How to Pivot the Right Way
We all love a good startup pivot, right? I know the word is overused, but the concept is important. (#35)
The dreaded ‘P’ word. Just say it out loud and watch the eye rolls. The word’s misuse and abuse has led to a reduced appreciation for the concept, which is a shame because pivoting is common and important in early stage startups.
Done properly, a pivot can save a startup. 🎉
Done incorrectly, it can be the final nail in the coffin. ⚰️
Here’s my definition of a pivot:
“A pivot is a shift in one aspect of your startup’s focus, based on validated learning.”
Two key things to highlight:
“One aspect of your startup’s focus” — The ideal pivot is changing one key thing in the business, not multiple things or everything at once.
“Based on validated learning” — You’re making the change because you learned something, not for the sake of it, or because it feels like a good idea. If you’re not perpetually learning through a reasonably rigorous methodology, you won’t be able to pivot successfully.
Beware the Lazy Pivot
Not surprisingly, startups “pivot” for a host of bad reasons. These are lazy pivots because they weren’t properly validated. Examples include:
Pivoting into a big trend. Everyone sees big trends (once they’re big) and founders will often jump into them quickly. AI, anyone? Years ago when subscription e-commerce exploded onto the scene, it felt like half the startups on the planet shifted their business model.
Pivoting to follow competition. You shouldn’t ignore competition but you can’t make major decisions based on what they’re doing. You weren’t in their board room, you don’t know what’s happening on the inside.
Pivoting for the heck of it. I’ve seen this. Founders get bored or frustrated with what they’re doing and decide, “We just have to make a change!” Maybe this rallies the troops, or maybe it makes everyone realize that the captain steering the ship is blindfolded.
Lazy pivots rarely work because they’re not based on anything material. There’s no indication your customers care. You don’t have any insights that would suggest the shift you’re making is a good one.
Lazy pivots often result in complete resets. “We’re not an X company any more, we’re a Y company!” Um…ok.
Resets happen, and sometimes they work out very well, but hopefully you’re still doing it based on validated learning.
What about Flickr and Slack?
Many of you will be familiar with Stewart Butterfield and his story. He tried to build game companies twice and failed. And yet, in both cases he created incredible businesses. The first was Flickr, which changed how we thought about online photo sharing. The second was Slack, which had a huge impact on internal company communication.
People refer to these as pivots. Both of them emerged from assets the company had, but they’re really complete resets more than actual pivots.
In Reid Hoffman’s Masters of Scale interview with Stewart, Reid calls them “big pivots.” Maybe that’s the right way of describing them, and what I’m referencing in this post is “small pivots.”
The semantic debate is endless, but it’s important to recognize that what Stewart did (twice!) is incredibly rare. Successful startups can emerge from the ashes of failure, but I’m always cautious about romanticizing or hero worshipping these experiences and giving founders the wrong impression.
Most pivots are smaller (but not incremental) and rightfully so. Resetting your business completely (even with an existing asset or hint of something working) is a big, big step. You might call it a pivot, I might call it a reset. For me, the most important thing is helping founders think through how and when to pivot successfully.
5 Things You Need to Pivot Thoughtfully, Systematically and Successfully
If we ignore the Hail Mary pivots (“big pivots”) for a moment, how can you go about pivoting in a more thoughtful and systematic way?
First, you need to recognize that things aren’t working.
This is likely a combination of data and intuition. Most founders know when things are going sideways or stalling, even if they don’t want to fully admit it. Data can help paint a clearer picture.
Before pivoting you should think about whether it’s time to shut your startup down. Pivoting and persevering are tough paths. You may not have it in you. Assuming you’re going to continue, you now need to figure out how to pivot and increase the odds that you’re successful.
Pivoting with Product, Price and Market
There are three major things you can change:
Product (i.e. problem it solves, feature set, etc.)
Price (i.e. how you make money; might include changing the business model completely)
Market (i.e. your target customer)
Changing all three at the same time is incredibly risky. That’s basically a reset. But if you aim to change one of these, substantially, it’s a pivot. For example:
You might realize you have the wrong product but the right business model and target customer; so you build a new or almost new product, likely solving a different problem (i.e. you may have gotten the problem wrong altogether)
You might realize that you have a good product, but you’re focused on the wrong target market; so you pivot to a new market (i.e. from small business to mid-market, or one vertical to another)
You might realize that you have a good product, but how you’re selling (including price and/or business model) is off; so you pivot that (i.e. shift from product-led to sales-led or vice versa)
Each of these—product, price & market—should be frequently experimented against before you actually pivot.
Most startups spend a lot of time on product experimentation, adding new features, etc. in the hopes that they finally build something people want and use. These small changes aren’t pivots, but they’re still important, although I think there’s too much focus on product experimentation compared to price/business model and market. Startups get caught in the trap of "building one more thing” (over and over again) expecting that to finally work. It rarely does.
Incidentally, if you can get the product, price and market all right, you have Product-Market Fit.
OK, let’s focus on what you need to pivot well.
1. Validated Learning
I already mentioned this, but it bears repeating.
What have you learned about your product (problem + solution), price or market that suggests you should pivot?
