Time to pivot
a need for change could be right around the corner. Here's why and how André Ferraz pivoted his startup in early and late stages.
One day, you might realize you need to kill your startup.
What?! Noo, my babyyy 😭
Yeah… sorrows, prayers…
👉 The motive: so your startup becomes stronger.
👉 The weapon: a pivot.
Let's be real here: you probably won't get everything right on your first try. That's when pivots enter through the front door, in all shapes and sizes. They help you:
Rebuild your product and offerings from scratch.
Cut or expand your customer profiles.
Change your sales channels or pricing strategy.
And the list goes on, all so your startup can keep on surviving and thriving.
What you probably haven't realized yet is… Pivots can be done at any time in your business – not only when you're starting out.
Take Incognia, a digital security startup based out of Silicon Valley that just raised its Series B, led by Bessemer Venture Partners.
Incognia was actually born from a marketing startup in the Brazilian northeast. That company, called In Loco Media, made two very important pivots.
And since we know you're here for the tea, we asked its co-founder André Ferraz about it on this episode of the Latitud Podcast 🍵👇
☝️ The Problem Pivot
André and his friends developed a precise geolocation technology as a university research project. And for what, you might ask?
Making ubiquitous computing a reality – for those of us that don't speak brainynese 🧠: making smart devices so seamless we don't even notice they exist while we go about our days.
But when they started to hunt recurrent users… reality hit.
It was too early to enter the ubiquitous computing game.
Making life less device-filled wasn't enough of a pain yet – it was the early 2010s Juan, we were all pressing those Blackberry buttons, remember? 👵
The researchers-turned-founders needed to be pragmatic and find a down-to-earth problem to solve.
One of the ideas stuck the landing: helping physical stores attract customers and compete with e-commerce. Their research project finally turned into In Loco Media, a startup that generated foot traffic and sales to retailers by sending deal alerts to nearby smartphones.
Your checklist for the problem pivot:
✔ Identify a problem that merits painkillers, not vitamins
✔ Fall in love with this problem, and not with your idea
✔ Focus on one solution that you can be the best at
✌️ The Long-Term Success Pivot
In Loco Media sported high margins and quick growth in its early days: 200+ employees, a Series B, and profitability (!!!). But then…
André saw some, y'know, veeeery small competition coming in hot.
"They were too big, too capitalized, and would bundle this offer with their existing products. We'd be over if we didn't prepare for that moment and invest in new products."
"They" were Google and Facebook. André then decided to bet its chips into an identity product, using the same geolocation tech to combat fraud. Some argued that the marketing product was still growing and healthy, that André was spending too much on R&D, and that the company should focus on its core offering.
He followed his gut anyway, passionate about their long-term vision and confident that the legacy business could finance them for the time being.
In Loco was eventually sold to the retailer Magazine Luiza. André formed a new company for its identity product: Incognia.
Your checklist for the long-term success pivot:
✔ Be wary of the landscape of your segment
✔ Build moats as a plan A and hedges as a plan B
✔ If needed, pivot but keep your long-term vision (= your fuel 🔥)
Pivots like André's might be an inevitable step back so you take multiple steps forward on your journey to product-market fit.
Dunno how to master it?
We got you covered.
Hot News Ahoy! ⛵
📣 January's results are in
LatAm startups received over USD 315M in venture capital funding in the past month, Distrito reports. That's the largest amount raised by these startups in the past 3 months 📈 but it's still less than what we saw back in January 2023, when LatAm startups raised USD 353M 📉.
🦄 10 years of unicorns
Cowboy Ventures coined the term "unicorn" back in 2013 – and recently reflected on what's changed in the past decade. The good news: we now have more diversity of backgrounds and geographies. The bad news: capital efficiency has declined significantly. 💸