When and How to Pivot Presented at Startup Lessons Learned             23 May 2011             David Binetti              ...
Preface• Share!• No Original Thoughts...• We’re Hiring! slideshare.com/votizen                                         @db...
A Bit About Me• Business Model Designer at Votizen• Mentor at Hacker Dojo• Six Startups both Agile and Fixed              ...
A Bit About You• Startups?• Something else?• Unsure?                        @dbinetti
High Finance               @dbinetti
High Finance33%         33%      33%                           @dbinetti
High Finance      10%                  30%30%            30%                                 @dbinetti
High Finance       13%         20%20%                     20%  7%             20%                                    @dbin...
High Finance              12%  20%                    12%20%                 12%                5%        19%             ...
High Finance                          Sells for: $50M              12%  20%                    12%   Your stake: ~$6M20%  ...
High Finance      Startup    GoogleY1      0         175Y2      40        175Y3     120        200Y4     120        200Y5 ...
High Finance      Startup    GoogleY1      0         175Y2      40        175Y3     120        200Y4     120        200Y5 ...
High Finance            Startup    Google  Y1          0         175  Y2          40        175  Y3         120        200...
High Finance            Startup      Google  Y1           0          175  Y2           40         175  Y3          120    ...
High Finance• You must be high if you think this makes  financial sense.• But money isn’t everything.• What makes the entre...
@dbinetti
@dbinetti
@dbinetti
@dbinetti
Why Lean?• Mitigates your reality distortion field.• Helps avoid (expensive) false positives.• Converts market risk to tech...
Lean Framework Formulate       Iterate, Release &   Model              Measure             Pivot                          ...
Lean Framework Formulate       Iterate, Release &   Model              Measure             Pivot                          ...
Lean Framework Formulate    Iterate, Release &   Model           Measure             Pivot                                ...
Lean Framework Formulate      Iterate, Release &   Model             Measure             Pivot                            ...
On Pivots            @dbinetti
On Pivots            @dbinetti
On Pivots• Pivots are restatements of your business  model; not synonymous with change.• Pivots are a consequence of learn...
Our Vision• Social media is disrupting Politics.• Voters can now join with each other and  connect to their officials direc...
The Framework Formulate       Iterate, Release &   Model              Measure             Pivot                           ...
1.0         1.1          2.0          3.0     4.0  Model                          Hypothesis Product      Facebook for pol...
1.0         1.1          2.0         3.0   4.0 Metric                         DescriptionAcquisition   Creates accountActi...
The Framework Formulate    Iterate, Release &   Model           Measure             Pivot                                 ...
1.0        1.1      2.0         3.0    4.0• Did: The “MVP”, six weeks at $1206• Learned: It’s a start.  Metric       v.1  ...
1.0        1.1      2.0         3.0    4.0• Did: The “MVP”, six weeks at $1206• Learned: It’s a start.  Metric       v.1  ...
1.0        1.1      2.0         3.0    4.0• Did: The “MVP”, six weeks at $1206• Learned: It’s a start.  Metric       v.1  ...
1.0        1.1         2.0         3.0    4.0• Did: A/B testing to optimize• Learned: Significant jump in conversion.  Metr...
1.0        1.1         2.0         3.0    4.0• Did: A/B testing to optimize• Learned: Significant jump in conversion.  Metr...
1.0        1.1         2.0         3.0    4.0• Did: A/B testing to optimize• Learned: Significant jump in conversion.  Metr...
1.0        1.1         2.0         3.0    4.0• Did: A/B testing to optimize• Learned: Significant jump in conversion.  Metr...
1.0        1.1         2.0         3.0    4.0• Did: Same process as before• Learned: Missing something important.  Metric ...
1.0        1.1         2.0         3.0    4.0• Did: Same process as before• Learned: Missing something important.  Metric ...
The Framework Formulate      Iterate, Release &   Model             Measure             Pivot                             ...
When to Pivot• Surveys, A/B testing, landing pages, etc. are  all good ways to find a local maximum for a  given set of ass...
How to Pivot• Put down the dry erase and step away from  the whiteboard.• You earned what you learned; don’t flail.• Vision...
