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"Sometimes you have the right product but the wrong business model" This is the 3rd time I've heard a variant of this in the past couple of days. Most of the t

"Sometimes you have the right product but the wrong business model" This is the 3rd time I've heard a variant of this in the past couple of days. Most of the time when I think of a pivot I imagine changing the product pretty substantially, but I think this seems more true to the analogy. I've seen some success in changing my business model as I started pitching again recently. People are responding much better to our new approach than the one we had a year ago. (Not that successful pitches are the same thing as real success)

brudgers 13y ago
The product changed, the widget didn't. In other words, because TACODA was selling services, by changing accounting practices their customers saw a radically different product - one which made the person recommending it to their boss look clever. The pivot more fully leveraged TACODA's expertise. Because their they understood the how and why and when of the data's value so much better than their customers, the fraction of their monetization sent to their customers was more money than their customers were ever likely to extract. "How can I send someone a check?" is a counter-intuitive business model for most people. Even though it is used all the time.
- waps 13y ago
  One might say it more closely played to the greed of their "consumers" (publishers in the article), letting them use the company's product without any real risk or even competence. Instead of taking money from their customers, they gave money to their customers. Now if I could only make Lamborghini do the same ...
  - darkxanthos 13y ago
    One might say that, but I wouldn't agree. :) They didn't so much target greed as they did reduce the initial investment risk.
  - brudgers 13y ago
    Getting Lamborghini to take your money is trivial. Monetizing that taking is the hard part.
- gcb0 13y ago
  The customers didn't see a different product. They completely changed the product. I doubt you change from publisher saas model to be an ad network just changing your Billing contracts (like the little anecdote makes you believe), now they have to go after they agency and sell to them, and manage impression mismatch claims and what-not
  - brudgers 13y ago
    In service industry terms, they went from self-service to full service. When the service provided is for business and revenue generating, just sending a check is as full service as it gets. Their model reminds me of payroll services like ADP which are ridiculously cheap. They make their money on short term float and the larger the payroll they handle, the more money they make.
- gopi 13y ago
  >> "How can I send someone a check?" is a counter-intuitive business model for most people Great Point. This was the sole reason for Groupon's success even though were a lot of coupon companies before. Imagine what would have happened if Groupon charged small business to distribute their coupons instead of paying them?
- davemorgannyc 13y ago
  Yes. We worked very hard for years to build, sell and service "tools to help web publishers sell more ads for more money." Once we pivoted, we realized that all publishers really wanted was "more money."
mindcrime 13y ago
Most of the time when I think of a pivot I imagine changing the product pretty substantially, but I think this seems more true to the analogy. Well... if you are an advocate of the @sgblank "Customer Development" approach, then changing the product is the last thing you do. The goal of Customer Discovery is to find a market for "the thing you are building" and you only change to a different "thing" if you can't find a market. Of course, there are cases where the line between the "thing" and the "business model" can be a bit fuzzy. In the case of TFA, switching the business model essentially was a change in the "product" that was being offered. But the important thing is that they found product/market fit - even if they didn't follow the letter of some process in doing so.

brudgers 13y ago

The product changed, the widget didn't. In other words, because TACODA was selling services, by changing accounting practices their customers saw a radically different product - one which made the person recommending it to their boss look clever. The pivot more fully leveraged TACODA's expertise. Because their they understood the how and why and when of the data's value so much better than their customers, the fraction of their monetization sent to their customers was more money than their customers were ever likely to extract. "How can I send someone a check?" is a counter-intuitive business model for most people. Even though it is used all the time.

waps 13y ago
One might say it more closely played to the greed of their "consumers" (publishers in the article), letting them use the company's product without any real risk or even competence. Instead of taking money from their customers, they gave money to their customers. Now if I could only make Lamborghini do the same ...
- darkxanthos 13y ago
  One might say that, but I wouldn't agree. :) They didn't so much target greed as they did reduce the initial investment risk.
- brudgers 13y ago
  Getting Lamborghini to take your money is trivial. Monetizing that taking is the hard part.
gcb0 13y ago
The customers didn't see a different product. They completely changed the product. I doubt you change from publisher saas model to be an ad network just changing your Billing contracts (like the little anecdote makes you believe), now they have to go after they agency and sell to them, and manage impression mismatch claims and what-not
- brudgers 13y ago
  In service industry terms, they went from self-service to full service. When the service provided is for business and revenue generating, just sending a check is as full service as it gets. Their model reminds me of payroll services like ADP which are ridiculously cheap. They make their money on short term float and the larger the payroll they handle, the more money they make.
gopi 13y ago
>> "How can I send someone a check?" is a counter-intuitive business model for most people Great Point. This was the sole reason for Groupon's success even though were a lot of coupon companies before. Imagine what would have happened if Groupon charged small business to distribute their coupons instead of paying them?
davemorgannyc 13y ago
Yes. We worked very hard for years to build, sell and service "tools to help web publishers sell more ads for more money." Once we pivoted, we realized that all publishers really wanted was "more money."

mindcrime 13y ago

Most of the time when I think of a pivot I imagine changing the product pretty substantially, but I think this seems more true to the analogy. Well... if you are an advocate of the @sgblank "Customer Development" approach, then changing the product is the last thing you do. The goal of Customer Discovery is to find a market for "the thing you are building" and you only change to a different "thing" if you can't find a market. Of course, there are cases where the line between the "thing" and the "business model" can be a bit fuzzy. In the case of TFA, switching the business model essentially was a change in the "product" that was being offered. But the important thing is that they found product/market fit - even if they didn't follow the letter of some process in doing so.