Time to pivot your startup? – Understanding startup pivots with examples
This article is about startup pivots. What are they? How do you know when it’s time to make one? What are the benefits of making a pivot? These are just a few of the questions that will be answered in this article. By the end, you’ll have a better understanding of what a startup pivot is and whether or not it
What is a startup pivot?
A pivot is a strategy employed by startups when they need to change direction in order to achieve success. This usually happens when the original business model isn’t working as planned and the company needs to find a new way to achieve its goals.
A pivot is a change in a company’s business model or strategy. This change is made in order to test a new theory about how the company can grow. Groupon, for example, first started out as an online activism platform called The Point.
Steve Blank defines a pivot as “changing the plan instead of the executive.” In other words, if something isn’t working, don’t fire the person in charge-change the plan.
Why do startups need to pivot?
A pivot is a change in strategy by a startup, usually in response to new information or changes in the marketplace. Startups typically make pivots early on in their lifecycle as they are trying to find a business model that works.
A startup pivot is a change in a company’s business model with the aim of finding greater success.
There are several signs that indicate it may be time for a company to pivot, such as poor financial performance, declining market share, or increasing competition.
The decision to pivot should not be made lightly, as it can be a risky move. However, if done correctly, it can be the difference between failure and success.
How to Know When It’s Time to Pivot Your Startup?
There are a few signs that it might be time for a pivot:
The product is not successful
This is probably the most obvious sign that a pivot is needed. If you’ve launched a product and it’s not selling, it’s time to reassess your strategy.
There is no market for the product: Another clear sign that a pivot is necessary is if there is simply no market for your product. This could be due to a number of factors, such as changing consumer trends or the emergence of new technologies.
The product is not scalable: A third sign that a company needs to pivot is if their product is not scalable. This means that it’s not possible to grow the business without making significant changes to the product.
The original business model is not working
If your startup isn’t growing as quickly as you want it to, it might be time to consider a pivot. This is especially true if you’ve tested different marketing and sales strategies and nothing seems to be working.
You’re not attracting the right customers: Startups typically have to make a lot of assumptions when they first start out. As you get more data, you might realize that your target market is different than you originally thought. If you’re not attracting the right customers, it might be time to consider a pivot.
You’re not generating enough revenue: If your startup isn’t generating enough revenue, it might be time to consider a pivot. This is especially true if you’ve raised money from investors and you need to start generating revenue quickly.
The target market has changed or shifted
If the market for your product or service has changed, it might be time to consider a pivot. For example, if there’s a new technology that makes your product obsolete, you might need to pivot.
You have new insights or information
If you’ve gathered new data or insights that change your understanding of the market, it might be time to consider a pivot. For example, if you’ve done customer research and found that your target market is different than you originally thought, it might be time to consider a pivot.
Too much competition
If there’s too much competition in your market, it might be time to consider a pivot. This is especially true if you’re not the market leader and you don’t have a clear differentiator.
If a competitor suddenly ends up raising a lot of money from investors, it will be a lot more difficult to compete with them going forward.
The startup doesn’t make sense – financially
If your company is running out of money, you’ll need to change what you’re doing to save it. This might mean changing the way you do things or abandoning the idea altogether and starting fresh.
Take a look at your business objectively and see where you could be doing better. See what you can get rid of, what is costing you money, and where you could go with the resources you have. Use that information to figure out how to make a change in your business.
Also, read our post on how to reduce burn.
What are the benefits of making a pivot?
There are a few benefits of making a pivot:
You can test new hypotheses: When you make a pivot, you’re essentially testing a new hypothesis. This can help you validate or invalidate your original assumptions.
You can focus on a new market: When you make a pivot, you can also focus on a new market. This can help you tap into a new market that might be more receptive to your product or service.
You can raise money: Pivots can also be used as a way to raise money. If you make a pivot that’s successful, you can use it as a way to attract new investors.
You can learn from your mistakes: Making a pivot can also help you learn from your mistakes. By making a change, you can see what works and what doesn’t work. This can help you avoid making the same mistakes in the future.
