A serial pivot to success story
As I travel the country documenting the tech revolution, one of the most crucial insights I encounter across all sectors, from transportation to education, is that a company’s chances of survival are directly tied to their ability to identify what needs to be changed in order to reach their goal as a company and “pivot."
Eric Ries, the author of "The Lean Startup," appropriated the term “pivot” to mean a "change in strategy without a change in vision," and it’s become a widely-adopted tactic for startups ever since. (They always did this, but now they had a term for it and realized they weren't the only ones doing it!)
We hear about the top companies who have achieved success, but in most cases, they changed course along the way. Twitter, for example, began as a podcasting service, and YouTube was a dating site. Groupon was a platform to organize political protests before it turned into the coupon and discount business we all know it to be today. One of the most amazing stories of pivoting belongs to "Hot or Not" founder, James Hong, who changed his strategy over six times on his way to creating one of the most popular sites on the Internet, which he eventually sold for $20 million -- without ever raising funding from outside sources.
James has much wisdom to relay. He definitively states that as you realize how the marketplace receives your product, "You are going to have to change as a result or you will die. Check out the piece we are releasing on A Total Disruption today:
Here's a recap of the pivots in case you're a reader, not a watcher...
Back in 2000, James Hong and friend, Jim Young, set out to create a fun way to compare and rate people’s attractiveness online and quickly discovered that success can kill if you don't figure out how to handle it quick. Hong knew he had struck gold when he saw his own father compelled to rate people on the site. In their first week of launch, Hot or Not had over two million unique page views, an extraordinary feat for a website started with little to no capital -- and by "little to no" I mean NONE. But it was also the beginning of the extraordinary challenges they would face as an emerging company.
Pivot #1: Name Change -- When "Am I Hot or Not" went viral, shock-jock Howard Stern plugged the site’s URL on his show incorrectly leaving off the "Or Not." Over 100 imitators came out of the woodwork using twists on the company’s name trying to cash in on Hong’s concept. Hong quickly jumped into PR mode and did every interview he could get to push the Hot or Not brand. By dropping the "Am I" portion of their title, they could have easily lost all the branding work they had done, but Hot or Not prevailed with around 1.8 million page views daily in the weeks that followed.
Pivot #2: Stash Server -- James and Jim were still running low on funds but now running high on the need for bandwidth to run the site. Their solution? They went cloak and dagger and stashed the server under co-founder Jim’s desk at Berkeley, hiding it under a pile of books.
Pivot #3: Beg for Server -- Once Berkeley caught onto their antics and gave them the boot, they had to go out and beg for some help. As a startup, it never hurts to ask for something for free until you get your feet off the ground. Hong did just that, contacting RackSpace Hosting, who -- to his amazement -- were actually willing to let Hot or Not scale their servers and go big!
Pivot #4: Introduce Ads -- Armed with a powerful network, it was time to make money from their loyal and growing following of users. The next logical step for Hong was to partner up with advertisers, but it wasn’t an easy match. Up against the racy nature of the site, which was also crucial to its success, Hot or Not had to go out on a limb and pivot again...
Pivot #5: Remove Porn -- In order to monetize, Hong needed an interface where they could easily remove any pornographic images uploaded by members of the site. James sheepishly offered his newly retired parents the task. To his surprise, they accepted. Ah, the importance of early adopters, even if they are Mom and Dad. Ultimately, they were able to enlist members of the site to work as moderators and make Hot or Not PG, so it would be palatable to advertisers.
Pivot #6: Dating Service -- The most crucial pivot for Hot or Not was to take advantage of what was hidden in plain sight: It was connecting members to each other like wildfire. The founders eventually realized that their revenue stream should come from the love connections their platform was facilitating.
From surviving brand mishaps, to stashing servers, to ultimately selling the company for $20 million dollars, Hot or Not is the ultimate pivot success story. Hong perfectly sums up the meaning of the pivot, “you’re changing everything, but you’re still leveraging what you have -- which is your team.”
When you dive in and start up a company, you may not know the road you will take, but the key to survival is your ability to pivot and adapt to the constantly shifting digital landscape. Just ask James Hong -- it can mean the difference between whether your company is Hot...or Not.
If you want to see what Eric Ries says about pivots and their rich history, take this 3 minute knowledge shot: