Rockstars are those hotshot employees that founders and investors crave. They are the unicorn CRO, CMO, or Product Managers that promise big ideas, big connections, and big sales to the company.

“Do I need to hire rockstars at this point?” pondered my founder friend.

“Fuck no!” I exclaimed with usual tact. “They are way more trouble than they are ever worth,” I continued. This kicked off a lively discussion (with fewer f-bombs.)

Rockstars are distractions. They feed egos not growth. What startups need are experts.

Rockstars vs. Experts

When you are in that tenuous early phase of a startup, you need people who are agile, creative, and can execute effectively against less-than-ideal plans. You want experience. However, many of the people who sell themselves as experienced startup rockstars, are merely frauds cashing in on a single success years (or decades) ago.

What startups need are experts who have experience sans the attitude.

How do you differentiate rockstars from experts?

• Rockstars are always telling stories about their amazing accomplishments of the past as a method to impress you. Conversely, experts use the past as an example of when they learned something.
• Rockstars routinely drop names of all the big shots they know. They will become especially name-droppy when under stress. Experts are more interested in ideas and goals, than personalities.
• Rockstars show minimal interest in the company’s plans or vision. Experts want to discuss the plans and goals all the time. They want to make sure they are meeting expectations.
• Rockstars demand a big compensation package and a lofty title. Experts want fair pay and a reasonable title that reflects their role, duties, and authority.
• Rockstars believe they are exempt from the company’s hiring practices, policies, or procedures. They expect “short cuts” on the way to getting an offer. Experts may not like all the procedures, but respect them as a necessary part of running a business.
• Rockstars tell you they know everything and have “been there done that.” Experts are quick to tell you what they do not know and want to learn.
• Rockstars ignore the founder when it suits them. Experts challenge the founder when it makes sense.
• Rockstars are overqualified. Experts are slightly underqualified.

Rockstars are not necessarily arrogant, self-absorbed jerks. They are usually quite personable and likable. They are after all, selling you on themselves. Difficult to do that if you are unlikable. Likewise, experts are not all humble, self-aware monks. They often have coarse personalities. The difference is how these two candidates approach their role. Rockstars coast on their previous success, experts want to build new success.

Rockstars Feed the Ego

Why are startups so enamored with rockstars?

When a startup is in its early stages, it is desperate for credibility. This is especially true in the early funding rounds. The founder(s) and investor(s) want to validate that the company, its products, and its market are all viable. They are desperate to get the company on the map and make a name for themselves (so they can all exit with big paydays.)

The responsible way to do this is to focus on building a great product, creating loyal customers, and cultivating valued partners. Those are all “heads-down” activities that take time. They are not sexy. They are the nuts and bolts grind of everyday.

Rockstars promise a shortcut. They are the Billy McFarland’s of Startup world. They make promises of great successes using their huge network and vast experiences, in exchange for a giant comp package. Foolish founders and weak investors fall for this, as they are desperate to validate the business. As such, the rockstars feed the egos and make everybody feel important.

Of course, the same thing always happens. These rockstars waste time and money, dancing and waving their hands, constantly telling everybody of what a genius they are. Eventually the walls close in and they jump ship, to the next startup desperate for credibility.

People do not magically give a company credibility. Those people must be able to execute the company’s mission. If they cannot do that, then it does not matter who they know or what successes they had in the past.

What About All Those Startup Rockstars?

They did not start as rockstars. The people who become real rockstars, started out as experts. They applied themselves, stuck to a vision, and generated success iteratively. Also, most rockstars had tremendous help on their path to fame. You do not build the next ChatGPT alone in your garage. It takes the contributions of numerous people, united around a set of common goals.

Think Past Your Ego

The rockstar issue is one of the many issues you will face as a founder where you must think past your own ego. The ego-centric thing to do is to hire rockstars, as they will make you feel good about your company. The intelligent thing to do is to hire people who will challenge you and bring creativity to the company. These people may not always make you feel comfortable, but they are much more likely to execute against the company’s vision and mission.

