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How to pivot the right way

The document discusses the concept of business pivots, emphasizing their importance in adapting strategies and responding to market changes, especially during uncertain times. It categorizes various types of pivots such as zoom-in, customer need, value driver, and user segment pivots, illustrating real-world examples from successful companies. Overall, it highlights that pivots are essential for growth, profitability, and leveraging existing organizational strengths across all business stages and industries.

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An exploration into pivots to decode the science in it all and the art of doing it the right way. Pivot R I G H T
why & what the big In times like these, when the playing fields have levelled, businesses are becoming more and more focused on ‘value’ than ‘being first.’ 1 VUCA times call for a rethinking of status quo - a redefinition of who they are and how they can bullet- proof themselves. 2 Some of the most valuable startups have one thing in common – an origin story set in times of uncertainty (Uber, YouTube, Yahoo, Slack, Dropbox). Ever, wondered why? We did. A playbook on the art of the pivot – Right on Pivot, 2021.
An organization's ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage. - Jack Welch CEO, General Electric
this document inside © Prequate Advisory, 2021
© Prequate Advisory, 2021 What is a pivot? Who is a pivot for? What types of pivots exist? What does each kind mean?
A business pivot is an adaptation or improvement 1 of adjusting or modifying (a product, service, or even strategy) 2. They are the result of today’s organizations embracing agility 3 as a core part of their DNA. They occur irrespective of the stage 4 of a company in its lifecycle. 2 Pivots can span from just a small tweak to a complete redo of the organization’s strategy. 1 Pivots at times seem like big changes, their core foundation elements remain the same. 3 All organizations are considering pivots as a part of Org strategy rather than in troubled times. 4 Pivots occur in Orgs of all stages – Startup, Growth or Maturity or all sizes, be it small or enterprise.
Who is a pivot for? There are a lot of misconceptions about Pivots – mostly because it seems to be grabbing eye-balls in relation to the tech industry. But there is half truth to that. Here are some pivot-al myths busted. I’m not in tech. Is this playbook relevant for me? I’m an enterprise today. Isn’t this something that startups do? MYTH #1 MYTH #2 Doesn’t pivoting mean doing something new entirely? MYTH #3 Of course. Pivots are not specific to an industry – though tech businesses tend to be more nimble and hence can pivot faster, but the most successful pivots in the world aren’t only tech. Western Union from telecommunication to payments Not at all. Pivots can be made irrespective of the stage that the business is in. The challenges can differ in achieving success or the time to materialize, but all sizes are welcome. Sony from cassette to digital only Thankfully not. Pivots are a way to accelerate growth and profitability while leveraging on the strengths that the organization possesses. It does involve new thinking but need not mean starting afresh. Groupon from campaign mgmt. to deal aggregation
What kinds of pivot are possible? As business get more dynamic and macro-economic circumstances get more uncertain, there are endless new pivots that can come up. Here are the buckets that they most likely fall under: ZOOM IN PIVOT CUSTOMER NEED PIVOT VALUE DRIVER PIVOT USER SEGMENT PIVOT ZOOM OUT PIVOT CHANNEL PIVOT PLATFORM PIVOT GROWTH ENGINE PIVOT ARCHITECTURE PIVOT
What do they mean, really? As business get more dynamic and macro-economic circumstances get more uncertain, there are endless new pivots that can come up. Here are the buckets that they most likely fall under: ZOOM IN PIVOT CUSTOMER NEED PIVOT VALUE DRIVER PIVOT USER SEGMENT PIVOT ZOOM OUT PIVOT CHANNEL PIVOT PLATFORM PIVOT GROWTH ENGINE PIVOT ARCHITECTURE PIVOT when a product/ service feature ends up becoming your whole product when the feature that is growing is different from the first intended one when a particular aspect can be segregated and a value chain is built on it when the product is capable of actually solving a different persons problem when the product ends up becoming a single feature in a bigger product when you pivot to deliver your product/ service through a different channel when you move from application to a platform allowing others to build when a new strategy is deployed to dramatically increase growth when you change strategy by trading off between volume & margin
What do they mean, really? Following the thread for each kind of pivot, here is a deep-dive into some of the the most successful pivots of our time from across the world: ZOOM IN PIVOT CUSTOMER NEED PIVOT VALUE DRIVER PIVOT USER SEGMENT PIVOT ZOOM OUT PIVOT CHANNEL PIVOT PLATFORM PIVOT GROWTH ENGINE PIVOT ARCHITECTURE PIVOT
ZOOM IN PIVOT when a product/ service feature ends up becoming your whole product Started in 2010 as Burbn, a check-in app like Foursquare but with images due to shared personal interest. Noticed that users were using Burbn as a photo log as they really loved the photography features. Pivoted the app development to focus on the photography elements and be great at that one thing. Concentrated on building it as an inclusive social network by marrying photo filters, tagging & check-ins. Raised $0.5M @ ~$2-4M valuation Raised $7M @ $25M valuation Mar 2012, Users hit 27M. Sold to Facebook @ $1B valuation Instagram’s Zoom-In Pivot
In-depth User Behaviour & Usage Analysis leading to realizations Strategy shift to focus on building products that are great at one thing Embracing openness and interoperability with other platforms ZOOM IN PIVOT when a product/ service feature ends up becoming your whole product Raised $0.5M @ ~$2-4M valuation Raised $7M @ $25M valuation Mar 2012, Users hit 27M. Sold to Facebook @ $1B valuation Instagram’s Zoom-In Pivot
ZOOM IN PIVOT when a product/ service feature ends up becoming your whole product Burbn Check in at locations, make plans with friends, earn points for hanging out with friends, and post pictures of the meet-ups. Instagram’s Zoom-In Pivot Instagram Fast, beautiful photo sharing for your Phone Meet Instagram. It’s a fast, beautiful and fun way to share your life with friends through a series of pictures. Snap a photo with your Phone, choose a filter to transform the look and feel, send to Facebook, Twitter or Flickr – it’s all as easy as pie. It’s photo sharing, reinvented. Oh yeah, did we mention it’s free? product promise changed product functionality unchanged flexibility & openness changed target user demographic unchanged product positioning changed technology infrastructure unchanged
CUSTOMER NEED PIVOT when the feature that is growing is different from the first intended one Flickr’s Customer Need Pivot Flickr grew out of Ludicorp’s Game Neverending- a MMOG that focused on social interaction and object manipulation. Realized that photo dropping feature as users extensively to share photos that often had nothing to do with the game. The development of the game was later shut down in 2004 and the tools built for it later evolved into Flickr. Flickr focused on providing cutting-edge real-time photo sharing with photo commenting and advanced privacy options. Mar 2005, sold to Yahoo for ~$25M
