When to Pivot

In the search for product-market fit, for a repeatable and scalable business model, for traction, start-ups need to be open to the option of a complete detour. Call it Plan B turning to be Plan A; Pivot; or a significant shift. Sometimes it is the only way.

Take Instagram, for example. Before Instagram launched in October 2010, the founders had built a location-based social network called Burbn. It was a very early example of a browser-based mobile app, developed using the then experimental new markup language HTML5. Instagram, based on Burbn, was mostly about mobile phone photos. That feature, uploading photos, turned out to be the most-used feature in Burbn. The location part proved to be a secondary appeal led the founders to the pivot: the creation of an iPhone app exclusively focused on photo-sharing.
And so, a $1 billion acquisition was actually based on Plan B. Instagram co-founder Kevin Systrom explained at Disrupt 2010:
“I’ve heard that Plan A is never the product entrepreneurs actually end up with. I didn’t believe it…in many ways Burbn was getting a bunch of press, but it wasn’t taking off the way we thought it would. We found people loved posting pictures, and that photos the the thing that stuck. Mike, my co-founder, and I, sat down and thought about the one thing that made the product unique and interesting, and photos kept coming up”.

According to Eric Reis in “The Lean Startup”, a pivot is  defined as a “structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth.” Other great examples of successful pivots are flickr, YouTube, Twitter and Paypal. Each of these successful companies started as something else, and successfully shifted.

We were fortunate enough to be part of three start-ups and their pivots. The first one had to switch from a vision of a complex, expensive, and on-premise deployed product, to a lighter, consumer-facing, affordable online product. Six months into the process, the new product is getting real traction with investors and customers, in a way the old product never did. Another founder had to admit that there is no real problem to solve behind its platform, and together we are now defining a direction that is a better fit both for the market and for the entrepreneur’s core strengths. And another start-up brought us to consult on sales infrastructure, only to discover that in order to get there, there needs to be a complete shift in the offering to be able to reach product-market fit. After a product change was made, this start-up is now having for the first time successful discussions with venture capital firms on raising Round A.

These three CEOs showed courage and strength to be able to go through the humbling experience of admitting they were wrong, and seek a new direction, which proved to be successful.

But how do you know if it’s time to pivot? entrepreneur Bernard Moon, recommends you watch for these four signs:
1. You are constantly in a need to educate the market: You may have a great idea, but if you constantly in a need to educate your target audience and trying to create a market, you may be too early, and you should consider a pivot.
2. Your Beta users don’t like your product: Only Steve Jobs can say that focus groups and user feedback are not important. And you are not Steve Jobs. So listen carefully to what your users are saying, or what they are not saying.
3. Investors you meet aren’t buying it: If it’s repeated feedback that your product is not compelling, you should consider a pivot.
4. You’re being everything to everyone: Some startups develop products that are bigger than they should, instead of focusing on one core competency that is a problem solver to a specific market. Going after everyone might confuse your users, and will burn expensive  R&D resources.

Do you balance your vision and execution with flexibility and the ability to listen? check with yourself and with people that know you well.

Have thoughts on how to successful pivot a start-up? we’d love to hear them.