MAGNET Incubation Center

Blog

The Perks of Punting, Pivoting, and Persevering

If you're starting a business, there's a good chance an assumption you've made will turn out to be wrong. You can hope that day never comes but, trust me, it will. Startups, after all, are full of risky bets and guesses (that's what makes them startups).

But even if you know it's coming - even if you're looking for your own weak assumptions - it's tough to absorb the blow of being wrong. Sometimes it's even harder to know what to do next.

We're here to help.

First, congratulate yourself. As we've discussed, entrepreneurs don't look for evidence that refutes their ideas often enough. If you've discovered a flaw in your plans - say, your customer target was off - that's actually great news. It means you've saved yourself a lot of time and money.

Now you have three options:

Punt - It's never fun to admit your idea won’t work, but the end of one entrepreneurial journey can be the start of another. Consider whether the circumstances are right to keep going. Do you have the cash? Are the rest of your assumptions still solid? Does your team have the energy to keep going? When you're at a crossroads, be honest with yourself. Giving way to the next thing isn't giving up.

Pivot - This term is used too often in business circles to describe a change of course. However, a pivot is actually a deliberate and dramatic adjustment to a business model. For example, shifting focus to businesses rather than individuals qualifies as a pivot. Selling online when you're already selling in brick-and-mortar retail is just an adjustment, not a pivot. The distinction matters because a pivot means you should reassess all of your key assumptions. Adjustments mean you're still mostly on track.

Persevere - Finally, you can (and should) keep going. You might try a new way to test your assumptions or talk with more customers. You might try new ways to market or slight adjustments to your product. But this path means you're willing to keep investing in your idea, at least until you assess your next critical assumption.

Whenever you learn something important about your businesses, you should honestly ask yourself whether it's time to punt, pivot, or persevere. It's a hard question, but ask it. Keep these three paths in mind and you’ll keep moving forward.

Need help turning your product idea into a growing business? Learn about our membership here.

Nicole Shedden
Combating Confirmation Bias: How to Spell Success for Your Startup

Entrepreneurs are a self-confident bunch, and for good reason. The old perception of nine-in-ten startups failing remains as true as ever, and you have to have deep faith in yourself and your idea to face down such long odds.

But the gift of self-confidence can also be a liability. As human beings, we're already programmed to find evidence that supports our beliefs. Psychologists call this “Confirmation Bias”, and in ultra-confident entrepreneurs, that bias is often turbo charged… sometimes with expensive consequences.

Building a successful startup in today's economy requires a willingness to learn from mistakes and, when necessary, make major adjustments. When you're starting a business, assumptions that once seemed unquestionably true can quickly turn into big misses. As author and entrepreneur Steve Blank famously says, "No business model survives first contact with the customer."

Here are three ways entrepreneurs can overcome the confirmation bias and let evidence drive their decisions:

Look for disconfirming evidence
It's not easy and it sounds counterproductive, but the best thing a founder can do is look for reasons a new idea won't work (yes, you read that right). If nine out of ten startups fail, assume your first, second, and tenth idea has a fatal flaw (or two). Looking for weaknesses is the only way to find them, and that means identifying your main guesses and setting up experiments that shoot down your riskiest assumptions.

Avoid biasing your experiments
When you're gathering information about your product, it's natural to want positive feedback. You'll instinctively set up situations that show your product in the best possible light. You'll add your magnetic personality or your compelling back-story to the conversation in hopes of smiles and nods. You'll spend extra time explaining all of the wonderful benefits of your amazing idea. But if you want honest feedback, don't let any of that get in the way of your product. Talk to strangers who won't be afraid to tell you what you don't want to hear. Add disclaimers like "this isn't my idea" or "this is one of many options we're working on." If you can, have friends do customer interviews and exploratory sales calls. Let your product stand on its own - whether on a retail shelf or online - and see if customers buy what you're selling without a pitch. Do everything you can to distance yourself and your biases from the transaction.

Get customers to show you (rather than tell you).
It's amazing how often I see smart entrepreneurs investing lots of money based on the things people tell them. "Yes, I'd totally buy your product!" is music to an entrepreneur’s ears, but unfortunately what customers say they'll do and what they'll actually do are often very different things. Actions, not words, should drive your decisions. If a customer says they'll buy your product, ask them to buy it, right there on the spot. Don't have it on hand? Ask for a pre-order or a down-payment. Don't have a working prototype? Mock one up. As imperfect as your lo-fi product/service might be, selling one product (or getting rejected) is priceless.

Want to know more? Find out more about [M]IC's services, or take the next step by contacting us today

Nicole Shedden