While nearly everyone agrees that you should only pivot when you need to, for the vast majority of startups, pivoting is essential to surviving. Whether they pivot 1% or 180%, nearly all startups pivot from their original vision and target market. Or they fail.
In part, that's the beauty of entrepreneurship. Learning, adjusting, finding new and better ways of doing things. Pivoting is the way startups adjust course once they get the opportunity to read the market's reaction and get feedback from their customers.
What Is a Startup Pivot?
Simply put, a pivot is a change in a startup’s primary strategies. In many cases, it involves finding the right customer, the right value proposition, or the right positioning.
Pivots are among the key concepts of the lean startup and are widely utilized within software and tech development.
Many people think that pivoting means that the entire company or company strategy has to be changed, but this isn't necessarily the case. A startup pivot can be large or small. In fact, in most cases, a startup will make small shifts in a few aspects of the company strategy and business model without drastically changing the company or pursuing something new entirely.
The question often arises as to whether it’s better to pivot or persevere. But, the two are not mutually exclusive. Most of the time, pivoting is persevering through adjusting your company strategy as you learn and grow.
Whether large or small, pivots must be carefully planned and executed. Think of this as a way to test a new approach to your startup idea once you have had the opportunity to learn.
We’ll talk more about types of pivots in the next section, but here are a few examples of the ways startups can pivot:
- Focusing on a new target market
- Focusing on a new marketing message
- Focusing on a new set of features
- Adopting a new revenue model
- Adopting new technology
- Turn one product feature into its own product
- Turn your product into one feature of a larger product
- Turn your platform to an app or your app to a platform
Types of Startup Pivots
As you just saw, there are numerous ways for startups to pivot. These pivots range from smaller pivots such as repositioning your product or service or pivoting in your existing market to more extreme pivots like building something new entirely.
While there are many different ways that startups can pivot, Eric Ries, the author of “The Lean Startup” and a champion of the startup pivot, suggests there are 10 main types of startup pivots:
- Zoom-in Pivot: The zoom-in pivot means you “zoom in” to focus on one particular function or offering of your product, rather than multiple things at once.
- Zoom-out Pivot: The zoom-out pivot, then, is the opposite of the zoom-in pivot. Are you thinking too small? In this type of pivot, instead of zooming in to focus on one particular function, a startup zooms out and the previous product becomes a single feature of a much larger product.
- Customer Segment Pivot: With the customer segment pivot, instead of pivoting your product or service, you pivot with respect to your target customers. This pivot involves repositioning your product to meet the specific segment that’s actually buying what you’re selling.
- Customer Needs Pivot: The customer needs pivot is pivoting to respond to and meet the needs that you have discovered are more important to customers than the original problem your product was intended to solve.
- Platform Pivot: A platform pivot is a pivot from a platform to an app or vice versa.
- Business Architecture (or Business Model) Pivot: A business architecture (or business model) pivot is a pivot in business architectures or business models. For example, according to Geoffrey Moore, there are two types of business architectures: high-volume, low margin and low-volume, high-margin. This type of pivot restructures the business and business model from one to the other (or somewhere in between).
- Value Capture Pivot: The value capture pivot is a pivot in revenue models. This type of pivot is a pivot in the way you capture value from your customers or users (i.e., how your startup makes money).
- Engine of Growth Pivot: The engine of growth pivot is a pivot in the way you drive growth. There are three main growth engines: viral, sticky, or paid growth. If one is not working, you can pivot to another and see what “sticks.”
- Channel Pivot: The channel pivot is a pivot in the marketing and sales channels that a startup uses to reach customers. This type of pivot requires you to reevaluate the way you’re marketing and selling your product and to adjust the sales avenues that you use.
- Technology Pivot: This pivot is used when a startup is able to solve the same problem with their product using a different kind of technology. In many cases, that technology makes the startup more competitive, such as higher quality or lower price.
Now that you have a little better understanding of what a startup pivot is and the differing types of startup pivots, you are in a better position to decide if and when your startup needs to pivot.
