Pivots are usually for consumer ventures. This is what I learned leading an enterprise software pivot November 22, 2013Posted by bernardlunn in Uncategorized.
The company had built a product for a market that evaporated after we had made a few big sales. I was given the job of finding another market. We had a great product that I could position as a framework, some superb developers and a management team committed to going the extra mile for clients (because company survival depended on them being happy).
All I needed were some problems to solve that were relevant to the technology we had.
A wise fellow suggested I go to the City of London as they have lots of money and lots of problems. That is still true today.
It worked. We found a market, closed a few deals to establish credibility in that market and rebuilt the company around that market.
I started with the usual “what keeps you up at night?” line of questioning. Through this I stumbled on a “blue ocean” market that was just emerging (blue ocean means that no other vendors were targetting the market, as the market did not yet exist, but a simple trend analysis indicated to me that a big market would emerge and it did).
I learned three things from this:
1. The technical killer feature was not what we all thought it would be. I came back from the first meeting a bit despondent, because the problem that the client had – which he had freely admitted was very difficult to solve as per all the tech advice he was getting – was not the problem that I had thought best suited to our platform. I was dejectdly chatting about this with one of the developers and he said “oh, that would be easy”. As the client had told me that he considered it tough to solve, once I had a solution the sale was relatively easy.
2. Once means nothing, twice is coincidence, three times is a trend. The first sale just showed what we could do technically. The market did not yet exist – it was only a gleam in the eye for a few people. So we simply delivered a custom project using our framework. The second sale was closer to the market that was emerging. Also on the second sale we turned it into something more like a product, by the usual productization techniques. The client was recognised as an innovator – “a name to conjure with”. Yet we still needed the third client, a more mainstream one, to prove to the market (which was starting to be perceived as a market) that we had a product. Also on the third deal/project we knew enough and were confident enough to really create a product. Then we launched and scaled from 3 clients to 30.
3. When you hit the mother lode, throway the pickaxe and find the money to get a backhoe. This was where we went wrong. We were a boostrapped company. We did OK, became #2 in a good market, got acquired. We scaled from 3 to 30 clients, even the next 10x to 300; but we stumbled at the next 10x. This is where today in America you get calls from Growth Equity Funds. This was in Europe and before Growth Equity was mainstream. We might have been first in the market, but another venture saw the big picture opportunity and seized it (they are now a multi-$billion public company).
Its harder today. There are lots of software ventures with sophisticated frameworks and great developers. The key is still the same – find a problem to solve in a blue ocean market, get three customers ready to rave about you, then scale to meet the opportunity.