Many startups never see any sort of growth. Their big project—the one designed to catapult everybody involved to fame and fortune—fails to make much of an impact in the marketplace, and the business eventually crumbles away.
Then you have the startups that ride a single hit to the promised land, and grow accordingly, only to find it impossible to sustain momentum over the long term. That’s exactly the problem confronting Rovio, the maker of the popular (and at one point, seemingly ubiquitous) Angry Birds mobile games, which just announced plans to lay off 260 employees.
Rovio’s current layoffs aren’t its first: In late 2014, it announced that it would cut 110 workers (at the time, 14 percent of its workforce) as part of an attempt to consolidate operations.
Although the original Angry Birds game became a massive hit soon after its release in 2009, Rovio’s attempts at producing sequels (Angry Birds Space, Bad Piggies, and many, many, many more) were met with mixed success, and gamers’ attention soon drifted to other games.
Rovio isn’t the only company to struggle in the wake of a massive hit. Zynga, an early pioneer in “social” video games such as FarmVille, has famously struggled to transform its early successes into sustained and healthy growth. Unlike Rovio, which chose to put the bulk of its efforts behind games in which the player hurls irritated fowl into pigs, Zynga tried to diversify its software portfolio beyond a single franchise—but structural issues, including an inability to swivel smoothly into mobile gaming, have so far thwarted its best intentions.
Learning to Pivot
A successful startup that sees its core market eroding has no choice but to pivot. Such a maneuver is much easier said than done, however. A few years back, Forbes contributor Martin Zwilling offered up ten types of pivots, including ones based on customer segments, value capture, and channel. All offer a certain degree of risk—but all offer the prospect of continued survival for a struggling company.
Slack, the enterprise-communication app that’s currently taking some segments of the business world by storm, is an example of a company that pivoted successfully; the software started life as a feature for Glitch, a browser-based game that never really took off beyond a small, dedicated fan base.
That’s not to say that Rovio can survive by retooling some aspect of Angry Birds as business or productivity software. And even if it did come up with a brilliant idea (“It’s spreadsheet software… where you can hurl birds!”), there’s no guarantee that it could complete a successful transition; pivots, like building a successful piece of software in the first place, are hard. Nonetheless, the company’s current burst of layoffs should be a lesson to new startups: No success lasts forever, and sooner or later you’ll need to evolve.