decided to pivot, we were a team of 21 people, close to 2 years old, $700K ARR revenue post customer churn ( at peak we were at $900K), growing at double-digit MoM, $1 Mn+ in the pipeline, but a very weak PMF. We were building a pure enterprise SaaS business, and retention was the key metric for us to prove that we have built a viable business model.
Post our seed raise, I formed a great habit of writing and documenting everything. When we saw customers has started churning and understood the reasons, I remember the breakthrough moment, when I started writing, What will happen if we continue to sell? What are things that we can fix and can’t fix to solve the problem of churn? Visualizing your company a year or two from now if we live with problems that are not fixable?
Some of the reasons why we failed to achieve a strong PMF:
- Product: The real product for our business was humans, no matter how much tech you want to incorporate into that, it is extremely difficult to build long-term product moats.
- Natural Churn: The service we were providing had an organic churn of 6 months since the user achieved their goals by then and even with great NPS we saw enterprises churning. To achieve scalability, B2C was a more strong GTM which was conflicting with the founders' DNA.
- Geo-Limitation: The market where we were operating was very small for our B2B service, and when we did customer discovery in the bigger market, their needs and expectations were very different in contrast to the current offerings & market maturity which meant building again from scratch.
In hindsight, when I reflect back & think about what we could have done better to have these realizations earlier:
- Thorough customer discovery process before we built (I jumped to execution fast)
- Hire strong and agile individual contributors instead of managers pre-PMF (my definition of PMF was blurred)
- The disconnect between what our users and enterprises wanted v/s how we wanted to build. ( Forcing our design choices on the idea that required a different execution strategy for our market)
Though this looks very data-driven and logical, you’re going to expose yourself to a lot of judgment if you pivot, especially with traction. You can look risk-averse, bored, and non-commital to the world, but not taking failures and hardships personally is the biggest gift you’ll give yourself as a founder.
Once you stick to an idea you may end up making it your life’s work and would spend close to 10 years & these early decisions will define what kind of company you are building.
During these times, I found a lot of inspiration in Doug Leone’s ( Global Managing Partner, Sequoia Capital) philosophy of, Flops are better than Slogs.
Fast forward to today, we are a lean and focused team of 7 that includes engineers and growth folks. In the last few months, we stuck & worked together and I am super grateful for this amazing team we have, who trusts each other and is extremely ambitious.
A bit about me & my cofounder:
Nilesh & I love to work together and we have a very rare skill combination of engineering and sales. Two personas that are famous for their love-hate relationship but we have turned it around! (a post for some other day ;) )
While running our last startup together, also gave us the opportunity to be real with ourselves and figure out what we are really good at and things we are not! We realized, more than anything what we really enjoy is solving really hard engineering problems, working with a team and users who inspire us, selling to enterprises, and the common goal of building an exceptional product and an enduring company!
Our strengths, weaknesses, and personal goals really helped us in manifesting what we want to build next.
The Process:
How we figured out Ideas:
We came up with a 2-week process to help us determine whether a particular problem is worth solving, with as much objectivity as possible. The thought was also to invalidate our ideas to avoid building any confirmation bias toward them.
We listed the parameters that were must-haves for us :
- Nature: Pure Enterprise product & has a need big enough to solve across the globe.
- Design Choice: Product-Led & Revenue First.
- User Persona: We should feel excited and inspired while working with users. It’s like building your team, people I can actually build long-term relationships with and I empathize with their problems. The ideal choice if we have been one of them.
A few unknowns that we wanted to figure out through the process was a strong product wedge, why now is the right time to build it, and whether can we solve it.
Putting together a team
We divided the responsibility as follows:
1. Aishwarya (Me): Customer Discovery & Market Landscape
2. Nilesh ( my cofounder): Product Discovery & finding engineering breakthroughs
We also got our finance lead to do the market sizing and took the help of our lead investor’s team to go deeper into the problem and ask us really hard questions.
While rest of our team was busy making our last startup technology open-source so that our supply of coaches can benefit from it.
Week 1:
Goals:
- Product: Understand how the problem is currently being solved & challenges with it. What would our product differentiation be?
- Growth: Building Assumptions that we want to validate & reach out to potential customers.
Product:
- After understanding the current product landscape, Nilesh would spend time building the technical architecture on how we are going to solve the specific problem along with the first cut of product features.
With zero engineering effort, the architecture & detailed product feature list will help us pitch our product to the potential customer & onboard early design partners.
