Lean Startups: Part 3 - Startups That Pivoted
"Pivot." It's become a buzz word among startups thanks to Eric Ries and his lean startup language. It can often be overused and in the process be stripped of its meaning. But the principle remains invaluable for startups, and large companies for that matter, to constantly embrace change. What you set out to do will probably look nothing like what you will be doing in 3-5 years. Embrace it.
This post will take more of a case study approach, introducing three "graduated" startups that started as something very different than what eventually made them big.
Paypal
Max Levchin, co-founder of Paypal, started a company in 1998 called Cofinity that would later become the internet giant that Paypal is today. The original idea morphed from cryptography based libraries for Palm Pilot devices, to a semi-successful handheld software product that allowed users to "beam" money to each other, and finally was replaced by an iteration of the current web platform in 2000.
Max explained that when they decided to kill their handheld product, it was emotional, but the right business decision. At that time, their original product, the handheld version, only had 12,000 users while the new and immature web platform claimed a whopping 1.5 million.
Hotmail
Sabeer Bhatia, co-founder of Hotmail, began the story of personal web-based email with a product idea called JavaSoft. JavaSoft existed as a business plan to create databases that were accessible through any browser. The planning for JavaSoft was occurring while he and his business partner, Jack Smith, were working at FirePower Systems. They met a great challenge when a firewall was installed preventing them from dialing out to their personal email accounts.
They ended up inefficiently trading information on floppy disks and out of that frustration was born Hotmail. "If we made email available through the web browser, that would solve our problem," they said. Eventually, though not easily, they killed the JavaSoft idea and went full-time on Hotmail, never looking back.
TiVo
Mike Ramsay and Jim Barton, co-founders of TiVo, came out of HP looking to be their own bosses. The idea they received funding for was a home server network, not a digital video recorder (DVR). But they soon came to the conclusion that their confusing product idea was too complex to explain and sell to the average consumer. So they honed in on one component of their business plan, which at the time was called a "personalized television" or PVR. As the last ten years of television tells us, this was the idea that consumers could grasp.
Stories of successful startups are riddled with examples of major pivots like these. In the above examples, the original ideas were even validated by millions of dollars in VC money. But did this stop the founders from completely changing directions? Of course not. Sticking to your original idea is overrated. Let your idea change and shift as needed and it'll be unrecognizable, but will have a better chance of being successful.
