Startup Pivot: Knowing When To Pivot Your SaaS Business Model (Go-To-Market Case Study)

Startup Pivot: Knowing When To Pivot Your SaaS Business Model (Go-To-Market Case Study)

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- Startups are tricky. They have a high failure rate, but the successful founders always find a way. But on that direction, on that way, almost every successful founder eventually had to make a change to their strategy, whether it was their product, their go to market or market, they needed to make a change.

And the toughest thing to do is actually know when it's time for a change versus you've just got to keep doing what you're doing and the promise land is just around the corner. In startups, in SaaS, we call this a pivot. A pivot is when you make a very strategic change to the company based on new data. And when you make that change, everything starts to work. But here's the big question. How do you know whether it's time to do a pivot? What kind of pivot do you do? How do you actually do a pivot and how do you even know whether the pivot worked or not? In this episode, I'm gonna walk you through the three principles you absolutely need to know in terms of doing a pivot in case what you're doing now is just not working.

And by the end of this episode, I will have introduced you to a founder that I personally worked with as they navigated a pivot, and we're also gonna walk you through the three principles that you can apply, so once you do that pivot, you'll be able to break through and get to success for your company. Intro. (upbeat music) What's up everybody? Welcome to Unstoppable. I'm TK and on this channel, I help SaaS founders like you grow your SaaS businesses faster with an unstoppable strategy.

Now, if you are new to this channel, welcome, every single Sunday I drop an episode like this with actionable strategies on how to grow your SaaS business faster. So, be sure to hit that subscribe button and that bell icon. That way you'll get notified every single time I drop an episode with the TK energy. Now, if you're already part of this channel, if you're part of this community, if you're part of my coaching programs, my people, welcome back, it's really awesome to see you over here. Okay. So, if you're a founder, if you're a leader, when you're building an early stage SaaS business, you essentially have three options at any given moment.

I don't care what stage you're in, what you're doing, if you're a startup or you're still breaking through and getting to scale, you're not a big company yet, you have three options at any given moment. Option one is you keep iterating. Meaning whatever you're doing, maybe it's working, maybe it's not, but you're just gonna keep iterating, keep getting better, keep getting better and hopefully you actually get to that next level of growth.

Number two, which you also have an option on is just give up. Anyone at any moment can just stand up and say, you know what? I give up. I'm not gonna do this anymore. And plenty do.

And number three is you can choose to pivot. And as I mentioned, a pivot is when you change the direction of your company, what you're doing, who you're serving, what product you're building in a very strategic way. It's very different than giving up and starting another company. It's about, hey, look, there's something here, it's not quite working, let's pivot it into a way where we think it will work.

And more often than not, pivots end up being wildly successful for companies. So on this episode, I'm gonna introduce you to Alex. Alex is the co-founder and CEO at a company called Caribou. They're part of my go-to market program.

And while I've shared a lot of stories about founders in my go-to market program, who've reached incredible levels of growth and scale and fall on funding, with Alex, while they're scaling now, they had to pivot along the way, things weren't quite working as they expected. So in this episode, I'm gonna introduce you to Alex, we're gonna talk about exactly how they navigated their pivot and while I'm showing you parts of our conversation, I'm gonna teach you these three principles that's gonna help you understand how to pivot, if that's the right fit for you and how to actually navigate that path so that you too can get to breaking through and getting to the next stage of growth. So if you're excited to dig in, go ahead and smash that like button for the YouTube algorithm, it really likes it when you do that. Let's first introduce you to Alex. - Biggest problem in healthcare right now is the labor shortage of frontline healthcare workers. So, we've developed a staff rewards program that's built specifically for health care companies, whether that's home care, skilled nursing, senior living facilities.

And it really motivates, delights staff and it turns them into effective recruiters for their organization and effective advocates. So it really gamifies many elements of their experience and it's really helping our customers grow their workforce. So that's their biggest problem and it's working so far. - Now that we know what you guys are doing, let's talk a little bit around what you were doing in the beginning when you first started Caribou. Like how did that come about and what was the idea then? - Yeah, absolutely.