CUSTOMER NEED PIVOT when the feature that is growing is different from the first intended one Game Neverending A massively multiplayer online game focus was social interaction & object manipulation Flickr An image hosting & video hosting service, as well as an online community the home for all your photos. upload, access, organize, edit, and share your photos from any device, from anywhere in the world revenue earned from premium subscriptions product promise changed product functionality changed flexibility & openness changed target user demographic changed product positioning changed technology infrastructure changed Flickr’s Customer Need Pivot
Started in 2016, as a B2B Digitization solution for SMBs to allow them to transact online with logistics support Transformed into a B2B buying platform that supplies directly from manufacturers and other SMBs with credit support Switched over to a full-stack listing platform to enable sellers to create listings and buyers to discover new suppliers by product category Moved to a marketplace model that can connect SMBs directly and facilitate buying and selling with payments and logistics VALUE DRIVER PIVOT when a particular aspect can be segregated and a value chain is built on it Raised $10M @ $40M valuation Udaan’s Value Driver Pivot Raised $585M @ $2.7B valuation Raised $225M @ $1B valuation
“Making online trading simple, safe and convenient." “B2B Buying for Retailers" "India's B2B Commerce Network of Retailers, Manufacturers, Traders, Wholesalers" "India's B2B Marketplace of Retailers, Manufacturers, Traders, Wholesalers" VALUE DRIVER PIVOT when a particular aspect can be segregated and a value chain is built on it Raised $10M @ $40M valuation Udaan’s Value Driver Pivot Raised $585M @ $2.7B valuation Raised $225M @ $1B valuation
VALUE DRIVER PIVOT when a particular aspect can be segregated and a value chain is built on it Udaan Network centric B2B Trade Platform Providing SMBs with digitalization tools to allow for transacting online with logistics support Revenue earned from logistics and commissions on purchases Udaan India's largest B2B Buying Platform for SMBs Established its own distribution, logistics and credit network to complement the listing platform and become the primary supplier based on predictability and buyer behaviour Revenue from gross margins on buying, delivery charges & interest on credit provided product promise changed product functionality changed flexibility & openness changed target user demographic unchanged product positioning unchanged technology infrastructure changed Udaan’s Value Driver Pivot
USER SEGMENT PIVOT when the product is capable of actually solving a different person’s problem Practo’s Customer Need Pivot Started in 2009 as a web- based clinic & document management software for doctors & hospitals. Realized that the real problem in healthcare was experienced by patients and their tech could solve that. Opened up the earlier closed off user end to solve the patients needs for ease of booking & confirmation. Started the pivot to make Practo a healthcare discovery platform focused on the patient. Raised $4M @ $12-15M valuation Used by 180M+ in 21 countries Raised $90M @ $500M valuation Transitioned to a full- service patient companion app for end-to-end health.
USER SEGMENT PIVOT when the product is capable of actually solving a different person’s problem “Practo is an online practice management software which helps you serve your patient better and makes managing your practice simpler.” “Find Doctors in […….]. Book confirmed doctor appointments online for FREE.” “Find & book appointments with doctors, diagnostic labs” Practo’s Customer Need Pivot “Say Hello to India’s top doctors via video consultation, get digital prescriptions, order medicines, book doctor appointments & lab tests”
ZOOM OUT PIVOT when the product ends up becoming a single feature in a bigger product Started in 2005 as a dating website where users could upload video profiles as an alternative to other platforms. Realized that (1) users were uploading a lot more videos than their profiles & (2) new users weren’t posting videos. Changed the architecture to allow users to post videos about anything they liked and share them. Focused on providing users with infrastructure to host all video content and allowed plug-ins. Raised $3.5M @ $15M valuation Nov 2006, sold to Google @ $1.7B valuation YouTube’s Zoom-Out Pivot Raised $8M @ $35M valuation Focused on providing users with infrastructure to host all video content.
ZOOM OUT PIVOT when the product ends up becoming a single feature in a bigger product Users’ Usage Analysis leading to realizations of product capability “Your Digital Video Repository” “Share your videos with friends and family” Raised $3.5M @ $15M valuation Nov 2006, sold to Google @ $1.7B valuation YouTube’s Zoom-Out Pivot Raised $8M @ $35M valuation “Broadcast yourself”
ZOOM OUT PIVOT when the product ends up becoming a single feature in a bigger product YouTube’s Zoom-Out Pivot YouTube as a video profile and discovery website for dating focus is to drive user acquisition and thereby receive trickle down subscriptions from total users over time revenue earned from subscriptions, uploads YouTube as a tool for all creators to upload video content irrespective of the use-case focus is to drive adoption to all users to create more content and make it available to more users like a broadcast channel – purely online only revenue earned from sponsored content, premium content, advertising product promise changed product functionality unchanged flexibility & openness changed target user demographic changed product positioning changed technology infrastructure unchanged
ARCHITECTURE PIVOT when you change strategy by trading off between volume & margin Office’s Architecture Pivot Initially operated on a Licensing model, later realising that SaaS had a greater potential when compared to licencing their product on a perpetual model. Introduced Microsoft 365- developed to give businesses & individuals access to all the Microsoft tools on a subscription basis. 2020 Revenue: $46B 2015 Revenue: $25B Expanding accessibility by building it as a cloud-first application, thereby allowing users to collaborate online. The new subscription model would make it accessible for the users who earlier found it unaffordable especially for small business needs & home use. 2010 Revenue: $17B
ARCHITECTURE PIVOT when you change strategy by trading off between volume & margin Office’s Architecture Pivot “Try or buy Office 2010, view product information, get help and training, explore templates, images, and downloads.” “As part of Microsoft 365, Office will continue to provide the best productivity experience.” 2020 Revenue: $46B 2015 Revenue: $25B “Collaborate for free with online versions of [……….]. Share them with others and work together at the same time.” “Try or buy Office 365 for Home or Business, view product information, get help and training, explore templates, images, and apps for Office.” 2010 Revenue: $17B
GROWTH ENGINE PIVOT when a new strategy is deployed to dramatically increase growth Dropbox’s Growth Engine Pivot Started in 2007, Dropbox started as a cloud storage offering to allow for anywhere & anytime access to personal users. A userbase of 100K in 2008 with growing CAC (of $233+) from traditional channels meant 2+ years for CAC recovery. Raised $6M @ $25M valuation Raised $250M @ $4B valuation Dropbox has since then built a user base of 600M+ with over 15M+ paid users generating $1.9B a year. Raised $1M @ $5M valuation To induce virality, Dropbox began a referral program offering free space when you invited new ones. Users went up 40x in 15 months.
