6 Things You Need to Pivot Successfully

Pivot. We’re all familiar with the word — and many people now roll their eyes when they hear it. The word has been bastardized, overused, and taken out of context. But it doesn’t mean pivots aren’t important. Dont hate the word, hate the people that use it incorrectly and ignore its importance.

Pivot. Say it with me. Pivot. Pivot. Pivot.

Recently, I did a presentation on pivoting: what it means, why it’s important, and how to do it properly. In preparing the presentation, I came up with a definition that speaks to the core of pivoting:

A pivot is a shift in one aspect of your startup’s focus based on validated learning.

(Others of course have defined pivots before this, but this is how I described it.)

I’ve included the presentation as a Slideshare deck. Below that, I’ve shared some additional details on the 6 things you need to pivot successfully.

And yes, I hype the book, Lean Analytics — it’s coming out March 8th, and we’re hoping people will pre-order copies ASAP!

You can do so here: http://leananalyticsbook.com/buy-lean-analytics-book/

On to pivoting. So what do you need to at least try and pivot successfully?

  1. Big vision. Without a big vision — without knowing where you want to go and why you’re doing things — you simply can’t weave your way there. Without a big vision, you’re weaving (or pivoting!) aimlessly. Lean startup can help you achieve your big vision but it can’t create or define it for you.
  2. A deep understanding of the problem. Most entrepreneurs I speak with genuinely don’t understand the problem they’re trying to solve whether or not it’s worth solving. They haven’t dug into the problem enough. Or they’re trying to solve a universal truth. If you don’t understand the problems at their core, you can’t figure out how to pivot properly.
  3. Validated learning. A pivot without actual learning is basically a “lazy pivot”. You’re deciding — on a whim, with no real evidence — that you should go do something else. And usually that lack of learning means you pivot somewhere half-ass, ending up at about the same point in your startup’s progress as you were before (not very far!)
  4. Actual (falsifiable) hypotheses. Validated learning isn’t enough. You need falsifiable hypotheses that you can test against, otherwise it’s very difficult to know if your pivot is going well or not.
  5. Metrics and lines in the sand. A big part of Lean Analytics is our discussion of what to track and what to compare yourself against. You need to know your One Metric That Matters and ideally you’ve got a targetin mind. If you miss the target, you re-evaluate; if you hit that target, you have the confidence (and data) to move on to the next step.
  6. A passion for the pivot. Entrepreneurs live on passion. Without it, you’ll fail, it’s as simple as that. There’s nothing in Lean Startup or Lean Analytics that says you can automatically follow a process and win. You need passion and guts. So even if you have everything else ready to go for your pivot, if you don’t actually care about where you’re pivoting to, it won’t work.

I don’t have a problem with the word pivot. It means something important to me (and to many others) and shouldn’t be taken lightly. And when you see companies successfully pivot, the results are amazing. In the book we have a number of examples of companies that successfully pivoted.

  • Backupify started as a B2C company offering consumers cloud-based digital storage. The company realized it was paying $243 to acquire a customer that only paid $39/year. The economics didn’t make sense. Backupify pivoted to providing (essentially) the same service to businesses. The company is now growing successfully, and has a Customer Lifetime Value (CLV) that’s 5-6x its Customer Acquisition Cost (CAC). That’s a fantastic ratio! (Typically in a SaaS business you’ll want to aim for 3x.)
  • Parsely also started as a B2C company, providing a reading tool to consumers to help them find content they’d like. It had thousands of users, but not enough revenue. Parsely pivoted to a content suggestion tool for publishers, and then pivoted again to offer publishers analytics tools.
  • Circle of Moms was originally called Circle of Friends. By leveraging the Facebook platform back in 2008, it grew its user base to 10 million. Except engagement was terrible. Mike Greenfield (one of the founders) did some exploratory analysis on the company’s data and discovered that moms were incredibly engaged users (in stark contrast to most others.) The company pivoted to focus on moms, and a few years later exited to Sugar, Inc.

Pivots aren’t “get out of startup failure free cards”, far from it. They lead to more intensity, more decisions, more uncertainty, and more hard work. But if you’ve decided it’s not time to quit, but time to pivot then do it properly and go for it.

January 27, 2013 Posted in Lean Startup by

  • Teresa Torres

    Great post. Very clearly outlines how to think about a pivot. I’m looking forward to the book.