If you don’t have that, focus on experimentation before pivoting. Try things out, iterate and learn—then make the bigger decision to pivot. Pivots aren’t small shifts or tweaks, they’re significant. You’re changing a key component of the company’s focus and strategy.
2. A Culture of Experimentation, Intellectual Honesty & Risk Taking
Pivoting is an emotional rollercoaster. You know what you’re currently doing isn’t working, but it doesn’t mean you and/or your team won’t cling to it. In some cases, staying the course is the right decision, which makes pivoting scary. What if you just had to wait it out a bit longer, doing what you’re doing, and things fall into place?
Pivoting is not for the weak of stomach or heart.
To pivot successfully you’ll need a culture and team that believes in the value of experimentation (I always go back to the core of Build → Measure → Learn.) If you’re constantly experimenting and learning, it becomes easier to recognize when something isn’t working, and hopefully find something that is.
In order to experiment regularly and trust the results, you’ll need a culture of intellectual honesty. If people can’t put up their hand and say, “This isn’t working,” you won’t find the right pivot. If you as the founder become a zealot for every little thing you’re doing and act as the only decision maker, you’ll have a lot of followers, but no doers. That’s not a recipe for pivoting successfully.
Finally, you need a team that believes in taking risk. You’d think this would be a given within a startup but it’s not. People fall in love with the status quo pretty fast. They fall in love with the solution they built. They were hoping, when they joined the startup (which they knew was risky), that they would quickly de-risk things and move onto the scale part of the journey. Meanwhile, you’re taking steps “back” to go forward. And those backward steps often feel riskier than plodding forward.
Pivoting isn’t only about execution, it’s a way of thinking and approaching how you want to build your company.
3. Big Vision
Pivoting without purpose scares me. While I believe in experimenting and learning, doing so doesn’t replace having a vision / mission / purpose for what you’re doing.
Why get out of bed every morning to “fight the good fight” if you don’t have a purpose?
Your vision / mission / purpose shouldn’t drastically change because of a pivot. Ideally you’re pivoting towards achieving your vision, not away from it. If it’s a “big pivot” or reset, then you may need to rethink that vision / mission / purpose (but I suspect some of it survives anyway.)
The key is this: A pivot isn’t designed to eliminate your vision, it’s meant to get you closer to it.
Achieving your vision / mission / purpose is never a straight line. Pivoting is part of the journey. But without that vision / mission / purpose you may find yourself pivoting blindly or meandering around aimlessly, which will result in failure.
You need passion for the pivot. At minimum you need commitment to it. Hopefully a part of that commitment comes from your vision. Pivoting mechanically into something you don’t care about isn’t going to work.
4. A Deep Understanding of the Problem
Fundamentally, your pivot will fail if you don’t understand the problem you’re solving. In very early stage startups, you might find that you actually pivot from one problem to another as you do more user/customer research.
You have to ask yourself, “Am I solving a real problem that actually matters?”
If the answer is “no” or “I’m not sure” then you need to pivot. No amount of product, pricing or market iterations or pivots will solve for a weak problem that too few people care about. So before you decide to pivot through product, price or market, make sure you’re confident you understand the problem deeply, who has it and why it matters.
5. The Right Process for Pivoting
Once you’ve decided to pivot, you need to do it in a systematic, but bold way. You should apply rigorous experimentation methodologies to the pivot. At the same time, you can’t shy away from making big changes.
“Fortune favours the bold!”
True. But now is not the time to run headfirst into a tsunami of destruction. You’re trying to save your startup, not commit hari-kari.
Clearly define the riskiest assumptions to the pivot: You can use this simple Assumption Tracker tool (free download) to get you started.
Define the experiments you want to run: These might be big experiments, but they’re experiments nonetheless. You can use this free Experiment Toolkit for ideas.
Establish key metrics to hit: You know how your current business is doing, so you can use those as benchmarks for what you need to accomplish. Identify the key metrics to track and set targets for yourself. You can use Lean Analytics to help you identify the metrics that matter.
Get everyone aligned: Ideally you can rally the troops and get everyone pulling in the same direction on the pivot. If you can’t, you may need to exert top down force. “Team, this is the bet we’re making. Let’s go.” War time isn’t made for broad consensus building, but hopefully you can rally and motivate the team to go in a new direction.
Has Any Startup Ever Won Without Pivoting?
Yes. (Although no startup has ever won without iterating and adapting.)
But many startups that pivot also win.
Micah Friedland used ChatGPT to get some good examples and shared them on Twitter:
Pivoting isn’t good or bad, but it can be done poorly or well.
Founders can be overly flippant or nonchalant about it. They can pivot lazily or make complete U-turns with no reasoning. They can panic and chase shiny objects.
The best thing is to be extremely thoughtful, leverage validated learning and make bold decisions. Don’t get caught in analysis paralysis or consensus building with everyone. Don’t flail. Use experimentation and a focus on learning to identify where you need to go, and once you’ve figured that out (or at least enough to make a decision)—go. And go fast.
Sidebar: No article on pivoting would be complete without this:
OK, now I’m done. 😃