The post Do Startups Need Rockstars? appeared first on Zenaciti.

You bought a froduct, a product that is really a feature or collection of features. Froducts are everywhere, but they are particularly pervasive in cloud and security market. Free flowing funds has fostered fertile field for founders flaunting froducts.

What is a Froduct?

For something to be a froduct, it must meet two criteria:

1. Limited Use. Security and cloud froducts target specific needs, such as compliance, data replication, or incident response.
2. Dependencies. Froducts depend on other technologies, systems, or people to work properly.

Froducts are not necessarily a bad thing.  In fact, many innovative technologies begin their life as a foduct.

One example of a successful froduct was Portshift. This Israeli company made a Kubernetes security product. Their product, like many container security products, was really a collection of existing Kubernetes and cloud capabilities. You could do almost everything Portshift did with existing open source tools. You also had to have a containerized application environment — limited uses, critical dependencies.

Portshift brought these features together into a product, racked up some wins, and got acquired. Investors put in $5 million and Cisco paid approximately $100 million for the company (the actual amounts remain undisclosed.) That is a 20x return on capital. A fabulous froduct finish.

While froducts are great for founders and investors (when they work), they are not always so good for customers. Froducts can create as many issues as they solve. Yes, you have security mesh on your containers, but who is going to define, manage, and monitor that? Container security mesh, like many other security froducts, is a great idea that is difficult to implement successfully. Froducts often make lofty promises of efficiency, security, and reliability, that are difficult to fully realize.

So where do all these froducts go?

Cloud Eat Froduct

In my recent analysis article, Cloud Eats Security, I described how the Cloud Service Providers (CSPs) such as AWS or Azure, are gobbling up security capabilities.

For example, consider Web Application Firewalls (WAF). A decade ago, WAF was a thriving market, with multiple big players like Imperva and F5. Now, WAF is a few clicks on your AWS, Azure, or Cloudflare console. There is really no reason to buy a WAF anymore.

Cloud providers are slowly gobbling up froducts. Bundling them up into their offerings and making them easier to implement. While their versions of these technologies may not be as good as the stand-alone ones, it does not matter. They are good enough. Like it or not, that is all most buyers want.

Go to Froduct Market

For every froduct that clocks in a 20x return, there are hundreds that merely burn investor cash. The core problem with these places is they have their go-to-market efforts completely wrong.

Security and cloud froduct companies keep struggling to solve security or cloud problems. They put out endless marketing fluff about hacking, peace of mind, and attack surface areas but fail to address the real question that buyers want to know: what business problem do you solve?

Security problems are small, nuanced, esoteric pixies that require lengthy explanation, education, and endurance to comprehend. In contrast business problems are lumbering leviathans that even the most clueless investor can understand. For example…

Business problem: we need money.

Security problem: we need to restrict access to specific users, with approved session tokens.

A security froduct might be innovative and effective, but if it creates any kind of impediment to revenue, then who cares. Startups with froducts need to look way beyond the cool thing they do and think about what those cloud service providers are doing.

Froduct Packaging

The reason AWS can get away with a subpar WAF is because the totality of AWS is more valuable than the individual components. AWS’s value is not in their security or compute capabilities, it is in the platform.

Or another way to say this, AWS does not solve compute problems (or security ones for that matter), they solve business problems with computing products.

Startups can use this same technique to make their languishing froduct more useful and valuable.

For example, which one of these product pitches do you think work better on a C-level executive with limited budget?

Our cloud deployed IAM product integrates with your on-premise Active Directory to synchronize user identities across cloud environments. It can reduce unauthorized access and protect data.

Our product keeps your people working earning revenue.

Do not sell the froduct, sell the better future the froduct (on some big platform) delivers. Froducts, packaged together, to solve large scale problems are irresistible to leaders who want to contain costs. Moreover, they alleviate pain.

So, what are some of these large, business problems? There are only a few of them.

