It was great to catch up yesterday, we met at one of my workshops earlier this year but your business has changed quite a bit since then.
Pivoting a business takes guts.
It requires honesty and humility to see that the previous model isn’t going to work, and then creativity and discipline to find a new and better alternative.
To top it off, you need a decent reserve of energy and optimism, rare commodities during times of doubt and exhaustion.
The fact that you and your business partner have all of these in your early twenties is remarkable.
Aside from these attributes, the actual process of pivoting can feel awkward because there’s so much uncertainty.
The temptation is to treat this as a linear process, like building a house or baking a cake.
Whilst these tend to have clear steps in a set order, pivoting is much messier.
You’re going to have to hold a lot of questions simultaneously, and new information will undo your previous ideas.
That can feel like backwards progress, but it’s massively in your interest to stay in the discomfort.
For example, I think you’re still evaluating a few fundamental questions:
1. Who are we serving?
2. What problem are we solving for them?
3. How valuable is this solution to the customer?
4. How should we deliver this solution?
5. What sort of platform should we build?
6. How will be drive traffic to our platform?
7. How will we retain our customers?
The challenge is that you might change your answer to question 1 in the next few months, which means all of the subsequent questions need re-evaluation.
It will be the right call, but it will feel like you’re back to square one.
I see three moving parts that need to fit together: the model, the industry and the mechanism.
If you’re looking at an aggregator model (showing customers all of their options and letting them pick the best/cheapest deal), then you want to quickly become an expert on aggregator models.
Who does them well?
Who did them poorly?
What do the good ones do differently?
Is the model a good approach for 2019/2020?
If you want to become indispensable in women’s fashion rental, they you want to become an expert on how each business and customer segment behaves.
What are they each looking for?
What is frustrating them?
Which needs are going unmet?
What are their dealbreakers?
How sophisticated are they?
If you want to build a tribe around your brand, then you need to become an expert on the mechanisms that are available to you.
What sort of channels will you operate?
How do you want to get in front of your prospective customers?
How frequently will you engage with them?
How can you take some friction out of the process?
What would delight people?
Most brands run terrible pages and campaigns, how will yours be different?
Here are the questions to grapple with next:
What separate good and bad aggregators?
What do people want from an aggregator?
What constitutes a sophisticated/unsophisticated customer? How do they behave?
What are some good examples of businesses who “clip the ticket”?
Why choose us? What’s the incentive for switching?
How do we nudge users into completing transactions?
How do we best frame our Value Propositions? Is it better to have a $200 product as 10% off, or $20 off? How do customers measure value?
What are our Value Proposition dealbreakers? e.g. if we’re cheaper, how much cheaper do we need to be? If we’re faster, how much faster do we need to be?
How do we grow our audience? How do we increase loyalty? How do we do it in a cost effective way?
How much will it cost to acquire each customer? What is their average lifetime value?
It’s going to be tempting to take shortcuts with these questions – like searching for the answers that match your current expectations or discounting inconvenient evidence.
This is, as they say, like cheating at your parachute packing class.
You want to take the time to think the model through in detail, because you’re the beneficiary of good decisions.
If the first version of the idea passes this testing, great!
If it needs some modification in order to pass, great!
If there isn’t a version of the idea that stacks up…not great, but at least you’ve found out in the quickest and cheapest way possible.
Please let me know how I can help with these questions, either as a sounding board or as someone who puts the ugly conversations on the table.
The great part about being young is that you’re not trapped by sunk costs – therefore this new business has to be better than all of the other options available for you in the next few years.
The job isn’t to prove a model to other people, it’s about proving it to yourself.