In My Case• Looked past the product to the nature of  the problem.  • “I’ve always wanted to get involved. This    makes i...
The Framework Formulate       Iterate, Release &   Model              Measure             Pivot                           ...
1.0         1.1          2.0          3.0     4.0  Model                          Hypothesis Product      Simple messaging...
The Framework Formulate    Iterate, Release &   Model           Measure             Pivot                                 ...
1.0        1.1          2.0         3.0    4.0•    Did: Asymmetric message delivery•    Learned: Found a new local max on ...
1.0        1.1          2.0         3.0    4.0•    Did: Asymmetric message delivery•    Learned: Found a new local max on ...
1.0        1.1          2.0         3.0    4.0•    Did: Asymmetric message delivery•    Learned: Found a new local max on ...
The Framework Formulate      Iterate, Release &   Model             Measure             Pivot                             ...
1.0         1.1          2.0          3.0     4.0  Model                          Hypothesis Product      Simple involveme...
Focus on Revenue• Website, analytics, dashboards.• Custom work specific to your issue.• People loved it! Let’s Build!      ...
1.0        1.1            2.0         3.0    4.0•    Did: New tools and analytics•    Learned: No signature means no sale ...
1.0        1.1            2.0         3.0    4.0•    Did: New tools and analytics•    Learned: No signature means no sale ...
1.0        1.1            2.0         3.0    4.0•    Did: New tools and analytics•    Learned: No signature means no sale ...
1.0        1.1            2.0         3.0    4.0•    Did: New tools and analytics•    Learned: No signature means no sale ...
Don’t Underestimate• Easy to fool yourself • “Show Yourself the Money”• This is why PR and vanity metrics are so  dangerou...
The Framework Formulate      Iterate, Release &   Model             Measure             Pivot                             ...
Learning• Poor Sales Cycle (contract, cost, channel) • “I’m just not sure about this Twitter    thing.”• Make the engageme...
1.0         1.1          2.0          3.0     4.0  Model                          Hypothesis Product      Simple involveme...
Ad Words for Activism• Special Delivery on a per-message basis • Only pay for value• Initial sale: $200 first day.         ...
1.0         1.1           2.0         3.0       4.0•    Total investment at this point: ~$120K and 18 months.•    Model ha...
1.0         1.1           2.0         3.0       4.0•    Total investment at this point: ~$120K and 18 months.•    Model ha...
Important Notes• Iteration loops got tighter.• Each validation justified a higher level of  investment/engagement.  • 1K - ...
Summary• Set Model so you know what your  measuring and when you’re done.• Use Metrics to find local maxima, not to  find a ...
Feedback• bit.ly/sllconfdb• slideshare.net/votizen• @votizen                           @dbinetti
Final Thought                @dbinetti
@dbinetti
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David Binetti Lean Startup Votizen Pivot at SLLCONF 2011

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  • David Binetti Lean Startup Votizen Pivot at SLLCONF 2011

    1. 1. When and How to Pivot Presented at Startup Lessons Learned 23 May 2011 David Binetti @dbinetti
    2. 2. Preface• Share!• No Original Thoughts...• We’re Hiring! slideshare.com/votizen @dbinetti
