 Hello Slash. It's nice to be back. Hey, David. So hi, I'm Yusie. I'm here to talk about how to pivot put more accurately when to pivot. So let's get the show on the road. I Want to talk to you about first about two fundamental truths. As you all know when you're running a startup, you're running on willpower. When you run out of the willpower as founders, that is when the company dies. Not before, never before. When you give up, the startup dies. But I also want to talk about another fundamental truth, which is if you never give up, the startup also dies. That is if you're chasing one dream you set out to do and you never change direction, you never look the reality in face and you just continue to pick headedly forward, you will also die. So the question we are trying to answer today is whether to persevere or whether to pivot. So hi, my name is Yusie Larkonen and this is my favorite animal, the cockroach. Not really. The story goes that in GDC 2013, there were so many unicorn starters that could really fit up with that and I said, I'm a cockroach founder. You cannot kill me. Because I will persevere, I will pivot, I will do whatever it takes to take this company further and farther. And that story ended up with my dear friend David then acquiring my company to Unity, which is today a 50 billion dollar market cap game technology powerhouse. Applifier, at powers, or the legacy of Applifier powers, Unity's ads business. Built originally here in Helsinki and worth, well, a lot of money and it's doing really well. And this was basically a result of two very hard pivots and many course corrections on the way. Today, I'm a co-founder and a CEO of a company called Noise and you can find me on Twitter at Yusie L. Please ping me and ask me more questions there. So let's get to it. We have three topics that I want to touch upon today. That is the founder mindset. What is it and how you embody it? Two, it is when to pivot and three, what is the most important thing when you pivot? If you remember one thing today, it is really going to be about this first session, the first part of this presentation, the founder mindset. What goes inside your head because it's all about pivots, it's all about mentality and what goes inside your brain. So, what do you mean about that? Let's distill first down the responsibilities of a CEO. As a founding CEO, you will do many things, but the three most important things to me are, one, that you set and communicate the strategy of the company. Who are we? What are we here for? What are we going to do? This is so important to align the company, use scarce resources to make something happen. That is your number one responsibility. The second is, you recruit and retain the team that can execute on the strategy. Without a team, you have nothing. And thirdly, you secure the resources, primarily funding in the case of startups. These are the three things you must do and you must do well as a founding CEO. And in order to do them well, you know what? You must be a true believer. If you do not believe in a company's mission, how can you do these things? And by a true believer, I mean, you can look at yourself in the mirror and say, I believe and be honest with yourself. It is not something you fake, you show it to your VC, yes, I believe. No, you true it to your core. This is my company where I'm working with this awesome team. We're going to make this happen. I believe we're going to get there. This has to be so physically embodied that you cannot say otherwise. You have to be truly religious about this. Because if you're not, how will you set the strategy? How will you communicate? How are we going to convince anybody? Yeah, I think we're going to go there, but I'm not quite sure. No. We are going to go there. It's going to happen. The world will change the way we think it's going to change. And how can you recruit and retain people to a high-risk endeavor like a startup? They have a really cushy job somewhere. They have family and kids and now like, come on on board. It's going to be all fun and games. No, it's going to be hard. It's going to be a lot of work. It's going to be awful, but we're going to change the world. Men wanted for a hazard journey, safe return, not guaranteed. And in order to get that funding from a VC, they need to see that you believe, that you will go through whatever it takes in order to get to the goal, because otherwise, why give you money? So you need to be a true believer, but here's the hard part. Believing is kind of easy. The hard part is to understand that you are also very likely wrong. This is a schizophrenic ask. You have to believe, but you have to know you're very likely wrong. And this is probably the thing that makes the job of a pre-market fit, early states, founding CEO, life so difficult, because you need to do these both of those things. You must doubt while you believe. Because the future will never happen as you imagine it today. It will change. There will be roadblocks on your way that you simply cannot get around. You have to change the direction. And every day you're adjusting course a little bit. If we're doing this, we're choosing that customer over that customer. That customer is telling us they need this. We're going to build that instead of that. You're always doing this anyway. And sometimes you're changing your direction quite drastically. Oh, actually, we thought we're going to price our product on a seed basis, but now we're going with subscription. And sometimes you will pivot. Maybe really hard. Oh, actually, we are not a business-to-consumer startup anymore. We're actually serving other startups like ourselves. This happened to us. We started as a gaming company. We failed miserably, but we built cross-promotion tools for other gaming startups, and suddenly we were successful. We completely changed our business. Business-to-consumer, the business-to-business, free-to-play to basically ads. Like, that's not a pivot. That's like throw the company away and start again, basically, pivot. Now, how can you doubt yourself about being a true believer? I think this is just a really hard thing you need to learn to do. But I'm going to use an example from outside the startups. And this person here waving is James Stockdale. He's a highly decorated, recently deceased admiral in the US Army. And he was captured during the Vietnam War and went through unimaginable horrors and conditions and torture. And his story is captured by Jim Collins in the book Good to Great. As