How to pivot like a startup
"Our business model isn’t working."
These are words that no one in business likes to hear. Startups hear it a lot. These days, so do magazine and newspaper publishers. In the latter context, the sentence usually precedes a round (or several) of cutbacks, layoffs, retrenchment, and wheel-spinning.
With a startup, the declaration usually leads to something else: a pivot.
What’s a pivot? Eric Ries is credited with coining the term, in 2009. The pivot, he explained, encompasses the idea “that successful startups change directions but stay grounded in what they've learned. They keep one foot in the past and place one foot in a new possible future.”
Steve Blank further describes the concept:
“Pivoting” is when you change a fundamental part of the business model. It can be as simple as recognizing that your product was priced incorrectly. It can be more complex if you find the your target customer or users need to change or the feature set is wrong or you need to “repackage” a monolithic product into a family of products or you chose the wrong sales channel or your customer acquisition programs were ineffective.
Tagged.com CEO Greg Tseng noted in a post for TechCrunch earlier this year that many successful startups went through some form of pivot when their original ideas flopped:
“PayPal was beaming money between Palm Pilots. YouTube was a video dating site. Twitter was group SMS, which came out of a struggling Odeo. Pandora started as a B2B music recommendation service. Groupon started as The Point, serving collective political action. The list goes on.” (And includes Tagged, which after losing the social network battle to Facebook pivoted into a niche Tseng calls “social discovery” - basically, meeting new people instead of connecting with existing friends or family.)
Angel investor Mike Maples talked last fall about the distinction between a pivot and a simple product iteration. From TechCrunch:
This isn’t about product iteration– the pivot has to do with business model. Business model shouldn’t be confused with “business plan,” Maples says. A business plan is a static thing, a business model charts money flowing out to create a product and money flowing back in from that product. A startup’s entire reason to exist is to have more arrows going back in than arrows going out, and it’s always changing.
These are lessons from startups, but they pertain as well to publishers that are trying to evolve their business models beyond legacy print and Web properties. We’ve written before about the things publishers can learn from startups; you can add to the list the ability to pivot.
We’ve seen some pivots in the media space, usually involving pure-play digital companies trying to carve out a niche. Fabulis.com, for example, launched last year as a gay social network site. In December it changed its name to Fab.com. And last month it announced its pivot strategy: offering daily deals for design enthusiasts. Will it be successful? Who knows? The point is to keep trying until you find a model that works and is sustainable.
There’s no reason print publishers can’t take this approach with their digital strategy. It’s really more mindset than strategy, characterized by a willingness to take chances, try new things, learn from mistakes, “fail fast,” and re-calibrate. The industry is moving too quickly for publishers to overanalyze new opportunities to the point where they’re afraid to act – the paralysis by analysis syndrome.
Unfortunately, there’s not enough of this type of fresh thinking in the publishing world. Some don’t try at all. Others commit to trying a new business model, then get cold feet when they don’t see immediate returns. (Exhibit A: Allbritton and TBD.com.)
Some media companies, instead of embracing new opportunities, spend their energy kicking and screaming about the barriers. Consider the tablet market. paidContent’s David Kaplan wrote this week about how publishers are struggling with app development. He quoted an unnamed executive at a major publisher, who whined: “We shouldn’t be doing magazine apps. It’s a different format entirely from a print publication.”
Well, duh. Of course it’s a different format – which is why you should stop viewing it through a print lens. The unnamed executive – I can understand why he wouldn’t want his name attached to these comments – went on to say, “Consider the fact that iTunes doesn’t even have a dedicated ‘magazine section,’ so we’re effectively competing with Angry Birds and Flipboard at the same time.”
Right again! And guess what: Your print magazine is competing against those apps too – competing for attention. And Angry Birds and Flipboard are winning.
The executive also said that the publication would be better off allocating those app resources “to come up with special extensions of the brand.” News flash: Those apps are extensions of your brand. Or they would be if you stopped thinking about them as print replicas. Instead, the app world should be your greenfield, your sandbox for experimentation, a great new way for you to extend your content in new and innovative ways. In other words, you need to think like an entrepreneur.
Media professionals who can’t start thinking this way should pivot, all right – right toward the exit.