    3. 3. A Bit About Me• Business Model Designer at Votizen• Mentor at Hacker Dojo• Six Startups both Agile and Fixed @dbinetti
    4. 4. A Bit About You• Startups?• Something else?• Unsure? @dbinetti
    5. 5. High Finance @dbinetti
    6. 6. High Finance33% 33% 33% @dbinetti
    7. 7. High Finance 10% 30%30% 30% @dbinetti
    8. 8. High Finance 13% 20%20% 20% 7% 20% @dbinetti
    9. 9. High Finance 12% 20% 12%20% 12% 5% 19% @dbinetti
    10. 10. High Finance Sells for: $50M 12% 20% 12% Your stake: ~$6M20% 12% Chance of Success: 10% 5% 19% Expected Value: $600K @dbinetti
    11. 11. High Finance Startup GoogleY1 0 175Y2 40 175Y3 120 200Y4 120 200Y5 120 + 600 250 @dbinetti
    12. 12. High Finance Startup GoogleY1 0 175Y2 40 175Y3 120 200Y4 120 200Y5 120 + 600 250 @dbinetti
    13. 13. High Finance Startup Google Y1 0 175 Y2 40 175 Y3 120 200 Y4 120 200 Y5 120 + 600 250Expected 1.0 M 1.0 M @dbinetti
    14. 14. High Finance Startup Google Y1 0 175 Y2 40 175 Y3 120 200 Y4 120 200 Y5 120 + 600 250Expected 1.0 M 1.0 MVariance 3.6 x 10^12 0 @dbinetti
    15. 15. High Finance• You must be high if you think this makes financial sense.• But money isn’t everything.• What makes the entrepreneur different? @dbinetti
    16. 16. @dbinetti
    17. 17. @dbinetti
    18. 18. @dbinetti
    19. 19. @dbinetti
    20. 20. Why Lean?• Mitigates your reality distortion field.• Helps avoid (expensive) false positives.• Converts market risk to technical risk @dbinetti
    21. 21. Lean Framework Formulate Iterate, Release & Model Measure Pivot @dbinetti
    22. 22. Lean Framework Formulate Iterate, Release & Model Measure Pivot @dbinetti
    23. 23. Lean Framework Formulate Iterate, Release & Model Measure Pivot @dbinetti
    24. 24. Lean Framework Formulate Iterate, Release & Model Measure Pivot @dbinetti
    25. 25. On Pivots @dbinetti
    26. 26. On Pivots @dbinetti
    27. 27. On Pivots• Pivots are restatements of your business model; not synonymous with change.• Pivots are a consequence of learning about your business, not just your product.• Pivots are vision-driven, not testing-driven. @dbinetti
    28. 28. Our Vision• Social media is disrupting Politics.• Voters can now join with each other and connect to their officials directly.• Facilitating meaningful connections will result in a new form of civic participation that will profoundly change our world. @dbinetti
    29. 29. The Framework Formulate Iterate, Release & Model Measure Pivot @dbinetti
    30. 30. 1.0 1.1 2.0 3.0 4.0 Model Hypothesis Product Facebook for politics Problem People want a stronger voice Channel Social networks Demand Viral (self-perpetuating demand) Market Resegmented (donations engine)Competitive Hyper-fragmented @dbinetti
    31. 31. 1.0 1.1 2.0 3.0 4.0 Metric DescriptionAcquisition Creates accountActivation Certified authenticity Referrals Forwards to friendsRetention Uses system thrice or greater Revenue Supports causes @dbinetti
    32. 32. The Framework Formulate Iterate, Release & Model Measure Pivot @dbinetti
    33. 33. 1.0 1.1 2.0 3.0 4.0• Did: The “MVP”, six weeks at $1206• Learned: It’s a start. Metric v.1 v.1.1 v.2 v.3 v.4 Acquisition 5% Activation 17% Referrals - Retention - Revenue - @dbinetti
    34. 34. 1.0 1.1 2.0 3.0 4.0• Did: The “MVP”, six weeks at $1206• Learned: It’s a start. Metric v.1 v.1.1 v.2 v.3 v.4 Acquisition 5% Activation 17% Referrals - Retention - Revenue - @dbinetti
