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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.

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Building Houston

 
 

As of this week, Lara Cottingham is the chief of staff at Greentown Labs. Photo via LinkedIn

The country's largest climatetech startup incubator has made a strategic new hire.

Lara Cottingham is the new chief of staff for Greentown Labs, a Boston-area company that opened in Houston earlier this year. Cottingham previously served as the city of Houston's chief sustainability officer and the chief of staff for the city's Administration and Regulatory Affairs Department for the past seven years. In her new role, Cottingham will oversee the day-to-day operations and communications for Greentown's CEO Emily Reichert, along with key stakeholder engagements and strategic initiatives for the incubator.

"Lara brings a tremendous wealth of knowledge and experience to our team from her dynamic leadership role at the City of Houston," says Reichert in a news release. "Her breadth of knowledge in sustainability, climate, and the energy transition, and her expertise in regulatory and stakeholder aspects of the energy industry, will be incredibly valuable to our team and community."

Under her leadership at the city of Houston, Cottingham was the chief author of Houston's Climate Action Plan, an initiative aimed at reducing greenhouse gas emissions in Houston, and getting the city to a point where it meets the Paris Agreement goal of carbon neutrality by 2050. Cottingham helped the city move to 100 percent renewable electricity, according to the release, and helped turn a 240-acre landfill into the nation's largest urban solar farm.

"In leading the Climate Action Plan, Lara helped spark Houston's leadership in what has become a global energy transition and was a passionate advocate for climate action in Houston," says Houston Mayor Sylvester Turner in the release. "While she will be missed, this new role will only strengthen our partnership with Greentown. I look forward to working with Emily, Lara, and the Greentown team to meet our climate goals and make Houston the energy capital of the future."

Before her work at the city, Cottingham worked at Hill+Knowlton Strategies' Houston office range of clients across the energy sector. Earlier in her career, she served as communications director for two congressmen in the U.S. House of Representatives. She began her work with the city in 2014.

"In working with Mayor Turner and Climate Mayors across the U.S., I saw how important partnerships are to helping cities decarbonize," says Cottingham in the release. "There is no better partner or place for climate action at work than Greentown Labs. Greentown is 100 percent committed to attracting and nurturing the energy companies of the future and making Houston the energy transition capital of the world. I'm excited to join the team and see how climatetech can help cities reach their climate goals."

Greentown Labs first announced its entrance into the Houston market last summer. The new 40,000-square-foot facility in Midtown across the street from The Ion opened its prototyping and wet lab space, offices, and community gathering areas for about 50 startup companies opened in April. Greentown was founded in 2011 in Somerville, Massachusetts, and has supported more than 400 startups, which have raised more than $1.5 billion in funding.

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