To Pivot or Not to Pivot

Pivots are part of many successful startup stories, but there’s no clear playbook on how to make them work. There should be no shame in pivoting, despite what many founders think, but they need to be well thought out before burning the boats.

Instead of a clear answer, here are some questions to ask before you change your company’s direction:

?? Will the team support the change and do they have gas left in the tank?

??? Does evidence support this pivot?

?? Can you reuse big chunks of what you’ve built?

?? Is your desire to build a company overriding the “what” you’re building??

?? Are you willing to make the hard choices?

Lenny Rachitsky wrote a great post identifying two kinds of pivots:

1) Ideation pivots typically happen within the first year of a startup’s existence and involve massive changes in the business. For example, Brex switched from a VR headset to a business credit card.

2) Hard Pivots, which involve doubling down on a feature of a product that is working, typically after a year or two of work on the business. An example might be Notion simplifying its no-code website building suite to a single collaboration tool.

There are many good reasons to pivot! Sometimes, unpredictable macro news changed the dynamics of the industry from tailwinds to headwinds. Maybe a Big Tech platform changed its algorithm or spending in a category completely stopped, and thus, you have to re-focus the business. In the best cases, demands from the market change your path. In any case, founders should pivot when evidence, not just vibes or irrational exuberance, takes hold. Whichever kind of pivot you embark on, consider these questions ...

?? Does the team still trust you?

A pivot is an admission to your team that your initial vision was off. Some folks left higher-paying roles to join you. Founders are often most concerned about selling their VCs on the shift, but the more significant challenge is keeping your team’s energy, morale, and focus up. (And don’t forget to manage your own mental state which can often be the hardest part.) VCs rarely ask for their money back, but your team will almost certainly start thinking about their next gig or at least taking recruiter calls more seriously.?

If your team is small – like the founders and 2-3 people you know well – you might get to pivot twice or make one big change. Once you’re past 10 people, a single pivot is likely all you can afford financially and reputation-wise.?Whether the pivot is clear or a bit vague, you need to be prepared to give your team direction. Whether it is to build the new boat or swim to shore to gather materials.

??? Does evidence support this pivot?

Pivots, especially hard pivots, work best when they seem obvious. Their logic becomes apparent when you can’t get the new idea out of your head. For instance, you may start building a horizontal service that catches fire with a specific vertical and suddenly see opportunities to specialize.?

This was the case of our portfolio company, Broadlume, a Cyncly company , which started as an SMB AdTech platform before deciding to focus on the flooring industry and become the “HubSpot of Hardwood.” It was a hard decision at the time, and not without risk, but it paid off.

Shopify is an example of a startup that went in the opposite direction. They started selling snowboards before seeing the opportunity to build a generalized platform for e-commerce.

The best way to ensure the team is behind a change is by helping them see it in the data. They may not like the new direction, but even the most skeptical should be able to understand the justification. Founders can celebrate the journey traveled and have a frank discussion about the lessons learned. In many cases, those are valuable lessons for V2.

?? Can you reuse big chunks of what you’ve built?

The emotional and financial cost of pivoting can leave the team feeling depleted. This sense of exhaustion around the team can be hard to overcome, especially if there have been weeks or months of late nights and weekends around the previous goal.

Even if your team sticks around, you now have the challenge of hitting a fundable milestone before your capital runs out. You must quickly gather market evidence that the new hypothesis has legs. This leap of faith is a big ask, but it’s a lighter lift if the pivot uses prior work.

Pivots in the first months of a startup are common and almost expected. However, if you’ve been operating for a year or more and can’t reuse the majority of what you’ve built, it might make the most sense to shut down. If you gave away 15-20% of your equity for what is now essentially sunk costs, the math might not make sense anymore.??

?? Is your desire to build a company overriding “what” you’re building??

Are you simply trading new problems for old ones? All businesses are hard, but it’s important to ask if there has been a genuine “Aha” moment motivating this pivot. Or is it really more of a desire not to admit defeat??

You should also revisit customer discovery and TAM from an objective perspective. You may have spent months (years?) validating the initial business, but don’t forget the bottoms-up analysis just because you’re in a hurry.

It’s important to validate the business before committing to the pivot. Speak to trusted investors or advisors to temperature-check and test your thinking. And don’t forget to trust your gut. Sometimes, V1 of the business leads you to get a sixth-sense about a new opportunity—bring those hunches to knowledgeable folks in the industry to validate.

?? Are you ready to make the hard choices?

Can you let veteran team members go because you’re pivoting from a consumer app to B2B SaaS? Do you still need all 20 people you recruited to build the first business when you have much less evidence the second will work? Pivoting is complex, and the later in the company’s life cycle it happens, the harder it gets. Still, pivoting requires making hard decisions.

Pivots are tricky and come with trade-offs. While fighting for your original vision is tempting, you owe it to your team—and yourself—to be strategic. Keep asking the tough questions, and don’t let desperation drive your decisions. But once you've made the hard choice, turn the ship hard and don't look back!