5 Pivots That Can Help Scale Your Startup

Lessons from Lemon.io's CEO, Aleksandr Volodarsky

Today we're going to look at 5 startup pivots that can accelerate your growth.

We'll hear from Aleksandr Volodarsky, founder of Lemon.io, about his experiences pivoting through business challenges to grow.

Lemon.io is a two-sided marketplace connecting tech teams with vetted engineers from Europe and Latin America.

Time to read: 4 minutes

Difficulty level: MEDIUM (pivots aren't always easy but they are available to everyone)

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"A pivot is a change in strategy without a change in vision."

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Now on to the main event:

Pivoting as a Startup Growth Strategy

Underwhelmed customers?

Missed growth targets?

High churn rates?

All signs that there may be a better approach.

A good pivot might be exactly what you need.

A "startup pivot" is when a company changes a core component of the product, target market or business strategy to adapt to new market conditions, customer feedback or insights.

Some famous examples of startup pivots include:

PayPal: originally launched as a service to allow users to send money between Palm Pilots, PayPal pivoted to sending money via email instead. They realized most people didn't have Palm Pilots but everyone used email, and saw a huge jump in traction almost immediately.

Slack: Originally launched as a gaming company, Slack pivoted to become a business-oriented chat and collaboration platform and has since become one of the most widely used communication tools in the corporate world.

Instagram: Originally launched as a location-based game, Instagram pivoted to become a photo and video sharing platform and was later acquired by Facebook.

Alexsandr Volodarsky on Pivots That Have Helped Lemon.io

Here are summarized notes from my conversation with Alex on the evolution of Lemon.io as it evolved to its present state.

Pivot 1: Business Model

Initially the idea for Lemon was to be like Uber for web dev projects. I saw how Airbnb had revolutionized short-term rentals. I thought we could do the same with outsourcing development.

We handled small dev tasks with a ticketing system that automatically assigned projects to developers. We did a lot of stuff with Wordpress plugins. Margins were 60%. But we had a lot of issues because the plugins had complex interaction effects with each other and would break the application.

We got to $200K monthly billed developer time this way. But the problem was - every issue was unique, and couldn't be automated.

At the same time, we had clients who came to us to hire developers, rather than for specific tasks.

At first, I didn't want to do it. I still wanted to be the Airbnb of developers. But at some point my co-founder showed me a chart. 80-90% of our revenue was coming from clients looking for developers. Not people trying to fix something.

Before I was fanatical about starting a revolutionary business. But this is actually a much better business.

People come to us to fill out their dev teams. It's a way to outsource a team member. Whereas before, jobs were project-based (usually 15-20 hours).

So our business model has changed, as have our target clients.

Before, most clients were marketing teams that wanted small fixes. Now most of our clients are technical, like CTOs or technical CEOs.

Our value proposition has evolved as well. Compared to traditional hiring, using us is much faster. It might take you 3-12 months to recruit a senior developer. To do it quickly you need to go remote.

So why not consider candidates from anywhere in that case?

Pivot 2 - Rebranding

The company started as "Coding Ninjas".

It was summer in Israel, my son had just been born, I had my first client and needed to open a bank account.

So I just came up with the name and checked that the domain was available.

We decided to rebrand in April 2020.

By that point, there were so many coding "ninja-style" names. And "ninja", "guru" type names have a bad vibe. People didn't trust the brand.

We didn’t want to pay $250K to an agency so we decided to do it themselves. With the help of someone I cold emailed, we followed a brand building exercise. We sketched out the brand persona and audience persona. We then went to visual design agencies and copywriting agencies, and helped them to create a voice.

The new brand was very noticeable, and used an unusual combination of colors. For copy, we used a lot of culty startup stuff that's really resonated. Because YC is a cult.

We've had people come to us to hire developers who remembered the brand six or seven months later.

We didn’t believe the name should be descriptive of the services, like TopTal (“Top Talent”).

We didn't want a first-level association with the services. I didn’t believe it was important to have something very connected. But we wanted something short, with an available domain. So we came up with Lemon. We spent $26K to buy the domain.

After we’d done that, our branding agency said - we didn’t know the expression of a “lemon car”. They said it could set a bad expectation.

We said “screw it”.

Because no one is going to do that. Unless we’re really bad, and we’ll deserve it.

Pivot 3 - Changing the Team

My mistake was to think that because we were doing well, we’d take the same people and make them managers.

I gave promotions to several people that I shouldn't have. They were great individual contributors and had a lot of initiative.

But it didn’t bring any structure to our growth because it was a bunch of sporadic activities that didn’t have any strategy.

We were growing, but it was despite, not because of.

We realized this very late.

We finally hired a Head of Marketing who came on with a lot of experience. But months after coming on, he had to go fight in the war.

Pivot 4 - Marketing Strategy

Even though we’re growing, we've made so many mistakes.

A lot of things we’re still figuring out now, like strategy.

Only a month ago, we went through our expenses and cut 60% of it because Google Ads didn’t work, there were a lot of sponsorships that didn’t work.

Now we’ve changed our strategy about how we work with influencers, we have a content team, and Twitter is working well for us.

The main thing I put my hope in - there’s almost no chance that a founder would go to Google and hire a React Native developer. Instead they’ll go to someone they know, or peers or investors. One of the things we’ve been working on is a partner system where we work with influencers and investors and founders to partner so they refer us to people who come to them.

Different incentives - small / individual investors, and big firms. Big firms we’re not pursuing right now. The value for them is - whatever they offer, whatever they refer - has to be exclusive. Their companies have to have access to better IP, discounts, etc.

Smaller investors care about the money, so we’ll do revshare wth them. Treat them like resellers. We figured this out because word of mouth is growing like crazy. Peer recommendations are working well.

"What can a company do to amplify word of mouth?"

In our space, you have to have champions. You win those champions by really catering to them. Lenny Rachitsky did a talk about Airtable giving branded Airpods to their champions and helping their organizations build workflows with Airtable.

We try to get people to be very motivated to talk about us. It has to seem exclusive. This idea about “VCs adding value” is real. For some influencers, this is more of an earning game. Figure out what incentive matters to the person giving the referral.

Pivot 5 - Supply Sourcing

Lemon's two-sided marketplace very much depends on having a supply of developers.

Before the war in Ukraine, most of our developers were in Ukraine.

But when the war started, despite the generally supportive attitude for Ukraine, people didn't want to hire Ukrainian developers because of the risk.

Would the developers be able to work? Have reliable internet access?

So we went from sourcing developers from one country to 40 countries in six months.

We had to understand the local markets, figure out what motivates developers and understand how they find jobs locally.

Thanks Alex for sharing Lemon's evolution with us. If you're looking for developers, you can get a free quote and developer match within 48 hours.

✨ That's it for today.

Sometimes you're just a pivot away from unlocking major growth.

If you're not seeing traction, consider a new approach.

I hope these insights help you in your growth journey.

-Brian 🦄

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