    35. 35. 1.0 1.1 2.0 3.0 4.0• Did: The “MVP”, six weeks at $1206• Learned: It’s a start. Metric v.1 v.1.1 v.2 v.3 v.4 Acquisition 5% Activation 17% Referrals - Retention - Revenue - @dbinetti
    36. 36. 1.0 1.1 2.0 3.0 4.0• Did: A/B testing to optimize• Learned: Significant jump in conversion. Metric v.1 v.1.1 v.2 v.3 v.4 Acquisition 5% 17% Activation 17% 90% Referrals - 4% Retention - 5% Revenue - - @dbinetti
    37. 37. 1.0 1.1 2.0 3.0 4.0• Did: A/B testing to optimize• Learned: Significant jump in conversion. Metric v.1 v.1.1 v.2 v.3 v.4 Acquisition 5% 17% Activation 17% 90% Referrals - 4% Retention - 5% Revenue - - @dbinetti
    38. 38. 1.0 1.1 2.0 3.0 4.0• Did: A/B testing to optimize• Learned: Significant jump in conversion. Metric v.1 v.1.1 v.2 v.3 v.4 Acquisition 5% 17% Activation 17% 90% Referrals - 4% Retention - 5% Revenue - - @dbinetti
    39. 39. 1.0 1.1 2.0 3.0 4.0• Did: A/B testing to optimize• Learned: Significant jump in conversion. Metric v.1 v.1.1 v.2 v.3 v.4 Acquisition 5% 17% Activation 17% 90% Referrals - 4% Retention - 5% Revenue - - @dbinetti
    40. 40. 1.0 1.1 2.0 3.0 4.0• Did: Same process as before• Learned: Missing something important. Metric v.1 v.1.1 v.2 v.3 v.4 Acquisition 5% 17% Activation 17% 90% Referrals - 4% Retention - 5% Revenue - - @dbinetti
    41. 41. 1.0 1.1 2.0 3.0 4.0• Did: Same process as before• Learned: Missing something important. Metric v.1 v.1.1 v.2 v.3 v.4 Acquisition 5% 17% Activation 17% 90% Referrals - 4% Retention - 5% Revenue - - @dbinetti
    42. 42. The Framework Formulate Iterate, Release & Model Measure Pivot @dbinetti
    43. 43. When to Pivot• Surveys, A/B testing, landing pages, etc. are all good ways to find a local maximum for a given set of assumptions.• If you’ve hit that local max and your model isn’t a sustainable business, it’s time to restate your assumptions (ie, to pivot.) @dbinetti
    44. 44. How to Pivot• Put down the dry erase and step away from the whiteboard.• You earned what you learned; don’t flail.• Vision + Learning = Inspiration @dbinetti
    45. 45. In My Case• Looked past the product to the nature of the problem. • “I’ve always wanted to get involved. This makes it so much easier.”• Put myself in the “let’s make it easier” mindset and got out of the building.• Lead to the inspiration for @2gov. @dbinetti
    46. 46. The Framework Formulate Iterate, Release & Model Measure Pivot @dbinetti
    47. 47. 1.0 1.1 2.0 3.0 4.0 Model Hypothesis Product Simple messaging tool Problem Getting involved is hard Channel Social networks Demand Viral (self-perpetuating demand) Market Resegmented (donations engine)Competitive Hyper-fragmented @dbinetti
    48. 48. The Framework Formulate Iterate, Release & Model Measure Pivot @dbinetti
    49. 49. 1.0 1.1 2.0 3.0 4.0• Did: Asymmetric message delivery• Learned: Found a new local max on revenue Metric v.1 v.1.1 v.2 v.3 v.4 Acquisition 5% 17% 42% Activation 17% 90% 83% Referrals - 4% 54% Retention - 5% 21% Revenue - - 1% @dbinetti
    50. 50. 1.0 1.1 2.0 3.0 4.0• Did: Asymmetric message delivery• Learned: Found a new local max on revenue Metric v.1 v.1.1 v.2 v.3 v.4 Acquisition 5% 17% 42% Activation 17% 90% 83% Referrals - 4% 54% Retention - 5% 21% Revenue - - 1% @dbinetti
    51. 51. 1.0 1.1 2.0 3.0 4.0• Did: Asymmetric message delivery• Learned: Found a new local max on revenue Metric v.1 v.1.1 v.2 v.3 v.4 Acquisition 5% 17% 42% Activation 17% 90% 83% Referrals - 4% 54% Retention - 5% 21% Revenue - - 1% @dbinetti
    52. 52. The Framework Formulate Iterate, Release & Model Measure Pivot @dbinetti