1. People: expensive, fickle, smelly, hungry
2. Money: never enough of it
3. Time: never enough of it

If your froduct platform can replace people, save money, and/or reduce time to success, then you have a winner. If your froduct requires a company to hire more people, pay more money, or consumes more time, you have an uphill battle ahead of you.

Conclusion

When you go shopping for new security products, take the time to consider the dependencies.  You may be buying a froduct.  Likewise, products that integrate with existing platforms, like AWS or Azure, are naturally more effective since they can work on existing environments.

If you are a product company, then you must be able to place your product into the context of a customer’s environment.  Stop talking about the security challenges you address, and start talking about how you will improve the customer’s experience. You can still talk about those security benefits, but only after you and the customer are clear on the business problems you solve.

The post Rise of the Froduct appeared first on Zenaciti.

It was quite a turnaround. Honestly, it was not that difficult.

Turning around a failing customer relationship is one of the more rewarding things you can do as a founder. It is also relatively easy, if you have a growth mindset and can handle some pain.

Let’s look at how you can turn the most spittle flecked, rage monster into a champion for your company.

For Sale: Pain Relief

While your company may sell products and/or services, that is not what customers purchase. Customers buy pain relief. They have pain(s), your products and/or services will make the pain(s) go away.

Customer pain comes in many different flavors, such as inefficiency, inconsistency, human errors, excessive costs, or a barrier to progress. In 2011, my customer needed better security scanning to pass audits and win business. The lack of security monitoring was a barrier to opportunity. Opportunity barriers are especially painful to companies. Companies spend millions (billions?) a year to remove these barriers since they limit revenue and growth. For example, the entire cloud computing industry is one giant virtualized ibuprofen that makes deploying applications easier.

This customer hired my company for pain relief. We were doing the opposite, causing pain. The customer did not care about our internal problems, inexperience, or the consultant’s incompetence.

Consequently, to make the situation right, I needed to make a commitment.

Growth Commitment

The consultant assigned to the project got overwhelmed. Rather than ask for help, he blamed the customer, the firewall manufacturer, the sales team, and so forth. More specifically, he approached the project with a fixed mindset. He believed that since he was unable to do the work, it was therefore impossible, and the company should never have sold the customer the service in the first place.

I fired the consultant and took on the project myself. I approached the issue with a growth mindset: there was a solution, I merely did not know it, yet.

I did lot of reading and tinkering. After a few long nights, I figured it out. While it was difficult, it was absolutely possible. When the firewall operated as expected, I had a great sense of accomplishment. The customer was delighted. The pain was gone.

If you want to turn around a relationship, you must commit to relieve the pain. Otherwise, what use are you? Incidentally, this same concept applies to friends, neighbors, spouses and most relationships. If you want rewarding relationships, you need to commit.

Your Value is Your Commitment

In my recent blog, Should You Fake It Until You Make It, I discussed the importance of commitment when building a business. Customers judge their vendors based on their ability to uphold commitments. Likewise, people judge you on your ability to meet commitments. If you can make and keep commitments, you are going places. If you blame others, make excuses, and play the victim, you are going nowhere.

Furthermore, you cannot push your problems on to your customers. If your team lacks the skills, they need to acquire them, quickly. If your product cannot do what it says, then you need to fix it, now. If your salespeople overpromised, then you need to overdeliver. Once the deal is signed, you cannot back out of that commitment. You also do not get to re-write the story to suit your inability to handle learning.

As a founder, you must stomp out toxic, blame-culture at the first signs. When your people are blaming others rather than solving problems, the company is on a bad path. Furthermore, you must uphold and nurture a growth mindset. For more information, read Carol Dweck’s book Mindset or FS Blog has a good summary.

Focus on Pain

Lastly, your entire company, must focus on how you are reducing or eliminating customer pain, not causing it. I have sat in countless meetings (in my own even) where people blathered endlessly about all their grandiose ideas, telling one pointless story after another, never once addressing how they are going to reduce a customer’s pain. You are either reducing pain or increasing it. Be on the left side of that equation.