PLATFORM PIVOT when you move from application to a platform allowing others to build Shopify’s Platform Pivot Launched in 2006, as an e- commerce platform helping aspiring merchants set up an online store hassle free. Expanded beyond its primary offering to Merchant Solutions- that housed multiple offerings like Shopify Payments, Shopify Shipping, Shopify Capital, etc. 2010 Valuation: $25M 2020 Valuation: $139B 2013 Valuation: $900M Emerged as an ERP software that simplified managing the day-to- day business activities and offering more plug-ins than the customers thought they needed. Evolved into a linked ecosystem of services - Shopify Expert Marketplace, which embraced open-system architecture by focusing on the developer ecosystem. 2015 Valuation: $1.3B
PLATFORM PIVOT when you move from application to a platform allowing others to build Shopify’s Platform Pivot “Hosted e-commerce with Shopify, the easy way to start your own online store.” “Everything you need to sell. Build your online store with Shopify's ecommerce software and easily sell.” 2010 Valuation: $25M 2020 Valuation: $139B 2013 Valuation: $900M “Get more than ecommerce software with tools to manage every part of your business.” “Shopify is a powerful ecommerce solution that includes everything you need to run an online store.” 2015 Valuation: $1.3B
CHANNEL PIVOT when you pivot to deliver your product/ service through a different channel Netflix’s Channel Pivot Started in 1997 purely as a ‘movie rental service’ providing door-to- door delivery of DVDs ordered by users through the website. 2020 MCap: $238.9B 2010 MCap: $9.3B In 2018, emerged as a content creation powerhouse and became the largest digital content player in the world. In 2007, started offering an online streaming option as broadband availability and internet speeds matured. 2012 MCap: $48.9B In 2010, understood the value of content creation and ownership as they moved into self-produced content. 2006 MCap: $1.8B
CHANNEL PIVOT when you pivot to deliver your product/ service through a different channel “Netflix: Rent as many DVDs as you want for $20 a month. No late fees.” 2020 MCap: $238.9B 2010 MCap: $9.3B “Watch Netflix movies & TV shows online or stream right to your smart TV, game console, PC, Mac, mobile, tablet and more.” “Watch TV Shows & Movies Online or Streaming to your TV via Wii, Xbox, PS3 & many other devices.” 2012 MCap: $48.9B "Watch Movies & TV Shows Online or Streaming right to your TV via Xbox, Wii, PlayStation & many other devices.” 2006 MCap: $1.8B Netflix’s Channel Pivot
CHANNEL PIVOT when you pivot to deliver your product/ service through a different channel Netflix “The Easiest Way to Rent a DVD!” mail-order DVD rental service that promises 2 – 3-day delivery of the largest catalogue of movies Netflix “Watch Netflix movies & TV shows online or stream right to your smart TV, game console, PC, Mac, mobile, tablet and more.” envisions to become the biggest global entertainment distribution service by catering to the taste & preference of its users revenue earned from a monthly subscription plan product promise unchanged product functionality changed flexibility & openness changed target user demographic unchanged product positioning unchanged technology infrastructure changed Netflix’s Channel Pivot
38% of ‘unicorn’ startups in India have pivoted at least once in their journey.
© Prequate Advisory, 2021 What is making others pivot? When do you consider one? What should you prepare for? Is it worthwhile considering?
What is making others pivot? Deciding to pivot is a critical decision that most organizations make – probably the most critical one as it involves a lot more stakeholders and could at times mean backtracking on progress already made or realignment of teams. Here are a few indicators: Smart startups will almost always pivot, even more than once. It may be a course correction, a new strategy or may be a new business altogether. According to the Startup Genome Report that startups that pivot once or twice grow 3.6 times better and raise 5.2 times more money than others. Startups need to continuously have their ears to the ground. This is what keeps startups nimble enough to even take on giants in the industry. 1 Traction or the lack of it When a business fails to get attention or plant a flag in a particular space 2 Industries are converging When forces are moving different industries closer (say finance & procurement) 3 Competition is innovating When competitors seem to be playing a better game or users are not remaining loyal 4 Genuine Eureka moments When competitors seem to be playing a better game or users are not remaining loyal
When do you need to consider one? Deciding to pivot is a critical decision that most organizations make – probably the most critical one as it involves a lot more stakeholders and could at times mean backtracking on progress already made or realignment of teams. Here are a few indicators: Your market/ need hypothesis has changed significantly the market is telling you to Your pricing is becoming the #1 selling point to customers The competition for your value proposition has become fierce Most customers are mostly using only 1-2 feature offerings the customer is telling you to Most customers testify to highly specific product/ service claims One segment has a drastically different traction or success rate You feel like you are always playing catch-up with your competitors the organization is telling you to Your growth rate has plateaued while the industry is thriving Sales cycles involve a lot of education, often long or a high drop off Your talent plan often seems to change from priorities the talent is telling you to Your talent is leaving you for your competition You are spending more and more time on goal alignment
Being at the right place at the right time Pivots are a powerful tool to ensure that a business is built for what is needed at that point of time for the market. It allows the management to capitalize on opportunities when the time is right. pivot can’t unlock Team 32% a pivot can directly unlock Biz Model 24% Ideas 28% Timing 42% Funding 14% Key Success Aspects > When founders of successful startups across the world were asked what they felt were the primary reasons that they became successful, this is what they attributed their success to.
What challenges would be a signal? Deciding to pivot is a critical decision that most organizations make – probably the most critical one as it involves a lot more stakeholders and could at times mean backtracking on progress already made or realignment of teams. Here are a few indicators: Indicators 3 2 1 6 5 4 Competition Fierce competition, many times led on pricing Repetitive goal setting Significant deviations needing high-level redos Product positioning Product too complex or features unutilized Lost in plot Initiatives consistently not meeting planned outcomes Industry feedback Feeling of being in the wrong industry or segment Strategy gaps Sense of being in the market with wrong product/ features
But why should I consider pivoting? Pivoting has helped organizations that got it right significantly leapfrog and achieve breakneck speed by changing/ clarifying the focus. In the world of startups (especially those who can afford to), this has been directly reflected in their enterprise value. valuation before valuation after 18m $2-3M $250M 12m $4-5M $1,700B 24m $12-15M $700M 12m $4-5M $25M valuation before valuation after 24m $1.8B $2.3B 22m $40M $1B 36m $25M $4B 8m $0 $1B Instagram YouTube Practo Zetwerk Netflix Udaan Dropbox Slack
To improve is to change; to be perfect is to change often. - Sir Winston Churchill Former Prime Minister, United Kingdom
© Prequate Advisory, 2021 What should you avoid? What advice does this entail?
What should I be avoiding? Pivots are tricky to say the least. They involve a complete rewiring of goals and OKRs. Which means that the keys to success of a pivot are as much inside the organization as they are at your customer’s/ user’s end. 1.5x startups fail as a result of failed pivots compared to those that were successful with their pivots Why? 1 2 3 Trying to pivot into something you don’t know well about Pivoting when there isn’t a need for one really Pivoting to a highly established segment already competitive Shipping service for individuals $1B valuation Shipping service for SMBs shutdown Flash sales for fast fashion $1B valuation Designer home products shutdown High-end audio device $3B valuation Mass market fitness trackers $3B valuation 4 Pivoting to a lesser scalability model or more complex model Book stays anywhere from 20k options $100M valuation Personalized stays with flexi- pay options shutdown ▪ Rewiring to play the volume game ▪ Significant change in business model ▪ Highly competitive product category ▪ No sustainable advantage ▪ New R&D focus of company ▪ Faulty product delivery ▪ High servicing & retention cost ▪ User acquisition built on price competition from to
What advice would this be for me? In a world as dynamic as ours, both user preferences and the state of competition can change rapidly. While tricky, Pivots are sometimes the only lifeline for a few companies. They are journeys that need to be taken. So are there some golden rules? ALWAYS PIVOT WIDER OR DEEPER as pivoting to something smaller is a death-knell listen to the market TALK TO THE MARKET MOVERS before making a switch in the market focus Idea to pivot are driven outside-in rather than inside-out. PAY ATTENTION TO YOUR CUSTOMER and what he is really asking for listen to your customer REATTEMPT A QUICK & DIRTY PMF even if at a much smaller scale with experiments Pivots must not kill the magic sauce you have already made. A PIVOT IS NOT A NEW BUSINESS use what you have built and build on it listen to your organization PLAN, PLAN, PLAN & then PLAN B as assumptions can change significantly IF EVERYONE ISN’T ON, NO ONE IS ON whether it is at a goal setting level or KPIs listen to your talent QUESTION IF THIS IS RIGHT FOR YOUR ORG ability to build businesses varies for teams Pivots must be like band-aids – right off and quickly.
