Top Tips to Prepare for Startup Pivots

Winding Startup Path to Success

Do not be embarrassed by your failures, learn from them and start again. –Richard Branson

Failure is an option here. If things are not failing, you are not innovating enough. –Elon Musk

All successful companies make changes to some aspect of their strategies at some point along their paths. Those who don’t, fade out or burn out.

Pivot Examples

Here are a a couple examples of pivots that enabled companies to position themselves for massive success:

  • Groupon began as a crowdfunding website called The Point, which sought to leverage the power of large group consensus and action for social good. The site gave people the opportunity to create campaigns, then let other members pledge to take action. Pledges for action would only be honored when the campaign had reached a “tipping point” of a certain number of pledges. That model didn’t prove lucrative in the activism space, but on the side, the founders created promotions where if enough people decided to do an activity, they would unlock a discount.  This side project quickly eclipsed the main business in the activism space, while still aligning with the company’s mission: “To connect local commerce, increasing consumer buying power while driving more business to local merchants through price and discovery,” so the company’s founders pivoted to a similar need but with a different solution, applying the same principle to deals instead of activism.  
  • Instagram The successful photo-sharing application began as a check-in app, similar to FourSquare, that included gaming elements from Mafia Wars with a photo sharing feature as one of many, many features.  The app was too complicated, though, and not terribly successful.  The team used analytics to determine that users weren’t using the check-in features at all, but what they were using was the app’s photo-sharing features.  They stripped down all the features to make Instagram into what is now the most widely used photo application.  This pivot allowed them to maintain their mission of “capturing the world’s moments,” maintaining the same customers, while adjusting the specific benefits and features that address those customer needs.
  • Twitter The mega-successful micro-blogging platform was born as a side project by the makers of Odeo, a podcasting platform that never hit its stride due to competition from iTunes. Once the realization hit that Odeo was not going to make it, founders dug into another idea that emerged from hackathons they’d been holding to find new sources of success: a social networking/media platform where user posts could only contain as many characters as a text (SMS) message.  They could achieve this pivot through maintaining sight of their mission “to give everyone the power to create and share ideas and information instantly, without barriers” which still gave them the flexibility to adjust the specifics of the platform that could enable that idea sharing.

Pivoting means small adjustments based on feedback, not throwing out the idea entirely

Pivoting is NOT a complete change in direction or abandonment of a product or business model. Typically, pivots are small and happen within the confines of one part of the business. The examples above might seem drastic, but each are small: a feature, a customer focus, a definition of the benefit.  Startups may pivot in any area of the business, from shifting which market segment they approach with an existing product, to changing up their sales strategy, to moving in a direction that sets them apart from competitors by highlighting and focusing on their differentiators.

Every startup (and really every company) has to be prepared to change course at some point, or risk becoming irrelevant. How difficult that course change is comes down to whether the company has built the agility to do so into its foundation. So, how can a company do that?

Start with a Mission Statement and North Star Vision

Your company’s “what” and your “how” may need to shift when you pivot, but your “why” should be constant and consistent. Make sure there is a strong “why” behind what your company makes, offers, or enables. This allows you to return to that vision when market demands are pulling you in different directions. And it helps inform the decisions you make about which of those directions to go in.

People don’t buy what you do.  They buy why you do it.  –Simon Sinek

A strong “why” is your guide. Not every opportunity is going to fit with your vision. When you are focusing on your “why”, not the “what” or the “how,” you are focusing on the thing that’s underpinning what you do. You’re letting that inform the logistics.

Something might seem like an amazing opportunity, but it goes completely against your vision and would take you in a direction that overhauls your why. Whereas another pivot opportunity fits perfectly with your why and can facilitate the breakthrough you need. If you keep your vision in mind at all times, you’ll be able to make the right choice in that scenario.

A good mission statement will help you achieve this.  Ensure it is specific enough to allow direction, but also not so vague that any type of company could achieve the mission. Spend some time crafting one that reflects your company’s and team’s goals.  Your mission statement is the reason your company exists, is the root of your team’s motivation, and will ensure that you have consistent decisions that get everyone moving in the right direction. This statement should reflect that, and can be referred back to as you receive feedback that may require pivoting.

Some examples of great mission statements include:

  • Google: “To organize the world’s information and make it universally accessible and useful.”
  • Nike: “To bring inspiration and innovation to every athlete in the world.”
  • Make a Wish Foundation: “To bring inspiration and innovation to every athlete in the world.”

