![When & How to Pivot Your Startup [With Real-Life Examples]](data:image/svg+xml;nitro-empty-id=MzkyMTozMDM=-1;base64,PHN2ZyB2aWV3Qm94PSIwIDAgMjU2MCAxNzA3IiB3aWR0aD0iMjU2MCIgaGVpZ2h0PSIxNzA3IiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==)
“Starting a company is like jumping off a cliff and assembling a plane on the way down.”
That’s Linkedin’s founder Reid Hoffmann.
And every single founder I know can vouch for that.
My founding team had built over 10 startups before coming together to form Altar.io. Since then, we’ve helped over 60 other founders build their products.
And it’s pretty much the same story every time.
10,000 fires burning 24 hours a day, 7 days a week. As soon as you put one out, three more pop up.
And, while you’re in the trenches dealing with all those fires, you still need to find time to take a high-level, objective view to ensure you’re moving in the right direction.
Moreover, building a startup is very personal.
So even if you find the time to take that high-level view, being truly objective is a challenge in and of itself.
The first iteration of one of his startups, BillGuard, was designed to be a security product to protect you from credit card fraud.
Yaron and his team did all the market research, analysed competitors, everything the books say you should do when building a startup.
“There was just one problem, in spite of all the due diligence, when they launched, no one actually went out to use their product.”
So, they did what many startups do, they decided to pivot. They moved to a B2B model and went on to sell their security product to banks.
That decision came with its own set of hurdles. Chief among them was that Yaron and his team didn’t have the runway to make it through the classically long sales cycle that comes with selling to a bank.
So after two years of attempting the B2B model, they decided to pivot back to B2C. This time deciding to change the product itself. Now, as well as protecting you from fraud, the app will help you save money by notifying you with vouchers for local shops, restaurants and cafés.
This process was extremely difficult for Yaron, because of how close he was to the product. As he puts it:
“As an entrepreneur, you’re so excited about everything that you get too emotionally tied to your product. You’re not intellectually honest enough to be true to the data.”
While these pivots were difficult to execute for Yaron, both on a personal and technical level, they led to a multi-million dollar company.
And Yaron is not the only successful entrepreneur who had to pivot to find success.
If Burbn hadn’t listened to its users and pivoted to fit their needs, we wouldn’t have Instagram.
If Netflix were still sending users DVDs in the post, they would be dead in the water. A true Blockbuster.
Twitter was originally a platform designed to help people find and subscribe to podcasts called Odeo. But, when iTunes started dominating the podcast niche, the founding team went back to the drawing board and pivoted the company.
Whether it’s a critical business problem (like no demand), or a matter of evolving to keep up with the market trends (like switching to streaming over mailing DVDs), pivoting is something extremely common in the startup world.
The questions that remain are:
- When should you commit to a pivot?
- How can you execute that pivot effectively?
First, let’s get stuck in with a quick definition of pivoting as it pertains to startups.
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What is a Startup Pivot?
In short, “pivoting” in the startup ecosystem can be defined as:
Shifting the direction of a business to accommodate changes in the industry, user preference, or any other factor that impacts your value proposition.
Expanding a bit more on one of the examples above, Instagram did exactly this. Originally Burbn, the app was filled with features, with the founder Kevin Systrom saying himself that “The app felt cluttered and overrun with features”.
Adoption was poor but there was one thing that all the users loved: The ability to easily share photos with friends.
So Systrom and his team made a tough decision. They stripped the majority of features out of the product. What remained was the ability to upload, like and comment on photos – and Instagram was born.
It could be the opposite of that, where your current product becomes a feature of a larger platform that offers more to your market.
It may also be targeting your platform to a different set of users (e.g. switching from B2B to B2C and vice versa). Or changing the technology on which your product is built.
These are just a few examples of what it means to pivot your business. Now I want to dive into deciding whether or not you should pivot your startup.
Do you have a brilliant idea that you want to bring to life?
From the product and business reasoning to streamlining your MVP to the most important features, our team of product experts and ex-startup founders can help you bring your vision to life.
When Should You Pivot Your Startup?
To help you identify whether or not pivoting is right at this moment in your startup’s journey, here are some common signs that normally mean a pivot is a necessity.
1. Competition is Overwhelming
As unique as you may think your idea is, probably someone else has had it before. If like you, they’re acting on it, there’s a danger that they may have more resources than you to beat you to market.
Or, an existing company may have heard about your product and be using their resources to the same end.
Which is exactly what’s happening to Clubhouse. Now at over 10M active users, other social media giants are rushing to take on the newest social media platform on the block.
From Twitter’s soft launch of Twitter Spaces to Instagram launching Live Rooms – these bigger companies are using their extensive resources in an attempt to overshadow Clubhouse.
And when your unique value proposition is no longer unique, you may have to consider a small pivot to stay relevant in your market.
2. A Slow Climb
If despite your best efforts, you’re not progressing as quickly as you like in terms of your KPIs, it may be time to pivot.
Probably one of the most famous examples of this is Slack.
Slack started its life as a video game, Glitch. However, unlike many games where the goal is to fight monsters or solve puzzles, Glitch was focused on socialisation and exploration.
While the game gained some popularity, the founding team found profitability to be an uphill battle.
To combat that they pivoted, redesigning the product as a chat app for coworkers – and the rest is history.
While Slack pivoted their entire business, it may not take such an extreme pivot to achieve your KPIs. It may just take a slight pivot to the product, market, revenue model, etc.