Growth is never by mere chance; it is the result of forces working together. - James Cash Penney Founder, JC Penney
© Prequate Advisory, 2021 What are the successful ones? What is common between them? How important is timing?
Anatomy of a successful pivot The ability to address uncertainties head-on can be rooted in a first principles thinking. The factors here are more human, more philosophical than technical. It is hard to one factor and attribute success to it because the complexity can be more than an internal factor. Embracing change, while keeping the essence intact external internal These principles increased their odds of having things fall into place. Fortuitous Timing Studying Competition Proactive Leaders Extend > Revamp Improved phone cameras gave impetus to digital photography as photo albums became passé Thanks to the advent of technology, venturing into online streaming seemed possible for the first time Marrying photos with filters embraced the comfort that users were having to using smartphone tech ‘Netflix Originals’ certainly mitigated the risks of being cut out by the media houses Pivoting from the game to an image hosting service was risky but was what users wanted Building products that the people wanted as a motive to their existence allowed them to be nimble Expanding to functions that are more wholesome and go deeper into the customer relationships Credits where due - building a relationship beyond just listing helped give a lasting moat to our business
The right thing at the right time The truth is that it can always feel like the right time to pivot. When you’re exposed to success stories of companies that made it big, you could see a growing temptation to change course. But the most important consideration you need to have? Timing. why it made sense Paid heed to the insights shared by the first 100 users- focusing on photo sharing. Lucky for us, it was quick! An [….] attempt to build upon the aspect that gets most traction could be an opportunity lost if not grabbed early on An early pivot made sense as the relationships it had gathered could now help solidify its moat as a B2B marketplace Pivoting after having a sizable userbase made sense as it could use its existing users in order to onboard new ones through a referral program Right when technology for streaming had matured, it pivoted to its streaming business so as to deliver more entertainment value Pivoting late made sense as it had built an established userbase and a superior product which it could leverage to a subscription model Journey 0-3 3-7 > 7 Years 4 Months 6 Months 15 Months 2 Years 3 Years 5 Years 10 Years 13 Years 21 Years
The future is already here – it's just not evenly distributed. - William Gibson The Economist, 2003
thing the right Today, a pivot is more than just a short-term survival response – It’s a response for long-term resilience. Most great pivots were brought on by a healthy mix of introspection and vision for the future. But what united them was that they were always well timed, decisive and quick. So should you? The woods are lovely, dark and deep, But I have promises to keep, And miles to go before I sleep, And miles to go before I sleep. Robert Frost ‘Stopping by Woods on a Snowy Evening’
Now, can Prequate help? Of course © Prequate Advisory 2010 - 2021
Now, can Prequate help? Some of our work © Prequate Advisory 2010 - 2021 Early stage HealthTech Asia We helped re-model a 5YO organization for a pivot from a medical device manufacturer to a diagnostics and data analytics provider. Key pivot > From Value-on-sale to Value-in- use Role > Value proposition analysis Business re-modelling Financial modelling Impact > ▪ Revenue potential went up 13x ▪ Projected Y5 EBIT went up 3x ▪ Investment required came down by 45% Growth stage Enterprise SaaS Asia We helped re-model a 5YO organization for a pivot from a e- com player to a B2B SaaS player providing customers with an integrated and sticky solution. Key pivot > From Transaction led model to Continuity led Role > Business modelling Investor collateral Financial modelling Impact > ▪ MRR went up 170% ▪ Gross Margins went up 85% ▪ Company successfully raised next round of venture capital Late stage Telecommunications US We re-modelled a 15YO organization for a pivot from a telecom infrastructure player to an integrated consumer tech & data analytics provider. Key pivot > From Value-on-sale to Value-in- use Role > Entity expansion plan International expansion plan Financial modelling Impact > ▪ Revenue potential went up 3x ▪ Proj. NPV increased by 7x ▪ Investment required dropped by $12.1Mn
Setup in 2010, Prequate Advisory (Prequate) is a management ^ strategic finance advisory. Prequate acts and manages as a Management Assist group / CXO bridge on matters ranging from business strategy to planning and execution. Over the last 10+ years, we have worked with 400+ businesses (ranging from Fortune 500 companies to award- winning start-ups) across 20+ countries in capacities ranging from crafting their international expansion strategy to managing investor relations. These clients include the portfolio of funds like Sequoia Capital, Accel Partners, Omidyar, Tiger Global, Coatue, Naspers, Breakthrough Energy among others. During this time, Prequate has been featured on various publications for their breakthrough approach to advisory. Prequate‘s DNA is made of a team with experiences from some of the world’s leading consulting outfits on areas spanning international business management, business consulting, risk advisory, assurance, corporate finance, investment banking and entrepreneurship and work as partners for growth to SMBs across the world. management ^ finance © Prequate Advisory 2010 - 2021
This world is a better place thanks to people who are ready to commit to missions far beyond themselves – to make available insights and information about the world we live in. One such organization is The Internet Archive, a non-profit library which we have used extensively to capture the pulse of the state of their thoughts using their web presence as a proxy. Another instrumental influence is of Eric Ries, author of The Lean Startup which has shaped the industry’s thoughts on pivots itself. Apart from this, the teams at HBR and some of the other professionals from across the world who put their thought leadership out there for us to learn from. The most important people to thank are the brands that feature in this report - Dropbox, Flickr, Instagram, Microsoft, Netflix, Practo, Shopify, Udaan, YouTube, Zetwerk. Their journeys truly inspired the research and gave new perspectives to the research. Thank you. Lastly, this may be a few Mb of data, but it has taken hundreds of hours to research, host and compile. Our team of dedicated, gifted individuals contributed to it with their time, reputations & hearts to make this document possible - to them, a heartfelt thank you. Disclaimer: This report has been prepared for the general guidance on matters of interest and for learning only. This is not professional advice from Prequate. As a reader of this content, you should exercise due caution while employing or deploying analysis and results from this publication. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, Prequate does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © Prequate Advisory 2010 - 2021 thanks A big
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How to pivot the right way

  • 1.
    An exploration intopivots to decode the science in it all and the art of doing it the right way. Pivot R I G H T
  • 2.
    why & what thebig In times like these, when the playing fields have levelled, businesses are becoming more and more focused on ‘value’ than ‘being first.’ 1 VUCA times call for a rethinking of status quo - a redefinition of who they are and how they can bullet- proof themselves. 2 Some of the most valuable startups have one thing in common – an origin story set in times of uncertainty (Uber, YouTube, Yahoo, Slack, Dropbox). Ever, wondered why? We did. A playbook on the art of the pivot – Right on Pivot, 2021.