the Stockdale paradox, and it goes like this, you must maintain unwavering faith that you will prevail in the end, regardless of the difficulties, and at the same time, have the discipline to confront the most brutal facts of your current reality. However tough they may be. This was embodied on a prison camp in Vietnam War, but it applies equally to startups. We will prevail, but I will face the reality. So let's talk about some tools that you can use for this founder mindset. The first tool is just simply embracing this duality that I've been talking about. Besides schizophrenia that I've been talking about. I We will prevail and I will face a reality. You cannot only run on belief, but you have to have that belief. Both things have to happen. Secondly, you have to believe what you're doing while realizing that you're wrong. And you are not gonna give up what you can't give up on some things. This is a summary what I said before, so it's nothing new here in terms of what we talked about. But this is the one thing if you were to take something away, just take these things away and try and do these things and it will work much better. The second one I think is much more practical. To do those things on the previous slide, you need to be both a leader and a learner. It's not sufficient just to speak of lofty things and point the direction. You need to be out there learning on the ground and then adjusting your decision-making. The way to do that, you start with vision. You always lead to vision. We're going there. Here's our strategy and you want the people to understand this because they need to have a compelling direction to chase. And it doesn't matter if it's imperfect. You don't know every step there. You don't know everything that's going to happen. But you need to excite, compel, engage your team and your customers that we are going to do these things. We're going to democratize game development. A compelling vision by David for Unity. We're going to do this thing and you can join this movement. It's imperfect. We don't know how it's going to happen. We don't know what it actually even means completely, but it is motivating. We're going to be part of that mission. You're going to over-communicate this on every single chance you can of where we are going because if you don't over-communicate, well, guess what? You don't have alignment. You're just constantly talking about what we're going to do, where we're going to go. And you're going to prioritize action over lofty speak. You have a vision, but there are things to do. There's stuff to get done. There's no time to waste. We are doing things. We're not talking about the future. Yes, we're going there, but now we cannot do actual things. Secondly, you have to learn as a company. The best way I know to learn as a company is to lean startup. And I know it feels like it's, oh, that's such an old thing. Don't you have anything new for us? You see, we've heard about lean startup for 10 years now, and you don't have anything. No, actually, this is the best formalized methodology that you can use to learn as a company, which means simply you start with a vision. You craft, test around that vision. You build that vision. You put it in the market with customers. In a small way as possible, you test, you measure, you adjust. Build, test, measure, adjust. It's just a loop you execute as fast as you possible with the real customers with as small increments as you can to learn as fast as possible. There's no substitute to learning from your customers, because it forces you to face that reality we talked about. They are the reality. What do you need? Do you have the right customers? Do you need to fire your customer? Do you need to change your product? Do you need to change direction? The only way to know these things is to execute this type of learning loop. But that's not sufficient. It's required, but what's also required is you need to learn as an individual. Lean startup is what you do as a company. As an individual, you need to put yourself a little bit further out of your comfort zone. That is, you need to find out things that you're not testing for yet. You need to find out things that can challenge your viewpoints. The only way to do that is you have to book some time to learn. You have to make it a priority. By talking to your customers, your competitors, people don't yet use your product that might use your product, talking to investors, and seeing what they say. Not that you believe everything to say, but to gather viewpoints that can challenge your viewpoints. Use your product with your end users, you go there, be one of them, and you search out for people that disagree with you. They try to understand, why do they disagree with me? What do they know that I do not know? You have to be really curious about these things because it's not comfortable to talk to people that you disagree with, but it can help you learn a lot. So be a learner, but be a leader also. Two or three, you know what? As you start learning, you start doubting yourself. Oh my god, we are going to die. It's not going to work out and it's horrible, and they don't really love us. And what happens if you tell everybody that? But what happens if you keep it all in your head and you have nobody to talk to? The best inner circle you'll have is your co-founders, the people who have the most aligned interests with you. They are in the same boat, they're going the same direction, and you need to talk with these people. And the best way to do that, you start when the problems are small. You start building that relation, that trust, by talking about those doubts you have. You talk about the things that you want to do together. Why are we doing this? Where are we going? Because when things get problematic, you need that trust and understanding how both of you operate, the three of you operate, the four of you operate. So that you can talk about the big problems as they come up and they are not an exception. They are part of your normal working practice is to handle those doubts and to learn as a team by setting goals. You know what? We don't know about this thing. You're going to go after that. I'm going to go after that. And we're going to come back and discuss what we learned. I'm of two minds of a board. I've had a great board with Petperi Koppener from Lifeline and Mark Sugarman from Acer Capital. The board that I trusted, the board that I had in my back. And I was incredibly fortunate to have a lot of good