How to Pivot Your Startup

On February 14th 2005, three co-founders from Texas bought the domain for their online dating platform. The idea was for users to upload video presentations to find dates and hopefully some lovin’. As it turned out though, people weren’t jumping at the opportunity to get in front of a camera and let Online Cupid display their (missing) love life on the internet.

Now, one might think that was the end of the Valentine's Day-founded dating startup. But today that same business is the multi billion dollar business we all know as YouTube.

The founders, Chen, Hurley and Karim, knew they had built a platform with the potential for something great. They just had to use it to solve a different problem. In other words, they had to pivot.

When Things Aren’t Working, Pivot!

Pivoting means that when something isn’t working the way you want it to, you change it.It doesn’t have to be major changes to your startup’s core. A lot of the time a series of smaller experiments leading to changes in your strategy and product will be enough.

In a fast-paced, ever-changing world you can expect to pivot more than once if you want your business to make it long term. In fact, research from the Startup Genome Project shows that businesses that pivot twice are most successful in terms of growth, money raised and scaling the business at the right time.

Securing product/market fit is a difficult task. No matter how much research you’ve done, you won’t know for sure if there’s a place for you in the market, until your product is out there standing the test of time. And even then, when the market changes, so should you. Probably.

There’s a common misunderstanding that pivoting is a sign of failure. It’s really not. Failure doesn’t strike until you stop acting. And a pivot just might be the action you need to take.

🎶 Everything I do I do it for… Growth 🎶

When in doubt, always go for a Bryan Adams reference. Or is that not a thing?

Sorry, let’s get back on track. According to The Failure Report 2020, one of the four most common traits of successful entrepreneurs is perseverance. By no means should you go out and make major changes to your product or strategy just because pivot is a fun word you heard on Friends. Perseverance can very well be what’s right for you.

But while you keep up the hard work, remember to be alert, aware and curious to discover things you can do differently to increase the growth of your business. If you want your business to stick around for the next decade, you need to be willing and able to pivot for the purpose of growth.

Find Your Inner Scientist 👨‍🔬

Like scientists, great entrepreneurs aren’t afraid to experiment. In fact they thrive on it.They constantly experiment with new initiatives on a quest to grow their business.

And like scientists, great entrepreneurs back up their actions with data. The small experiments they do teach them valuable lessons and point the business in the right direction. If an experiment works, they make a change, and if done right the business starts to grow.

You should always base a pivot on research and data. One way to get that data is to set up key metrics and keep track on them continuously. Once you have a solid foundation for making a change, you’ll know what changes you need to make to what parts of your business.

The Pivot Pyramid

In 2016, CEO of Bunch Selcuk Atli introduced the Pivot Pyramid in a blog post on 500 Startups. The pyramid comes in really handy when working with pivots.

It consists of five parts, and the lower you go the more extensive your efforts will be. No pun intended. Let’s go through the five parts.

Customers

Your customers are at the center of everything you do. If you want to make changes to your customer base, be aware that it can affect all other aspects of your business.

The reasons for a customer pivot can be many. Maybe the needs of your initial customers changed. Maybe you took a turn when building your product, that resonates more with a different target group.

No matter the reason, be sure to evaluate the rest of the steps in the pyramid, if you make changes here.

Here’s an example: 

We know. Using Facebook as an example is getting a little old. But there’s a reason for that. They did a lot of things right. Like for example deciding to change their user base from a semi-secret (and semi-sketchy) college club to a global party where everyone is invited.

Problem

Are you solving the right problem for your customers?

If you are, you’ve come a long way. There’s a market for you. But identifying the right problem is really difficult. If your customers aren’t really buying the whole idea of what you’re trying to do, chances are you didn’t get it right. Now would be a great time to get back out there and learn more about what’s actually bothering them.

If you decide to pivot on the problem, be sure to have a closer look at your solution, the technology and your growth strategy as well.

Let’s give you an example:

The retargeting campaign company Criterio, started out as a recommendation engine for online retailers. But as it turned out that issue wasn’t as important to retailers as another one.

Online retailers struggled with a large number of “almost-customers”, who abandoned their shopping cart right before checkout, never to return again. This was hurting the retailers way more than the issue Criterio originally identified, and so they set out on their retargeting quest.

Solution

The solution you’re offering will probably be subject to a lot of changes. Not always big ones, but you will make updates, create new features or offer new services. At least we hope you will.

It may also be that you discover that people are really loving one feature and don’t spend too much time on the others. Or that you’ve focused mainly one one feature, but your users are requesting other features too.

If that’s the case, consider a pivot to meet their wishes. When you make changes to your solution remember to have a look at the technology you’re using. Is it still the right one? And what adjustments could you make to keep growing, once you’ve made the product changes?

Another example? You got it!

Did you know Nintendo was already founded way back in 1889? They started out as a playing card company. But as the market changed and technology evolved, so did the demand for new entertainment and games. As we know, Nintendo went on to revolutionize the gaming industry. And they did that by making a very smart, very significant solution pivot.

At first they apparently considered a variety of pivots, including a taxi company and instant rice. But eventually they decided to stay in the field of games and entertainment and acquired the rights to distribute the first ever video game console in 1977. And the rest, as they say, is history.

Technology

As your business grows, your tech needs may change. The technology you choose in the beginning may not be good enough to keep your business growing.

For the most part, your users won’t know what technology you use, but they will definitely know if something isn’t working. That’s why you need to keep the options for changing your tech in mind. The good news is that if you do it right, no one will know you changed it.

You guessed it, here’s one more example:

Here’s one more Facebook example for you. Oh yes we did. Because there’s another reason why that social media platform succeeded as opposed to their lesser known little brother, Friendster from 2002 for example.

Bear with us while we geek out for a moment. When Facebook started to take off, their PHP programming couldn’t keep up with the scale. So they developed a technology called HipHop that converted PHP into a more scalable language (C++ if you’re curious). This pivot allowed them to keep up with the demand and eventually get to where they are today.

Growth

If everything up to this point goes smoothly, you’re really on the right track. So now is a great time to start experimenting with your growth strategy. What are you doing to reach your customers? And how is it working? Are you getting enough users, or do you believe you could get more? (Hint: You almost always can)

Small experiments with your growth initiatives and then implementing the ones that have the most positive effect can really help you on your way to the startup stars!

And another ex.. Got ya! Here are three growth strategies:

Eric Ries, author of The Lean Startup, identifies three primary growth engines.Sticky growth, viral growth and paid growth.

Sticky growth means a main focus on retaining users long term. Do you have a product that people will keep using for a long time? Will they be screwed without you? Then this is probably the strategy for you.

Viral growth basically means creating a hype around your product. The more social interactions, the more users, the more sales. Does your product have viral appeal? Do you think it’s fit for all the buzz you will need? Then go for it!

Paid growth means having a larger marketing budget that you use to reach and bring in more customers. The revenue you get from your paying customer base goes back into your marketing budget and gets reinvested to create even more growth.