Growth:
- Building Assumptions that we want to validate and in-validate for the idea. Would highly recommend reading the Mom Test, on the approach of how you come up with assumptions. The thumb role for assumption testing is,
1. Validate & Invalidate the unmet needs your product could potentially solve in the most concrete manner. Generally, the answer to your statements should be Yes OR No.
2. Pain point OR Not: To avoid fluff, ask potential customers, when was the last time something like that happened, how they solved it, were they successful in their attempt or failed.
3. Urgency: Understand whether are they planning to solve it in the near future OR if they can live with it.
- Once, you have created the questionnaire, I would parallelly start with the reach-out process to the potential customers. I earlier wrote a detailed blog on the framework to set 6–8 discovery calls a week per person with 0$ spent.
Week 2:
Goals:
- Product: Detailed product teardowns of existing solutions and our differentiator.
- Growth: Building a discovery grid to measure the depth of the problem statement through the discovery call process.
Product:
If the idea is from a matured category:
- Figuring out all the products in the market, trying them out, talking to their salespeople, and understanding the pros/cons of their platform through detailed product teardowns.
If it’s a new category:
Doing the same above thing for alternate products and hacky solutions that a user would be using to solve their problem.
Growth:
- Through the week 1 effort, I would have a good number of calls for Week 2. The goal is to set up high-quality 10 calls to build a POV on your idea. I follow a discovery grid framework to build a more mathematical approach for my assumption calls.
Once the discovery grid is completed, then I would create the summary of our Ideal customer persona, user, and buyer in the below format:
In these two weeks, we would also do a detailed market sizing either top-down OR bottom-up to make sure it's a large enough market.
Week 3:
Here comes the week to reflect and document our thesis on the idea. As founders, we will do two things.
- For each idea, we used to put it across on a Venn diagram to see if it meets our important criteria.
- We would also build a product thesis & customer discovery document for our internal team, mentors & investment team to get their unbiased perspective and let them ask difficult questions which would help us think more deeply.
Most of our ideas, where I would start getting the calls set up within 2–3 days were filtered within 2 weeks. Please don’t settle before 10 high-quality calls.
A few ideas that we iterated and worked on in 12 weeks:
- Observation Stack for Managers — AI-based coaching: This was a soft pivot from what we were earlier building. The vision was to build a pure SaaS offering for managers which can help them level up their behavioral skills in the flow of work. The reason we did not pursue post our discovery calls, was a lack of founder-market fit and high instrumentation cost.
- Converting Scripts to Internal Tools in Minutes: A platform that can help the engineering teams to stitch the internal scripts and cron jobs into a usable business operations tool with access controls, approval flows, and UI components that can eventually be used by someone with zero engineering knowledge. The reason we did not pursue this was we had an assumption that Zapier will launch it very soon and they actually did 2 months back & a lack of product wedge.
- Warehouse-led Customer Engagement Platform: We saw an opportunity to build a data warehouse-led, customer engagement platform that empowers marketers to engage with customers on real-time data affordably. For example, Braze, and Clevertap but on-prem. The frustrations faced by the users with legacy tools presented a compelling opportunity for us. But, we soon realized that the buyer ( Marketers) are not so much worried about bringing this change to their tech stack and were furious to make any changes even if Engineers ( Influencers) were sold on the thesis.
Apart from the above ones, we also evaluated a few more ideas like Usage-based billing for API companies (Chargebee Alternative), Warehouse-led customer data platforms ( Segment Alternative), and Code Analysis tools but did not pursue the customer discovery process since we did not feel a strong inclination towards those markets.
I am sure you must be curious to know by now what we are building now, We are currently in stealth & in phase 2 of our customer discovery process & low-fidelity product development. The idea we selected, fits all our parameters and we found a strong need in the market which we discovered through our discovery calls.
If you wish to connect with me, I am here — @Twitter.
Resources:
- Book Recommendation: The Mom Test
- Defining your ICP & Personas by Unusual Ventures Field Guide
- Building an Enduring company by Doug Leone, Sequoia Capital
- Founder-Led Sales by me here
Disclaimer: Please note the above framework was put together through our learnings from our previous experiences, mentors, and inspiration on the internet. Though we saw great success during our iteration process, feel free to take inspiration from this & mold it as you want. It can be helpful to founders going through a pivot, launching a new product for existing customers, or vice versa, validating ideas before launching a new startup, etc. Also, if you don’t believe in Fail Fast mindset, this framework may not make sense.
