Last Updated Jul 29, 2010 1:15 PM EDT
I started my company just in time for the economy to head off a cliff. Despite the obvious downsides -- trouble raising capital and a challenging consumer environment -- starting a company in a recession actually has an upside: Failure comes really fast.
When I started Pixability in October 2008 I wanted to help families with their home video needs. Almost two years later our target audience is no longer families, it's businesses. And rather than creating home videos, we're making Web video marketing easier for businesses. They give us the raw footage of their marketing and sales people, filmed using a simple Flip camera that we provide them, and we edit it into a professional-looking marketing video they can post on the Web.
The change came as a result of what I call a "seismic pivot point" in July 2009. The path we were on wasn't working, and so we pivoted the company into a new direction. But that shift, along with several more along the way, came with a lot of trial and error.
Try, try again
I knew pretty quickly that the family angle wasn't working. We were editing footage of family gatherings and the like, and turning it into polished, movie-quality home videos. It was a pretty inexpensive service. Our clients, who had average annual incomes of more than $250,000, liked what we were doing and were saying wonderful things about us, but we couldn't really grow to generate profit. We had to figure something out, and we had to figure it out fast if we wanted to stay in business.
So I started looking for ways to adapt. First we considered going into the film and video conversion business -- 8mm film to digital, VHS to digital, etc. -- but the home video work showed just us how frustrating working with multiple formats could be, so we decided to avoid that headache.
Then we thought there might be a market for sports highlight videos for college-bound high school grads competing for sports scholarships. So we partnered with an online platform that boasted a couple hundred thousand student athletes, and they said, "Oh yeah, we need that video stuff." We paid them $250 a month and they funneled a number of their athletes to the website we'd created.
In three to four months, we only sold three videos. It clearly wasn't a viable strategy -- although it wasn't as bad as a previous experiment in which we placed home video products in 10 stores in the Boston area. That netted a total of zero sales, which would be funny if it hadn't been so depressing at the time.
Focused but receptive
While I was still trying to make the home videos strategy work, a number of businesses asked if we could do the same thing for their business videos as I was doing for the family ones. But I kept turning them down because I knew that to make the company work I needed to stay focused. Fortunately, I eventually realized that I needed the money, so I decided to give the new idea a shot.
We paid for a small ad on HARO, a social media listserve that had 60,000 businesses subscribed at the time. I told my team that if we got five orders from the ad, then the idea had potential. We ended up with 20 orders in less than a week, and I knew we were on to something -- we've been growing ever since. Last year our revenue was a dismal $60,000. This year we're on track to pull in more than eight times that amount largely due to how we shifted the business.
Adapt to survive
Pivot points don't need to be as seismic as the one we had. However, one of my angel investors told me that of all of the successful companies he invests in, only one percent actually end up doing what they started out doing. Since last July we've continued to develop and adapt our strategy. We've added an animation component for people who aren't comfortable in front of the camera, and we're writing software that helps clients upload their videos to their websites or social media pages since that remains a fairly high technological hurdle for many of them.
We only adopt a new strategy after we've tested it to prove that it makes sense. A successful pivot, whether seismic or smaller, is not about luck. It's about systematically scanning for opportunities and testing things out as you go.
Bettina Hein is a repeat technology entrepreneur with an uncanny talent for starting companies right before a recession hits. Before starting Pixability on the eve of the worst recession since the Great Depression, she started a still-successful speech technology company in 2001, just as the dot-com bubble burst.
-- As told to Peter McDougall
- Read Built to Last: Successful Habits of Visionary Companies by Jim Collins and Jerry Porras to learn how successful companies constantly adapt their strategies.
- Learn about the challenges of reinventing your company.