The simple formula to turn around irate customers:

• Listen to the customer and their pain
• Ensure every aspect of your business understands customer pain: sales, marketing, messaging, pricing, delivery, customer success, support, etc. Nobody gets to avoid or ignore the customer’s pain.
• Require a growth mindset. Stomp out blame.
• Make and meet commitments.

It really is that simple.

What do you think? I love feedback, even the negative kind. Email me at andrew.plato@zenaciti.com with your thoughts, suggestions, or insults.

The post Customer Pain appeared first on Zenaciti.

These are all reasonable explanations, yet they ignore the most obvious one: outlandish valuations. Is a startup with $5M in revenue worth a billion?

No…and to think otherwise is outright delusional insanity. However, I do not fully understand the absurd valuation math of Silicon Valley. It seems that if an investor believes a valuation is true, then it is.

Keep in mind, this is the place that minted valuation absurdities like Theranos, Webvan, and (here is an oldie but a goodie) Cue Cat. Yes, that Cue Cat. In fairness, for every Cue Cat that Silicon Valley funded, there are dozens of genuinely innovative companies that contribute to the forward progress of humanity.

Whether it is absurd valuations or the lack of baby formula, a reset for startups seems inevitable. So, what kind of evasive maneuvers can startups take to weather the coming dark times?

Vision

To paraphrase the great philosopher Freewheelin’ Franklin: vision will get you through times of no customers better than customers will get you through times of no vision.

Vision is a description of the future. A well-defined, well-articulated bright future inspires hope. Hope that the company will successfully navigate through the darkness. Hope that rewards are attainable. Hope that all the struggle, toil, and stress will be worth it and have meaning.

To paraphrase Jyn Erso, startups are built on hope.

To promote a brighter future, startup leaders must emphatically promote the company’s vision. To do that, answer four questions:

1. Why does the company exist?
2. What problem(s) does the company solve?
3. What are the values of the company and its people?
4. How can people find meaning and relate to those values?
5. Where is the company going?

Do not make your vision about money — ever. Money is a weak motivator. Moreover, nobody cares about making money for the investors or founders. Vision must be about something people can genuinely care about. Money must be the result of staying true to the company’s vision, values, and mission.

Vision gives people purpose. Without purpose, employees invariably ask themselves “why am I here?” It does not matter how smart you are, or how many big shots you know, or how much money you have in the bank, without purpose people have no reason to stick with the company.

Vision will get you through the downturn. However, words alone will not solve everything. There are some other ways to stay on target.

Automate

One of the many ways we sap meaning from people is to put them into roles with repetitive, boring work. Automate repetitive tasks and promote the people into more meaningful work.

The mere act of shifting people’s focus from performing a repetitive task to automating that task, provides a more satisfying job. Moreover, one a task is automated, your products and services become more reliable, scalable, and valuable.

Put that Coffee Down

Maybe you need Alec Baldwin to yell this at you: Always Be Closing. You need to sell, sell, and sell some more. To do this, you must arm your sales team with the resources they need to effortlessly demonstrate your company’s value.

For example, all salespersons must be able to expertly demo your products at a moment’s notice. If you sell services, you must have a library of sample output (reports, content, etc.) that demonstrate your capabilities and expertise. Demos and samples are effective ways to communicate your company’s competitive advantages.

In my experience, the only way out of a hole, is to sell your way out. There are only so many cuts you can make to staff or spending before the company becomes ruined. Investing in sales and marketing is the ticket out of the dark times.

However, before you charge ahead, be clear with your sales and marketing teams that results are the only metric that truly matters. Effort is expected, but results are what they are measured on.

Product Improvements

You know the next valuation is going to be low(er). So why not actually improve your app and have something more valuable? Downturns are an excellent time to clean up all the crap in your app that is holding you back. Quit dickering around with every dumb customer feature request and go back and fix the big stuff.

