What is Pivoting?
Startups or early-stage companies are precarious ventures that can tumble to both the extremes. The company or business can be well-received and become highly successful; however, there is an equal probability of the idea getting rejected instantly and failing. This is where pivoting comes into play!
Pivoting is the process of turning a startup around. When a startup meets a roadblock, pivoting helps to overcome it and take the company across the obstacle.
In most cases, pivoting is considered to be the process of changing the whole company drastically, but it is not always the case. It is also possible that the founders identify a specific challenge or problem area and revamp the troubling aspect alone. This also amounts to pivoting and can bring favorable outcomes.
For instance, if a specific feature of a product is doing well and others are not, the startup can pivot and convert the function that is doing well into a completely new product. The vice versa also holds; an entire product can also be converted into one of the highlights of a larger suite of products.
Pivoting can also include a significant change in the target market or the target audience if the product is not doing well in a particular market segment, or the company may consider pivoting the business model or the revenue model if the current one does not seem to bring the required traction.
Overall, pivoting holds the capacity to change the fate of a dooming startup. However, it is critical to understand that pivoting is not a magic potion that will always lead to success. The founders must analyze the circumstances, give it considerable thought and planning, and pivot only when necessary. Pivoting must be the last alternative when all other resources and alternatives have been explored and exhausted.
The Epitome of Pivoting: Slack
One of the most outstanding examples of Pivoting is the pivoting of Glitch to Slack by the founder Stewart Butterfield. Stewart is a master of pivoting who turned around one online video game into the successful Flickr and another failing video game into Slack. He is the perfect example of converting failed attempts to successful unicorns.
Glitch was launched as an online multiplayer video game with high hopes; however, the concept did not go well with the users. Most of the users found the game complicated, weird, strange, and never-ending.
Stewart accepted the feedback that the online game will not work and grow and decided to shut down the company. However, he did not miss the opportunity that the game had already built a strong close-connected community through its inbuilt chat feature.
This is where Stewart used his pivoting skills and plucked the internal chat feature from the whole suite, and formed an entirely new company around it. This is how Slack was born out of Glitch. The founder worked on the foundation of a single scalable feature, added new features like file-sharing and searching the message database, and pivoted from online video game to a B2B workflow tool.
Slack is now an established multi-billion dollar group communication tool for corporate teams and has become way more popular than traditional IM tools used in the workplace. It is a textbook example of pivoting a single attribute of a product into a whole new product.
We are talking about a startup that had $5M left in the bank of over $18M raised with no foreseeable future. Stewart laid off most all of the employees and approached his investors with a stark truth, which is his game company was not going to work out.
But he also recognized that he and his team had created something of value amidst the missed opportunity of the game. And from the ashes arose a company that has gone on to be one of the most notable unicorn startups of the past 10+ years.
To be clear, this is an astounding story and one that won’t easily be recreated, but it clearly paints the picture that when building a startup initial assumptions will be tested and the results could really challenge you to redirect the business to where opportunity appears to be.
Why is Pivoting Important?
Startups do not always meet the fate as envisioned by the founders. How the company looks on paper may be entirely different from how it turns out in the practical world. Many startups meet several roadblocks on their way and struggle for survival.
However, giving up and letting go is not the only way to deal with it. It is highly probable that a particular segment, feature, or division of the startup does well while others do not. Moreover, it is also possible that the founders observe a change in their own vision after the product or the company becomes operational and receives feedback from the users.
At this juncture, pivoting becomes essential to turn the company around. When all the current strategies and options have been exhausted to make the startup work, or when the progress is too slow or plateaued, pivoting is an excellent mechanism to steer the direction of the startup towards something more productive and more plausibly successful.
How to do it Right
The most critical aspect of doing pivoting right is the timing. The founders must neither be too quick in deciding to pivot, nor should they be too delayed. All the possible options and strategies must be explored, but when they are exhausted, pivoting must be done as quickly as possible before more damage is done.
Pivoting right involves a lot of patience, conviction, and level-headedness from the founders. They must identify their strengths and weaknesses and learn from them while creating new solutions. They must be ready to let go of the original ideas, understand that the old vision failed and move on!
Also, the founders must form a new vision and align their new short-term and long-term goals with the new strategies. The bottom line is to be convinced of the new approach wholeheartedly and then persuade others, including the users, investors, and staff.
The most significant aspect of pivoting right is to learn from the past mistakes. There is no point of pivoting if the same drawbacks are going to be repeated, right? The founders must send out feelers into their target market, get surveys and feedback, devise new solutions and paths, and pivot accordingly. The bottom line is to not run into the same or similar roadblocks as before. The best founders know how to continually pivot or evolve to meet real market needs and generate value for the end-user and company in the process.
Don’t be afraid of the pivot, lean into it. And if you are an investor patience is key here. Turnarounds don’t happen overnight but resetting, reformatting and readjusting for long term success are events that occur in a startup more often than not. The Slack investors have been rewarded handsomely and so can you.