Pivoting is a startup business term that refers to shift completely the strategy or a product of the company because the first attempt into the market of the company was unsuccessful. Based in the idea that the market and customers desire are more and more unpredictable than ever, it´s securer (and cheaper) launching a MVP (minimum viable product), and test it before putting all the meat on the fire, and then pivot if it doesn't work.
Mostly all internet startups pivoted someway sooner or later, and that pivoting should be considered as a sing of maturation and success, not as of a lack of objectives or direction.
But, although the theory is great, in the real life, pivoting is seen lots of times like failure or fault of vision of the founders, even if startups are supposed to pivot 2,5 times average in their live time, and it is usually a big issue for the entrepreneurs t to explain it to investors.
And that's not just the only danger of pivoting, you have to be accurate not to spend all your budget before the first pivoting, trying to pursue your first idea. That's where all the juice of pivoting is, choosing when is the time of giving up the first attempt and jumping to a new idea.
Come on! Let's pivot!
In return, we have two important advantages any American start up would kill for:
1. Talented human resources cost
Technical human resources in Silicon Valley are highly qualified but they are also extremely expensive, in some cases, the salary of a programmer could be more than three times higher, than his counterpart in Spain. This, raises enormously the costs of any start up where salaries are the only initial expenses. Ok, it might be easier to find capital in US, but costs of any start up there are 5 or 6 times higher than a spanish one, always talking about human resources.
It's true that it's not easy to find good programmers in Spain, but neither in Silicon Valley, but when you do it, the spanish are going to be much cheaper and, probably, equal in quality. You can still move to Silicon Valley to compete there, with the sales team or a small office, leaving the development team in Spain.
The shortage of technical resources in the Valley causes the theft of staff between companies to become a very common practice, which makes even more costly to have the development team in US.
That's a competitive advantage in costs!
Curiously while I was writing this post, the spanish press has been pulling around with articles talking about the quality of spanish programmers:
The Twitter of my friend @ferrenet:
El Confidencial: ¿Are there good programmers in Spain for entrepreneurship? (spanish)
Enrique Dans: "Entrepreneurs and developers: shortening distance" (spanish)
2. Public capital of spain
US companies don't get any grants or help from the government, not even a single dollar of public cash is used to promote entrepreneurship, it happens naturally. In Spain, and in Europe in general, it's different, in order to impulse the creation of employ and wellness, there are lots of public programs for technological start ups, even though, lately, with the real state crisis this helps have decreased. Still, governments give lots of public money in forms of loans with low interests and reduced payback conditions and responsibilities to entrepreneurs. A Spanish company can combine public money with private capital and diversificate it's initial capital sources. Even more, public capital is a loan or a grant, so you don't have to give away your precious equity or talk about how to drive your company with the new investor.
What I am concerned about, as owner of a dot-com company, is how is going to affect this to the habitual dot-com investors, like the VCs. At first sight, I thought it was going to benefit the poor image of our sector after the dot-com bubble of 2000, but one week after the initial public offering, I'm thinking that it's going to question again the internet business models based on publicity.
It's true that Morgan Stanley and Goldman Sachs might have disguised the estimations of Facebook's future income in the reports, and it's value was over estimated. But, what they are really doing, it's generating doubt around the ad based internet business model, possibly, the only model for the content based web pages.
The revenue of popular web services like, Pinterest, Twitter, Instagram, or even Google, is Ad Based, if the market starts doubting the profitability of this business model, we will be back again in front of a "smaller" dot-com bubble puncture.
We will see what happens with the Facebook share value, it will possibly stabilize during the following weeks, probably in a value next to 30 $/share, that means that people paying the initial 40 $/share will be loosing 30% of their investment.
Hopefully it won't generate distrust over dot-com companies.
Our office is going to be located in the Rocket Space Building, in the middle of San Francisco's financial district, a co-working space with a lot of start ups like ours. Thinking about it…. I've been using Spotify to listen to music, and now we are going to be office partners, even more, the building is next to worldwide famous technology web Techcrunch.com. Needles to say that we are honored to be able to work in such ecosystem. Like I usually say, joking, we jump to "first division".
Etceter.com is going to compete with "the big ones" with our "content curation" solution, for example, Microsoft, Google, Facebook... Obviously we think we can do it better, otherwise we wouldn't move to the heart of Silicon Valley... the vortex of the battle.
"Ave, Caesar, morituri te salutant"