Weekly Accelerator Updates

Week 4: Persevere or Pivot?

Week 4 Recap

This week, many teams tackled some difficult conversations:

  • Persevere or Pivot?
  • Communicating your traction and progress
  • Accountability
  • Entrepreneur Self-Care

Persevere or Pivot?

When you invalidate your hypotheses

When entrepreneurs are following the process diligently, there inevitably comes a time when their hypotheses get invalidated. In some cases, the invalidated hypothesis involves a product feature, a marketing tactic, or a  pricing strategy. In this case, you can persevere while incorporating the feedback into your work.

In other cases, new data may invalidate the entire foundation of the business: You may find that the target market does not have the need you believe they do, or the product and service you are offering does not address a big enough need for your opportunity to be big enough to be worth building. This is the time you need to pivot.

Failing Fast And Pivoting

If this happens to you, congratulations! This means that you are doing exactly the right thing to “Fail Fast”. Building a new venture is hard, and it is much better to find out earlier than later.

You can now zoom back out within the problem area of interest. You can either find a different beachhead market to work with, or find another problem to solve within your beachhead market. It  will take you a lot less time to come up with a second business idea to pursue.

Transitions: Ending, Neutral Zone, New Beginning

Knowing you are doing the right thing does not mean that you will feel wonderful about moving on. It is perfectly normal to feel an emotional attachment to something you have poured your heart and soul into.

One framework that helps entrepreneurs work through these feelings is to explicitly manage the pivot through the three phases outlined in the book “Transitions” by William Bridges, written over 40 years ago. We suggest you adapt this approach to the pivoting process.

  • The Ending. Every transition begins with one, and letting go of the old approach is the start of the pivot.
  • The Neutral Zone. This is the uncomfortable space where the old approach is invalidated but you haven’t come up with a new approach. This feels unsettling – but this time of re-orientation can be a time of great creativity. Brainstorm alternatives, and do as much customer research as you can as quickly as you can to build new knowledge.
  • The New Beginning. With new hypotheses that see early validation, you have a new approach. You can build back faster and better than the first time around. Keep calm, and trust the process!

Communicating Your Traction And Progress

Different Pitches For Different Purposes

Most entrepreneurs have plenty of experience pitching their ventures to a variety of audiences. It should not come as a surprise that there is no such thing as the “One Perfect Pitch”. The pitch you will do depends on the audience (Funder? Advisor? Potential Employee? Members of the press? General Audience?) and the length of time you have for the pitch.

You are always pitching to earn the next pitch: a 1-minute pitch earns you 5 minutes, a 5-minute pitch earns you 10-20 minutes, and a 20-minute pitch might earn you more time with additional stakeholders.

Every entrepreneur ought to have a 1-minute pitch and a 5-minute pitch. The 1-minute pitch captures the interest and imagination of their target audience. A 5-minute pitch is infinitely adaptable and helps you clarify your thinking.

A Venture Pitch Must Communicate Traction, Not Just Theory

The 5-minute pitch is the most common length of time for a Demo Day style venture pitch. It is a product designed for a general audience.

If you have presented at pitch competitions like the Tufts $100k New Ventures Competition, you will be very comfortable with the components of such a pitch. Following is the rubric for the Tufts $100k. Note the absence of “traction” in the rubric.

  • Problem: Does the team understand the problem and their target customer?
  • Solution: Does the solution solve the problem in a unique manner compared to the alternative?
  • Go to market strategy: Does the team have a credible and actionable go-to-market strategy?
  • Financial sustainability: Is the proposed business model financially sustainable?
  • Scale: Is the venture capable of scaling up to impact a large number of people?
  • Impact: How is the world a better place if the team solves this problem?
  • Team: Did the team convince the judges they are the right people to solve this problem?
  • Presentation: Was the presentation engaging and effective?
  • Wildcard: Did anything else particularly impress you?

A Demo Day pitch has far higher expectations in two areas: Financial sustainability and Traction.  A story is no longer enough. We are looking for data from the field that shows your progress.

Expectations On Financial Sustainability

Financial sustainability involves having a clear idea of your business model, your unit economics, the timing and amount of capital injections (if any), and a practical, credible plan towards raising funds to meet those capital needs. While you may not have hard data to validate your hypotheses, we do expect you to have specific hypotheses/models that show a bottom-up model of how you are forecasting revenue and expenses.

Expectations On Traction

Traction for an early stage venture typically includes proof that you are able to acquire customers and early indication of their willingness to pay. This can come in the form of acquired customers for an unpaid beta, customers in a paid beta, customers who have pre-ordered your product, letters of intent / memos of understanding to enter into a paid pilot with you, or other forms of early revenue.

Communicating Your Traction

For a 5-minute venture pitch, you may find it hard to fit everything you want. You may over-invest in the problem statement and the merits of your product or service. While that is very important, you need to reduce the level of detail to make time for the business fundamentals.

There are numerous pitch deck templates. This includes Guy Kawasaki’s 10-slide infographic. You will find that none of them exactly suits your venture. Use these templates as a launchpad to make sure you include the right content at the right level – then make the pitch your own.

For more pitching resources, peruse the Pitching Page within the Derby Entrepreneurship Center’s Online Learning Center. We will also be providing practical pro-tips on the content, narrative, and delivery of a great venture pitch in the next weekly update.

Accountability

Part of the magic of a full time accelerator is the way we help teams think about accountability.

As part of the program, we provide structure: The Monday CEO checkin’s are designed to help teams stay accountable to themselves and to their peers in the cohort by reporting out what they got done the previous week, what they are doing this week and where they need help. This is called the “weekly standup” or “scrum”, and is a proven ritual adapted from the Agile software development process. Some teams may elect to adopt similar rituals for themselves at a cadence that works for them (e.g. daily standup is the cadence for software teams).

Teams also work independently during large stretches of time in the summer. This is where the concept of accountability becomes more nuanced. How do you define accountability? Is it by task or time spent? What are your promises to your team mates relative to your own contributions? What happens if you are not able to meet those contributions due to personal or professional reasons? Do you have open lines of communication where you talk about scenarios where you cannot contribute at the level your teammates expected? Are you honest about what level of contribution you can maintain? Do you have a team culture where it is safe to talk about how each person feels when one or more teammates has to pull back on the time and effort spent on the venture, either for a short time or indefinitely? What happens when the collective capacity or level of focus of you and your teammates as a whole falls below critical mass – how do you think about your accountability to each other and to your venture?

Things happen, and the best made plans sometimes fall apart due to new circumstances. Equal contribution by time is not necessarily equitable and everyone has their own circumstances to work through. The most important thing is to develop the skills to have these types of conversations in an open, curious, and constructive manner, so that you all can handle any changes in time commitments or level of output together as a team, taking all aspects of the situation into consideration.

Entrepreneur Self-Care

While making progress on your venture is important, taking care of yourselves is important too. Burnout is real. Make sure to create rituals and routines for rejuvenation for yourself and your team.

Some people are not great at taking care of themselves. You might find yourself running fast, and then burning out, cyclically. If that sounds like you, you may be a “catalyst”. Read “Move Fast, Break Shit, Burnout: The Catalyst’s Guide to Working Well” by Tracey Lovejoy and Shannon Lucas. Then create one new rejuvenation routine for yourself this week. Your brain, your team, and your venture will all thank you.