When to Pivot a Startup
Successfully pivoting a startup isn’t easy. Just because many successful startups have pivoted doesn’t mean that should be your goal. Many other startups have succeeded because they believed in what they were building and persevered.
However, sometimes a startup’s product or service, target market, business model, revenue model, etc., just isn’t working and a pivot is required.
Here are some of the cues to watch for that suggest your startup might need to pivot:
Your Startup Isn’t Scaling as Anticipated
You may want to consider pivoting your startup if it is not scaling as anticipated. Maybe your target market didn’t respond the way that you thought they would or you experienced some early traction but were never able to really grow at the rate you expected. It might be time for a pivot.
You may have designed a beautiful product or service and put a lot of effort into customer research, development, and getting it to market, but for some reason, you still get a limited response from the market. Maybe you are targeting the wrong market. Maybe your marketing messaging doesn’t resonate. Maybe there just aren’t as many potential customers willing to pay for your product or service as you anticipated.
You may still be saved by a pivot. When startups are not scaling, you can try pivoting your target market, marketing messaging, sales channels, revenue models, engine of growth, or even business architecture.
Your Startup Isn’t Financially Viable
You will likely want to consider pivoting your startup if it looks like your startup is not and probably will not be financially viable. Early and seed investments are only going to last so long. At some point, your startup is going to have to prove that it can be financially viable. If it can not, you should consider pivoting to a more financially viable idea.
For many founders, it is difficult to let go of their startup ideas; however, not all products or service ideas will ever be viable in the market. If it becomes obvious that your product or service idea is not going to be financially viable, you will need to learn to let go of your original ideas and pivot.
You Are Constantly Being Crushed by the Competition
Whether there is too much competition, you are always playing catch-up, your competition is well established in the market, or the competition just flat out outperforms, then it might be time to consider pivoting.
The startup world is full of hungry competitors. And, while some competition may signify there is a potential market for your startup’s product or service, if you are continually getting bested by the competition, you may need to pivot in order to differentiate yourself.
Some of the most common pivots in this situation are pivoting your target market, marketing messaging, sales channels, revenue models, and zooming in or zooming out on your product or service offering.
Customers Like One Thing About Your Product/Service Most
You might want to think about pivoting if there is only one or two aspects of your product or service that customers like. If you are doing one or two things that customers especially like, you should consider pivoting toward focusing on what is working.
If one or two aspects of your startup really stand out, pivot to focus on those aspects. You could choose to focus on those exclusively, or you could focus on redeveloping the rest of the features around the core features that your users and customers do like.
When customers seem to only use or like one or two features of your product or service, the most common type of pivot is to zoom in on that one feature. However, zooming in or zooming out your product or service may also require you to pivot any number of things, including your target market, engine of growth, channels, etc.
Your Objectives or Expectations Change
Finally, a pivot may be in order if your personal objectives or expectations change. Not only can personal circumstances change your personal objectives or goals, but as you launch your startup, you will also learn and grow.
Perhaps your goals change, and you want to pivot toward creating a larger (or smaller) company. Maybe your values have shifted, or you are not happy with the work or the direction that the startup is going. Perchance your newfound knowledge and insights from launching your startup opened your eyes to a more exciting opportunity or one that you are more passionate about pursuing. In these cases, a startup founder is pivoting to do what they believe to be best for them and their startup.
How to Pivot Your Startup
All startups, thus all pivots, are different. There is no single secret recipe for the ultimate pivot. There are, however, a number of things you can do to improve the chances of your startup pivot success.
Here are the six things you should do when pivoting your startup:
1. Determine Your Goals
One of the first things you need to do when you are considering pivoting is to assess your personal and business goals and objectives. Goals lay the foundation of where you intend to take your company and how you are going to get there. Thus, it is crucial to ascertain the short- and long-term goals for your startup when planning and beginning your pivot.
Your goals should be connected to your mission and vision, your business model, and your strategic plans. When pivoting, each of these will need to be aligned with your new goals and objectives.