  • 3.
    An organization's abilityto learn, and translate that learning into action rapidly, is the ultimate competitive advantage. - Jack Welch CEO, General Electric
  • 4.
  • 5.
    © Prequate Advisory,2021 What is a pivot? Who is a pivot for? What types of pivots exist? What does each kind mean?
  • 6.
    A business pivotis an adaptation or improvement 1 of adjusting or modifying (a product, service, or even strategy) 2. They are the result of today’s organizations embracing agility 3 as a core part of their DNA. They occur irrespective of the stage 4 of a company in its lifecycle. 2 Pivots can span from just a small tweak to a complete redo of the organization’s strategy. 1 Pivots at times seem like big changes, their core foundation elements remain the same. 3 All organizations are considering pivots as a part of Org strategy rather than in troubled times. 4 Pivots occur in Orgs of all stages – Startup, Growth or Maturity or all sizes, be it small or enterprise.
  • 7.
    Who is apivot for? There are a lot of misconceptions about Pivots – mostly because it seems to be grabbing eye-balls in relation to the tech industry. But there is half truth to that. Here are some pivot-al myths busted. I’m not in tech. Is this playbook relevant for me? I’m an enterprise today. Isn’t this something that startups do? MYTH #1 MYTH #2 Doesn’t pivoting mean doing something new entirely? MYTH #3 Of course. Pivots are not specific to an industry – though tech businesses tend to be more nimble and hence can pivot faster, but the most successful pivots in the world aren’t only tech. Western Union from telecommunication to payments Not at all. Pivots can be made irrespective of the stage that the business is in. The challenges can differ in achieving success or the time to materialize, but all sizes are welcome. Sony from cassette to digital only Thankfully not. Pivots are a way to accelerate growth and profitability while leveraging on the strengths that the organization possesses. It does involve new thinking but need not mean starting afresh. Groupon from campaign mgmt. to deal aggregation
  • 8.
    What kinds ofpivot are possible? As business get more dynamic and macro-economic circumstances get more uncertain, there are endless new pivots that can come up. Here are the buckets that they most likely fall under: ZOOM IN PIVOT CUSTOMER NEED PIVOT VALUE DRIVER PIVOT USER SEGMENT PIVOT ZOOM OUT PIVOT CHANNEL PIVOT PLATFORM PIVOT GROWTH ENGINE PIVOT ARCHITECTURE PIVOT
  • 9.
    What do theymean, really? As business get more dynamic and macro-economic circumstances get more uncertain, there are endless new pivots that can come up. Here are the buckets that they most likely fall under: ZOOM IN PIVOT CUSTOMER NEED PIVOT VALUE DRIVER PIVOT USER SEGMENT PIVOT ZOOM OUT PIVOT CHANNEL PIVOT PLATFORM PIVOT GROWTH ENGINE PIVOT ARCHITECTURE PIVOT when a product/ service feature ends up becoming your whole product when the feature that is growing is different from the first intended one when a particular aspect can be segregated and a value chain is built on it when the product is capable of actually solving a different persons problem when the product ends up becoming a single feature in a bigger product when you pivot to deliver your product/ service through a different channel when you move from application to a platform allowing others to build when a new strategy is deployed to dramatically increase growth when you change strategy by trading off between volume & margin
  • 10.
    What do theymean, really? Following the thread for each kind of pivot, here is a deep-dive into some of the the most successful pivots of our time from across the world: ZOOM IN PIVOT CUSTOMER NEED PIVOT VALUE DRIVER PIVOT USER SEGMENT PIVOT ZOOM OUT PIVOT CHANNEL PIVOT PLATFORM PIVOT GROWTH ENGINE PIVOT ARCHITECTURE PIVOT
  • 11.
    ZOOM IN PIVOT whena product/ service feature ends up becoming your whole product Started in 2010 as Burbn, a check-in app like Foursquare but with images due to shared personal interest. Noticed that users were using Burbn as a photo log as they really loved the photography features. Pivoted the app development to focus on the photography elements and be great at that one thing. Concentrated on building it as an inclusive social network by marrying photo filters, tagging & check-ins. Raised $0.5M @ ~$2-4M valuation Raised $7M @ $25M valuation Mar 2012, Users hit 27M. Sold to Facebook @ $1B valuation Instagram’s Zoom-In Pivot
  • 12.
    In-depth User Behaviour& Usage Analysis leading to realizations Strategy shift to focus on building products that are great at one thing Embracing openness and interoperability with other platforms ZOOM IN PIVOT when a product/ service feature ends up becoming your whole product Raised $0.5M @ ~$2-4M valuation Raised $7M @ $25M valuation Mar 2012, Users hit 27M. Sold to Facebook @ $1B valuation Instagram’s Zoom-In Pivot
  • 13.
    ZOOM IN PIVOT whena product/ service feature ends up becoming your whole product Burbn Check in at locations, make plans with friends, earn points for hanging out with friends, and post pictures of the meet-ups. Instagram’s Zoom-In Pivot Instagram Fast, beautiful photo sharing for your Phone Meet Instagram. It’s a fast, beautiful and fun way to share your life with friends through a series of pictures. Snap a photo with your Phone, choose a filter to transform the look and feel, send to Facebook, Twitter or Flickr – it’s all as easy as pie. It’s photo sharing, reinvented. Oh yeah, did we mention it’s free? product promise changed product functionality unchanged flexibility & openness changed target user demographic unchanged product positioning changed technology infrastructure unchanged
  • 14.
    CUSTOMER NEED PIVOT whenthe feature that is growing is different from the first intended one Flickr’s Customer Need Pivot Flickr grew out of Ludicorp’s Game Neverending- a MMOG that focused on social interaction and object manipulation. Realized that photo dropping feature as users extensively to share photos that often had nothing to do with the game. The development of the game was later shut down in 2004 and the tools built for it later evolved into Flickr. Flickr focused on providing cutting-edge real-time photo sharing with photo commenting and advanced privacy options. Mar 2005, sold to Yahoo for ~$25M
  • 15.
    CUSTOMER NEED PIVOT whenthe feature that is growing is different from the first intended one Game Neverending A massively multiplayer online game focus was social interaction & object manipulation Flickr An image hosting & video hosting service, as well as an online community the home for all your photos. upload, access, organize, edit, and share your photos from any device, from anywhere in the world revenue earned from premium subscriptions product promise changed product functionality changed flexibility & openness changed target user demographic changed product positioning changed technology infrastructure changed Flickr’s Customer Need Pivot
  • 16.
