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Business

Jacques Habra: Entrepreneurs and the Art of the Pivot

The modern entrepreneur is more of an artist than a technician. The entrepreneur’s canvas is the start-up business in which the entrepreneur designs a business model that creates value for the target market. Over the course of the design, launch and development, there are millions of brushstrokes found in everyday emails, calls, meetings, coding, market research and strategic decisions. From the outside looking in, one has little idea about the various adjustments made from start to launch, and from market capture to market leader.

To gain a glimpse of such adjustments, one can watch movies like The Social Network and see Mark Zuckerberg’s seemingly insignificant exchange about wearing one’s relationship status on a T-shirt becoming one of Facebook’s most important features during its early stages.

These adjustments are called pivots. By definition, pivots take place on multiple axes — sometimes all at once. What this means is that a pivot can be a change in pricing, an adjustment on how a product gets to market, or even a name or brand change. The pivot can be simple, or it can involve every single aspect of the company.

On Wednesday, the MIT Enterprise Forum of the Central Coast will showcase four entrepreneurs who have built companies ranging from a fledging start-up to a $300 million regional titan, and how “The Art of the Pivot” made all the difference.

My fellow MIT EF board member, Steve Sereboff, and I wanted to put a program together that featured the authentic side of the start-up. These are often moments when the money has run out and closing doors appears imminent. Those moments of desperation can be the catalyst to manifesting a “pivot” that turns it all around.

Steve Zahm
Steve Zahm

Just ask our keynote speaker, Steve Zahm, the president of local startup Procore, which develops mobile and Web technology for the construction industry. Zahm told me that for a long time “revenue was flat” and what led to a growth rate of 100 percent annually was in large part a notable pivot to offer yearly pricing instead of monthly pricing. This pivot allowed Procore to become more attractive to larger companies, thereby stabilizing and increasing revenue.

One of the program’s panelists includes Mike Sheldon, the CEO of Curvature, formerly Network Hardware Resale, who says the pivot meant shifting the sales model to become a direct sale-force enterprise. Within four years, sales quadrupled.

Sheldon also remarked on the consequences of avoiding a pivot for a growing company, saying that his “customers wanted support of the server hardware in addition to the networking hardware Curvature sold, but that adding that support meant significant investment and decided to avoid that pivot.” Within a few years, several competitors focused on the server support and captured market share that Curvature would have easily gained. Now Curvature does provide this service but the company has to contend with serious competition rather than dominating that sector of the market.

Indeed, one principle most business and entrepreneurship schools teach is “focus,” which suggests that adding ancillary services would be a mistake. It is precisely in this analysis and review that the “Art” of the Pivot comes into play. For those of you who are start-up executives or considering investment in a start-up, understanding what these CEOs did (and did not do) can help you begin to learn the Art.

The “Art of the Pivot” attendees will also hear from Mike Franco, CEO of Riptide IO, which develops technology like Nest (home automation), where Riptide’s technology is focused on commercial building systems. Franco’s company is still a relatively small group and thereby has the ability to pivot quickly, which Franco says can be a negative if the team loses focus “by chasing this week’s shiny object.”

In the case of Riptide, Franco’s instrumental pivot involved a complex and common problem on how to turn a service-based enterprise (selling hours that makes scaling quite difficult) into a product enterprise that allows faster growth and better margins.

“Riptide’s pivot challenge was how to break free from the service revenue dependency so we could productize our technology,” he explained.

Franco’s answer was to meet with experienced investors and garner advice on what pivots to make. Speaking from experience as a serial start-up founder, it is essential to take your problems outside of your immediate team to experts who can offer impartial perspective.

One such expert is our final panelist, Brian Plackis Cheng, angel investor and CEO of Cielo24, which aims to contextualize and productize the captioning of media to make videos more findable, accessible and ultimately more valuable. Cheng’s key pivot originated through market research that transformed Cielo24 from a notetaking service for meetings to a product for the booming online education market.

Each of these CEOs and investors has had to pivot to succeed, in some cases successfully and other cases too late. On Wednesday, you will hear their stories and begin to learn the “Art of the Pivot.”

The event takes place from 6 to 8 p.m. Wednesday at Cabrillo Pavilion Arts Center, 1118 E. Cabrillo Blvd. in Santa Barbara, and is preceded by an hour of networking at 5 p.m. Space is limited and registration is encouraged. Click here to register online, or click here for more information about the MIT Enterprise Forum of the Central Coast.

Jacques Habra is the founder and CEO of Noospheric, a Santa Barbara start-up incubator that has helped launch regional companies like TrackR (formerly Phone Halo), SelfEcho, First Click, SBClick and FreePropertyAlert. He serves on the boards of directors of MIT Enterprise Forum of the Central CoastMentorship Works, Foundation for Santa Barbara City College, Westmont College Foundation and the Arthritis Foundation’s Leadership Circle. The opinions expressed are his own.

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