discussions with them. I was a really fledgling entrepreneur when I started. I didn't really know much. And Petperi from Lifeline was a three-time, repeat founder, turned an investor. And he had a lot of time for me to coach me and push me, challenge me and help me. So we had a lot of discussions about what we were to do. But the one thing I think I did really well with my board members and I established a practice of every board that I shared two things and among the other things like metrics and finances. I shared every time the first two slides being what I'm excited about, what's working and then what do I worry about? What's not working? So that we could do it always, only talk about what's not working and what I worry about. So we could tackle those things. We started building the same trust that we had with our co-founders. Before they became big problems, we were talking about solving problems. Suddenly the big problem wasn't that big of a deal. It wasn't like a surprise. Da-da, here's the big problem. Now let's work together. No, we were working about this one guy's problematic. We need to figure out what we do to let him go or what we do with fundraising in 12 months time or very small things like, hey, I'll go to market starts. It's not working here. What can we do? And the one thing I also did, which I also encourage you to do, is I shared our board deck with our whole team every time after the board meeting, except the HR slide where we had people matters. And everybody in the company knew how much money we had. They knew we would go actually bankrupt in six months and nobody left because they had seen the same slide. They could make math. Now what? In three months' time, there's going to be six months' time left and nobody left. Guess what? I was really scared. Oh my God, six months they're going to bail. They hadn't seen the same deck every month and they knew the money's going out. Then we turned it around three months later. And then six months later, we were making a million a month and we were not going to bankrupt. And six months later, David bought my company. So it all worked out. But again, maybe the key lesson is you build the trust. They show you trust people, whether you're co-founders, your investors, before the problems hit because then you build trust and they trust you can solve those problems together. But by the way, just a word of warning, not every board has your back. So build the trust and kind of evaluate a little bit because if you have a lot of doubts, not every board is going to be there supporting you. So exercise on cost them. Okay, this is controversial. I believe you shouldn't talk about your doubts with the whole team. Some people will adequate openness and I applaud that. I don't believe in that because the moment you tell people how I have doubts about this direction, I'm not sure if it's going to work out. You know what happens? The motivation is gone and you made it a self-fulfilling prophecy. You told them not to believe anymore and they don't believe and suddenly it died. So to me, the time to talk about your doubts is when you decided that it's time to go to a pivot. Then you need to be open. You need to explain both the what and the why and you really need to engage people. But not when you're like, I'm not quite sure. That's not the time to talk with your team about this. With your co-founders at board, yes, but not the whole team. Third, fourth tool, obviously very famous by Geoffrey Moore. No, sorry, no. And the only thing to survive, this is a more tactical tool. So when you start to think about, oh my God, maybe things are not going to work out, so what tools can you use? These are very, very practical things. So you can play the devil's advocate. You know your company better than everybody else. If you were attacking your company, how would you attack your company? What would go wrong? Challenge yourself, play the other side, okay, you know, you see, I'm going to kick your ass. This is how I'm going to do it, and then figure out how you're going to stop that from happening. That's basically also the same as saying role-playing. What will your competitors do? What do they know? What resources do they have? Where are they going to? What are your customers doing? Why are they doing those things? And a similar tactical tool is scenario planning. If A happens and then B happens, what will we do? What will our customers do? But these are like practical tools so you can apply at the moment when you're starting to think about a thing. These are not something I would recommend you do all the time. It is really about when you start thinking about, oh, maybe we need to pivot, but let's examine this problem. It's more fundamental to have the mindset, the duality, and to be a leader and learner. And then we go down to the priority of these tools. Okay, let's talk about when to pivot. This is a trick question. When to pivot? Who knows? Who knows? You know. You are the only person that knows. Like, nobody on this stage will actually know when you need to pivot. When you use these kind of tools that you are challenging yourself to learn, you're pushing yourself to alter your viewpoints, you're challenging the truths that you hold dear at the company, it feels like pressure. Like, for me, it was always like little things piling up and pressure is building up. It's like a bottle that's being shaken, shaken, shaken. It's not quite ready to explode. It doesn't feel quite right, but we're still going here. And then suddenly, pop. And my opinion shifted completely. Like, oh, oh, we're not going there anymore. That may be different for other people. For me, it was always like this. I gathered information, I challenged myself, and eventually the pressure was too much to ignore. And suddenly my mind shifted to not be leaving anymore. Say, oh, oh, actually, no, we have to go there. But only you really will know when it's time. But you need this tooling in order to know when the time is. But a huge word of warning, pivots are dangerous. A pivot can easily kill your company. Why? Because you lose momentum. By definition, you're doing something new. You were going there, now you stop, you need to go somewhere else. You need to rebuild your momentum. You lose the work you've done so far. You know, you might have spent a year building something and toss it over the border. I don't know. What do we do now? But more importantly, your team is going to be so confused. You had the time to gather that information