    Started in 2016,as a B2B Digitization solution for SMBs to allow them to transact online with logistics support Transformed into a B2B buying platform that supplies directly from manufacturers and other SMBs with credit support Switched over to a full-stack listing platform to enable sellers to create listings and buyers to discover new suppliers by product category Moved to a marketplace model that can connect SMBs directly and facilitate buying and selling with payments and logistics VALUE DRIVER PIVOT when a particular aspect can be segregated and a value chain is built on it Raised $10M @ $40M valuation Udaan’s Value Driver Pivot Raised $585M @ $2.7B valuation Raised $225M @ $1B valuation
  • 17.
    “Making online tradingsimple, safe and convenient." “B2B Buying for Retailers" "India's B2B Commerce Network of Retailers, Manufacturers, Traders, Wholesalers" "India's B2B Marketplace of Retailers, Manufacturers, Traders, Wholesalers" VALUE DRIVER PIVOT when a particular aspect can be segregated and a value chain is built on it Raised $10M @ $40M valuation Udaan’s Value Driver Pivot Raised $585M @ $2.7B valuation Raised $225M @ $1B valuation
  • 18.
    VALUE DRIVER PIVOT whena particular aspect can be segregated and a value chain is built on it Udaan Network centric B2B Trade Platform Providing SMBs with digitalization tools to allow for transacting online with logistics support Revenue earned from logistics and commissions on purchases Udaan India's largest B2B Buying Platform for SMBs Established its own distribution, logistics and credit network to complement the listing platform and become the primary supplier based on predictability and buyer behaviour Revenue from gross margins on buying, delivery charges & interest on credit provided product promise changed product functionality changed flexibility & openness changed target user demographic unchanged product positioning unchanged technology infrastructure changed Udaan’s Value Driver Pivot
  • 19.
    USER SEGMENT PIVOT whenthe product is capable of actually solving a different person’s problem Practo’s Customer Need Pivot Started in 2009 as a web- based clinic & document management software for doctors & hospitals. Realized that the real problem in healthcare was experienced by patients and their tech could solve that. Opened up the earlier closed off user end to solve the patients needs for ease of booking & confirmation. Started the pivot to make Practo a healthcare discovery platform focused on the patient. Raised $4M @ $12-15M valuation Used by 180M+ in 21 countries Raised $90M @ $500M valuation Transitioned to a full- service patient companion app for end-to-end health.
  • 20.
    USER SEGMENT PIVOT whenthe product is capable of actually solving a different person’s problem “Practo is an online practice management software which helps you serve your patient better and makes managing your practice simpler.” “Find Doctors in […….]. Book confirmed doctor appointments online for FREE.” “Find & book appointments with doctors, diagnostic labs” Practo’s Customer Need Pivot “Say Hello to India’s top doctors via video consultation, get digital prescriptions, order medicines, book doctor appointments & lab tests”
  • 21.
    ZOOM OUT PIVOT whenthe product ends up becoming a single feature in a bigger product Started in 2005 as a dating website where users could upload video profiles as an alternative to other platforms. Realized that (1) users were uploading a lot more videos than their profiles & (2) new users weren’t posting videos. Changed the architecture to allow users to post videos about anything they liked and share them. Focused on providing users with infrastructure to host all video content and allowed plug-ins. Raised $3.5M @ $15M valuation Nov 2006, sold to Google @ $1.7B valuation YouTube’s Zoom-Out Pivot Raised $8M @ $35M valuation Focused on providing users with infrastructure to host all video content.
  • 22.
    ZOOM OUT PIVOT whenthe product ends up becoming a single feature in a bigger product Users’ Usage Analysis leading to realizations of product capability “Your Digital Video Repository” “Share your videos with friends and family” Raised $3.5M @ $15M valuation Nov 2006, sold to Google @ $1.7B valuation YouTube’s Zoom-Out Pivot Raised $8M @ $35M valuation “Broadcast yourself”
  • 23.
    ZOOM OUT PIVOT whenthe product ends up becoming a single feature in a bigger product YouTube’s Zoom-Out Pivot YouTube as a video profile and discovery website for dating focus is to drive user acquisition and thereby receive trickle down subscriptions from total users over time revenue earned from subscriptions, uploads YouTube as a tool for all creators to upload video content irrespective of the use-case focus is to drive adoption to all users to create more content and make it available to more users like a broadcast channel – purely online only revenue earned from sponsored content, premium content, advertising product promise changed product functionality unchanged flexibility & openness changed target user demographic changed product positioning changed technology infrastructure unchanged
  • 24.
    ARCHITECTURE PIVOT when youchange strategy by trading off between volume & margin Office’s Architecture Pivot Initially operated on a Licensing model, later realising that SaaS had a greater potential when compared to licencing their product on a perpetual model. Introduced Microsoft 365- developed to give businesses & individuals access to all the Microsoft tools on a subscription basis. 2020 Revenue: $46B 2015 Revenue: $25B Expanding accessibility by building it as a cloud-first application, thereby allowing users to collaborate online. The new subscription model would make it accessible for the users who earlier found it unaffordable especially for small business needs & home use. 2010 Revenue: $17B
  • 25.
    ARCHITECTURE PIVOT when youchange strategy by trading off between volume & margin Office’s Architecture Pivot “Try or buy Office 2010, view product information, get help and training, explore templates, images, and downloads.” “As part of Microsoft 365, Office will continue to provide the best productivity experience.” 2020 Revenue: $46B 2015 Revenue: $25B “Collaborate for free with online versions of [……….]. Share them with others and work together at the same time.” “Try or buy Office 365 for Home or Business, view product information, get help and training, explore templates, images, and apps for Office.” 2010 Revenue: $17B
  • 26.
    GROWTH ENGINE PIVOT whena new strategy is deployed to dramatically increase growth Dropbox’s Growth Engine Pivot Started in 2007, Dropbox started as a cloud storage offering to allow for anywhere & anytime access to personal users. A userbase of 100K in 2008 with growing CAC (of $233+) from traditional channels meant 2+ years for CAC recovery. Raised $6M @ $25M valuation Raised $250M @ $4B valuation Dropbox has since then built a user base of 600M+ with over 15M+ paid users generating $1.9B a year. Raised $1M @ $5M valuation To induce virality, Dropbox began a referral program offering free space when you invited new ones. Users went up 40x in 15 months.
  • 27.
    PLATFORM PIVOT when youmove from application to a platform allowing others to build Shopify’s Platform Pivot Launched in 2006, as an e- commerce platform helping aspiring merchants set up an online store hassle free. Expanded beyond its primary offering to Merchant Solutions- that housed multiple offerings like Shopify Payments, Shopify Shipping, Shopify Capital, etc. 2010 Valuation: $25M 2020 Valuation: $139B 2013 Valuation: $900M Emerged as an ERP software that simplified managing the day-to- day business activities and offering more plug-ins than the customers thought they needed. Evolved into a linked ecosystem of services - Shopify Expert Marketplace, which embraced open-system architecture by focusing on the developer ecosystem. 2015 Valuation: $1.3B
  • 28.
    PLATFORM PIVOT when youmove from application to a platform allowing others to build Shopify’s Platform Pivot “Hosted e-commerce with Shopify, the easy way to start your own online store.” “Everything you need to sell. Build your online store with Shopify's ecommerce software and easily sell.” 2010 Valuation: $25M 2020 Valuation: $139B 2013 Valuation: $900M “Get more than ecommerce software with tools to manage every part of your business.” “Shopify is a powerful ecommerce solution that includes everything you need to run an online store.” 2015 Valuation: $1.3B
  • 29.
