The Startup Pivot: Changing Courses Over Our Four-year Journey
A common misconception amongst new startups is that success comes from discovering an idea for a business model and then pushing it like crazy. To never lose hope in the idea is key.But when the idea ends up falling flat, what to do next?There is definitely an over-glorification of the idea within the startup community. The mental image of a college dropout having an “Aha!” moment at a makeshift office deep in his parents’ basement is just too strong when people think of how successful startups were founded. It is perfectly understandable that young entrepreneurs feel strongly attached totheir original ideas as it may have a meaningful backstory or grounded in a personal passion, but these aren’t enough to ensure that their business will take off. Real world market circumstances will almost never meet your initial expectations.This is why pivoting — to shift your business model, re-mold your idea or even change it completely — is a normal part of the startup journey. Some even go as far to say that it is essential. Once an idea no longer makes sense and is taking you nowhere, it may be time for you to stop, identify the challenges with your current business, consider new options for growth, then execute the pivot. But of course, this is easier said than done.
The biggest hurdle of pivoting may be something called the sunk cost fallacy. It is when businesses decide to continue a business model because a large amount of money, time, and effort has already been put into it, despite circumstances showing that continuing is not the best thing to do. This is why businesses should disregard past unrecoverable expenses — the sunk cost, from making future business decisions. To do this, it’s good to keep in mind that entrepreneurship is a constant process of trial and error, that there is a lesson learned in each failure, and that to change courses does not mean that you haven’t worked hard enough for your initial idea to be successful. It’s not surprising that so many successful entrepreneurs like Elon Musk stand by the slogan: “Fail fast, fail often.”Failing and then pivoting have created some of the biggest names in tech today. Some of you may know that Instagram started out as the location-based check-in app named Burbn. After deciding that Burbn was too complicated for users, the team revamped the app into a simple photo-sharing app which eventually became the social media platform that we all know and love (or hate!). Instagram’s co-founder, Kevin Systrom, couldn’t have said it better:
“It’s about going through false starts. Burbn was a false start. The best companies in the world all had predecessors. YouTube was a dating site. You always have to evolve into something else.”
Our Very Own "False Start"
As we celebrated our fourth anniversary last month, our team at Tokyo Techies are realizing just how much the business has changed over the previous years.Back in 2017, Tokyo Techies was founded as a company providing professional IT courses to individuals and organizations. It was born out of the idea to solve the huge gap between the high demand and low supply of tech talent in Japan. Suffering from a population crisis, Japan’s tech industry is under threat of a worker shortage. Meanwhile, Japan ranked the worst in the 2017 IMD World Talent ranking for attracting highly-skilled foreign tech talent. Seeing the opportunity to provide a long-term solution to the labor problem, we set up Tokyo Techies with the mission to train individuals and organizations to become global IT professionals that will contribute to the growth of Japan’s tech industry and represent it on the global stage.With a team of more than 35 experts with real work experience in major tech companies in Japan and abroad, we offered a comprehensive and uniquely tailored curriculum that included basic programming lessons all the way to concrete research projects in various emerging areas such as AI and data science. Our students ranged from 9 to 55 years old, many who went on to achieve success in the industry. Some of their student projects have even turned into real academic papers presented in global conferences, such as the IETC at Harvard University! But though it felt as if we peaked, things were not going where we wanted it to be. Our number of clients plateaued and the main challenges with our business model started to surface. We initially targeted a niche market with a very specific type of customer, but it ended up being too niche. There was very limited room for growth and for us to accomplish our mission. Adding on to that, the rise of online training platforms that provided far more affordable IT courses posed a serious competition. It also didn’t sit well with us that we were charging fees that were too high for knowledge that should be more accessible, especially to younger people.
The Pivot: From IT Training to IT Consulting
Our pivot to IT consulting wasn’t a one-night decision. It began completely by chance when our team decided to attend a tech seminar. Out of pure luck, we met someone there who ended up giving us the opportunity to provide hardware and software support for a robotics company. That was the beginning of our IT consulting unit, and we began to receive more requests for product development, business consulting, and cybersecurity audits, this time from our personal connections.At the time, we were exploring uncharted territory. IT consulting was completely new to us. Some of our members did not have much experience with it, and we struggled to get into the rhythm.But little by little, project by project, we were able to demonstrate our expertise and hard work to our clients. By mastering the Agile Development Methodology, we made sure our services are delivered with utmost quality in the shortest amount of time, and we are happy to have gained the trust of our clients and become indispensable partners with them.One of them is MeeTruck, a joint venture between SoftBank Group and Nippon Express providing logistics solutions. They initially requested our team as IT consultants to oversee their outsourcing vendors, but we ended up being directly involved in developing a large-scale SaaS platform from scratch! The result was a robust and user-friendly Transportation Management System (TMS) software capable of handling 20,000 requests per second and zero-downtime deployment — now already used by drivers and logistics companies across Japan. Further enhancements such as an AI match-making engine are already planned!With the success of each project, we have finally reached a moment of realization. We discovered the true value that we can provide to the Japanese tech industry and a better means to solving the lack of tech talent in Japan: to become a one-stop IT consulting firm capable of providing innovative solutions for all of a company’s IT-related business problems, everything from Product Development, Business Consulting, Systems Integration (SI), Cybersecurity Audits, all the way to Technical Due Diligence procedures!
A New Beginning
From May of this year, we’ve cast our pivot to IT Consulting in stone by terminating all of our IT Training services. It’s still going to be a tough ride from now on, but we’re confident that we’re on the right track and are currently doing what we do best. With projects from big-name clients and our very own in-house projects on the horizon, we’re excited to kick off the next chapter of the Tokyo Techies story with a blast!