3. Hitting a Wall
If you were gaining traction with your product, but it has suddenly ground to a halt, you may also want to consider a startup pivot.
Spotify experienced this exact issue when the pandemic hit back in 2020.
Spotify has long relied on advertising to make its money. However, as ad companies slashed their budgets in 2020 due to COVID Spotify had to find a way to supplement its revenue stream.
So they pivoted. Taking a leaf out of the Netflix playbook, they started making original content in the form of podcasts.
And it worked, with HBR reporting that:
“The platform saw artists and users upload more than 150,000 podcasts in just one month, and it has signed exclusive podcast deals with celebrities and started to curate playlists.”
This is another case where all it may take is a small pivot to invigorate your team, refresh your strategy or revitalise your business model.
4. An Uninterested Market
Just because someone says that they will buy your product, doesn’t mean they’ll actually do it. If now your product is built, people aren’t interested, consider pivoting.
Revisit the problem you’re trying to solve for your market and find the thing that will drive them to take action.
A great example I can share here comes from a conversation I had with successful entrepreneur Ali Halabi.
He’s the founder of Volt Lines, a B2B subscription-based travel solution for corporate users in Istanbul.
It’s a solution the market instantly found valuable, and since its inception in 2017 Volt Lines has raised over $7.5M in funding.
But Volt Lines wasn’t the first solution Ali brought to the market. His first idea was an on-demand carpooling service for commuters.
Quickly after launching, however, he and his team realised one critical issue. No one who drove themselves to work really wanted to carpool with a stranger. Diverting to pick someone up, and diverting again to drop them off, just brought more friction to their already frustrating commute.
With little to no traction, Ali revisited the problem he was trying to solve, the traffic problem in Istanbul. And while he was right in his theory that the problem was caused by empty seats, the inefficient use of vehicles, carpooling was not the solution the market wanted.
It turned out that subscription-based, bespoke, shuttle buses were.
If Ali hadn’t gone back to the problem and the market and pivoted based on the data he gathered, he wouldn’t have found the success he has today.
Expert Tip
“Don’t infer that there will be a demand for the product you’re going to build. You have to quantify customer action – not the intent. The burning question is will users like your product enough to take action at a cost that will enable you to run a sustainable business?”
Yaron Samid, Serial Entrepreneur & Startup Founder
5. Users Only Like One Feature
Much like the case of Burbn, it may be that once your product is out there, your users only actually like one feature.
Here, consider pivoting by trimming the fat, and turning that feature into the product.
Arguably, this would never be an issue if you had the right process to choose the features for your product when you first set out to build it.
How to Effectively Pivot Your Startup
There are numerous ways to perform a successful pivot. Here are some insights to increase your chances of success.
1. Listen to Your Users
I can’t stress this one enough, your product exists to solve a problem your market faces. So when they give you feedback, listen to it. Feedback like “it’s too expensive”, “the number features are overwhelming”, “X product does this better”, etc. is invaluable to your startup (even if you’re not pivoting!).
You can’t carry out a successful pivot, without first knowing what your users need.
2. Reanalyse Your Competition
Look again at how your direct and indirect competitors solve your target users’ problems.
What are they offering that you aren’t and vice versa. This research, with the feedback from your users, will go a long way to help you decide which direction to take your startup.
3. Speak Your Users’ Language
As important as building a product, is how you convey that product to your target market.
Focus on your messaging, shining a light on what you’re doing and, importantly, why you’re doing it.
Transparency with your audience is key to building a long term user base – and a pivot is an opportunity to reinforce that relationship.
Expert Tip
“Your product won’t work if your customers can’t see any value. Build what customers want and then scale.”
Joe Procopio, Product Expert & Startup Founder
4. Pivot Sooner Rather Than Later
As I mentioned at the start of the article, many successful companies have pivoted (some multiple times) to achieve success.
But if you’re going to do it, do it quickly and with certainty.
Fail to do so and you will waste time, money and effort. Plus you may leave your users confused as to what your product is trying to achieve. This is a surefire way to lose them to your competition.
5. Make Sure Your Team is Aligned
Speak to everyone in your team. Ensure they align on the reasoning behind your decision to pivot.
And bear in mind that pivoting may require fundamental changes.
Let’s look again at the example of BillGuard & Yaron Samid. He spent two years targeting B2B and building his team based on that fact.
So when he pivoted back to B2C, he had to let many of his B2B team go.
Fundamentally, he had to be honest with himself and the people around him.
This startup wasn’t going anywhere in its current direction, it was either pivoting or closing the business.
It’s not easy being a founder.
Wrapping Up
Pivoting your startup is not a decision that should be taken lightly.
It’s going to take considerable time and effort to achieve success. More importantly, it requires you to be completely honest with yourself and your startup.
If you find yourself in any of the situations listed in this article or any other that makes you feel a pivot is in order, these are some of the things you should consider.
And if it is necessary, here are some of the ways to effectively pull it off:
- Listen to Your Users
- Reanalyse Your Competition
- Speak Your Users’ Language
- Pivot Sooner Rather Than Later
- Make Sure Your Team Is Aligned
Thanks for reading.
Rui is a partner and CMO at Altar.io. He’s been dedicated to B2B marketing for his entire professional career. After spending eight years honing his craft at Portugal’s first B2B marketing agency, he joined Altar, where he leads both the marketing and sales department under the same umbrella.
His current focus is on business strategy, getting to know Altar’s customers and occasional early-stage strategy discussions with the entrepreneurs we work with.