    CHANNEL PIVOT when youpivot to deliver your product/ service through a different channel Netflix’s Channel Pivot Started in 1997 purely as a ‘movie rental service’ providing door-to- door delivery of DVDs ordered by users through the website. 2020 MCap: $238.9B 2010 MCap: $9.3B In 2018, emerged as a content creation powerhouse and became the largest digital content player in the world. In 2007, started offering an online streaming option as broadband availability and internet speeds matured. 2012 MCap: $48.9B In 2010, understood the value of content creation and ownership as they moved into self-produced content. 2006 MCap: $1.8B
  • 30.
    CHANNEL PIVOT when youpivot to deliver your product/ service through a different channel “Netflix: Rent as many DVDs as you want for $20 a month. No late fees.” 2020 MCap: $238.9B 2010 MCap: $9.3B “Watch Netflix movies & TV shows online or stream right to your smart TV, game console, PC, Mac, mobile, tablet and more.” “Watch TV Shows & Movies Online or Streaming to your TV via Wii, Xbox, PS3 & many other devices.” 2012 MCap: $48.9B "Watch Movies & TV Shows Online or Streaming right to your TV via Xbox, Wii, PlayStation & many other devices.” 2006 MCap: $1.8B Netflix’s Channel Pivot
  • 31.
    CHANNEL PIVOT when youpivot to deliver your product/ service through a different channel Netflix “The Easiest Way to Rent a DVD!” mail-order DVD rental service that promises 2 – 3-day delivery of the largest catalogue of movies Netflix “Watch Netflix movies & TV shows online or stream right to your smart TV, game console, PC, Mac, mobile, tablet and more.” envisions to become the biggest global entertainment distribution service by catering to the taste & preference of its users revenue earned from a monthly subscription plan product promise unchanged product functionality changed flexibility & openness changed target user demographic unchanged product positioning unchanged technology infrastructure changed Netflix’s Channel Pivot
  • 32.
    38% of ‘unicorn’ startupsin India have pivoted at least once in their journey.
  • 33.
    © Prequate Advisory,2021 What is making others pivot? When do you consider one? What should you prepare for? Is it worthwhile considering?
  • 34.
    What is makingothers pivot? Deciding to pivot is a critical decision that most organizations make – probably the most critical one as it involves a lot more stakeholders and could at times mean backtracking on progress already made or realignment of teams. Here are a few indicators: Smart startups will almost always pivot, even more than once. It may be a course correction, a new strategy or may be a new business altogether. According to the Startup Genome Report that startups that pivot once or twice grow 3.6 times better and raise 5.2 times more money than others. Startups need to continuously have their ears to the ground. This is what keeps startups nimble enough to even take on giants in the industry. 1 Traction or the lack of it When a business fails to get attention or plant a flag in a particular space 2 Industries are converging When forces are moving different industries closer (say finance & procurement) 3 Competition is innovating When competitors seem to be playing a better game or users are not remaining loyal 4 Genuine Eureka moments When competitors seem to be playing a better game or users are not remaining loyal
  • 35.
    When do youneed to consider one? Deciding to pivot is a critical decision that most organizations make – probably the most critical one as it involves a lot more stakeholders and could at times mean backtracking on progress already made or realignment of teams. Here are a few indicators: Your market/ need hypothesis has changed significantly the market is telling you to Your pricing is becoming the #1 selling point to customers The competition for your value proposition has become fierce Most customers are mostly using only 1-2 feature offerings the customer is telling you to Most customers testify to highly specific product/ service claims One segment has a drastically different traction or success rate You feel like you are always playing catch-up with your competitors the organization is telling you to Your growth rate has plateaued while the industry is thriving Sales cycles involve a lot of education, often long or a high drop off Your talent plan often seems to change from priorities the talent is telling you to Your talent is leaving you for your competition You are spending more and more time on goal alignment
  • 36.
    Being at theright place at the right time Pivots are a powerful tool to ensure that a business is built for what is needed at that point of time for the market. It allows the management to capitalize on opportunities when the time is right. pivot can’t unlock Team 32% a pivot can directly unlock Biz Model 24% Ideas 28% Timing 42% Funding 14% Key Success Aspects > When founders of successful startups across the world were asked what they felt were the primary reasons that they became successful, this is what they attributed their success to.
  • 37.
    What challenges wouldbe a signal? Deciding to pivot is a critical decision that most organizations make – probably the most critical one as it involves a lot more stakeholders and could at times mean backtracking on progress already made or realignment of teams. Here are a few indicators: Indicators 3 2 1 6 5 4 Competition Fierce competition, many times led on pricing Repetitive goal setting Significant deviations needing high-level redos Product positioning Product too complex or features unutilized Lost in plot Initiatives consistently not meeting planned outcomes Industry feedback Feeling of being in the wrong industry or segment Strategy gaps Sense of being in the market with wrong product/ features
  • 38.
    But why shouldI consider pivoting? Pivoting has helped organizations that got it right significantly leapfrog and achieve breakneck speed by changing/ clarifying the focus. In the world of startups (especially those who can afford to), this has been directly reflected in their enterprise value. valuation before valuation after 18m $2-3M $250M 12m $4-5M $1,700B 24m $12-15M $700M 12m $4-5M $25M valuation before valuation after 24m $1.8B $2.3B 22m $40M $1B 36m $25M $4B 8m $0 $1B Instagram YouTube Practo Zetwerk Netflix Udaan Dropbox Slack
  • 39.
    To improve isto change; to be perfect is to change often. - Sir Winston Churchill Former Prime Minister, United Kingdom
  • 40.
    © Prequate Advisory,2021 What should you avoid? What advice does this entail?
  • 41.
    What should Ibe avoiding? Pivots are tricky to say the least. They involve a complete rewiring of goals and OKRs. Which means that the keys to success of a pivot are as much inside the organization as they are at your customer’s/ user’s end. 1.5x startups fail as a result of failed pivots compared to those that were successful with their pivots Why? 1 2 3 Trying to pivot into something you don’t know well about Pivoting when there isn’t a need for one really Pivoting to a highly established segment already competitive Shipping service for individuals $1B valuation Shipping service for SMBs shutdown Flash sales for fast fashion $1B valuation Designer home products shutdown High-end audio device $3B valuation Mass market fitness trackers $3B valuation 4 Pivoting to a lesser scalability model or more complex model Book stays anywhere from 20k options $100M valuation Personalized stays with flexi- pay options shutdown ▪ Rewiring to play the volume game ▪ Significant change in business model ▪ Highly competitive product category ▪ No sustainable advantage ▪ New R&D focus of company ▪ Faulty product delivery ▪ High servicing & retention cost ▪ User acquisition built on price competition from to
  • 42.