In looking at the history of PayPal, you’ll see that they retained their vision while pivoting to a more lucrative and expansive product and delivery model. The company started out making a cryptography software that also facilitated the exchange of money using Palm Pilots. The technology didn’t work all that well and had a very limited target audience (plus Palm Pilots would go on to lose steam and a lot of market share in the coming years), so it wasn’t a good model for success. But the vision of making one-to-one online payments on the consumer level and beyond remained strong among the leadership, allowing the company to pivot and focus all its energies on those transactions.

Focus on the problem, not the solution

Remember that every successful and sustainable business solves a problem (or multiple problems in some cases). Fancy solutions to non-existent issues may captivate consumers for a while, but that’s not enough to keep the business afloat once the novelty wears off and the “solution” is revealed to be unnecessary.

Perhaps no recent spectacularly failed startup proves this better than Juicero. The company sought to capitalize on the growing juicing trend with an internet-connected, $400 machine that squeezed juice from its proprietary diced fruit and vegetable pouches. Over the course of 4 funding rounds, they received $118.5 million from various investors. Earlier this year, Bloomberg revealed that the juice could actually be hand-squeezed, meaning the expensive machine at the core of Juicero’s business was useless, which left a bad taste in the mouths of consumers and some investors alike. The company has since announced it’s shutting down.

Had Juicero stayed problem-focused, they might have realized that their contraption didn’t actually solve a problem. Maybe they could’ve dialed down the bells and whistles and sold the machine at a lower rate, or maybe they could’ve shifted their business model, value proposition, marketing. They may have been able to sell their proprietary pouches on a subscription basis, had the machine not been so pricey and so central to their offering. Or they could’ve tackled the problem that making fresh juice is messy, time-consuming, and cumbersome in any number of other ways.

Now let’s look at Facebook, which was initially envisioned as a dating site and quickly realized that with the proliferation of other dating sites it wasn’t really solving a problem in the best way possible. Mark Zuckerberg and his cofounders refocused on a different kind of connection: making campus “face books” digital and helping people stay in touch in an increasingly web-based world. That’s where the company found its niche.

When you focus on problems, you build the flexibility necessary to determine how best to solve whatever need you observe in the marketplace. You make it possible to change up your tactics and strategy without huge mindset adjustments. You stay on your toes (which, in a very real, physical sense, is the only way to pivot).

Make plans, then test them

In the absence of outside influence, startups run the risk of becoming vacuums and echo chambers. When the only people you’re bouncing ideas off of are your small startup team — who all eat and breathe the same business model and path — you’re in dangerous territory. It’s critical to know what’s going on in the market you’re hoping to enter.

It’s not a bad idea to send out surveys or questionnaires to better suss out what consumers’ real feelings and needs are around your product or service. Focus groups, market research, knowing as much about your potential consumers and the problems they desperately want solved can only inform you and push you in the direction of pivots that bring you success.

But, make sure you have mentors read over any surveys or interview outlines before you unleash questions on the public. You need to be sure that you are asking the right questions, looking for the right info. You have to be in information-seeking mode, instead of validation mode. Remember that the purpose of soliciting feedback should be to gain real insights into how people view your product or idea, not to reinforce your own convictions. You need to be open to responses you may not like. And you need to frame your inquiry in a way that gives respondents room to be honest, instead of just telling you what you want to hear.

Remember that the whole point of gathering data is to learn from it. So when you launch your surveys or A/B test something, really study the results of your test or the challenge you set forth. Don’t be dismissive of what the data is telling you, don’t try to write it off or get defensive about it. Cultivate a mindset that is open to feedback and challenges, and prizes constant learning and fast iteration based on new knowledge.  Recognize that hearing difficult feedback early is much more valuable than hearing it later.

You also must know what your big milestones are and when to reasonably expect them. For instance, how many people have to love your app or service before you can confidently say it’s viable and worth targeting others? How quickly must you secure those customers in order to prove that your model for growth and scaling is feasible? How many of your customers do you have to successfully upsell in order to make the consistent revenue you need to be profitable? Focus on answering these and other questions and be ready to change up your approach if the answers are different from what you thought they’d be.

Pivoting is never easy, but if your startup stays agile, open-minded, true to its vision, and problem-focused, you can remain resilient and successful through the challenges.

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