In order to pivot a startup, both management and consumers must have a shared understanding of potential tweaks and changes that could bring a better experience to everyone. There must be a highway where users can communicate with the startup to bring both criticism and encouragement to the team working together to turn this startup into a proper business model. This highway can come in the form of reviews, social media, active user interactions, or another outward-facing interaction that the startup has with its clients. Of course, there will be times when the idea to pivot a startup has to come from within, but listening to your clients is a proven way to understand where your startup is going.
The best way to go about beginning to pivot a startup is to define the parameters within which the pivot will take place. The first step is to identify exactly what pivoting a startup is. According to Hubspot, “a startup pivot occurs when a company shifts its business strategy to accommodate changes in its industry, customer preference, or any other factor that impacts its bottom line.” The purpose of pivoting a startup is to take the information you have gathered and focus it to invent interesting ways to satisfy the feedback you have received from those that have frequented your business.
In an over-simplistic description, it is like answering suggestion cards within reason. You want your customers to be happy, but you also want to balance that with the direction you want to take the company in the future. So, don’t put all your stock in customer feedback, but enough to keep them coming back without any hiccups in the process.
With a potential startup pivot looming, the air can be filled with frustration and uncertainty. But, it can help to look at other startups that pivoted successfully. Examples of this would be PayPal, Groupon, Starbucks, and even giants such as Twitter, Instagram, and Nintendo. Nintendo is famously known for Mario and Donkey Kong, but the reality is that the company existed hundreds of years prior, and is the definition of a successful startup pivot. According to Forbes, they “dabbled in producing everything from playing cards to vacuum cleaners, instant rice, a taxi company, and even a short-stay hotel chain.” They didn’t even begin producing video games and consoles until 1966.
We know that in order to pivot a startup successfully, the company needs to place an importance on customer and internal feedback, as well as industry trends so that executives can guide the startup in the correct direction for its future. But how do they know when to do it? Or how exactly do they attempt to pivot a startup?
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Listening to the experiences of others in your position can be of great help when deciding on a pivot path. Startup.com has a great interview with real professionals about their pivoting experiences. Lots of professionals have a negative view on pivoting, but the truth is much more encouraging than that.
When attempting to pivot a startup, there are some signs that could help you determine if you need to pivot, but as with anything, take them with a grain of salt. These are by no means automatic indicators, but they could alert you so that you can take a deeper look into a pivot.
You think you have a great product, but you aren’t seeing the sales that you predicted at the beginning of the year. There can be many reasons for this, but if you are confident in your ability to understand both industry and consumer, then you can narrow down the issue to a problem with the product. That is not to say that the product as a whole is bust. But maybe certain aspects of the product are causing sales to be stunted. This means you need to look at your product from a bird’s eye view and see if changes are in order.
For new companies to build a relationship with consumers in the industry, there needs to be a certain amount of education being done. If you have a unique new product that no one understands, then you have to educate consumers on why your product is the best. If potential customers simply aren’t understanding why they need your product after serious tries, then it may be time to look at pivoting your startup. There could be some large instances of your product being lost in translation, and that will eliminate any potential relationships you could build with customers.
In the market, you have to prove to customers not only that your product is worthy of their money, but that it will be easier than having to deal with the same old product they are used to having. In other words, you have to reduce their pain to change their habits and routines so that they will see the need in using your product. You want your product to be worth what it will cost your consumer both in terms of money and intangibles to switch to you. If you have a great product, but no one is switching to you, then you need to look at a potential pivot to your startup. This could provide you with just the right edge over your competitors.
So you’ve worked hard enough to get a steady stream of revenue for a couple of years. Your company is trending in the positive, but you don’t think it is getting off the ground quickly enough. It could be due to the lack of potential growth that the industry sees in your startup. If it seems as if you have already hit your ceiling within a short amount of time, then you won’t be getting the attention that you are in search of. If this is the case, pivoting could be a great place to start on the next chapter of your company.
If you find yourself frustrated with how the startup has taken shape over time, it may not have anything to do with the business side of things. Has your perspective changed? Are your goals the same now as they were when you started the company? These are important questions that have to be answered every so often. If you find yourself at a crossroads where you no longer believe in what you are doing or you think that your goals have strayed too much from the company model, then it is definitely time to look into a startup pivoting strategy. The last thing you or the company needs is a lack of shared goals between employees, executives, and the company. Everyone needs to be pulling in the same direction for similar reasons.
