The Pivot - How Startups Can Rework Products to Find Success
For startups, agility is key. Launching a product is just the beginning - young companies must keep a pulse on customers and the market to see what's working, what’s not, and what adjustments are needed. Often major pivots rather than minor tweaks can spell the difference between failure and explosive growth.
Take Twitter. It began in 2005 as Odeo, focusing on podcasting. But with iTunes dominating that landscape, Odeo’s founders evaluated their prospects and made a hard pivot. They relaunched in 2006 as a completely different platform - a text-based messaging service that became Twitter. Without this radical change of direction, Odeo may have fizzled out like countless other failed startups. Instead, the pivot gave birth to an iconic brand that has shaped global communication.
YouTube tells a similar story. Originally launched in 2005 as the video dating site Tune In Hook Up, the founders saw little traction. Rather than double down and try to make video dating work, they went back to the drawing board. They asked themselves “What does the market seem to want right now around online video?” Noticing a desire for more user-generated video sharing unconstrained by predefined themes, YouTube’s founders made a signature pivot. They reopened the platform to all kinds of videos, relaunching as YouTube in 2006. This flexibility and willingness to make fundamental changes positioned the reinvented YouTube to quickly gain millions of users eagerly producing and watching all manner of content.
Lego, too, drastically redirected strategy to lift itself out of financial difficulty. The once-struggling plastic block company was facing waning enthusiasm in the 2000s. Children became increasingly enamored with tech-savvy toys and video games. However, rather than stubbornly try to win back kids with just more blocks, Lego reimagined its building sets around popular movie franchises. Through partnerships, Lego designed block sets tailored to mega-brands like Star Wars, Harry Potter, and more. By listening to customers and identifying this opportunity, Lego revived itself to become the world’s most profitable toy company.
What the journeys of Twitter, YouTube, and Lego illustrate is that the ability to spot issues and make serious changes is vital for startups still searching for that perfect product-market fit. Founders must check their ego, objectively listen to customer feedback, and demonstrate flexibility to make bold pivots if required.
Why Pivots Matter
Fundamentally, a pivot means a reworking of one or more core aspects of a startup’s business model and strategy. This could involve tweaks or complete transformations. Typically it means changing key areas like the product itself, target customer segments, distribution channels, revenue models, and more.
Pivots are very different than simple iterative product improvements. They are bigger decisions to take the business in a new direction. For startups still testing assumptions, the willingness to pivot can make all the difference. Doubling down on early ideas and dismissing external indicators rarely ends well. In the beginning, no one knows what will work. Founders must stay nimble, using customer insights and market signals to learn and adapt. A pivot might just uncover the successful formula buried in a struggling startup.
Examples of Successful Pivots In addition to the companies already mentioned, there are many others that made critical pivots:
PayPal – Started as cryptography company Confinity, focused on developing security software. They then pivoted into an online payments service, which became PayPal.
Flickr – Began as Game Neverending, a multiplayer online game. But feedback indicated stronger interest in its photo sharing features as a community. Flickr was spun-out and relaunched to harness this demand.
Nintendo – Originally a playing card company formed in 1889, it tried several failed product experiments in the 1960s and 1970s including a taxi company, instant rice, and a love hotel chain. The company kept adapting until finally finding success in video games.
Groupon – First attempted to create an online activism platform called The Point focusing on collective action. No traction prompted a complete rethink, leading to the crowdsourced coupon platform Groupon.
Instagram – Originally launched in 2010 as Burbn, a check-in app with photos, posts, future event planning, and more. Too unfocused, founders pivoted to simplify as a mobile photo sharing app with filters. This streamlined Instagram took off.
Foursquare – Also began as a multipurpose tool called Dodgeball. After an initial sale then buyback, the founder redirected efforts towards specialized check-in features, openly borrowing ideas from competing platforms. This pragmatic flexibility fueled Foursquare’s rise.
All these companies struggled with early ideas but reinvented themselves by listening to feedback and making decisive pivots. Their evolution demonstrates that false starts and adjustments are expected when building something new. Rarely does the initial conception work flawlessly out of the gate. Pivots enable startups to fluidly respond to market indicators and shift in more fruitful directions.
