When Startups Should Pivot with Karoli Hindriks

INTRODUCTION: Welcome to the Daily Bolster. Each day we welcome transformational executives to share their real world experiences and practical advice about scaling yourself, your team, and your business.

Matt Blumberg: Welcome to The Daily Bolster. I'm Matt Blumberg, the co- founder and CEO of Bolster, and I'm here today with Karoli Hindriks. Karoli is the CEO and founder of Jobbatical, a startup that Forbes named one of Europe's 10 most exciting technology startups of 2018. Karoli, welcome to the Daily Bolster.

Karoli Hindriks: Happy to be here, Matt.

Matt Blumberg: I noted in your introduction that you were named one of the hottest startups in Europe in 2018. You had a very good run before COVID. COVID changed a lot of things. I know a little bit about Jobbatical because we're in a venture portfolio together. And I was really interested in an article that you wrote a few months ago about why you should consider pivoting even when times are good, so I'd love to hear a few of the reasons that startups should consider pivoting when times are good.

Karoli Hindriks: Yeah, thank you Matt. And I must say that we definitely did not have not had a linear journey. And yes, it was 2019 when we had about half a million users. We had raised$ 8 million, year before Forbes named us one of the sexiest, hottest startups in Europe, so things were pretty good. But what happened was that our core business, what we started to do was cross- border recruitment. So my whole idea was how to replicate Silicon Valley outside Silicon Valley. So we really helped people to get hired, smart, amazing people to get hired from 52 countries to 37 countries. And what happened there was that our clients, so we were selling this recruitment platform to our clients and they hired some people. And then they said, " Could you also help us to get those people here?" So suddenly we have a side business. So because we want to help our clients, we don't want to say no, so we have a side business. Now, what happened there was that side business started to grow so much faster than the core business. And honestly, as a founder, it was pretty tough because I still believe that this is where our vision is. And we already put four years of work and 6 million euros we had put into this, but we saw that something was there. And basically, what happened there was that by 2019 mid, so first two quarters, we're telling such a strong story. So the first two quarters, our cost base for the side business was 7%, so very tiny, but 40% of our revenue came from there, four zero.

Matt Blumberg: So that's a pretty strong market signal that you might need to change your focus.

Karoli Hindriks: Exactly. And then what the story this actually was telling was that as a recruitment platform, we were helpful to our clients, but nothing really happened to them if they didn't use us. But as supporting their immigration relocation, we realized we were really a painkiller. And so it was a very tough decision, honestly. I remember that board meeting really well when I had to tell Andy and other board members that we are now going to set aside everything we have built, $ 6 million, and start from the scratch. But the data was really telling us a story of a product market fit.

Matt Blumberg: How did you balance out intuition with data? Because it sounds like your intuition and emotion about the thing that you started versus the data of what was actually happening.

Karoli Hindriks: Yeah, I think that's a good question. And I think I remember back the management discussions. One of the things I've done in my learning process as a leader is a lot of hiring mistakes, but by that time I had really nailed on who was around me as a team, and everybody saw it. But honestly, what people didn't believe is that we will actually give up the core business. " Let's do both, little bit less, let's do both." But the one hand data was telling the story, and then my gut was telling the story that we have now one, basically one bullet, we have to go all in. We have to have focus and product market fit. As a startup, you need those two things. So if we don't focus, we don't use that final shot at the maximum way. So I think there was where my gut feeling really, I kind of went against my management, and I said like, " Okay, no, if we do it, we do it all in, no distractions and we will just try to see what we can do with that remaining$ 2 million and build out an experience of cross- border move that will change the industry."

Matt Blumberg: How did you get your team comfortable with the idea of pivoting?

Karoli Hindriks: Yeah, that's also a question because I think, and there's two levels. One was the management team. And funny, I had just hired a head of product who then became the co- founder of Jobbatical too, so from a napkin to what it is today. But I think from the management team, it was the same. I think the focus and what I just covered was very clear, but from the team perspective, we really gave very transparent overview of why we have made this decision, what led to this, where we are right now, what our vision is, what our roadmap is. So we literally, every detail of our decision making, we actually shared with the team. In general, I think that's kind of shifted. Now today, I can say that we are a super transparent company, but I think it kind of shifted during the pivot, everybody. We had to lay off one- third of the company because we didn't have any recruitment to relate to talent needed anymore. But even those people whom we had laid off, some of them were sitting in the inaudible and cheering for us because it was so clear and the narrative was so transparent that everybody understood, " Okay, this is what we have to do together."

Matt Blumberg: We have to do it. Yeah. All right. So if you were coaching an entrepreneur who came to you and asked you this question, " Hey, I'm thinking about pivoting. Should we pivot?" What is the one most important thing you would challenge that person around?

Karoli Hindriks: I think here, I actually remember the quote from one of our fellow USB portfolio members, Alan Lowe, who said that three months after pivoting, I told him the story and he told me that, " Karoli, if you are wondering if you have product market fit, then you probably don't." He was such, " If you're already asking me that question, then most probably this is a question that already is answering itself." So I think this would be my, I think if we are wondering, if our team is wondering, then it's time for a change, and the change usually is quite big. And I think that one thing that you have to then ask, and honestly today I'm super excited, Series A level CEO, but I have done that now twice. So I had to start from the completely scratch. Every pain point that is in the early stage, I had to do it again, so one thing you really have to ask, " Are you ready to start again?" Because your team needs you to be ready and the energy you need for that.

Matt Blumberg: All right. That's a great place to close. Karoli Hindriks, thank you so much for being here today.

Karoli Hindriks: Thank you.