  • http://www.instigatorblog.com/ Benjamin Yoskovitz

    Thanks Teresa. Appreciate your comment — the book is almost ready!

  • http://www.markevans.ca/ Mark Evans

    Another good post, Ben. I’m now working with a startup in the midst of doing a pivot. There are other important considerations:
    1. Convincing your investors that the new direction has more potential than the old one, and then explain why. They need to buy in, otherwise you’re fighting a losing battle.
    2. While it’s important to commit yourself to the new direction, it is a mistake to abandon original customers who used or bought the product/service. Taking care of them, at least for the short-term, is a key way to build goodwill.

    Mark

  • http://www.instigatorblog.com/ Benjamin Yoskovitz

    Very good points. When I gave the presentation someone asked me about #1 — how do you convince investors of what you’re doing. It’s hard and complicated. There’s no easy answer to that. My suggestions:

    1. Make sure you control the board.

    2. Have proof of some kind that the pivot is a better move than the status quo. Change how you do things (get validated learning / proof / traction / metrics); good investors will see not only the pivot but the changes you’ve made to get there and buy-in.

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  • dbenoni

    Great post. Going through one right now and this post is to the point. Just like the book…!

  • http://startupjon.blogspot.com/ Jon Skulemowski

    I’ve found that a lot of projects are either completely horrified about the idea of pivoting or just do so too easily. I think you’ve found a great happy medium with your list of outlines that is specific enough to apply to any project looking to switch gears. Personally, I’ve seen people go down with the ship as easily as people waffling like crazy all over the board. I can’t tell which is worse!

  • http://www.instigatorblog.com/ Benjamin Yoskovitz

    Thanks for the comment Jon. Sometimes you have to go down with the ship, it’s part of the experience. There may be nowhere else to pivot. I’ve had that experience, it’s awful, but you do learn from it. I’d rather get the failing over with, come out as best as possible, and try again, than waffle along forever.

  • http://startupjon.blogspot.com/ Jon Skulemowski

    Fail forward!

  • http://www.microsourcing.com/ MicroSourcing

    It’s a great concept for startups that are struggling in one area of their business. Validated learning plays a big role in it so that the startup doesn’t make the same mistakes over and over.

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  • http://www.kgaction.com/ Mary Kaplan

    It’s so true that every company is trying to solve some problem. If the company’s leaders don’t really understand what that problem is, then it probably won’t attract many customers. If a company comes to the conclusion that they aren’t sure of the problem or aren’t solving it, then a reframing is required, which seems to be the same as a pivot! Interesting and relevant post!

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  • http://www.frivmini.com/ friv

    Very impressive article. I have read each and every point and found it very interesting. I need it

  • http://www.yepiclip.com/ yepi

    Great post and insight Ben.You are one of the most creative thinkers I know

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  • http://www.frivmini.com/ friv

    Very useful and supportive article. I wish I can do all of that in a short period of time.

  • Jessica’sPianoStudio

    I think it’s hard for a startup to evaluate the plan based on metrics. We try to touch base with our loyal customers as we make decisions to find out if they value the changes we are making.

  • http://www.instigatorblog.com/ Benjamin Yoskovitz

    Jessica – I would say that metrics should be at the core of how you operate any business, to really understand what’s going on and help you identify areas that you need to investigate further. Using analytics doesn’t stop you from talking to customers, though, quite the opposite. It will most likely guide what you ask them and how you engage with them.

    Plus there’s a ton of qualitative data that you get from speaking with customers (it’s not just about hard numbers).

  • http://www.minecraftgames.co/ Minecraft Games

    Very useful and supportive article. I wish I can do all of that in a short period of time.

  • Sarah Browski

    Good article. The effective strategy to build up a risk management firm is to be identified with the help of professional experts. The article clearly explains about a pivot.

  • http://www.friv2friv3friv4.com/ friv 2 friv 3 friv 4

    Thanks for the comment Jon. Sometimes you have to go down with the ship,
    it’s part of the experience. There may be nowhere else to pivot. I’ve
    had that experience, it’s awful, but you do learn from it.

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Ben Yoskovitz
I'm VP Product at GoInstant (acq. by Salesforce).

I'm also a Founding Partner at Year One Labs, an early stage accelerator in Montreal. Previously I founded Standout Jobs (and sold it).

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