Early Stage eCommerce Pivot
The Challenge
A founder team approached us to help with a multipronged crisis. The company was finding its business model taking too long to gain traction just as capital sources were pulling back from investments in the space. So, with a strategy floundering and a significant unfunded burn-rate, we were brought in to lead the company through a radical downsizing, strategic pivot and revitalization.
Three Keys to Success
Making Hard Decisions
Startups quickly can get into trouble when the optimism of the early days come into conflict with the realities of a funding crunch. We had to make very hard decisions to control costs. Employee headcount was reduced by approximately 80%, and the remaining contributors agreed to take compensation in the form of equity for a limited period of time. Operations were trimmed to allow only essential expenditures while we looked for a financial turnaround.
Narrowing Focus for Revenue
While seeking to preserve the founders’ initial vision, we narrowed focus to get to quickest possible market validation. This meant rethinking our product offering and ideal customers to achieve quick wins with better customer lifetime value. Once this started to achieve our desired results, we were able to incrementally expand to return to the original vision.
Bringing in Capital in a Down Market
We were able to bring together a few investors and make them a compelling offer. The valuation was drastically reduced from the prior round of angel investment, but the infusion of cash was enough to bridge the gap until we were able to find a way to become cash flow positive.
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