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What Houston startups can learn from the power of the pivot

YouTube, Yelp, and Groupon all pivoted to great success. Here's what lessons Houston startups can take from these pivots. Miguel Tovar/University of Houston

Tons of companies start off as something completely different until they are faced with a challenge that only a change in direction can overcome.

Why should your startup pivot?

Imagine your startup is getting ready to present its product to the world at a tech exhibit. Right before you present, another company shows off their own product. And it's just like yours in every way. Is all lost for your company? No. Because now is the time where you must learn one of the most important principles in business. The startup pivot.

A pivot is a change in strategy. A new approach to your business model. A change in direction.

Companies that pivoted

Did you know that YouTube wasn't always a video sharing platform? That's right. YouTube actually started off as a dating service. You'd send in videos of yourself, essentially selling yourself to potential dates in your area. They even had a catchline: "Tune in, hook up."

Upon realizing the massive potential they had for hosting videos, the company pivoted and is now worth $40 billion. Talk about no regrets.

Yelp started off as an automated system that suggested recommendations from friends. The execution of this idea wasn't well-received. However, the founders recognized that users were writing tons of reviews for businesses just because they enjoyed it. And just like that, Yelp became the billion-dollar third-party directory we all know and love today. It was all because the founders knew enough to pivot.

Groupon actually started off as a social platform whereby people could unite to support charities and socially conscious causes. It was called The Point. This idea soon withered but a branch of The Point proved to be popular: a subdomain called Groupon. This idea turned out to be more popular, as people showed deep interest in pooling together funds to broker a group discount.

What these companies teach about pivoting

These companies' success from pivoting teaches us to focus on what we already have built. If there is an aspect of your business that isn't quite working out, there might actually be a part of your business that is. Look for that part and focus on it. Expand on it. Search for positives within your company and concentrate on developing them into something new and different.

We can also learn to cut our losses. Even if your idea is a genius one, if it's not yielding money, you have to move on. Getting stuck in the "just give it more time it'll work out" quicksand can sink your business fast. If you're hemorrhaging money because of your awesome-on-paper idea, the more chances you give it to succeed, the more money you'll lose. You have to know when to say when.

Another thing these three companies did was to follow the trail of money. They recognized areas of strength, and rode those areas to the bank. They concentrated on the aspects of their startups that yielded the most revenue. And you should too.

Don't be afraid of change. Your company doesn't have to be a success over night. It's okay to give it some time. But there is an art to knowing when give up and try something else. You have to master that art, just like the aforementioned companies did. Open yourself up to bigger possibilities. Sometimes, when working on the idea you thought was so brilliant, you stumble on to a different idea that proves to be more financially auspicious. Then it's time for a startup pivot. It's up to you to spot those instances and run with them, just like YouTube, Yelp, and Groupon did.

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This article originally appeared on the University of Houston's The Big Idea.

Rene Cantu is the writer and editor at UH Division of Research.

Choosing the right city in which to launch your startup can make or break your company. Miguel Tovar/University of Houston

Choosing the best city for your startup can mean the difference between success and closing up shop prematurely. It's important to think outside your home city for a startup launch because your home city may not have the ecosystem set up for your particular startup.

If you give in to your emotions; staying in your hometown because it's, well, your hometown, you risk preventing your company from launching in a city more conducive to its growth.

Here are three keys to making sure you choose the right city for your startup.

A city's ecosystem

Few things are more valuable to a new company than a web of like-minded companies, investors, social groups and connections. You want a city that uses its resources to grow and maintain its startups. Whether it be accelerators or pitching events or entrepreneur conferences, the city you choose needs to be active in the startup community. Establishing your startup in a city with a weak ecosystem will halt the growth of your company because it'll be that much harder to boost your company without a city's support.

A city's social network

A city with a robust social circle of like-minded entrepreneurs is a city that is doing something right for startups. First of all, if the city is rich in like-minded entrepreneurs, then that means they are living there. So there has to be a reason for that: the city is startup-friendly. Second, a city with a strong social sphere of startups means you have more opportunities to make connections and network. You can meet with other business owners to discuss issues important to your companies and even learn new things from each other. What's more is you have a chance to work with other companies to help each other grow. The city of New Orleans has Krewe de Nieux, for example. This social group is a resource for over forty technology startups in the city.

A chance to give back

Opportunities to give back. The best city for your startup will have plenty of opportunities to give back. For example, giving high school students real-life work experience to expand their knowledge and prepare them for a career in the field. A city with a plethora of opportunities like charities, youth groups, internships and career and business organizations allows startups to barter: we will give you experience and you can help us get work done. You help each other grow. In doing so, you blossom the city's startup community as a whole.

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This article originally appeared on the University of Houston's The Big Idea.

Rene Cantu is the writer and editor at UH Division of Research.