Most startups begin with an initial idea or concept, but over time, realize that for whatever reason, they need to pivot their business model as they learn more about their customers and the market.
There are many reasons why startups pivot their business model.
One of the main reasons is that the initial idea or concept may not be viable in the market. Startups may discover that their initial product or service is not in demand or that the TAM is not as large as they thought. In these cases, pivoting the business model allows the startup to focus on a different market or offer a different product/ service that might be more in demand or have a better market fit.
The fewer cooks in the kitchen the better
When a large company or a more advanced startup with many investors wants to pivot, the time it takes to actually create that change can be fraught with obstacles -meeting after meeting, and a whole host of reasons that can inevitably sink the company before they even make that dreaded pivot.
However, you may pull the trigger when it’s you, a co-founder, and perhaps a couple of more folks on the team. You listen to your early adopters, see what works, and what doesn’t, and move accordingly. Don’t fall in love with any one idea, the only idea you should fall in love with is a paying customer!
The tech landscape changes faster than the weather on top of Everest.
The only certainty is change!
Startups that are able to adapt and pivot their business model to take advantage of new opportunities are more likely to succeed. For example, many startups that were initially focused on the physical retail market pivoted to e-commerce when the COVID-19 pandemic hit and the demand for online shopping increased.
Here are 5 pivot examples:
Slack - It began with Stewart Butterfield’s company Tiny Speck developing a game called Glitch, a game that was returned to beta after an unsuccessful launch and ultimately rejected. The pivot came when he realized the communication platform that the company had been using between its US and Canada offices was the real opportunity. This was how Slack was born.
Youtube - Originally a dating site, where users could upload videos of themselves talking about what they wanted in a partner. Eventually, the founders decided to pivot the platform (since it didn’t resonate with users) and allow it to host any kind of video. That’s how Youtube was born.
Twitter - When Twitter was initially founded by Evan Williams in 2005, it was named Odeo. It was originally a platform for finding and subscribing to podcasts, however, Apple’s iTunes was the big dog in this space and Jack Dorsey suggested they pivot to a microblogging platform. That’s how Twitter was born.
Netflix - Netflix started as a mail-order DVD rental website, competing with video rental stores that were on their way out of popularity. But, as the capabilities of digital content began to grow at a massive rate, Netflix chose to pivot from its mail-order model to begin offering shows and movies on its website. That’s how Netflix was born.
Shopify - Originally called Snowdevil, it was an e-commerce site for snowboarding equipment. Unfortunately, the site didn’t see much success. The team decided to rebrand not as a store in and of itself, but as a way for other online retailers to sell via their platform. That’s how Shopify was born.
How will I know when it’s time?
Well, it’s hard to pinpoint exactly how and when, it will vary wildly based on the product or service that you are offering - your burn rate, run rate, and other things.
Ultimately if whatever it is that you’re selling is not resonating with clients or customers, it’s time to give it a ponder. Talk to your team, talk to your customers, look at the market, and make an honest analysis of what you think needs to change.
I too have seen the power of pivoting in the past as I pivoted back when I had my CPG Company. We went from Beyond Neutral (a 16oz alkaline-forming juice) to ShotCo. (a line of wellness shots) and immediately we saw a massive uptick in interest via social media and ultimately from our customers which translated into sales!!!
Currently, I’m going through a similar yet less drastic form of a pivot working on Wilder which I’m very excited about and will reveal in the near future.
Enjoying The Content?
The Honest Founders Journal is a transparent account of my journey as a founder but also personal insights and common misconceptions about what it’s like to be a startup founder and some best-case practices & lessons.
I love the metaphor of Mount Everest, especially since I've always seen building a startup as a discovery expedition. We know the direction, we see the peak, but we just can't know the right pathway. That's the nature of trailblazing.