So, the core problem was similar. I started out my career like, gosh, eight years ago in investment banking and I was focused on mostly M and A in senior care, the senior care field. So, home care agencies, long term care, et cetera.

And the repeating pattern and problem was the labor shortage even eight years ago. And then you look ahead at sort of the demographic trends that are happening, our senior population's doubling over the next 20 years, but the healthcare worker population is pretty stagnant or in some markets declining. So it really seemed like that was a good problem area to focus on and sort of where the light bulb went off was noticing that the number one reason care workers were quitting was their hours were too unstable, especially in home care. And meanwhile, there was families that were burning out, patients that were waitlisted, not getting the care they needed. So, we thought, hey, maybe we can create a solution where we work with the home care agencies and we kind of have like a last minute marketplace to transform their idle capacity into like on-demand care for patients that are maybe in the area, could use an extra visit, use some extra help.

So that was the original idea. And we did validate it with one government funder project, a big home care agency, but then when the pandemic hit, that really complicated our lives. And I can explain more like what exactly happened and the whole kind of period of running in place and trying to fine tune that solution before we decided to like really change course. - Yeah, this is bringing back memories because it was like, well, you can do this, and I remember we were talking about the go-to market for that.

I was like, well, you're gonna have to have two manifestos, right? Like you've got to sell on the families and you've got to sell on the providers and you've got to match the two and you've got to get demand going. Marketplaces are inherently very hard because you've got to get just enough critical mass on both sides for their matching to happen. And then there's like a model that you're trying to convince workers to follow. So I remember that.

Let's maybe break it down. So, you were doing that, the pandemic hit, did the pandemic just like kill the model or it was still like kind of slow? Like what prompted you to think maybe we need to pivot? And then after that, we can talk about how did you discover the pivot. - Yeah. So, I think as we kind of went through like that two year journey of trying to validate that solution, we really realized that it was most effective in government funded home care, where there was like wait listed patients who were approved for like free services and then the government contracted agencies had like this untapped supply.

And so we thought that's really where our ideal customer, lives on both sides. It's not private agencies that give like more of like that high end concierge experience. The families that can afford that are getting all the care they need. We've really got to get that family that really needs an extra few hours of care.

We've got to tap into that. So I guess what happened was was, once we had validation with the government project, some care workers were making an extra 400 bucks a month from these on-demand visits, their agency was making like an extra 700, 800 in revenue per staff. When we had our scale up meeting with the government, that was the week that the NBA shut down. And so they were like, hey, this is cool. Like we really need this capacity and it seems like a no-brainer to use it because it helps with retention of staff because it stabilizes their schedules and then we increase capacity to give care to like the most vulnerable people that are on the wait list, but you've got to bear with us because we've got this whole COVID thing to figure out.

So I think we basically were like, well, we can't necessarily wait forever, so we were trying to still get deals done with other funders. We actually tried the same model in private paid care with families paying out of pocket. But that was more of like a vitamin solution. It wasn't that helpful. As the pandemic wore on, we were kind of like, man, like there's too much out of our control here to really scale this business.

And I think the key thing was is like, it's hard to rely on like a government approving a new care model. Like their cycles are so long and we had to go even through like a privacy impact assessment just to get the opportunity to show them it works. And I thought we're like, we were like a pre seed company, we don't have the runway to wait this out. So that's when we really went back to the drawing board.

- So if the pandemic didn't happen, do you think you would've opened your mind to a pivot or approached a pivot? - That's a great question. Honestly, probably not. We probably would've really kept going with the government funded care and I do think we would've had success in scaling it. Like we had commitments from quite a few government funders to be scale up partners with this because this really kind of hit the nail on the head for some of their big problems.

But I guess the pandemic really, like it shined this big light with a magnifying glass on like this core labor shortage problem and it was a blessing in disguise I think, because it really forced us to simplify and focus more directly on that problem and also remove the multi-sided marketplace problem that you mentioned where this staff rewards platform, all we need to do is sell to the agency or the long term care facility. We don't need to get any government to approve a new funding model or anything like that. - Okay. So that's Alex and now you know the before and the after.

What they originally started as, why he started it and what they're doing now after their pivot and why it's working. Now, we're gonna go double click into this and we're really gonna dig into, well, how did they navigate that pivot? How did they know they needed to do that pivot? And what did their investors say? We're gonna go into all of that. But before we go into that, I want to introduce you to principle number one of pivoting. Principle number one of pivoting is that there's three major kinds of pivots. The first one is a zoom in pivot.

Now, it's important to know these three because if you just change things all crazy, it's not a pivot, it's just another company and maybe you have ADD. But if you do a pivot properly, it's gonna be one of these three types. And these are the three types that I've seen the most in personally working with founders and I've yielded the most success. And in fact, in my own companies, we've had to go through one of these three pivots to actually get to success. So, the first kind of pivot is a zoom in pivot. A zoom in pivot is when you have a bunch of features and a bunch of things that your product does, but there's one feature that really resonates with customers and really moves the needle.

And what you do is you hide all the other features and double click and you zoom in to that one feature. A great example of this is Instagram. Instagram when it first started wasn't just photos and filters, it was a whole bunch of other stuff and they realized, wow, the only thing that people really care about is taking a picture and making it look good with the filter, so let's go double down on that. That was a zoom in pivot. So that may be something that you could do in your product. If there's one feature really being the difference and people don't care about the rest of this stuff, it's a distraction.

Option number two, pivot number two is a customer need pivot. This is the case where the product was originally solving or building for a certain problem that a customer had and did your go-to market, you talked to enough people and you realize that the urgent and important need is not there. And so you actually figured out, you know what? There's another problem that we could solve that's more urgent and more important and if we just orient the product and our messaging and our go-to market around that, then we can sell more. That is essentially a customer need pivot.

One great example of this is in sales engagement. Outreach, which is one of the most successful companies in sales engagement originally built their email sequencing tool for recruiters. They were like, oh, recruiters need to send a lot of emails, so let's help them do that. But they quickly realized by looking at other companies that salespeople also had the same need for the same features, but that problem, that need was a lot more pronounced. And so they pivoted into that customer need and then took off. That's a customer need pivot.

And the third one is a customer segment pivot, all right? A customer segment pivot is essentially where you're solving the same... The product's the same, the problem's the same, but it's a different part of the market, a different ICP that has the more urgent important need or more budget. So you pivot into that part of the market. Any one of these three pivots can completely change the trajectory of your company. And what it's important for you to do is understand and recognize exactly what kind of pivot you're doing.

Now, in case you can't tell, for Alex, as part of his intro, they did a pivot that was really about a customer need. They stuck with the same ICP. They were already in there with them. They were like, look, we know these people and they realized, you know what? They have this problem, which is a part of the problem we're solving, but we can solve that way better. And they pivoted into that to get their success.

So they were very, very surgical about this. They actually went in for a customer need pivot. And this is something you'll want to ask yourself if you're like, you know what? Things are not quite working, do we do a pivot? You want to ask yourself, is there one of the pivots that you have available to you? Do you see an opportunity in one of these? Okay, so, that's principle number one. Principle number two is when you do decide to do a pivot and Alex is gonna talk about this as well, you actually want to make sure that you start with an MVP and you iterate from there. It can be very, very tempting to actually say, you know what, we're gonna go do this, this is the thing to do. Let's go rebuild everything.

Let's really revamp the software, let's make it great. We have so much conviction around it and let's go double down. And a lot of times, founders have lost months of building the wrong product because they did that. What you're gonna be better off doing is actually taking a minimum viable product approach to this pivot. Saying it like, you know what? Let's just test this and if that's true and then we'll iterate from there.

That's principle number two, where if you do choose a pivot, you don't want to just double down on it overnight and go crazy, you actually want to test it first and then iterate from there and double down on it if it starts working. So let's actually give an example to this. I'm gonna switch again to my conversation with Alex and myself and where he actually walks you through exactly how they approach their pivot. So, you're contemplating the pivot and you talk to your team, you've got your investors. Was it scary? Or was it like this is so obvious? Like you would be dumb...