Emerge from the darkness with products and services that are more valuable, and therefore can command reasonable valuations.

Repackage

When times are tight, buyers go bargain hunting. They expect every app, service agreement, and subscription to go farther, offer more, and solve more problems. If you are a special little unicorn app that only works in a narrowly defined set of requirements, then it is time to repackage yourself and broaden your appeal.

Build packages that solve entire business problems all in one. Moreover, reprice everything into monthly subscriptions, usage-based billing, or extended terms to make payment easier on customers.

Partner Up

Rather than be a lone sinking ship, partner up with other sinking ships. This also can help with repackaging. If you can bring partners to the table that fill gaps in your offerings, then you have more to offer.

However, before you sign up a bunch of partners, make sure you understand how each partner makes money. Each partner must be able to see how they can benefit, otherwise it is not a real partership.

However, be honest with your scale. A $5M startup is not going to have the market reach of a titan like Cisco or Microsoft. If you partner with a bigger player, then you need to accept the inherent unequalness of the partnership.

Be Brutally Honest

Unfortunately, tough times mean doing more with less people, resources, and time. Layoffs, cutbacks, and delays always feel bad.

Do not sugar coat the unwelcome news. This only makes you look foolish and desperate. Also do not make it about you. Be honest about the changes. Show remorse but show resolve as well.

The intent is to show you care about people, but you are committed to staying the course and seeing the bad times through. This is why vision is so desperately important in bad times. Layoffs and lost deals are the ideal time to double down on the company vision, values, and mission. It pulls everybody back together and recenters them on why the company exists.

Conclusion

Do not give up. Downturns are inevitable. Yet, nothing bad lasts forever. Startups can survive (even thrive) in bad times. Moreover, as the Wired article points out, troubled times can mint stronger companies. The key to coming out of this storm is keeping your eyes on the prize.

To quote one of the greatest philosophers I knew: perseverance furthers.

The post Surviving the Startup Crash appeared first on Zenaciti.

“At least I did not kill my startup like that!” one founder exclaimed.

This set off a discussion about all the ways startups collapse. Stories of failed startups are uncommon. However, for every sensational fail like Theranos, there are many more that simply fade into irrelevance. After a lengthy discussion, we came up with ten things that can kill a startup, as well how leaders can commute a startup death sentence.

1. No Sales

You can have the greatest idea in the world, but if nobody pays money for it, you might as well throw it away. Startups that cannot sell are startups that cannot survive.

Solution: Always be closing. Sales must be the top priority for everybody, especially the CEO.

2. Angry Customers

While customers of startups often know they are taking a risk, that tolerance has limits. Unhappy customers spread bad news quickly. When every sale is important, angering customers with poor support, unfulfilled promises, or unfixed bugs can be devastating.

Solution: Dedicate a person (or team) to customer success. Have a mechanism to capture and respond to customer feedback.

3. Irresponsible Cash Burn

Most startups burn cash. Not all cash burning is good. Burning cash to hire (the right) people or procure necessary supplies is good. Burning cash on ludicrous parties, lavish offices, or expensive vendors not only shows a lack of leadership, but it also shows a lack of control.

Solution: Aggressively scrutinize spending. Implement spending controls to prevent any executive (including the CEO) from spending more than a set amount.

4. Lack of Product (Management)

This may seem obvious, but plenty of startups get funded based on innovative ideas, and then faceplant when they confront the reality of product development. Even releasing flawed products, that are fixed later, is better than releasing nothing.

Solution: Hire a product manager, set goals, and meet them. Do not allow perfection to become the enemy of good (or even mediocre) product.

5. Internal Strife

It is profoundly difficult to build a product, bring it to market, and convince customers to buy it. It is impossible to do those things if the people in the company are going in different directions. Unifying everybody around a common set of goals and values is mandatory for success. Equally important is getting rid of the people will not get on board.