You can find a business model that works: Finally, making a pivot can help you find a business model that works. If your original business model wasn’t working, a pivot can help you find one that does.
Examples of successful pivots
In the early days of a startup, nothing is set in stone. The business model, the target market, the product or service… all of these things can (and should) be open to change. A pivot is a strategic shift that a startup makes in order to better achieve its goals.
There are many different types of pivots, but in general, they all involve changes to one or more of the following:
– The business model
– The target market
– The product or service
One of the most famous examples of a successful pivot is Google. Originally, Google was a search engine for enterprise users. However, they soon realized that the consumer market was much bigger and more lucrative. So, they pivot their business model to focus on consumers instead, and the rest is history.
When Twitter first launched, it was a podcasting platform called Odeo. However, after the iTunes store made podcasts obsolete, Twitter had to change its product and focus on something else. They eventually settled on the micro-blogging platform we all know and love today.
Originally, Instagram was a location-based social network called Burbn. However, the team soon realized that the photo-sharing aspect of their app was much more popular than the other features. So, they pivot their product to focus solely on photos, and the rest is history.
Slack
Originally, Slack was a game called Glitch. However, the team soon realized that the chat app they had built to support the game was much more popular than the game itself. So, they pivot their product to focus on the chat app, and the rest is history.
Youtube
YouTube is a website where people can watch videos. Nearly 2 billion people visit it every month.
But YouTube didn’t start out as a place for people to watch funny cat videos or find new celebrities.
YouTube was originally started as a dating site. This allowed singles to upload videos of themselves talking about what they wanted in a partner. However, not many people took advantage of this feature, so the founders pivoted and let people upload videos of any kind.
Paypal
PayPal first started in the payments industry during the Palm Pilot era. It started as a way of sending IOUs between personal devices. It was first launched as a security software company.
The service didn’t catch on, but the company shifted to enable money transfers via email. After being acquired by eBay, PayPal began to gain traction.
Netflix
Netflix was originally known for sending DVDs through the mail to people’s homes.
Netflix began offering access to movies and TV shows online, and also began producing its own original programming.
Pinterest was first called Tote. It was a mobile app that was meant to help you shop on your phone. This was in 2009 when mobile shopping wasn’t as popular as it is today.
The app flopped because the mobile payment technology was clunky. That prevented the app from being simple to use. However, the founders noticed that some Tote customers were creating collections of their favorite items they found online and sharing them with their friends.
Shopify
Shopify was founded in 2004 as an online store for selling snowboarding gear.
The e-commerce shop didn’t do well, but the founders realized that the platform they built could be used by other online retailers. They decided to rebrand, not as a store itself, but as a way for other online retailers to sell their products.
The company was able to raise millions of dollars from venture capitalists within a few years. In 2015, the company became public.
Groupon
Groupon was created as an online platform that allowed people to come together to support causes that were important to them.
When the company added a feature called Groupon, it allowed users to bargain for discounts together. This was more successful than the company’s other cause-based functions. That’s when Groupon began to grow in popularity.
As you can see, pivots can be extremely successful if they’re executed well.
What are the steps involved in making a successful pivot?
1. Assess your current situation – Take a step back and assess where your startup is currently at. What are your main goals? What are your core products or services? What is your target market? What is working well and what isn’t?
2. Identify the problem – Once you have a good understanding of your current situation, it’s time to identify the problem. Why do you need to make a change? What is causing your current situation?
3. brainstorm solutions – This is the fun part! Brainstorm a range of different solutions that could help solve the identified problem.
4. select the best solution – Now it’s time to choose the best solution. Consider factors such as feasibility, impact, and risk.
5. implement the solution – Once you’ve selected the best solution, it’s time to put it into action! This will involve putting together a plan and making sure everyone is on board.
Making a successful pivot can be a great way to improve your startup’s chances of success. By taking the time to assess your current situation, identify the problem, and brainstorm solutions, you can be sure that you’re making the best decision for your business.
Pivoting can be a difficult but necessary decision for startups. By understanding the signs that indicate it’s time to pivot, as well as the steps involved in making a successful pivot, companies can improve their chances of success.
