I have been working on my idea for the last couple of months, spending endless hours on the Business Model Canvas, abusing Google's search to find market data, competitor research, emailing leads, etc…
Today I got my first callback from an entity that would be my direct customer. That feedback was so useful, so knowledgeable so excited and invigorating.
After the call one thing was clear – I have to pivot.
I am actually excited having to pivot, because it will make my product better.
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As 2021 approaches, we’re past the initial pivot stories, in which vodka makers turned to developing hand sanitizer, and clothing companies began producing face masks on the side. These were, of course, smart and applaudable pivots that helped companies survive while aiding the greater good. However, most of these were short-term adjustments. The long-term pivoting due to COVID-19 requires a deeper approach.
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Here are three tips for shifting your startup strategy to get through the pandemic and set your company up for future success:
Balance the short- and long-term
During times of tumultuous and rapid change, as we’re seeing with COVID-19, there’s a challenge in balancing short-term survival and long-term strategic goals. For example, a retail store shifts toward curbside pickup and online ordering during the pandemic in a smart move to survive. If this sounds familiar, you need to start thinking now about the end of the pandemic and lifted restrictions.
When you think about the future, do you see people coming into your retail space? Do you sell merchandise that people like to consider, feel or experience in person before they buy? If demand for in-person shopping continues to plummet, you may want to consider shifting to curbside pickup, delivery and online shopping. This type of shift could mean transitioning away from a brick-and-mortar store and moving into a cheaper warehouse facility with an emphasis on logistics.
In the broader sense, stay focused on core foundational problems. For example, my company is aiming to transform how people wait in lines, a dynamic that’s remained unchanged for centuries. The need for our solution existed before COVID-19 and will persist afterward.
The same lesson applies to your business: delighting the customer with a smooth ordering experience and high-quality items are still primary goals, so focus on changing how you deliver on those goals.
Leverage what you have
My company, Sleek, is a young startup, originally designed as an app for managing line queuing. It enables people to receive alerts when their turn in line is coming up. I’m not alone in my dislike for the long lines at concerts and sporting events, so I wanted to shake up that dynamic. The app offers demand-based pricing like Uber, where users can pay a small amount to move ahead in line, with the revenue shared with the venue.
When COVID-19 hit the U.S., large events and waiting in long lines became a thing of the past. So, we had to pivot. We’re now serving essential businesses, such as grocery stores and restaurants, as well as high-demand COVID-19 testing centers.
When the pandemic ends, we’ll expand our business model back into events and other large-scale gatherings. But we’ll also retain the business we’ve developed in the meantime and continue to improve our technology with a better user experience and more value for our customers.
That’s the core lesson for pivoting companies: to take this time to garner some business, while running a lean operation focused on continual improvement.
Take stock of what you do well, whether it’s with people, technology or process (ideally all three!) and use those strengths to find new market opportunities.
Embrace the virtual world
Being an “online” business doesn’t apply to just e-commerce platforms. You can use the inexpensive online tools at your disposal to expand your company’s reach and ability to interact with customers.
If you run a small hardware store, for example, then you’re likely shifting to curbside pickup and online ordering. However, you can also use Zoom to conduct “Ask the Expert” sessions about home repairs. With your orders moving to online and digital payments, do something with all of that valuable data you’re collecting. Use an inexpensive CRM platform to conduct email marketing campaigns that offer discounts and other news.
The impact of COVID-19 provides you with an opportunity to modernize your business in a way that recognizes how we’ve all shifted our lives to go digital. Now is the time to use Facebook chat to answer customers’ inquiries and talk to customers via other social platforms. These platforms are also the perfect way to relay your pivot to your customers, so keep them informed about exciting changes.
Consider the implications of online learning, telemedicine, and other societal adjustments that are here to stay. How will these changes impact customer behaviors, and how you can adjust accordingly to survive and thrive?
The post 3 Steps to Pivot Your Business for the Long-Term During and After COVID-19 appeared first on StartupNation.
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Online education tools continue to see a surge of interest boosted by major changes in work and learning practices in the midst of a global health pandemic. And today, one of the early pioneers of the medium is announcing some funding as it tips into profitability on the back of a pivot to enterprise services, targeting businesses and governments that are looking to upskill workers to give them tech expertise more relevant to modern demands.
Udacity, which provides online courses and popularized the concept of “Nanodegrees” in tech-related subjects like artificial intelligence, programming, autonomous driving and cloud computing, has secured $ 75 million in the form of a debt facility. The funding will be used to continue investing in its platform to target more business customers.
Udacity said that part of the business is growing fast, with Q3 bookings up by 120% year-over-year and average run rates up 260% in H1 2020.
Udacity said that customers in the segment include “five of the world’s top seven aerospace companies, three of the Big Four professional services firms, the world’s leading pharmaceutical company, Egypt’s Information Technology Industry Development Agency, and three of the four branches of the United States Department of Defense”, which work with Udacity to build tailor-made courses for their specific needs, as well as use off-the-shelf content from its catalogue.
