The genetic testing company 23andMe, founded in 2006 and whose value soared to $6 billion when it went public in 2021, is on the verge of being delisted from the Nasdaq stock market index.
Co-founder and CEO Anne Wojcicki, who in July 2020 was the inaugural speaker of the Knight Venture Leaders Series at the University of Miami Patti and Allan Herbert Business School, is looking to pivot the company and stage a comeback, much as she did after the startup stumbled in 2013.
Alex Niemeyer, associate professor of professional practice in the Miami Herbert Business School’s Department of Management Science, highlighted that startups especially must embrace the concept of pivoting, which he defined as making a conscious choice to make a fundamental shift in the product or service, if they hope to survive and thrive.
“It’s very rare that a startup business does not go through a pivot at some point in time in its evolution,” said Niemeyer. “You make all kinds of predictions, and some do not come through and then, either you pivot, or you turn out to be much smaller or larger than you thought. Or maybe you go broke, which we know happens to many startups because the business model just doesn’t work.”
Niemeyer, whose experience includes 22 years of consulting with Fortune 500 firms and who continues to advise portfolio companies of a major private equity player, emphasized that flexibility and fluidity are paramount. He urged business founders to keep keenly tuned for market changes and trends.
“You need to continuously ask, ‘Is my projection working?’ and, if not, you need to understand why and what to do about it and whether you made the wrong assumptions. If you did, you need to massively counter and steer very quickly,” Niemeyer urged.
Listing the stories of startups that have pivoted is easy, he said, offering a number from his personal experience and also corporate pivots such as Apple’s recent decision to cancel “Project Titan,” the development of a self-driving electric car—after spending 10 years and billions of dollars in development.
Yet, it’s much harder to explain how to make them or to generate best practices because they come in so many different shapes and sizes. “The one thing not to do when you see a clear trend developing is to do nothing,” Niemeyer said.
Depending on the business, trends will appear in stages from six months to two years, he explained. First is the early warning sign, which means you should start watching more closely. Then, if the business (product or service) doesn’t pick up, you have to do some sort of diagnostic to figure out why people are using it a different way. Or, maybe they want to lease it, but not buy it.
Not all changes are negative. Niemeyer described multiple cases where customer interest in what was thought to be a side business completely overwhelmed the original business case, leading companies to shift from a product to a service model or from a technology platform to a solution.
“Keep your ears to the ground to understand what’s happening, and then run business models around it to see if there is a shift to make,” Niemeyer suggested. “You usually cannot do everything at the same time.”
Niemeyer highlighted the new elephant in the business world.
“Generative AI surprised everybody a couple years ago and is now pervading everything,” he said. “We will see a radical shift in what people do on the ground and how many people you need—it’s a whole new set of things that were impossible before but now are happening. It’s disruptive to anyone who cannot adapt quickly.”
He differentiated between a “hard” pivot, one where board members intervene to require a major shift in company direction or to shut something down, and a “soft” pivot where the management teams realize that some component of the business has evolved and an autocorrect of some sort is needed.
Entrepreneurial students across all University disciplines have multiple opportunities to learn to manage the risks and challenges in their ventures, according to Susan Amat, associate professor of professional practice and director of entrepreneurial initiatives at Miami Herbert Business School.
Out of the Dean M. Fogel Entrepreneurs Hub, Amat oversees UVenture, a component of the initiative, that helps student entrepreneurs grow their visions into companies. The UVenture umbrella provides workshops to strengthen entrepreneurial skills, weekly pitch labs, conferences and symposiums, pitch competitions, and the annual Business Plan Competition which awards more than $50,000 in prize money.
Niemeyer highlighted the challenges that startups face and emphasized the skill building value that UVenture and other entrepreneurial training provide.
“It’s fairly rare and so hard to think of everything and for a young company to get everything right and to predict the future,” he said. “A startup business lives in a world of imperfect data and an imperfect market, and information is rare by definition. It’s easy to have ideas, but it’s hard to convert them into a profitable company.”