Solutions: Provide leadership coaching for executives. Require unity to a strategic plan a condition for executives to remain employed.

6. Financial Shenanigans

Most founders find budgets, sales forecasts, and unit economics boring because…well they are boring. However, they are also supremely important to running a company effectively. When leaders begin messing around with the finances, to either hide failure or reassure jumpy investors, there is nowhere to go but down.

Solution: Empower finance team to report independently to the board. Perform annual, independent financial audit.

7. Outmaneuvered

When an innovative product emerges, competition is inevitable. Startups that become stuck on early success and fail to keep pace with their competitors can get outmaneuvered and rendered irrelevant. Moreover, if a large competitor (like Microsoft) enters the market, they can outspend smaller players resulting in the same result.

Solution: Pay attention to the competition and meet those product development goals.

8. Failing to Plan

While it may be a cliché, failing to plan is a plan to fail is an accurate statement. It is easy to become distracted with everyday struggles and problems. Moreover, it is equally easy to dismiss planning as overly formal, especially in fast-moving DevOps companies that promote a “fail fast” mentality. The purpose of a business plan goes beyond formality. Plans set boundaries and keep the company focused. Moreover, they prevent any one person (or team) from redirecting the company into some other product or effort.

Solution: Document an annual strategic plan. Get buy-in from the team. Enforce it. Stick to it.

9. Arrogance

When money floods in, some leaders transform into lunatics. This can lead to spectacular flameouts, such as WeWork. When arrogant leaders fancy themselves as prophets, the company is on a one-way trip to an early grave.

Solution: Do not enable craziness. A healthy dose of skepticism and reason can quickly defuse a lunatic.

10. Lost Vision

Among all the things we discussed, the most insidious killer of all startups is one of the most difficult to detect: a loss of vision. Vision is what a startup hopes to achieve and become. It is the intangible why of a company that Simon Sinek references. Large companies with an established customer-base and entrenched internal power structure can stagger along for decades with no vision. Startups cannot. The company’s momentum, enthusiasm, and focus all depend on the vision. Many startups lose vision when the founders exit, or the products fail to gain traction in the market. Immature leaders will dismiss talk of vision and core values as “touchy feely” nonsense.

It is vitally important for startup leaders to cultivate, communicate, and command a clear vision, mission, and core values. Many of the other items on this list can trace their origin back to the loss of vision within the company.

Solution: Document the company’s vision, mission, and core values. Refer to them regularly.

Conclusion

Startups are fragile things. Unlike big companies, which can weather mistakes, startups have less of a safety net. The primary advice this group of founders had was simple: stay on target. Startups routinely get lost and distracted along the path to success. Whether you lead a startup or work at one, stick to a plan.

Moreover, money is seldom why a startup fails. Rather, its leadership (or the lack thereof) that causes the chain of events that lead to lost money, lost deals, and lost opportunities.

The post How to Kill a Startup appeared first on Zenaciti.

Zenaciti CEO Andrew Plato is quoted.

Read the entire article at CIO.com

The post Secrets of Successful Vendor Negotiation appeared first on Zenaciti.

However, not all startup pivots are as drastic as rice to Donkey Kong. Many are ordinary business model adjustments in respond to customer demand. For example, in early-2000s YouTube was a dating site, where people uploaded videos looking for love. While the dating service was a dud, the video sharing was not. 

I was a founder who pivoted my company three times:

• In 1997, I ended my technical writing business to focus exclusively on being a cybersecurity product reseller (VAR). 
• In 2013, I sold off the VAR business and changed to professional and managed services. 
• In 2017, I launched a cloud security platform service, and began moving away from professional services. 

While the company remained in the security industry, each of those changes was necessary to keep pace with shifting customer demand. Each of those changes was also excruciating. Like changing the wings of the plane in mid-flight, I had to oversee drastic organizational changes while keeping the business running and making money.

All that struggle taught me some valuable lessons. Namely, it taught me that pivoting a company is a delicate dance, on a collapsing wooden bridge, over a river of lava, filled with sharks.

