The idea seemed brilliant.
Jamie Clarke wanted to sell adventure equipment, and he decided to do it by creating a social network—a sort of Facebook for adrenaline junkies. Once enough people with a knack for high-octane escapades signed up, the network would be the perfect venue to sell climbing harnesses, hydration packs and other specialized gear. Clarke, a professional adventurer who has written books about his conquests (including reaching the summit of Mount Everest four times) and filmed his expeditions, was convinced that "if we could build the community, the ecommerce would come."
When you get that nauseous, gut-sick feeling, something has to change
Fast-forward two years, and the startup—called LiveOutThere.com—was struggling. Sales were flat, early momentum had stalled and money was running out. A frustrated Clarke had a big decision to make: should he soldier on with his concept or move the business in a different direction? "I'd fallen in love with what we were doing," he recalls. "And I had to divorce that original idea if we wanted to survive."
So, he did: Clarke and his team ditched the social community and moved to a flat ecommerce model. It worked—enough to earn LiveOutThere.com the No. 39 spot on the 2013 PROFIT HOT 50 ranking of Canada's Top New Growth Companies.
There's an entrepreneurial stereotype that holds that in order to succeed, you must be an iconoclast: tune out the naysayers and hold fast to your vision, like Steve Jobs or Richard Branson did. This is an inspiring narrative. The trouble is, Jobs and Branson are exceptions, as Clarke's experience in transforming LiveOutThere.com taught him. "Most people accept the propaganda of 'You can do anything you set your mind to—don't let anyone talk you out of it,'" he says. "It spells the end for a lot of entrepreneurs."
Coming Back from the Brink: read about how two HOT 50 companies abandoned their initial model and turned their failing ventures into growth stars
Clarke believes that changing course—or, in startup lingo, pivoting—saved his firm: "Had we continued with our initial 'great idea,' I'm certain we'd be bankrupt today."
And he's not alone in this conviction. Many of the dynamic young firms on the HOT 50 now are selling different products or services to different customers in different ways than they did at inception. "Most successful entrepreneurs have morphed their business at least once, sometimes significantly, in terms of product or customers," says Elspeth Murray, director of the Centre for Business Venturing at the Queen's School of Business. "Less successful entrepreneurs are wedded to their initial thought for too long. That seems to differentiate the winners and losers."
Despite all the buzz about the lean-start-up methodology—which advises businesses to put out an early version of a product or service, then develop it iteratively based on client feedback—many entrepreneurs find it hard to abandon (or even alter) their initial idea, says Murray. It's a very human emotional response, but it stymies promising ventures. "Passion is incredibly important," she says. "But you need to be passionate about solving a problem, not a particular product you've developed."
But when you've invested scads of time, money and emotion into bringing your business plan to life, how do you know it's time to rethink? How do you decide what to do next? And how do you shift your company to get there? The leaders of fast-growing HOT 50 firms have some answers.