    What advice wouldthis be for me? In a world as dynamic as ours, both user preferences and the state of competition can change rapidly. While tricky, Pivots are sometimes the only lifeline for a few companies. They are journeys that need to be taken. So are there some golden rules? ALWAYS PIVOT WIDER OR DEEPER as pivoting to something smaller is a death-knell listen to the market TALK TO THE MARKET MOVERS before making a switch in the market focus Idea to pivot are driven outside-in rather than inside-out. PAY ATTENTION TO YOUR CUSTOMER and what he is really asking for listen to your customer REATTEMPT A QUICK & DIRTY PMF even if at a much smaller scale with experiments Pivots must not kill the magic sauce you have already made. A PIVOT IS NOT A NEW BUSINESS use what you have built and build on it listen to your organization PLAN, PLAN, PLAN & then PLAN B as assumptions can change significantly IF EVERYONE ISN’T ON, NO ONE IS ON whether it is at a goal setting level or KPIs listen to your talent QUESTION IF THIS IS RIGHT FOR YOUR ORG ability to build businesses varies for teams Pivots must be like band-aids – right off and quickly.
  • 43.
    Growth is neverby mere chance; it is the result of forces working together. - James Cash Penney Founder, JC Penney
  • 44.
    © Prequate Advisory,2021 What are the successful ones? What is common between them? How important is timing?
  • 45.
    Anatomy of asuccessful pivot The ability to address uncertainties head-on can be rooted in a first principles thinking. The factors here are more human, more philosophical than technical. It is hard to one factor and attribute success to it because the complexity can be more than an internal factor. Embracing change, while keeping the essence intact external internal These principles increased their odds of having things fall into place. Fortuitous Timing Studying Competition Proactive Leaders Extend > Revamp Improved phone cameras gave impetus to digital photography as photo albums became passé Thanks to the advent of technology, venturing into online streaming seemed possible for the first time Marrying photos with filters embraced the comfort that users were having to using smartphone tech ‘Netflix Originals’ certainly mitigated the risks of being cut out by the media houses Pivoting from the game to an image hosting service was risky but was what users wanted Building products that the people wanted as a motive to their existence allowed them to be nimble Expanding to functions that are more wholesome and go deeper into the customer relationships Credits where due - building a relationship beyond just listing helped give a lasting moat to our business
  • 46.
    The right thingat the right time The truth is that it can always feel like the right time to pivot. When you’re exposed to success stories of companies that made it big, you could see a growing temptation to change course. But the most important consideration you need to have? Timing. why it made sense Paid heed to the insights shared by the first 100 users- focusing on photo sharing. Lucky for us, it was quick! An [….] attempt to build upon the aspect that gets most traction could be an opportunity lost if not grabbed early on An early pivot made sense as the relationships it had gathered could now help solidify its moat as a B2B marketplace Pivoting after having a sizable userbase made sense as it could use its existing users in order to onboard new ones through a referral program Right when technology for streaming had matured, it pivoted to its streaming business so as to deliver more entertainment value Pivoting late made sense as it had built an established userbase and a superior product which it could leverage to a subscription model Journey 0-3 3-7 > 7 Years 4 Months 6 Months 15 Months 2 Years 3 Years 5 Years 10 Years 13 Years 21 Years
  • 47.
    The future isalready here – it's just not evenly distributed. - William Gibson The Economist, 2003
  • 48.
    thing the right Today, apivot is more than just a short-term survival response – It’s a response for long-term resilience. Most great pivots were brought on by a healthy mix of introspection and vision for the future. But what united them was that they were always well timed, decisive and quick. So should you? The woods are lovely, dark and deep, But I have promises to keep, And miles to go before I sleep, And miles to go before I sleep. Robert Frost ‘Stopping by Woods on a Snowy Evening’
  • 49.
    Now, can Prequate help? Of course ©Prequate Advisory 2010 - 2021
  • 50.
    Now, can Prequate help? Someof our work © Prequate Advisory 2010 - 2021 Early stage HealthTech Asia We helped re-model a 5YO organization for a pivot from a medical device manufacturer to a diagnostics and data analytics provider. Key pivot > From Value-on-sale to Value-in- use Role > Value proposition analysis Business re-modelling Financial modelling Impact > ▪ Revenue potential went up 13x ▪ Projected Y5 EBIT went up 3x ▪ Investment required came down by 45% Growth stage Enterprise SaaS Asia We helped re-model a 5YO organization for a pivot from a e- com player to a B2B SaaS player providing customers with an integrated and sticky solution. Key pivot > From Transaction led model to Continuity led Role > Business modelling Investor collateral Financial modelling Impact > ▪ MRR went up 170% ▪ Gross Margins went up 85% ▪ Company successfully raised next round of venture capital Late stage Telecommunications US We re-modelled a 15YO organization for a pivot from a telecom infrastructure player to an integrated consumer tech & data analytics provider. Key pivot > From Value-on-sale to Value-in- use Role > Entity expansion plan International expansion plan Financial modelling Impact > ▪ Revenue potential went up 3x ▪ Proj. NPV increased by 7x ▪ Investment required dropped by $12.1Mn
  • 51.
    Setup in 2010,Prequate Advisory (Prequate) is a management ^ strategic finance advisory. Prequate acts and manages as a Management Assist group / CXO bridge on matters ranging from business strategy to planning and execution. Over the last 10+ years, we have worked with 400+ businesses (ranging from Fortune 500 companies to award- winning start-ups) across 20+ countries in capacities ranging from crafting their international expansion strategy to managing investor relations. These clients include the portfolio of funds like Sequoia Capital, Accel Partners, Omidyar, Tiger Global, Coatue, Naspers, Breakthrough Energy among others. During this time, Prequate has been featured on various publications for their breakthrough approach to advisory. Prequate‘s DNA is made of a team with experiences from some of the world’s leading consulting outfits on areas spanning international business management, business consulting, risk advisory, assurance, corporate finance, investment banking and entrepreneurship and work as partners for growth to SMBs across the world. management ^ finance © Prequate Advisory 2010 - 2021
  • 52.
    This world isa better place thanks to people who are ready to commit to missions far beyond themselves – to make available insights and information about the world we live in. One such organization is The Internet Archive, a non-profit library which we have used extensively to capture the pulse of the state of their thoughts using their web presence as a proxy. Another instrumental influence is of Eric Ries, author of The Lean Startup which has shaped the industry’s thoughts on pivots itself. Apart from this, the teams at HBR and some of the other professionals from across the world who put their thought leadership out there for us to learn from. The most important people to thank are the brands that feature in this report - Dropbox, Flickr, Instagram, Microsoft, Netflix, Practo, Shopify, Udaan, YouTube, Zetwerk. Their journeys truly inspired the research and gave new perspectives to the research. Thank you. Lastly, this may be a few Mb of data, but it has taken hundreds of hours to research, host and compile. Our team of dedicated, gifted individuals contributed to it with their time, reputations & hearts to make this document possible - to them, a heartfelt thank you. Disclaimer: This report has been prepared for the general guidance on matters of interest and for learning only. This is not professional advice from Prequate. As a reader of this content, you should exercise due caution while employing or deploying analysis and results from this publication. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, Prequate does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © Prequate Advisory 2010 - 2021 thanks A big
  • 53.
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