The difference between a vertical market and pivoting your startup

Running your startup over the course of a couple of years with your team is a very challenging thing to do without funding. The few that have succeeded are the success stories that you hear every day. A lot of these large companies at one point did something different, but realized it wasn’t working out.  So they switched their business model (pivoted) to something that worked and eventually that led to success.

Other companies find other areas in their industry called vertical markets and successfully launch other products that cater to those markets. The question is, how do you know when you should pivot your idea, or simply launch something in a vertical market?  Well the answer has many variables. I will use my own real world example to explain to you how I decided what to do in my case.

Since 2013 I’ve been running my video dating startup (Instamour), while pitching hundreds of investors over the course of two years. Even though we raised $100,000 we still found it very difficult to raise money in Philadelphia and surrounding cities. Most investors said they only invested in B2B startups that are revenue-generating. Of course my startup is a consumer facing app and does not generate revenue, although it could in the future with an investment.

Instead of waiting around for someone to put money into the company, I decided roughly 8 months ago to start building a B2B version for companies to be able to communicate much easier with their customers using video technology. The business model is very simple, a business pays a monthly fee to use our service and customers can call them through video without having to install anything. Just like my video dating app, two parties use video to get to know each other and form a relationship (vertical market).

Did I have to pivot from one idea to the other? Not at all. Instamour grows at 200 users per day without any marketing, there’s no reason to shut it down, it is a network of singles who use it on a daily basis to get to know each other. See2B on the other hand doesn’t require millions of users, it just requires thousands or even just a few hundred businesses to use the service so that their customers can communicate with them much faster and more personally. The difference being that See2B charges a monthly fee per business, and it is strictly for businesses so therefore the investment community will find it appealing.

This is a great example of taking one market, finding a vertical, and launching a product in the same space, using the same technologies, with a different business model, and instead of simply pivoting, just launching a second product to complement the first.



Jason Sherman

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