    53. 53. 1.0 1.1 2.0 3.0 4.0 Model Hypothesis Product Simple involvement tool Problem People want to be good citizens Channel Social networks Demand Viral (self-perpetuating demand) Market Resegmented (campaign management)Competitive Hyper-fragmented @dbinetti
    54. 54. Focus on Revenue• Website, analytics, dashboards.• Custom work specific to your issue.• People loved it! Let’s Build! @dbinetti
    55. 55. 1.0 1.1 2.0 3.0 4.0• Did: New tools and analytics• Learned: No signature means no sale Metric v.1 v.1.1 v.2 v.3 v.4 Acquisition 5% 17% 42% 43% Activation 17% 90% 83% 85% Referrals - 4% 54% 52% Retention - 5% 21% 24% Revenue - - 1% 0% @dbinetti
    56. 56. 1.0 1.1 2.0 3.0 4.0• Did: New tools and analytics• Learned: No signature means no sale Metric v.1 v.1.1 v.2 v.3 v.4 Acquisition 5% 17% 42% 43% Activation 17% 90% 83% 85% Referrals - 4% 54% 52% Retention - 5% 21% 24% Revenue - - 1% 0% @dbinetti
    57. 57. 1.0 1.1 2.0 3.0 4.0• Did: New tools and analytics• Learned: No signature means no sale Metric v.1 v.1.1 v.2 v.3 v.4 Acquisition 5% 17% 42% 43% Activation 17% 90% 83% 85% Referrals - 4% 54% 52% ! Retention - 5% 21% 24% Revenue - - 1% 0% @dbinetti
    58. 58. 1.0 1.1 2.0 3.0 4.0• Did: New tools and analytics• Learned: No signature means no sale Metric v.1 v.1.1 v.2 v.3 v.4 Acquisition 5% 17% 42% 43% Activation 17% 90% 83% 85% Referrals - 4% 54% 52% ! Retention - 5% 21% 24% Revenue - - 1% 0% @dbinetti
    59. 59. Don’t Underestimate• Easy to fool yourself • “Show Yourself the Money”• This is why PR and vanity metrics are so dangerous. @dbinetti
    60. 60. The Framework Formulate Iterate, Release & Model Measure Pivot @dbinetti
    61. 61. Learning• Poor Sales Cycle (contract, cost, channel) • “I’m just not sure about this Twitter thing.”• Make the engagement easy to try and show ROI out of the gate. @dbinetti
    62. 62. 1.0 1.1 2.0 3.0 4.0 Model Hypothesis Product Simple involvement tool Problem People want to be good citizens Channel Social networks Demand Viral (self-perpetuating demand) Market Resegmented (look like AdWords)Competitive Hyper-fragmented @dbinetti
    63. 63. Ad Words for Activism• Special Delivery on a per-message basis • Only pay for value• Initial sale: $200 first day. @dbinetti
    64. 64. 1.0 1.1 2.0 3.0 4.0• Total investment at this point: ~$120K and 18 months.• Model has promise; raise some funds Metric v.1 v.1.1 v.2 v.3 v.4 Acquisition 5% 17% 42% 43% 51% Activation 17% 90% 83% 85% 92% Referrals - 4% 54% 52% 64% Retention - 5% 21% 24% 28% Revenue - - 1% 0% 11% @dbinetti
    65. 65. 1.0 1.1 2.0 3.0 4.0• Total investment at this point: ~$120K and 18 months.• Model has promise; raise some funds Metric v.1 v.1.1 v.2 v.3 v.4 Acquisition 5% 17% 42% 43% 51% Activation 17% 90% 83% 85% 92% Referrals - 4% 54% 52% 64% Retention - 5% 21% 24% 28% Revenue - - 1% 0% 11% @dbinetti
    66. 66. Important Notes• Iteration loops got tighter.• Each validation justified a higher level of investment/engagement. • 1K - 10K - 100K - 1000K• Seek funding when you think you have more technical risk than market risk. @dbinetti
    67. 67. Summary• Set Model so you know what your measuring and when you’re done.• Use Metrics to find local maxima, not to find a business.• Pivots are vision-driven. @dbinetti
    68. 68. Feedback• bit.ly/sllconfdb• slideshare.net/votizen• @votizen @dbinetti
    69. 69. Final Thought @dbinetti
    70. 70. @dbinetti

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