Inc. Southeast Asia | 2 May 2017
When Plan A isn’t working, what’s a start-up to do?
In the dynamic and fluid world of tech start-ups, there’s a great chance that the business you envisioned building will not resemble the company you end up operating several years down the line.
For Paul Rivera, the co-founder and CEO of Kalibrr, a start-up that’s beginning to disrupt traditional recruitment in Indonesia and the Philippines with its job discovery and matching platform, that evolution period took three years. It involved two “very painful” pivots that saw Rivera making “some of the most difficult decisions” of his life, including letting go of half his 40-strong pioneering team. “We started as an online learning platform to an assessments company, and from these two failures created the innovation that’s propelled us to the growth we have today,” he says.
This is an experience shared by Irzan Raditya, the co-founder and CEO of former YesBoss, which had pivoted its on-demand virtual concierge service into chatbot solutions provider Kata.ai when it spotted more potential in providing an AI platform that would bridge conversations between brands and Indonesian consumers. “As a start-up, you’re always fighting to sustain your resources and back in October 2016, we had to make the tough call of pivoting into this new business model that we felt had greater and faster growth potential,” says Raditya.
Changing one’s business direction is hard, especially if you have a strong conviction that your solution is exactly what your target business needs. But as your start-up begins to discover what you’re good (and less good) at, a pivot is often inevitable. Here are four things Southeast Asian founders can expect:
1. A pivot can be the result of circumstances outside your control
Sometimes, even when you’ve built a very good product, certain external factors may require you to change direction even when you really, really don’t want to. Kalibrr pivoted from being an online learning platform and into an assessments company after it had already built the technology the founders felt would make a positive impact on the country’s job market.
Unfortunately, politics got in the way. Its first client—a government agency—for whom it built its assessment platform, suddenly withdrew its contract as the government’s development assistance funds were mired in scandal. “Our client wasn’t directly connected to the controversy, but nobody wanted to touch the grant money, which was supposed to pay for our services and our product. We were ready to go, but overnight we had to start over again,” says Rivera.
2. You’re likely going to lose good people
For Raditya, the hardest part about YesBoss’ pivot process into Kata.ai was having to lay off people across multiple departments. “As a start-up, you’re always fighting for resources so we had to make the decision of prioritizing what mattered the most at that time,” he says. This meant shutting down YesBoss’ operations both in Indonesia and the Philippines, which led to letting a lot of people go.
To temper the blow, YesBoss made the pivot process a relatively long one. “I would say more than two months. First we started by reducing operation time, then we laid off a couple of people, then eventually departments like Customer Support and Sales because we were spending resources on product development again. But one thing we made sure of was that they understood the company’s situation, that it was going in a different direction,” says Raditya, adding that they also helped their employees craft their CVs, create a LinkedIn profile, and connect them with other start-ups and investors looking for employees.
3. It’s going to be lonely at the top
According to Rivera, it was during Kalibrr’s pivot periods that he felt most grateful for having his co-founders Dexter Ligot-Gordon and Danny Castonguay around. Like Raditya, Rivera had to let a lot of people go as Kalibrr built its third product. “I was dithering, I didn’t know what to do and how to do it, and so it was super helpful to have co-founders who were very honest with me and were looking after the best interest of the business,” he explains.
As a CEO, Rivera says he appreciated the fact that his co-founders would tell things to him straight. “You don’t want to be in an echo chamber where people are afraid to challenge or give you their honest opinion. I think I was ultimately able to make that decision and do it in a timely manner because I had talented people giving me honest advice. As a CEO, you want to make sure you get that, because it’s lonely at the top,” he says.
4. You have to be an eternal optimist, even when it’s hard
As a CEO, Rivera says you have to play the role of the eternal optimist even when things are murky and grey.
Make sure the remaining members of the team understand there’s a reason why they are still there. “Remind them of the company’s mission. The easy thing to do in these circumstances is to give up, but when you give up, the problem you tried to solve will only get worse. It will fester,” he says. “As a founder, you really have to put on that leadership hat and make people see a future that doesn’t exist. You have to make it look like everything’s okay even though internally it’s not—because if your team begins to see you crap, they will crap. That’s probably the toughest part—you almost have to play two sides, how you feel internally and what you portray externally.”