Saturday, October 23, 2010

Mike Maples on pivoting business models

In this presentation Mike Maples, a business angel with previous investments in ngmoco, Chegg, Digg and Odeo/Twitter, talks about developing and pivoting business models, at a Founder Institute event. Mike shares his experiences and provides interesting examples on ngmoco's pricing pivot, Chegg's product pivot, Odeo's company pivot into Twitter.

Mike shares Steve Blanks and several others’ view that “A start-up exists to do one and only one thing and that is to find a business model”. “Once a start-up has achieved a scalable and profitable business model, they are ready to transition from being a start-up to a real company”. Mike represents the business model concept with the following illustration, I believe was developed by Steve Blank and Ann Miura-Ko:

The arrows represent monetary flows in and out from the company. The pivoting starts from formulating hypothesis for each flow, testing assumptions to validate and improve the business model. This approach is very similar to the one presented in Getting to Plan B by John Mullins and Randy Komisar.

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