In search of things new and useful.
Don’t Pivot, Do the Eurostep
In honor of the NBA Playoffs, I thought I’d sprinkle a little basketball lingo into this post I’ve been thinking about for a while.
I think the most dangerous place to be for an early stage, venture funded company to be is where things are “sort-of-working”. When things are totally working, it’s clearly better. When things are not working at all, at least it’s obvious and the path before you is relatively clear as well. But when things are only sort-of-working, founders and investors face more of a dilemma. Are you just a few iterations away from the promised land? Do you just need a few more resources or a few more quarters? Or are you stuck near a local maximum that won’t actually lead to the kind of outcome that everyone is hoping for?
This is a tough place to be because its much more comfortable to cling to the belief that things are sort-of-working and believe that incremental changes or improvements will work. Those changes feel more predictable and the range of potential outcomes are narrower. In this scenario, one might make meaningful changes in direction, but won’t need sacrifice what is already sort-of-working. You might pivot, but will still have one foot planted so there is no risk for a travelling violation.
I think this approach can and has worked. But for early stage companies still seeking product/market fit, I find that most founders would be better off making bigger adjustments, even if it means lifting your pivot foot. Generally speaking, when companies have not worked out, I’ve found that founders and investors all wish that they had made bigger changes sooner, and realized that in retrospect, the things that were giving them comfort were actually holding them back from trying more interesting potential experiments.
This is where I think the role of the investor is pretty critical. Investors should be able to offer perspective. Sometimes, that perspective is in the form of empathy. This stuff is really hard! But just as important, sometimes this perspective is in the form of setting higher standards for what things look like if they were REALLY working. Investors see a cross section of companies, and hopefully your investor has seen what great (not good) looks like. When you have great product/market fit, what does that look like in terms of customer growth and engagement? When you have a great team, how fast do they move and how effectively do they bring on more great talent? When one is faced with a model of what great looks like, it becomes harder to convince yourself that you are just a few incremental steps away from getting there. It can give a greater sense of urgency and be a catalyst for bigger and maybe more painful changes.
Now, the ugly version of this is to use data from great companies to beat up on a founder and shame them for where they are. I think many of us have been in rooms with other founders or investors who have boasted about how great another company is doing in a way that only makes a founder feel shitty about themselves. What’s also unhelpful is drawing analogies from companies that are completely different or face an entirely different set of circumstances than what a founder is going through. This isn’t helpful at all. But in a world where companies need to really outperform to drive venture returns (or raise future rounds of capital), it is important to come face to face with what outlier performance looks like, and seriously consider whether it’s possible to get there without doing more dramatic things.
That’s why I like the Eurostep as an analogy. For those of you who aren’t familiar with it, it’s a move that is often used by smaller players to evade much taller defenders in an effort to score or draw a foul. Here’s a good explainer and some videos here.
The move involves a dramatic change of direction that helps you get around the defense. It still involves leveraging your forward momentum, but requires that you lift your pivot foot to make the change effective. It’s a more dynamic move than a pivot, a bit more reckless, but much more effective for small players with the odds stacked against them. It still might not work out, but it may give a player a better chance to score rather than just delaying the inevitable. Incremental adjustments feel like the most comfortable thing in the short term, but often doesn’t help anyone in the longer term.
For more Eurostep – here’s a good video: