[credit provider=”Craft Coffee”]
The “pivot” is such a staple of the new Silicon Valley culture that it’s almost become a cliche.But at the second 500 Startups demo day yesterday, the importance of moving fast was really clear.
Several company founders admitted that they basically stumbled across their current business ideas:
Cardinal Blue based its pitch around Pic Collage, an iPhone and iPad app that lets you take pictures and arrange them into a collage. The app launched a month ago and has been installed more than 400,000 times, which is about the same as Instagram in its first month. But Cardinal Blue’s original business — the one that funded Pic Collage — was Facebook apps. Company cofounder Jaime Cham told me he coded the Pic Collage to pass the time during a plane ride with no Internet access. They had no idea it would be such a smash.
Console.fm is a free Web site that plays a selection of great electronic music sourced from SoundCloud (no licensing fees!), and already has 40,000 users after less than a month. CEO Alex Baldwin explained that the entire idea for Console.fm grew out of the founders’ frustration at being able to find good music to listen to while working on their original project, which was a kind of networking site for developers.
LaunchBit was probably the most promising business presented yesterday. This ad network for email newsletters is boasting conversion rates (not clickthroughs, but actual sales) of 10% and cost-per-thousand rates of $74. That’s way higher than most other forms of online advertising. But LaunchBit just pivoted four weeks ago — previously, the company was working on other kinds of ad products and had a guide for new startups.
Craft Coffee — the only New York company at yesterday’s event — started off as an e-commerce site for gourmet coffee. But as company founder Michael Horn admitted, the company didn’t sell anything. So Horn went around to cafes and asked coffee drinkers what they were interested in. He discovered that while they liked drinking fancy coffee, they felt a little intimidated by it — sort of like casual wine drinkers felt in the 1970s. He pivoted to a subscription-based model, which delivers a selection of gourmet coffee every month without requiring users to seek it out. He now finds that more than 3% of the people who visit his Web site make a purchase, and the average price is $80.
The lesson in all this: don’t be too wedded to your original business idea. If you see a great opportunity, jump on it.