In other words, pivoting a startup is not something you do on a whim. 

With the benefit of hindsight, I identified six major lessons from my pivoting experience. While I wrote these six lessons with a business leader in mind, they are equally relevant for employees enduring a pivot as well.

1. Why?

There is a reason I used the image of dancing over lava. Changing the direction of a company is dangerous. If it fails, the company collapses. Before doing or saying anything, you must nail down your reasons for doing it at all. 

When I pivoted away from the VAR business, I had powerfully precise and personal reasons to make the change. The VAR business model is profoundly outdated (I documented this in the Anitian blog, Goodbye Yellow Brick VAR). However, what truly motivated me was that running a VAR was turning me into somebody I hated: a cruel and selfish leader. 

As you move through a pivot, you will face a tremendous amount of self-doubt and detractors. You must ground yourself with a clear reason why you are making the change, otherwise the self-doubt will crush you. It will be too easy to abandon the pivot and go back to what is comfortable.  Pivoting a startup will never be comfortable, which is why you need to know why. 

Your reasons why will ultimately help you convince people to follow you into this new venture. This is why Simon Sinek reminds us to start with why. 

It helps to write down your reasons and keep them close (like taped to your mirror so you look at them every day.)

2. Where?

Once you know why to pivot, the next question is “where?” Where is the company going? 

When I changed from a services company to a product company, I spent a year talking about a new kind of security company. I laid out my ideas in presentations, articles, and goals. This vision of a new company, with a new set of products and services helped guide employees, partners, and eventually customers through the change.

The ultimate question you must answer is: after the change is made, what will the company look like? Who is employed in this new company? What do they do? How do you make money? Who are your customers? Why do your customers buy? These are all basic questions you must be able to answer.

However, you need to be careful with all this discussion in the early stages, which leads to the next item on this list.

3. Control

Pivoting a company is a bit like running a nuclear power plant. You must carefully control the rate of change to achieve the outcome you want. The unstable element in this reactor is (as it always is) people. Change too quickly, and your employees and customers will react in unpredictable, and potentially devastating ways. Change too slowly, and your efforts may sputter out.

For example, as I pivoted out of the VAR business, I slowly modified our sales pitch and marketing content over a 12-month period. Each quarter, I had the sales team focus a little more on services, and less on products. I also made small changes to commissions to reward service sales. The changes were small, easy for people to handle, and always linked back to the vision.

In the early phases of a pivot, the changes to the company need to be almost imperceptible. This allows your team to ease into the changes. Make these changes small, but keep talking about the old business and its value. You want people to see movement toward the new business, with a grounding in the old. 

In time, you must accelerate change, which increases fear, stress, and opposition among your employees. Once the pivot heats up, the stakes also increase. You are no longer controlling change, but playing a tense game of poker with the old business.

4. Stack the Deck

As change accelerates, your team will notice the changes. This will make them uncomfortable. At this point, you must not only accelerate the changes, but make it so there is no “going backwards.”   

In the tense final days of my VAR business, one of the finance people became frustrated as I questioned an outdated process. Exasperated, he said, “that’s not how we do it. We cannot just change everything overnight.” Amused, I replied, “why not?” This person had come face to face with a new reality. The old, comfortable ways of doing things were ending.  A new order was coming. 

People derive satisfaction and value from their expertise and experience. Change threatens this balance. When the discomfort of change becomes overwhelming, people will revolt and undermine your efforts to pivot the company.

I faced this dilemma many times.  After some trial and error, I devised a strategy to keep the pivot moving: stacking the deck. 

It works like this: 

1. Identify the people who are resisting the changes and unlikely to come on board with the new business model. 
2. Keep those people comfortable working under the old business methods. This keeps them satisfied and keeps the existing business (and income) chugging along.
3. Hire new people and train them exclusively on new processes and new business (what you are pivoting the business toward.) 
4. As the new business model takes hold, slowly marginalize the old business and the people working in it.
5. In time, the resisting employees will have to face a choice: get with the new business or leave. 