Like what was that like? Was there a meeting? Like, how do you do that? How do you pivot? Like how does that work? - Yeah, yeah. I think we really were exploring a number of different things. I think we had a lot of calls with like... I guess we had the benefit of having learned so much and developed really great relationships in this space with companies that were forward thinking like healthcare companies, we were aligned on the problem areas and they were keen to be like early adopters for whatever we came up with.

So I think it was like, through those conversations, it really started to become clear that like all of these companies have some kind of like a staff incentive program, employee of the month, retention milestone, birthday bonus, a referral program. Like you refer a caregiver. If they stay six months, we'll give you $500. But that was all like spreadsheets, emails, payroll runs. It was inefficient. And all of these like healthcare leaders were using like their own best judgment on how to run this, but it wasn't really data backed.

It was hard to see like these are the dollars in, these are the dollars out. So some people were throwing money at these incentive programs that weren't really moving the dial on, maybe the retention or performance behavior they were trying to incentivize. So we thought, hmm, this is like a cool thing that we could just become the masters of, and if we're kind of doing this for everybody, like our product's gonna be the best. And we'll be able to really show them that it works. So that really clicked.

And then we had to start simple though, right? With something that we could like get to market with an MVP. So, we focused with just staff referrals as the first thing. So the experiment was like, can we motivate staff to fill up the funnel with more candidates to get hired? If we give them like these little micro rewards, like a dollar if you post it on Facebook, text it out to your friends and then like earning more rewards as your applicants go through the hiring funnel and then get retained for the long run, we were able to like crush their old school referral programs.

We were like number one or number two source of hiring with just the MVP and like also their cheapest source of hiring. So, despite the upfront cost, we were like still sub $200 on like a hiring cost, whereas the industry average is like 450 per hire. So yeah, we were super pumped and then it was kind of like, all right, let's make this scalable and then figure out what are the other kind of incentives to build upon, with this referral program and kind of go from there. - That's really interesting because it sounds like there wasn't like a... You go into a phone booth, you come out as Superman, totally different.

It was like you were running a bunch of experiments and you just kept tweaking and tweaking and tweaking until you're like, oh, that fits way better. Let's go double down on that. So it wasn't like a big bang pivot and it never is, right? Like, no pivot is ever like, we're gonna go to...

Those fail, but because you kept iterating, kept tweaking the ICP, like ultimately you still solved a massive problem for the healthcare worker, but in a wildly different way, but you iterated into it. - Yeah, exactly. And yeah, that's gonna basically never stop for us. And I can see it coming full circle to where like one feature we're working on right now is availability updates.

It's a big problem in the industry because these healthcare workers have multiple jobs. Their availability goes stale. - I'm smiling because this totally dovetails back to how you started also, because-- - That's it. - Okay.

So, now you know, Alex and Caribou, you know what they were doing originally, how they pivoted the type of pivot they did and how they approached their pivot. Now, you might be wondering, what exactly happened? How did their investors react? How did they have the conversation? How did they actually decide on that pivot and what happened after? So, I'm gonna get into that and that's gonna bring me to principle number three, but before I go there, let me just pause here for a second. Are you starting to see the power in this? Are you starting to see the power of, if things aren't quite working in your startup, you don't have to give up and also just doing the same thing over and over and expecting a different return is insanity. But instead you can actually identify if there are pivot opportunities in your business with your customers and if you actually approach it in an iterative way, you can actually break through to the next level of growth and actually get to a deeper level of product market fit.

If you start to see the power in this, can I just get a yes in the comments below? Also smash that like button for the YouTube algorithm. It really likes it when you do that. And also, if you're in this stage where you're trying to figure out your go to market, you're really trying to strengthen your position in the market, you're trying to scale. Maybe you're trying to break through to a deeper product market fit, I encourage you to check out my SaaS, go to market coaching program, the exact coaching program that Alex is part of where I worked with him. I'll tell you more about it at the end of this video, I'll link to it below, but let's go to principle number three. And also smash that like button if you haven't already.