2. (Re)assess the Market
The essence of pivoting is all about finding product-market fit. Product-market fit is the fit between a product and its desire by the market and ability to satisfy customers’ needs. Thus, the first place you should begin is by (re)assessing the market, the problem your product or service solves, and how to better align it with your customers’ needs.
In order to know if you have product-market fit, you have to understand the market. A great place to start is by gathering feedback directly from your own users, customers, and sales teams. You can use surveys, focus groups, one-on-one interviews, or a number of other methods, but the important thing is to ask. (If you’ve already inquired about what your startup could be doing better from your customers or sales teams, this feedback can be extremely helpful.)
Reassessing the market will help you determine if you are trying to sell your product or service to the wrong audience, marketing your product or service incorrectly, or have created a product that no one wants or is willing to pay for. These insights should provide guidance in planning and carrying out your pivot.
3. Research Your Competitors
Next, you should also spend some time researching and assessing your competitors. Your competitors may include anyone offering alternatives to your solution that people are using to solve the same problem.
If you don’t know who your direct competitors will be after pivoting, start by identifying the major competitors within your sector or niche. You should focus on your closest competitors. Those that will compete with you directly.
When assessing your competitors, try to ascertain what makes them successful. What are their strategies? Their strengths? Their weaknesses? What distinguishes your product or service from theirs?
By gaining a better perspective on your competitors and the competitive landscape, you will gain insight on the strategies and direction to take with your own pivot, how you can distinguish yourself from your competitors, and how you can take advantage of the places where your competitors fall short.
4. Determine Your Pivot Strategy
Another thing you should do when pivoting your startup is to determine your pivot strategy. You don’t want to pivot blindly or “flail” at opportunities, hoping to find one. You should undertake a pivot with a strategy in mind.
As you read earlier, there are numerous strategies you can undertake to pivot your startup. The right pivot for you depends on your startup, why you are pivoting, your goals and objectives, the market, and your competitors.
Here are some tips on determining your pivot strategy:
Focus on What’s Working
Evaluate the strengths of your startup and focus on what was working. What does your startup do best or with a competitive advantage? Did you build an innovative product or service that just couldn’t find a market? Did customers or users love one aspect or feature of your product or service, but they just weren’t sold? Focusing on what was working may help determine your pivot strategy. Can you keep what works?
Ensure Growth Opportunities
When pivoting a struggling startup, you will want to ensure that you avoid the same pitfalls. This means ensuring opportunities to find product-market fit and grow to a scale that will support the venture. Is the market you are pivoting toward large enough to support your startup? How big is the market? How much market share can you expect to attain? Will this opportunity be financially viable? Determining the growth opportunities or alternatives is another crucial element of choosing a pivot strategy. Do the numbers work? Is it feasible?
Consider Alternative Technology
Another thing to consider when pivoting is if you can solve the problem with alternative technologies. The technologies available to us are changing by the day. From manufacturing to design to how we interact with the world, change occurs at a continuously increasing rate. The best technological solutions two years ago may not be the best technological solutions today. Have better solutions emerged to help you solve your customers’ problems and meet the market need?
Before you pivot, or when you are considering pivoting, you should look at your tech stack and determine if there is better technology to solve the problem.
5. Develop a Prototype
Before launching into a full-scale pivot, you should also consider developing a prototype of your updated vision. A prototype is an early simulation or model of a product or service used to test a concept.
Prototypes are a great way to start bringing a pivot to life. They serve as a simulation of the final product and give you the opportunity to evaluate the functionality of your new product or solution as well as the response of your customers and users.
Prototypes are an easy way to help you get feedback from real customers and users before pushing ahead with your pivot. These insights are invaluable in choosing and implementing your pivot strategy, designing your product or service, and finding your target market.
Tip: After creating a prototype, the next step is building an MVP. Read our What Is a Minimum Viable Product guide to learn more about building prototypes and MVPs.