If the time comes that you have seen the writing on the wall, and you think it is time to make a pivot with your startup, then you must strike and strike without haste. You may only get one solid opportunity to pivot in the right direction. You must make sure you have done your homework on potential pivots and laid out multiple plans for potential pivots. While there is no mathematical formula to successfully pivot a startup, there are ways to increase your chances of completing a successful pivot of your startup.
When pivoting a startup, the first thing you have to plan for is a drastic change. The point of a pivot is to change your product, services, or strategies enough to make a difference with consumers and the market in general. This may mean changes that you thought you would never have to make. But that’s part of the gig. Of course, you will have a balancing act to play with changes. You want to keep what reputation you have within the industry. So make sure you don’t change so much that no one can recognize you on the other side of the pivot. Reap both the benefits of who you were and who you become.
A pivot in a startup can be a terrifying and overwhelming thought, but you must resist those emotions. The leaders of the company must exude confidence even if they don’t particularly feel confident. Making confident decisions is a vital aspect of a successful startup pivot. Being indecisive or wavering on every decision will not only waste valuable time, but it will leave you terrified to make any sort of decision, and that will end up crippling the company. In the real world, sometimes you make the correct decision and sometimes the wrong decision. If it turns out to be wrong, accept it and try again. Acting without confidence will not only leave your company in a bad place but any partners or angel investors involved will certainly end up questioning your leadership.
A startup pivot will bring about new ideas, organization, and potentially even products. With this comes the need to step back and look at your current staff. Can they handle a change? Is the change leading in a direction where their skills are still applicable? If you find yourself even hesitating on the answer to these questions, you need to at least look into hiring new people to handle the changing landscape that is your startup. Perhaps your pivot has led you into a realm where you only need to reassign employees to other departments. Whatever the case may be, don’t underestimate the need for new blood inside your startup pivot.
The future is what every company in the world tries to align themselves and their product with. While the present is important, it is the future that you are working towards, especially in a startup pivot. So don’t get bogged down so much in what is happening today. It isn’t all that matters. In fact, focusing on the present is probably what forced you to pivot your startup in the first place. This time around, you must have foresight. Look for the trends that are about to happen in your industry and align your company with them. If you are pivoting your startup based on present ideas, then the industry will pass you by before you finish pivoting. Make sure you are thinking about the future with every decision you make. Here is an article giving you real-world examples of companies that saw the future and pivoted accordingly.
Pivoting a startup is a high-risk, high-reward undertaking, but if you aren’t meeting a proper trajectory, then it must be done. It is a terrifying experience to jump into the void without knowing the ending. But it can also give your company the exact jumpstart it needs to bust through the glass ceiling and make a difference in the market.
The biggest asset you have when thinking about a potential pivot is the brains of your company’s leaders. If you trust them, then they will help you figure out where your company could find a niche in the future. Remember, it isn’t about the present, it’s about the future. Take the time to study your own company on the inside, as well as your current leadership and employees. This will give you a better understanding of what direction you can or cannot take when pivoting. Most of all, when deciding to pivot, trust what you know and what you see.
Being decisive once you have determined a plan of action is the best response when taking on a pivot. The longer you sit and wait, the more likely you are to change your mind. Be confident in the trends you see and go for it. You will not regret making a swift decision based on information. You will, however, regret stewing over a decision and being wrong. Take advice from someone you trust, but no one should know your company as you do. In this, you ultimately have the best angle and background to make these decisions.
Once you realize that studying your company and focusing on the future will give you the best option to succeed in a startup pivot, then you will be confident in the decisions you make going forward. You can make it simple for yourself or difficult based on the path you take to your decision. Make sure you are taking the right paths to reach your goals.
About the Author
Jonathan Hung is one of the most active angel investors in Southern California, his mission is to drive value creation within each portfolio company. In support of this mission, he serves as Co-Managing Partner at – Unicorn Venture Partners.
He and his team target investments in US companies that have global market potential with a focus on long-term growth expansion to East Asian markets.
Jonathan developed his investing prowess as a Managing Member for his family office fund, J Heart Ventures, which made investments in start-up companies such as Gyft, ChowNow, Miso Robotics, Clover Health, Bitmain, to name a few startups he funded.
Jonathan has various degrees from the University of Southern California, London School of Economics, Massachusetts Institute of Technology, and The Wharton School at the University of Pennsylvania.