
“Working Too Hard And Not Getting Anywhere” - dmarinoc
http://www.avc.com/a_vc/2013/04/you-are-working-too-hard-and-not-getting-anywhere.html
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tarr11
This is a great story. But perhaps a story of survivorship bias as well?

It would be interesting to know if this happened 3 months, 6 months, or
several years after TACODA was working on their product.

According to this Rho ventures article, TACODA was founded in 2001.
<http://www.rhoventures.com/new-media-Tacoda-case-sudy.htm> They raised 12M
from Union Square in 2006. Fred Wilson states he was an early angel investor,
and that this conversation occurred early.

My question is - Did they pivot because they raised a lot of money and were
under pressure from investors? Or was it the right thing to do?

They certainly had a successful exit by selling to AOL a year later for a good
chunk. Hard to argue with that.

But, then AOL shuttered it, and there's not much data on why (other than the
"AOL are incompetent" trope)

So, did they sell AOL a time bomb? Or did AOL screw it up?

~~~
davemorgannyc
The pivot of TACODA occurred more than 3 years after launching the business
and a lot of work in the product. We weren't pressured into the pivot. But, as
Fred Wilson related, we were working super-hard at the business and only had a
modest technology license business to show for it. Our board - Fred, Brad
Burnham, Rich Levandov (Masthead/Avalon), Habib Kairouz (Rho) and Curt
Viebranz (COO) - was composed of folks who were long-time VC's and very
strategic and senior, so they were comfortable with the idea that we should
try to go big. We knew that our clients couldn't exploit our platform as well
as we could. So, when Brad pushed us to really evaluate whether we couldn't
build a bigger (and easier) business doing what our clients weren't doing well
- using our platform to deliver and sell better targeted online ads - it
didn't take long for all of us to realize that we should take the chance and
pivot.

As for post-AOL ... a lot was going on at that time that makes it hard to
analyze without the advantage of hindsight. While most of the team didn't end
up staying with AOL very long, the technology still powers most of Aol's
targeted ad business, I believe, and the team has spread out and populate
dozens of adtech start=-ups today.

~~~
fredwilson
i love it when the lead character in the post stops by and participates in the
discussion

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Eduardo3rd
"Sometimes you have the right product but the wrong business model"

This is the 3rd time I've heard a variant of this in the past couple of days.
Most of the time when I think of a pivot I imagine changing the product pretty
substantially, but I think this seems more true to the analogy. I've seen some
success in changing my business model as I started pitching again recently.
People are responding much better to our new approach than the one we had a
year ago. (Not that successful pitches are the same thing as real success)

~~~
brudgers
The product changed, the widget didn't.

In other words, because TACODA was selling services, by changing accounting
practices their customers saw a radically different product - one which made
the person recommending it to their boss look clever.

The pivot more fully leveraged TACODA's expertise. Because their they
understood the how and why and when of the data's value so much better than
their customers, the fraction of their monetization sent to their customers
was more money than their customers were ever likely to extract.

"How can I send someone a check?" is a counter-intuitive business model for
most people. Even though it is used all the time.

~~~
waps
One might say it more closely played to the greed of their "consumers"
(publishers in the article), letting them use the company's product without
any real risk or even competence.

Instead of taking money from their customers, they gave money to their
customers.

Now if I could only make Lamborghini do the same ...

~~~
darkxanthos
One might say that, but I wouldn't agree. :)

They didn't so much target greed as they did reduce the initial investment
risk.

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sbarre
I love stories like this..

I personally know of a similar story on a smaller scale, where a consulting
team was developing custom web solutions for client after client (in the CRM
space), and one day decided to turn their product into a SAAS offering
instead.

They went from selling 3-4 sites a year to having several hundred clients in
about 3 years, and even spinning the SAAS business out into it's own separate
company that is now 10x the size of the consulting company (which they still
run for other types of custom work).

So it's definitely true that sometimes the pivot is in the approach and not
the product.

And isn't that basically the 37 Signals success story also? They took their
custom products and turned them into SAAS offerings..

~~~
jdminhbg
> And isn't that basically the 37 Signals success story also? They took their
> custom products and turned them into SAAS offerings..

Not quite; they spun out their internal tools into SaaS offerings while doing
custom dev.

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msrpotus
My worry, though, is how do you know you're reaching a local maxima? What's
the tip off that the slow-going is a sign that you need to change directions
and not just work harder?

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corry
I think successful "pivots" like this usually have to do with rebalancing the
risk of the customers. In the article's example, the risk is shifted away from
the publishers ("am I sure this software will be worth it?") to the startup
("we only make money when this works").

To my eyes, even the more traditional enterprise-to-SaaS model shifts that are
happening reflect the same trend - trading the (customer) risks of big $$$ up-
front, long implementation etc for the (startup) risks of needing to attract
more customers to make the same amount of $$$.

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AznHisoka
Misleading title.. I was expecting to read something similar to that article
on the programmer that completely lost it.

~~~
aheilbut
There's no reason that the same thinking can't be applied to one's individual
strategy.

~~~
watsonc73
I think most seasoned experts (in their respective domains) have applied this
approach in one shape or form to their individual strategy. Working smart
instead of hard has to be learned the hard way though. It's very difficult to
see the wood from the trees unless you're actually in a forest. A certain
amount of trial and error is required before anyone can reach this point in my
opinion.

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rrsk
Absolutely correct for an entrepreneur.

But If you are in good job but feel bored. here is my version

You may have the right job but the wrong working model. Fixing the working
model can fix ur work life.

