8 Lessons Learned from Pivoting a $5M Startup

How to increase your odds of survival

Pivoting. It's an unimaginably tough process.

Especially during a full-blown pandemic. Even more so when your material wealth or personal identity is etched into the fabric of your startup.

A pivot -- especially a drastic one -- can be a difficult process to come to realization with, even if it's necessary for the long term viability of a startup.

Fortunately, I was spared from making this tough decision -- being put in a position where my startup had to no choice but to pivot. Within days.

Why? As most of us know -- COVID decimated the restaurant and seafood industries -- two springboards that helped my startup Coastline grow to $5M+ in sales. Nearly overnight, we went from planning out our Series A playbook to having to ask ourselves:

Is there a future for Coastline in a post-COVID world?

Not to mention: as a venture-backed company, it wasn't just a matter of if, but when and how quickly things would rebound. This velocity would have a direct impact in our ability to raise our next round before cash ran out.

Taking the leap of faith

Fortunately, with a bias for action, amazing guidance from advisors, and a conviction in our ability to figure things out -- our team rallied to an entirely new business model in less than sixty days.

Further, we pivoted not once, but twice -- eventually landing on a new thesis with the potential to reshape the fabric of e-commerce and become the operating system for those who supply the world's food.

As a result of our pivot, I ended up doing a lot less warehouse visiting (enduring -20'c freezers isn't easy!) and a lot more heads-down building.

But the pivot wasn't seamless or easy by any means. It was actually the most gruelling, stressful, and uncertain time in my admittedly short startup career.

But the process came with lifelong gains in knowledge, experience, and lessons -- some of which I'd like to share with any entrepreneur considering a pivot of their own.

Here are some of them in no particular order:

1. Reduce, Reuse & Recycle

Reduce your spending as quickly and as radically as you can, as long as it doesn't inhibit your ability to execute or unequivocally damages your culture. Ask the hard questions -- whether your current team makeup, experience, or hierarchy -- makes sense for the new plans. If not, be candid and generous but decisive.

Reuse & Recycle your existing product, design, processes, or content for your first MVP. Time's ticking and so you don't want to start from scratch unless you absolutely have to. Your goal is to lower the cost and time-to-market to experiment, even if it's stuck together with band-aids.

In our case, we hard-coded an iteration of our seafood marketplace to create a white-labelled e-commerce experience for any supplier. We didn't even have custom promotional codes, branded URLs, or even a page for suppliers to easily view their customer lists.

But recycling allowed us to ship quickly and onboard dozens of suppliers, helping us grow from $0 to millions in volume in just a few months. In parallel, we were able to work directly with users to validate our thesis, and rebuild based on actual usage-based data versus pre-conceived intuitions.

2. Focus radically and cut out the noise

If you've already built a successful startup, it can be gut-wrenching to forgo existing revenues, customers, or processes. But letting things drag on can be one of the worst things you can do, regardless of the short-term gains.

For example, despite a >70% drop in revenue (at the height of lockdowns), Coastline was still generating cashflow that was worth salvaging. But as we tried to keep the business afloat, we realized it was taking up precious resources from the very opportunity that we were banking on to save our business.

Holding on was akin to inertia -- preventing us from taking the sharp left turn that would ultimately save our business.

In all, if your ambition is to build a truly scalable, global business, you need to act decisively and play to win. And to win, you can't spend precious resources or mindshare on ingredients that aren't a part of this end recipe.

3. Wipe away your accomplishments and ego

Depending on how radical or quick your pivot is, your product will likely be subpar. And users will call you out for it. Don't be offended and take criticism as an opportunity to improve.

Emails from unhappy customers were tough -- especially after we'd been grinding away for years and felt like we had finally deserved some of the recognition that came with accolades like Forbes 30 Under 30 or Techstars.

But I quickly realized that patting ourselves on the back or being satisfied with past successes wouldn't change future outcomes.

The only thing that mattered was re-learning to enjoy building from scratch -- including all of the 'dirty work' -- and doing whatever means necessary to move the needle forward.

4. Things almost never go according to plan

At Freshline, we actually ended up pivoting twice in the span of just a few months.

Startups are inherently plagued by uncertainty. Now amplify this by 10x if you're in the middle of a pivot. Even if you have bulletproof conviction in your new idea, it can just as quickly turn out to be a false positive.

In fact, our current e-commerce and operations platform wasn't even our first idea to pivot to. We initially launched a high-end grocery delivery service -- aimed at delivering elusive, previously difficult to source ingredients like Toyosu-direct seafood or Wagyu Beef direct to consumers.

Despite having high conviction (and some great early traction), we struggled to build a delightful experience across so many new business functions (supply, logistics, demand gen, marketplace dynamics).

Essentially, we had spread ourselves too thin and watered down our value proposition and focus. But without this initial plan, we never would have landed on our current opportunity.

5. Outcomes take time (and lots of it)

In the age of overnight successes and TechCrunch funding announcements, founders (including myself) can sometimes be short-sighted and expect immediate, viral outcomes.

What we often forget -- especially when we're in the thick of the day to day operations -- is how long it takes for brands, products, or processes to take root in the ecosystem.

Furthermore, collecting data and signals to assess product-market fit takes time. Sometimes, we need to be a bit more patient and expect slow (but steady) progress. Unless you're Clubhouse, I guess.

6. Be a megaphone -- early and often

As a founder, no one will understand your product or value proposition better. Hence, you need to be the loudest megaphone for your company -- early and often.

It can be tempting to delegate the task of cold calling, crafting sales sequences, or conducting first demos -- especially if you transitioned/scaled beyond this stage before. But it's important to avoid delegating this task.

Why? At such an early juncture, you have an inordinate amount of sway on the success or failure of the pivot. You are the company, and the company is you. You need to steer the initial direction and set the tone.

By putting yourself on the front lines and being a megaphone -- you'll gain valuable feedback and 10x your progress.

7. Have empathy during times of pain

Over the last year, I've learned how challenging and long-winded pivots can be. Not only for founders, but for employees, spouses, families, and friends.

At times, it'll be difficult to find the motivation to start from ground zero again. And even if you're shouting from the rooftops, not everyone will listen right away. Long, relentless nights of coding and building drip campaigns are a necessary part of the equation. As is failure.

During a transition, founders should give themselves the leeway to fail, learn, rebound, and fail once again. The key is to survive long enough until you hit the goldilocks zone of luck x opportunity x action.

More importantly -- as founders, we should extend our empathy and kindness to employees, who may not be accustomed to the same levels of risk or uncertainty.

Do right by them, as they'll make or break your pivot.

8. Question the status quo

One of the first lessons I learned during my foray into entrepreneurship is to never underestimate the capacity of large companies to miss obvious opportunities.

We need to drop the false narrative that a company with more money, more resources, or more experience has already done what you're doing or will easily squash your idea. That pivoting into a competitive space is simply not worth it.

But this is simply wrong. These same incumbents were once small themselves -- dealing with the same fears and resistance you may be facing. And somehow they won against their own Goliaths.

If you're radically focused and understand your niche better than anyone else, take the leap. Don't be afraid of being contrarian. Be confident and get your ideas out there -- early and often.

Closing remarks

Hopefully, some of these lessons are helpful to founders considering a pivot of their own. If nothing else, this was a helpful exercise for me to distill and reinforce what I learned during Coastline's pivot to Freshline.

Here's to helping build each other up in 2021.

Joseph, Co-Founder @ Freshline

Opinions expressed are solely my own. Have a question? Shoot me a message at joseph[at]jhylee.com.