The Spark Blog

So, by now, I am deep into what looks like a successful pivot of a Spark Program Startup. I say "looks like" because, while all signs are strong (more on the signs later), the final verdict from the jury is still pending.

In due time, the story of this unique group of people and their interesting and surprising pivot will be told.
Meanwhile, let's delve into the WH questions surrounding the subject of a startup pivot.

Early Perspectives on Pivoting

Early in my career (mid-80s), the need for a pivot was seen as bad news—a symptom of failure. It was only later in my career that I learned failure is an essential part of growth, improvement, and becoming adept at operating successfully.

As with everything in life, perceptions evolve. Over time, I learned that when physically challenging our body in the gym and training, the failure of our muscles to generate force makes them develop and become stronger.

The Opportunity in Pivoting

Pivoting your startup is also an opportunity to re-examine basic questions and pave a more accurate path to success.
Not all pivots are alike. A “shallow” pivot might involve setting a new pricing model, while a “deep” pivot might mean a complete restart: a new problem discovery (ideally significant and involving a large market), a new solution with a better fit, breakthrough technology, and perhaps a new team and skills.

Why Pivoting?

Today, I will shed light on what seems like the easiest question: Why pivot?

The truth is that while this seems like an easy question, it often becomes a significant obstacle in the minds of entrepreneurs programmed to overcome any barrier or challenge, sometimes to the point of ignoring reality.

Thoughts like "If we just had more funds for marketing education" or "If the prospect could understand what they need" are examples of a stuck management mindset.

We call it “market feedback.”

Sometimes it's so silent that it's hard to hear, but the market always signals. Customers are usually polite and provide many excuses, but if the problem you've identified doesn't bother them, it's simply not in their top five issues to solve. This might indicate that the current business model, product, or market approach is flawed. For more developed startups, it might mean the current strategy is leading to unsustainable financial losses, or funding is drying up with no fresh financing options.

Technology Shifts

A common reason for pivoting nowadays is a technology shift.
Many startups were initiated before the revolution of Generative AI, with some even reaching $100 million ARR.
Their solutions are now more easily and efficiently solved using GenAI, disrupting their market.

For example, the company Verbit, a global leader in transcription and captioning technology, faces a huge challenge from GenAI.

Will they survive it? Do they urgently need to pivot?

There are many such examples.

Types of Pivots

And what is a pivot?

Can Verbit claim that their next version is “GenAI-based”? Is that enough?

I'm not sure. It seems to me that Verbit needs to redefine itself completely.

Here are the types of pivots:

• Product Pivot: Changing the core product while keeping the target market the same.
• Market Pivot: Keeping the product the same but changing the target market.
• Business Model Pivot: Changing the revenue model or the way the startup monetizes its product or service.
• Technology Pivot: Switching to a new technology that better supports the startup’s goals.
• Customer Need Pivot: Addressing a different set of customer needs than originally planned.

Is any of the above enough for Verbit?

Do they need all of the above? Or perhaps they need a fresh start with a whole new “significant problem” in a remarkable market size.

Optimizing Current Assets

When they pivot, is it important to optimize their current assets—technology, expertise, or maybe just the team?

Or maybe there is a built-in conflict between doing the optimal pivot and maintaining or optimizing old assets.

In any case, an essential and critical asset pivot teams and leadership may need is courage.
A lot of it.

More on pivoting in my next post.