Unpacking the elusive pivot


November 21, 2019

The Hustle
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Happy Thursday, people. Has it been a tough week? Well, Thursday’s a great day to pivot. 

Unsatisfied with your sales manager? No problem –– just pivot and become a magician. Sick of running your small business? Easy –– pivot to a career deep sea spearfishing. Today:

  • Crazy-sounding pivots are more common than you think
  • Eleven biotech companies failed in 2019 and more are on the brink
  • Sometimes, children’s books really stink

Have a great day (wink, wink).

The Hustle Daily Email

It’s a big week for pivots. But what does that even mean? Let’s unpack the ‘pivot’

Earlier this week, TechCrunch reported that Maslo, a startup that started out as a personal mindfulness app, would be pivoting to become an executive coaching app –– and, separately, SocialRank’s team pivoted from audience analytics to a mobile-first professional networking app. 

News of startups pivoting from one business niche to another –– and often remarkably different –– business niche is common. 

It’s easy to poke fun: What do you mean you pivoted your gay social network to a flash sales site, and after raising $336m now you’re pivoting to e-commerce? (Yes, that actually happened.)

But pivots are more complicated –– and more common –– than they may initially appear.

So, why are pivots so common?

Are startup founders just serial opportunists hell-bent on making a buck? In some cases, maybe.

But more often than not, pivots don’t come about merely due to internal opportunism, but also due to external pressure from investors –– many of whom encourage pivots to facilitate growth.

Pivots are possible only when entrepreneurs behind a slumping business have enough money to pivot –– and that money often comes from someone else.

Sometimes, pivots end in complete failure. But other times companies pivot past their original ideas –– and consumers often don’t even realize it.

A surprising number of well-known businesses resulted from pivots

Here are some other noteworthy companies that pivoted their way to productivity:

  • Wrigley started out as a soap company that gave away free baking powder and then pivoted to a baking powder company that gave away free gum and then pivoted again to focus on the sweet stuff.
  • Avon’s founder started out as a bookseller who attracted buyers with perfume samples before pivoting to launch a cosmetics company (and, arguably, a multi-level marketing operation).
  • Suzuki began as company that built looms for silk weaving before pivoting to motorcycles and other machines.
  • YouTube started out as a dating app before its founders realized they’d find more success as a general video platform.
  • Twitter began as a podcasting platform before it pivoted to its current, status-posting form.

Shopify started out as a snowboard store called Snowdevil before shifting its focus to e-commerce.

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The hottest trend among the super-rich? Safe-deposit boxes 

Safe-deposit boxes hidden in subterranean bank vaults are no longer just for European spy movies. 

Their demand is steadily increasing among the super-rich, according to Bloomberg. Billionaires and millionaires fear recession and climate change and just want some security for their cash, art, and jewels –– security that can cost as much as a mansion. 

That’s right. People are paying millions to store millions

At one private club in London, the firm IBV International Vaults offers apartment-size storage areas for $3.2m a year and has been getting calls from interested people every week. Prices aren’t quite as high elsewhere: Some safe-deposit boxes in Switzerland are going for ~$5k a year. 

In Switzerland, which has a population of 8.5m, one wealth management branch alone has 250k boxes. A precious metals dealer in Zurich has been renting five safe-deposit boxes a day, and the dealer expects its supply of 1k boxes to be gone soon.

As illicit as you would think

Safe-deposit boxes are often more about gaming the system than security. In Switzerland, lawmakers have questioned whether the safe-deposit boxes offered by non-banking entities are havens for money launderers.  

In the US, where banks have stopped installing safe-deposit boxes as more people store sensitive documents electronically, many people who use them are involved with cannabis. Because the federal government still bans weed, marijuana companies need a place to stash their other kind of green.

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From the Trends Community

Earlier this month, a Trends subscriber asked, “What are some good projects for first-time entrepreneurs who don’t have a ton of money to spend?” 

The Trends community sprang into action with dozens of businesses ideas that could be started quickly on the cheap — some for less than $1k even. Check it out: 

  • Dropshipping website: Handle shipping for sellers.
  • Printing on demand: Combined with direct shipping.
  • Your own skills: Taking an existing skill and selling as a service. Think copywriting or design
  • Matching platform for local trades and services: A service that finds the best local handymen, maids, and more. 

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You call this biotech? It’s more like bio-sketch

11 biotech companies filed for bankruptcy this year, which makes 2019 biotech’s worst year in a decade. Until now, it’s been almost impossible for well-funded biotech companies to fail. But a number of issues ranging from dangerous drugs to unsavory characters have shown that even medicine isn’t too big to fail. So just what went down? 

Oh, opioids

OxyContin maker Purdue Pharma is perhaps the most notable name to go down. Legal liabilities stemming from the opioid crisis have finally fatally bitten this once high-flying bad boy in the ass. Its bankruptcy filing seeks to settle a whopping 2.6k federal and state lawsuits by dedicating all company assets to the betterment of the American public. 

But this isn’t a done deal. Numerous states don’t wanna settle, and argue that Purdue’s assessed value of $10B is based on “optimistic calculations.” In the midst of an epidemic that claims thousands of lives, ain’t nobody got time for that. Other opioid makers are nervously on notice.

And there’s no love lost on a pharmabro

Martin Shkreli, the hedge fund manager turned pharmaceutical CEO, was sentenced to 7 years in prison on federal fraud charges… but not before he purchased a single-copy Wu-Tang Clan album for $2m and raised the price of a 60-year-old drug by 5k%.

One offense was simply cultural — how does a wanker like that abscond with such a prize?

The other was far more serious. Daraprim is a life-saving drug used to treat complications in HIV/AIDS and cancer patients. Under Shrkeli’s leadership, it went from $13.50/pill to $750/pill. Shkreli argued he was acting in the best interest of investors, but c’mon.

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What Else…

Autonomous wheelchairs are hitting airports in North America. A Japanese company called WHILL, which has already launched autonomous wheelchairs in Abu Dhabi, Amsterdam, and Tokyo, will bring its technology to Dallas and Winnipeg in coming months. The company has raised roughly $80m.

🌐 Net neutrality may be coming back… via local cities and states. Thanks to the federal government, internet service providers can slow down or speed up the internet as they please. But The Conversation reports that cities and states are fighting for the people, who widely support net neutrality. 

💺 Furniture rental startups are filling up the room. A Chicago-based furniture called Inhabitr raised $4m to expand. As workers become more mobile, paying premium to not own furnishings is starting to seem like a good idea — and plenty of startups are racing to fill the void in the market.

📚 What the hell is going on with children’s books in Baltimore? A former Baltimore mayor wrote a children’s book series called “Healthy Holly” (adorable, right?). But then she used the books as cover to commit fraud and earn some $600k — and now she’s been indicted on corruption charges, according to The New York Times. What would Holly think?!

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