Principle number three, and this is not necessarily just from Alex, but also I've seen it with other founders is once you decide to double down on a pivot, the MVP worked and the iterations are starting to work, the principle number three is don't look back. Instead, craft your forward looking bigger vision. It can be very tempting to pivot and then keep looking backwards to that other thing you were working on.

Maybe because you're in love with the idea, but the market isn't. So, it's really important that if you're gonna do the pivot and it's proven to be true, you commit all in. You don't keep one foot over there, you go full all in on the pivot and say, this is what we're gonna do, here's how we're gonna grow, here's where you're gonna serve. And then craft a bigger vision around that.

Now, I've seen this in multiple cases, but I think Alex really articulates how for them, they really committed and then crafted a bigger vision going forward. And part of this was also about how they pitched this and positioned this with investors so that everyone would be bought in in terms of the pivot. So, let's cut back into that conversation where Alex tells you exactly what happened after they decided to do the pivot.

So you iterated to the pivot and then things started to work. How has growth been since the pivot? What's it been like? Like how different does it feel? What does it look like in terms of revenue growth? - Yeah, yeah it's been huge. It's crazy that it was just last spring we were doing an MVP, probably making hundreds of dollars a month with, call it a hundred care workers and maybe like two companies as we were fine tuning it.

And now like the growth... It feels like we're kind of at the edge of the hockey stick because we're starting to get like enterprise clients now with like in the thousands of staff. In the 10 thousands of MRR kind of contract size.

So, these are the deals that are really late stage in the sales cycle now. So it's like an amazing feeling, you know? And it feels like at that point where we've got to really like, get our fundraising strategy together and throw gasoline on this, right? Because the team's been working really hard and it feels like we've got something here. - How does that go with the investors? Like who invested in a different idea, but now you're doing well in this new idea. They're obviously in it for the ride. What are the conversations like with them after a pivot? - We're lucky that we've got just like a really aligned group of investors that, like mostly angels, some have experience in healthcare or finance or some even built and sold an aging tech related business themselves. So they really understand sort of what this is like and they really believed in the problem area, they believed in our team, but they were kind to give us the flexibility to make this move.

No one was a resistor. Everyone thought it made sense. And I'd say, if we ever got a good, healthy push was to be like, don't lose sight of that demand side marketplace eventually. Like this really could be your trojan horse to be embedded within the healthcare system and kind of that supply and demand massager that just makes sure none of these resources go to waste. I think them really not letting us lose sight of that grander has been really helpful too. Because that's what they originally invested in.

- Yeah, that is interesting because if you have every single healthcare worker on your platform for ensuring that they're getting your attention and they're happy and they're driving referrals, you also now have the most comprehensive database of healthcare workers that you can drive demand to. Or drive creator growth for which is your original vision. It's funny how sometimes a pivot is not a different direction, but really a clearer next step to get to the bigger step. - Yeah, that's it. It was like this necessary interim phase, our business needed that we just didn't know. And if it wasn't for the pandemic, we might have never realized this.

- Okay, so one more thing that was there... Alex and I had a really long conversation. I'm trying to give you the snippets here and I'll link below to the full conversation if you want to watch it.

One more thing that really stuck out to me in our conversation was Alex highlighted how because they dug into the go to market, the messaging, the positioning, it allowed them to really get the confidence to really engage their customers. And because they had that confidence, they were able to break through and really identify the core, urgent and important problem in that market and then get into product market fit and grow from there. This is a really important distinction because so often, founders that aren't quite hitting product market fit or scale, or are struggling to break through to the next level of growth are holding back on go to market and are stuck in the one more feature track.

Alex and his team did the opposite. They doubled down on go to market. Maybe even earlier than most founders. And they said, let's just go talk to these people and build those relationships. And because of that, they were really able to break through with this pivot. Let's go cut to that part of the conversation where really Alex highlights the importance of go-to market leading to understanding how to redefine their market and their product and pivot.