And leave they will. Tensions will increase as the old and new business clash. When the tensions hit a boiling point, you need to hit the gas. 

5. Tipping Point

Pivots hit a tipping point, when everybody sees change happening. Tensions are high. The old business and new business are fighting for prominence. 

Once this tipping point arrives, you must go all in. Wipe away the old business swiftly. You cannot hesitate at this stage. Change must be decisive, conclusive, and absolute. 

When I exited the VAR business, I pulled down the website on Friday. On Sunday, a new site was running with all mention of the VAR business wiped away. On Monday, I made an announcement to the employees, we were done being a VAR and there was absolutely no going back. Some were shocked, most were not. Anybody who had been paying attention saw this change happening. The only people shocked were those that were never going to accept the change in the first place. 

Rapid change like this will shock people, partners, and customers. Yet, it demonstrates your resolve. When the tipping point arrives, change must be swift and final. 

Nevertheless, there will be fallout from the change, which gets to the last item. 

6. Leave the Past in the Past

A company pivot, regardless of the scope, emotionally affects people (including you). Former employees may feel betrayed and lash out. Employees that remain will feel confused and uncertain about the new direction. After enduring the stress of pivoting the company, this emotional collateral damage can unravel everything.

For example, after dumping the VAR business, I harbored unhealthy levels of anger and resentment. I felt like a failure. The anger was blocking me, worrying employees, and threatening the whole change.

Time heals all wounds. I was fortunate to have a network of coaches, counselors, and supporters who helped me deal with my emotions and refocus on the future. However, your people may lack these resources.

Intellectually, we all understand that change is necessary (usually). However, change generates uncertainty, which in turn causes anxiety and discomfort. It is natural for people feeling unsure about the future of the company, to reject the changes, undermine leadership, and push the company to return to “the good old days” when they felt more comfortable. I saw this happen repeatedly when I went through my pivot in 2017.

People derive their self-worth from their experience and role in the company. Changing the company threatens their self-worth. Change becomes the enemy.

How can you resolve this?

1. Acknowledge the Past: The previous business was a necessary step on the road to the future.
2. Show Gratitude: Openly thank and praise to those who stuck with you and the company during the change.
3. Full Speed Ahead: Be firm and clear there is no going back to the old ways.

The first step shows people that the past has value and creates a bridge to the future. This helps people feel like their previous contributions had value.

The second step reduces anxiety, fear, and feelings of loss. It allows the people who stayed to continue to earn self-worth from their experience (which they need.) However, it also reassures new people. Seeing experienced people get praise, shows newer employees they too can earn praise if they stick with changes and remain agile. Public praise is the most powerful motivator you have as a leader (it is significantly more powerful and long-lasting than money.)

The final item, and the most important of my list, cuts off any return to the past. People need this. They need certainty. Be decisive and firm that the changes are permanent. If you sense any attempt to go back to the old ways, snuff it out quickly. This is especially important with sales and marketing groups. 

Conclusion

Change is the only constant in life. How we deal with change is as least as important as how we deal with life. The necessity of change is often obvious (new technology, new methods, new markets, new demands, etc.) What people lack is the nerve to make the changes and embrace discomfort. This is why any pivot must begin with the leadership. 

A leader who respects the complexities of change can help people navigate that change and deliver success. Moreover, leaders can make a stressful experience, become an extremely rewarding one. When the change is successful, people look back on the experience with fondness. The stress and anxiety, in time, become positive feelings of growth and empowerment. 

Reflecting back on my pivots, they were all miserable, stressful, and exhausting…and I would do it all over again. I look back upon them with pride.  

There is a reason companies like Nintendo made their change. The path from rice to Donkey Kong was undoubtedly rough. Yet, could you imagine anything different? Pivots may be painful, but they are a necessary part of building a great business. 

Go forth and pivot.

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