When to Pivot
Timing pivots require founder honesty about progress. Too often emotions, ego, pride, or denial prevent acknowledging when existing efforts simply aren’t working. Some indicators a pivot might be needed:
Consistently low customer adoption
Engagement metrics declining
Paying customers and revenue remain negligible
Core assumptions proving false
Customer input keeps identifying major problems
Competitors continuously outperforming
Of course making flippant, frequent changes is unwise. Patience is required to let ideas grow. But founders must be self-aware, with triggers in place to step back and reevaluate. If the same patterns slow progress emerge, it likely signals efforts pointed the wrong way.
At major tech companies, PMs are often rotated between projects to bring fresh eyes. Startups can gain from the same outside-in perspective. Founders can become myopic and over-invested in pet projects. An advisor or feedback from a newly hired teammate might highlight when a founder is sticking too long with a failing hand.
Executing a Pivot
Once the need for change is clear, enacting a successful pivot requires methodical re-analysis of markets, users, options, and offering differentiation. Not all pivots are equally fruitful, so pressure testing assumptions with experiments and prototypes is useful before fully committing resources.
Start by examining why the current product falls short and clearly articulate the job the customer needs done. Collect user feedback through surveys, interviews, observation, and examination of usage metrics. An outsider’s perspective can prove invaluable.
Next brainstorm how capabilities could be retooled to solve higher value problems for customers. Evaluate all ideas through lean validation methods like landing pages with conversion data, explainer videos, crowdfunding response, waitlists signups, etc. Use these signals to determine what users get most excited by.
Make data-informed decisions, not intuitions. Allow your customers guide you. They will tell you, indirectly, the right way to serve them. Approach with scientific method mentality, not fixed assumptions.
Be willing to make substantial changes. Surface level tweaks likely will not produce profoundly different results. Often pivots involve entirely new products, customers, customer acquisition strategies, partnerships, revenue models, and more.
With experiments indicating a clearly superior direction, execute decisively. Major pivots cause confusion internally if done gradually. Rip off the bandaid in one motion. Fully reorient teams around the pivot like a fresh start rather than hedging bets across old and new strategies.
The Pivot AB Test
In many ways, early stage startups can frame themselves as large pivot AB tests. Testing product A and product B. Version A landed flat while version B took off. So we focus resources on accelerating version B, learning as we grow.
This mentality reduces feelings of failure. It acknowledges misfires provide valuable learnings to uncover what really generates customer enthusiasm. If startups enter new projects with the willingness to pivot, directing efforts down whichever path shows most traction, they can adapt to give themselves the best chance of success.
When pivots happen, the startup is not “failing and starting over.” It is methodically iterating and evolving, using customer insights to hone market fit. Mr. Tassium, a NYC courier startup, described their experience: “An unwillingness to change can be toxic. We couldn’t be more proud of our team and customers for pushing us to constantly improve.”
This cycle of testing, learning, and pivoting is exactly what startups need to navigate ambiguous, complex customer problems. As Eric Reis, author of The LeanStartup, explains regarding two startups he founded before finding success: “It wasn’t that we gave up too easily the first two times. It was that we didn’t pivot early enough or sharply enough.”
Hard Things Are Hard
Of course, pivots are challenging moments for founders. Emotionally, psychologically, organizationally, nothing is more difficult than mobilizing everyone and everything down a radically uncharted new path. It can be deeply destabilizing and demoralizing. Employees worry about job security amidst whiplashing changes. Investors grow impatient. Customers and partners feel confused by inconsistent messaging.
However, volatility is the price of doing groundbreaking work. Raiders of the lost ark wouldn’t exist without grappling through boobytrapped temples. Startups require the same courage to persist through uncertainty as they hunt for treasure.
Great companies are not built in straight lines. Success emerges through zigzagging experimentation. Masayoshi Son of Softbank explains: “Many entrepreneurs change their business model several times before they find the right one. Quitting is not an option.”
Startups are defined by the unknown. But maintaining observational rigor to data inputs while responding with agility is key. As long as truth is faced and intelligence applied, strong pivots can convert stagnation into forward progress. Teams that master this evolutionary dance will unlock outcomes more rewarding than first imagined.
15th January 2024