You know, being in the go-to market program, like obviously we talk about ICP, we talk about manifesto, we've talked about a bunch of other things, but those are core pillars, how has that helped you or what value have you gotten as you've navigated this crazy journey, even from original idea to pivoted idea to driving growth now? - Yeah, it's been huge. I'd say, particularly around that part of really locking in that messaging and really iterating on it, I think something I struggled with was, I don't know, I didn't want to like ask someone to go to prom and get turned down. Like I think that was like a mental barrier I had to get over myself and you really have to...

To find out what works, you have to find out what's not working. Like what's not resonating. So I think getting comfortable with that iteration process on the messaging has been really helpful. I think it was great to have an existing network that had been built up from the original idea to be able to test that with in a bit more of like a friendly space. So I think that's giving me the confidence now to go to the broader market and continue to iterate on that and really open up the other, these other main channels through LinkedIn, webinars, et cetera. So, we're building up some things that, ideas that came really from going through the program, like, I really love your philosophy on like giving value and out teaching your competition, and we've learned so much along the way.

We do have really unique learnings, but we've got to get better at communicating that and sharing that. - Okay, by the way, if you want to get in touch with Alex, all of his details are down below, or you can just go to caribou.care.com to get all their details and Alex is also on LinkedIn. I'll link to it below. Now you know, firstly, what a pivot is and the three principles that you need to follow to successfully navigate your pivot, just like Alex did. Number one, you want to be purposeful about the type of pivot that you're going after.

Number two, you want to make sure that you follow an MVP, minimum viable product approach and an iterative approach instead of an all-in pivot that you might not know is the right thing to do. And number three, you want to not look back and commit to the pivot if it does start working and then craft your bigger vision going forward. Now you know what these principles are. Now, what you may not know is how do you get into breaking into the market and actually engaging with these customers and really crafting a go-to market strategy, just like Alex did to flush out your messaging, your positioning, as you are experimenting with your pivot or your core idea.

This is the most important part of what we talk about in this channel. The most important part is having a proper go-to market strategy so you can break into the market and really test and grow your product and your business. This is exactly why I create my SaaS go-to market coaching program. Inside of this program, I work with you to actually flesh out your go-to market strategy and help you accelerate the growth of your SaaS business. Now, sometimes that just works really well and you start to scale right away. In Alex's case, you actually have to go through a pivot, but one thing for sure, when you actually follow a framework to actually build out your go-to-market strategy, to build out your ideal customer profile, your messaging, your strategic narrative, your Broadway show, all these pieces that we work on inside of the program, when you have that framework, you're able to take out the guesswork and you're able to actually focus on the framework and execute, and that way, you're able to reduce execution risk.

This is why this program exists and we've shared other case studies of how founders have grown, they've raised follow on rounds of kickstart profitability. In Alex's case study is yet another one that really shows how the program helps you break through the market and really figure out how to scale your company. So, if you're interested in learning more about it, just go to tkkader.com/gtm.

tkkader.com/gtm. Over there, you'll get all the details about the program. You'll get other case studies that I've done, and you just fill out a small form to apply to join. The better the fit, the better the results, which is why we'll get on a call, I'll take an understanding of exactly where you are with the business, see if we can help, and if we can, we're off to the races, we'll start working together right away. Again, just go to Tkkader.com/GTM.

Also, if you're interested in reaching out to Alex or Caribou Care, the details are below, along with the full recording of our interview. I gave the excerpts over here. I took a slightly different approach for this video.

And let me know how it went. If you enjoyed this format where I kind of give you the principles and then bring in the interviewee, instead of just a long discussion, if you like this better, then let me know, if you like the long form one, you can check it out and let me know. Let me know in the comments below.

If you got value from this video, please smash that like button for the YouTube algorithm. It really likes it when you do that. And also I drop an episode like this every single Sunday with actionable strategies like this from the trenches with actual founders that I'm working with. So, be sure that the subscribe button and that bell icon, if you haven't already. And lastly, remember, everyone needs a strategy for their life and their business. When you are with us, yours is gonna be unstoppable.

I'm TK and I'll see you in the next episode. (upbeat music)

2022-04-22 11:22

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