to build up the pressure. And suddenly the team is like, wow, you just told us yesterday we're going here and now we're going there. What's happening here? Can we trust you? Why are you doing this thing? What's happening? This is really, really hard for the team. And maybe you just say to new hotness, hey, it's crypto, web 3 metaverse, let's go, baby. And you might be wrong again. By pivot means that you were wrong. You just admit you were wrong. Maybe you're wrong again. So really do this as a pretty extreme measure. There's a time when it's an easy decision, which is when basically COVID hits. You're doing an events business like flush. COVID comes along. This is the easy pivot because there's no choice and your team and the stances. This is the only time when people absolutely always make sense. But I hope you never encounter situations like this because then it's forced upon you. You don't have control. But this is the only time it's easy. Every other time is hard. And here's a couple of things that might tell you need to pivot. And by the way, for every single one of these, there's a counter example of persevering. Your customer needs change. You can serve them. Yeah, maybe you need to pivot. Growth goes down. Market goes down. Investors go away. Then again, it might mean, oh, I'm going to be the last dog standing. And by the way, I'm going to figure out new customers in the segment. And by the way, because we have new customers, our business is going to grow again. And because our competitors are going away, it's going to be better. So it's not clear cut. These are just possible signs. Secondly, these are all the mental signs. You're pushing and pushing and pushing. The market is not pulling things out from your company. And you feel it's getting harder and harder and harder the more you're trying to get the same results. And well, you know, if you don't believe, well, do. And by the way, you're running out of money. Do you think this is a good sign of pivot? It's not necessarily. I had two examples of running out of money. One, we pivoted away from games to doing cross-promotion. And that worked fantastically in the right decision. At the time, we were running out of money. I need to start firing people in three months. And we persevered. We pushed and we sold. And it worked out. There is no clear sign for this. You have to do it the homework yourself. So only you know when the time is. Okay. So mindset, when to pivot, and the number one thing that matters with your pivot. And I'm sure every single one of you already know what the one thing is because it's your team. Nothing else matters at the moment of pivot. Now, your customers actually don't matter. That means you're kind of leaving your customers behind to some extent. The main thing is to get your team behind this pivot. And if they're not fully on board, if they don't understand what's happening and why it's happening, you might as well pivot, probably. You really, this is the number one thing you need to invest time on. I'm a strong believer that in this moment, the why matters more than the what. The new direction is super important, but the why and the what are used to help rebuild the world view. We were going there, now we're going here. But why? Why? Why are we doing this? You need to go multiple levels deep and really help them understand your decision making, not just the result of decision making, but why did you make the decision? How did you make this decision? This is time for the openness. I said before, don't talk with your team about your doubts. But when you decide, then there's nothing but openness. You, you were wrong and they know you were wrong. You cannot hide that thing. So now you need to know them that you know that where you're going is right again. And why is it right? And why should they believe you knew? So you need to share the process. How you learned, what did you learn? How did you come to the decision and what is the conclusion? And this is time to also give room. You are setting the vision, but now it's time to discuss, be open to challenges and debate because there will be those. And if you shut those down, they're not going to get on board. You're helping them rebuild the trust in you, which means you have to debate. You have to be challenged. You're going to engage. But at the same time, be very careful that you don't water it down. This is the new direction. It is set. We're going there. If you need to, the analogies burn the balls, which means you fire your customer and say, we're not doing that. We're going there and we're actually not talking to those customers anymore. We are changing direction. But if you learn something from your team that makes you adjust your decision, engage it, put it in and change the direction. But only if you now believe that the micro people just need it. So you are really now going to work with your team to refine that pivot, to be a better pivot. But you are going there. Because now if you water it down, oh, we're actually not going to do it. Now I hear you, we're not going to do it. Then you were really, really wrong to start the pivot. And then you are putting back and suddenly you have made such a mess for yourself. Okay. Number one thing. Communicate, communicate, communicate, communicate, communicate, communicate, communicate. And you do it until you're sick of it. And do you know what you do after that? You communicate a little bit more. Because if I learned one thing from my former boss, John Riccatella, who now runs Unity, it is that there is no just thing that's talking about strategy and where are we going too much. You are sick of it. You know it so deeply. But the team doesn't get it until they're sick of hearing it. Then it will tell you, you see, we get it. Okay, now we get it. And you're going to build momentum, go faster, lean startup, execute faster, smaller start wins, move with the willing. Some people are not going to move very rapidly. Move with the people who are ready to go. And you support those people who are ready to go and build those small wins fast. Okay. So those are the three things. That you are the schizophrenia, you will prevail, but you will face reality. When you're a learner and a leader, you will know when to pivot. And the number one thing is your team. And I wish you were going to be cockroaches because you're going to be unkillable. You can take over the world and you can find me with questions and comments at UCL and UC at noise.com. Thank you so much.