6. Communicate With Investors
Throughout this entire process, you should be talking to your startup’s investors and other key stakeholders. Your investors will want to be kept up to date on your progress, and you should inform them when you begin thinking about pivoting from the business, and business model, that they invested in.
You will want to communicate not only why you believe you need to pivot but also be able to back it up with your customer feedback, research, assessment of the market, and reasoning. This will show your investors that you have done your homework and are ready to hit the ground running.
By not keeping your investors in the loop, you damage the relationship between your startup and your investors and may even make it less likely to receive follow-on investment in the future.
Examples of Successful Startup Pivots
There are countless examples of startups that have successfully pivoted from a flawed or failing startup to a vastly successful company. They include:
Here are how some of these companies started and evolved:
Instagram hasn’t always been the same popular photo and video-sharing app it is today. Originally named Burbn, Instagram had to pivot to become the wildly successful app that it has become.
Burbn began as a location-based check-in app. While Burbn did utilize photo-sharing capabilities, the app featured a litany of additional features such as check-ins and point earning. However, after realizing that most users used the app for its photo-sharing capabilities, the company pivoted and simplified the app, scrapping nearly all of the other features except for photo sharing, likes, and comments, putting the newly rebranded Instagram on its path to success.
Innovative startups like Netflix emerged quickly in the mid-2000s as a convenient alternative to high-cost video rental stores such as Blockbuster and Hollywood Video.
The convenience and cost-effectiveness of receiving movies and TV shows directly to your door were appealing to customers, and Netflix capitalized. However, as the capabilities of digital content began, Netflix had a different vision.
Netflix used its movie and television licensing sources to pivot from its mail-order DVD rental model and begin offering shows and movies on its website. This, coupled with the company’s foray into the production of original content, led to massive growth and the evolution of Netflix into what we know today.
Pinterest is another startup that pivoted to success. Pinterest was originally launched as a mobile app called Tote that brought shopping to the smartphone. However, back in 2009, consumers weren’t quite ready to shop from their phones.
While shoppers weren’t making many purchases from Tote, the founders noticed that users were saving large collections of “favorites” to share with their friends. Thus, with Tote stumbling, the company pivoted to creating a platform that allows users to save and share photo collections of just about anything. While pivoting from a mobile app to a web-based platform was a huge pivot, it appears to have worked out for Pinterest in the end.
Twitter was initially founded as Odeo back in 2005. Odeo was originally created to serve as a platform for finding and subscribing to podcasts, but when Apple moved into the podcast space with their iTunes platform, Odeo had trouble gaining traction.
Facing trouble, Jack Dorsey, an employee and eventual co-founder of Twitter, came up with the direction for a much-needed pivot — a microblogging platform called “Twittr” that would allow users to update and share their real-time location and activities with friends. As we all know, Twitter’s pivot resulted in one of the most successful social media platforms today, with roughly 217 million users worldwide.
Did you know that YouTube was originally created as a dating site? Users could utilize the platform to create videos of themselves describing their ideal partner so that they could potentially find their perfect match.
While video dating was probably a unique idea at the time, users weren’t quite sold on the concept. Thus, the founders of YouTube began to look for other utilizations for what they had built. What they came up with was a little closer to the YouTube you know today, a video platform that allows users to host just about any kind of video.
Frequently Asked Questions
Why do startups pivot?
Startups pivot for any number of reasons, but the biggest reason is they are unable to achieve product-market fit. Product-market fit is the fit between a product and its desire by the market and ability to satisfy customers’ needs. In other words, a startup fails to find a large enough market that is willing to pay for their product or service.
What is the right type of pivot for my startup?
There is no one best or right type of pivot. The right type of pivot for your startup depends on a number of things. When considering your pivot strategy, you should assess your goals, the market, your users or customers, and your competitors.
Why is pivoting important?
Pivoting is important for most startups because of how much they learn when they enter the market for the first time. It is the way startups adjust course once they get the opportunity to read the market's reaction and get feedback from their customers.