Ohio Venture - OVA Review Newsletter
News from the Ohio Venture Association meeting on February 10, 2017


The Art of the Pivot - A Panel Discussion


  • Rem Harris, senior partner, investing, JumpStart


  • Steve Haynes, CEO, Sparkbase
  • Mike Keresman, founder, chairman, president, CEO, Cardinal Commerce
  • Lance Hill, CEO, Within3
  • John Knific, co-founder, DecisionDesk
  • Andrew Vaeth, co-founder, Cureo

If any one buzzword has dominated the discussion about start-ups and entrepreneurship in the last couple of years, it's "pivot." As the notion of agile start-ups has increasingly taken hold, so too has the idea that companies must respond quickly to changing markets and/or failing strategies through swift repositioning of its strategy. In February, OVA hosted a panel discussion at JumpStart with five company leaders who have been through the exercise at least once.

Andrew Vaeth, who is about a year into a pivot with Cureo, a software platform, said pivoting is routine in the software industry. "I'm a student of software companies, and it's almost impossible to find one that having success that didn't have at least one pivot in there. The fastest-growing software in the history of the planet is Slack, and they're a pivot. It is sort of the way it works."

His own experience goes back to 1999, when he helped found an early business-to-business software as services company to do salesforce automation and customer relationship management. It attracted major well-known customers, "... but we were running out of money. So me and other leaders said, 'What are we gonna do? We gotta change, and we gotta change fast.' That's usually how a pivot starts."

It ultimately led to a major success with ExpenseWire, once just a popular expense-report application, but later spun off into its own company, which was eventually sold to payroll giant Paychex.

Serial entrepreneur John Knific also engineered a classic pivot with his first company, Decision Desk. Founded from a Case Western Reserve University dorm room, it later switched from a business-to-consumer model to a business-to-business company. "That first pivot was really powerful. It helped us go from a bunch of guys in a college dorm to a company with about a half million dollars in recurring revenue within about 18 months."

Lance Hill also hit a wall with his start-up, which was initially focused on trying to build a Linkedin-like platform for doctors. "In 2012, we pivoted and retooled the company around the pieces that were actually working. We had been at about 50 employees and we retrenched to 25." It recapitalized, with about 80% of investors participating. It's now selling to 19 of 20 top pharma companies, just hired a salesman for Europe, and has hit profitability.

Steve Haynes, founder and managing partner of Glengary LLC, noted that some of the problems inherent in pivots arise from "founderitis," a company founder's stubborn insistence on sticking to his idea even in the face of market indifference.

Haynes addressed the skeptic's view about pivots. "As an investor, when an entrepreneur comes to us and says they're executing a pivot, I have to tell you I'm typically skeptical, because it suggests that what they were doing didn't work, and they're trying to save the company. So it creates a little bit of a hurdle in my mind. It's a euphemism for my company was failing, is failing, so I'm going to try something else."

After serving as CFO of one of Northeast Ohio's biggest start-up successes ever, Steris, Mike Keresman built Cardinal Commerce into a leading authentication engine for e-commerce before recently selling it to Visa. He offered a contrarian view on communication. He noted that while Cardinal never had to do a pivot of its overall strategy, it did change the way it approached the market after initially experiencing resistance. But one thing never changed, he emphasized: its commitment to routine communications with investors (of which it had nearly 100).

What builds trust with investors, he said, is "... constant routine communication from management. When things are bad, and a company decides to pivot, you can't say, 'oh, we're in trouble. Time to amp up the communication.' No. Communications from your company should have a pretty even cadence, so investors are seeing that steady communication, and they're learning the story about your company. And that routine, consistent messaging of what is going on and what you're shooting at and what's going on with the market is what helped us quite a bit, because not everything went exactly as we had planned."

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  • March 10, 2017
    OVA Luncheon – Design Disruption: Panel Discussion
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    OVA Venture Summit 2017

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