Udacity also works with companies to build programs as part of their CSR remits, and with tech companies like Microsoft to build programs to get more developers using their tools.
“We’re seeing tremendous demand on the enterprise and government side,” said Gabe Dalporto, Udacity’s CEO who joined the company in 2019. “But to date it’s mostly been inbound, with enterprises, Fortune 500 companies and government organizations coming in and wanting to work with us. Now it’s time to build out a sales team to go after them.”
The news today is a welcome turn of events for a company that has been in the spotlight over the years for less rosy reasons, partly because it found it challenging to land on a profitable business model.
Founded nearly a decade ago by three robotics specialists, including Sebastian Thrun, the Stanford professor who at the time was instrumental in building and running Google’s self-driving car and larger moonshot programs, Udacity initially saw an opportunity to partner with colleges and universities to build online tech courses (Thrun’s academic standing, and the vogue for MOOCs, were possibly two fillips for that strategy).
After that proved to be too challenging and costly, Udacity pivoted to positioning itself as a vocational learning provider targeting adults, specifically those who didn’t have the hours or money to embark on full-time courses but wanted to learn tech skills that could help them land better jobs.
Currently, the company still provides direct-to-consumer (direct-to-learner?) courses, but it won’t be long, Dalporto said, before enterprise and government customers account for about 80% of the company’s business.
Previously, Udacity had raised nearly $ 170 million from a pretty illustrious group of investors that include Andreessen Horowitz, Ballie Gifford, CRV, Emerson Collective and more. This latest tranche is coming in the form of a debt facility from a single company, Hercules Capital.
Dalporto said the decision to take the debt route came after initially getting a number of term sheets for an equity round.
“We had multiple term sheets on the equity side, but then we received an unsolicited debt term sheet,” he said. That led to the company modelling out the cost of capital and dilution, he said, and “it turned out it was the better option.” For now, he added, equity was “off the table” but it may consider revisiting the idea en route to a public listing. “For the foreseeable future, we are cash flow positive so there is no compelling reason right now, but we might do something closer to an IPO.”
Being a debt facility, this funding does not mean a revisiting of Udacity’s valuation. The company was last capitalized five years ago at $ 1 billion, but Dalporto would not comment on how that had changed in the (uncompleted) equity term sheets it had received.
Education is in session
The interest Udacity is seeing — both from investors and as a company — is part of the bigger spotlight that online education companies have had in the last year. In K-12 and university education, the focus has been on building better technology and content to help students stay engaged and continue learning even when they cannot be in their normal physical classrooms as schools, districts, governments and public health officials implement social distancing to slow the spread of COVID-19.
But that’s not the only classroom where online education is getting called on. In the world of business, organizations that have also gone remote because of the pandemic are facing a matrix of challenges. How can they keep employees productive and feeling like part of a team when they no longer work next to each other? How do they make sure their workforces have the skills they need to work in the new environment? How do they make sure their own businesses are equipped with the right technology, and the expertise of people to run it, for this latest and future iterations of “work”? And how can governments make sure their economies don’t fall off a cliff as a result of the pandemic?
Online education has been seen as something of a panacea for all of these questions, and that has spelled a lot of opportunity for tech companies building online learning tools and other infrastructure — with others including the likes of Coursera, LinkedIn, Pluralsight, Treehouse and Springboard in the area of tech-related courses and learning platforms for workers.
As with other market segments like e-commerce, this isn’t about a trend emerging out of the blue, but about it accelerating much faster than people projected it would.
“Given Udacity’s growth, focus on sustainable business practices, and expanding reach across multiple industries, we are excited to provide this investment. We look forward to working with the company to help them sustain their impressive global growth, and continued innovation in upskilling and reskilling,” said Steve Kuo, senior MD and Technology Group head at Hercules Capital, in a statement.
In the areas of enterprise and government, Dalporto described a number of scenarios where Udacity is already active, which are natural progressions of the kind of vocational learning it was already offering.
They include, for example, the energy company Shell retraining structural and geological engineers “who had good math skills but no machine learning expertise” to be able to work in data science, needed as the company builds more automation into its operation and moves into new kinds of energy technology.
And he said that Egypt and other nations — looking to the success that India has had — have been providing technology expertise training to residents to help them find jobs in the “outsourcing economy.” He said that the program in Egypt has seen an 80% graduation rate and 70% “positive outcomes” (resulting in jobs).
“If you take just AI and machine learning, demand for these skills is growing at a rate of 70% year-over-year, but there is a shortage of talent to fill those roles,” Dalporto said.
Udacity is for now not looking at any acquisitions, he added, for another 6-12 months. “We have so much demand and work to do internally that there is no compelling reason to do that. At some point we will look at that but it needs to be linked to our strategy.”