You may recall our “PEP” model for successful entrepreneurs—that success is based on a combination of Passion, Experience, and Persistence. We have another model grounded in Ps that has come up several times recently in discussions with founders: When is it time to throw in the towel? Or change directions? Or jump all in and put the pedal to the metal? Virtually all startups have those inflection points, both negative and positive, that lead to doubt—or euphoria. The venture journey is littered with such times, both for specific decisions (like letting an employee go or changing terms with a customer, etc.) as well as overall sink or swim moments.
So how do you approach these inflection points? You definitely want to avoid the “zombie venture” status where you are among the walking dead, rambling along with no real momentum, traction, or enthusiasm, but also no plan to pull the plug. It’s important to have regular times of reflection to examine progress—or lack thereof—and decide if it’s time to Punt, Pivot, or Proceed. What does each of these options look like?
Punt. The punt comes from football when you have run out of downs and turn the ball over to the other team. Essentially, it means stopping, for a period of time or indefinitely. This is a hard decision. But if the venture concept is just not getting traction, enthusiasm is waning, stakeholders are disengaging, and the path forward is getting murkier instead of clearer, it may be time to accept that the venture is better left to sink than to keep bailing out the boat. This is a hard and courageous decision. Many founders never accept this end. Instead, they stumble on in zombie venture status. After all, that is easier than telling friends, loved ones, and supporters that the ship sank. But if you make this courageous decision, learn from it and move on to your next journey! No regrets.
Pivot. The criteria leading to a Pivot, or change in direction, may look very similar to a Punt. Something is not working. But rather than moving on from the opportunity to apply what was learned from this failure to the next startup, there is still enough energy, potential, and enthusiasm to move forward—but in a different direction. This may be a new product, a new market segment, a new business model, or a different leader. This too takes courage. But it should also take planning. Pivoting should never be random. Instead, it is a process of reasoned experimentation. What does that mean? Check out our blogpost “The Promise and Perils of a Pivot.” One key idea: Don’t change more than one element at a time. For example, if you change the business model, the target customer, AND the product features all at once, you will not know what part of the change worked or didn’t work. A controlled experiment does not change multiple variables at once. Change the product features and see how they do with the current target market. Still not working? Change the target market. Still not working? Review the business model. You get it, systematic experimentation is the goal.
Proceed. Finally, after an honest assessment, you may decide that things are going well enough to keep moving forward, at least for the time being. Proceed might consist of two different speeds, though:
Pick it up a gear and accelerate if there is enough evidence that things are working. If the early market response is positive and the product development is moving forward, you may need to accelerate to get real traction. If you are still treating the venture as a side gig, have not raised funds to complete product development to get beyond pilot, and have not really committed 110% to the venture, now is the time to jump all in.
Proceed at the same rate or dial back a little and wait for some uncertainty to be resolved. This might happen due to slow implementation at a first customer, loss of a key team member, slower development of the technology, or a lack of funds. Rather than committing more funds and time when a major source of uncertainty might lead to significant debtbergs, this might be a time for patience. Having a proven pilot with a customer that is a referenceable account will really help accelerate progress with other customers and lure investors. It’s worth waiting for. So, move your efforts down to a slow boil.
To successfully navigate the entrepreneurial journey, founding teams must constantly balance the Now, the Next, and the Navigation. As part of navigation (we suggest a half-day per week), you should undertake a regular reflection of the overall venture progress. Is it time to Punt or Pivot? Or are things moving forward, even if slowly? Don’t avoid the hard discussion. You should also involve advisors, co-founders, and others in this discussion. There’s nothing worse than a zombie in a rowboat, just bailing enough to stay afloat.