If you need to pivot, pivot hard

Managing Business Models

Left or right?

For many startups, there comes a time when it becomes clear that things are not going exactly as you planned. You can read the writing on the wall that you haven’t found a product-market fit, and you’ve run out of ideas on how to get there.

Typically, if you don’t see signs of traction after six to nine months with a SaaS or e-commerce model, it’s time to reassess your market or model (note: a marketplace-based business often requires a longer time table). And if it’s time to pivot, I have one piece of advice: pivot hard.

Too often, I see pivoting startups try to keep too many elements of their original business. This is to be expected. After all, founders invest untold time and energy into building a product and team. It can be downright heartbreaking to feel like you’re throwing it all away.

However, once you’ve decided to pivot, it’s time to forget about your existing business and have laser-like focus on the new opportunity. Don’t let history cloud your thinking about your future business. It’s time to ask yourself the following questions:

1. What opportunities should I be pursuing independent of all the assets (product, customers, teams) already built-up from the current business model? Explore your new opportunity with a fresh set of eyes: if you were starting up today as a new founder, what would you want your new business and business model to be?

2. What should the new product look like independent of what’s already been built? Don’t try to derive a new product based on trying to salvage your current code base. First think about what you need for your new product, then (and only then) look at what code can be reused.

3. What should the future team look like? Consider what roles, skills, personalities, and expertise you’ll need for the new business model. All hiring decisions should be based on the positions you’re trying to fill now, rather than trying to piece together how your current team members can fit into the new venture.

4. What financing do I need to execute on the opportunity? It’s critical to take a realistic look at how much you’ll need for the new opportunity, rather than thinking of what money is available. Underfunded startups can’t and won’t execute and you shouldn’t move forward if you don’t have a plan for sufficient funding and a long enough runway.

Course changes happen all the time and can lead to brilliant things. But when pivoting, you need to completely separate your old and new businesses. Approach your pivot as if it were a completely new startup. Then see which pieces of your current setup (people, product, etc.) can potentially help you accelerate the new opportunity.

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

    Good post. In working with a startup recently that did a hard pivot, one of the difficult decisions is what to do with the old product that still has customers but little traction. For some startups, the old business still generates revenue, which they like to make the transition to the new business easier financially. The downside is keeping the old (even if it is shunted to the sidelines) can be distracting and consume valuable resources.

  • http://twitter.com/bwertz Boris Wertz

    If the old business still generates significant amount of revenue and maintenance is minimal, I would definitely keep it going. If revenue is low and maintenance high, kill it. But in practice, this is definitely one of the harder questions to answer.

  • http://twitter.com/bwertz Boris Wertz

    Some good examples of startups having pulled off a hard pivot: http://techcrunch.com/2012/10/07/reinvention-and-re-rolling-the-dice/

  • http://twitter.com/PrimeObjects Gary Zhang

    very good point. pivot the product design is another similar case. What if the business model and market are still right, but the product architecture or UI need to be redesigned? It is always a hard decision.

  • http://www.facebook.com/coachdavender Davender Gupta

    What makes entrepreneurs fear a hard pivot is that they may have to jettison some members of the founding team. The desire to keep people happy may outweigh the logic of making the shift. In particular, a startup’s initial idea comes from the “hacker” in the team, and if the new direction is not something the “hacker” is comfortable with, and quits, then the startup dies.

  • http://twitter.com/gregvermeulen GregVermeulen

    This article needs a 5th question: what does the transition plan look like?

    It’s not enough to know you want to get to another place, you also need to consider how to get there, and what you bring with, or leave behind. ‘pivot’ is just another over-used word by entrepreneurs who can’t admit they make mistakes. To ‘pivot’ really means learning from mistakes, and trying something new. Whether you pivot ‘hard’ or ‘soft’ is irrelevant, what matters is that you learn something, apply your lesson, and succeed in the end, ie. transition correctly.

  • http://twitter.com/bwertz Boris Wertz

    very good point

  • http://twitter.com/bwertz Boris Wertz

    agreed – pivot needs to incorporate what you learned from the old business

  • http://twitter.com/curiousoffice curiousoffice

    Do you ever find yourself in discussions around the idea that you have no new “good” pivot ideas but still a lot of money in the bank? When does it ever make sense to just return capital to the investors? I’m surprised we don’t see that discusion happen more often. Seems like a big elephant in the room a lot of times. I don’t equate it with quitting if it looks like the logically wise choice if the pivot concept just really isn’t all that great. I realize I’m in the minority on this one but I see a lot of forced pivot ideas out there.

  • http://twitter.com/bwertz Boris Wertz

    To return the money to investors is probably one of the toughest decision an entrepreneur can make b/c it feels like complete failure. But agree with you that this always should be one option on the table and might be the best outcome for everybody involved.

  • http://twitter.com/curiousoffice curiousoffice

    Good thoughts and I agree. Glad you wrote this post. It’s a contrarian view I think and I believe it is a good stance to take around pivots in general.

  • http://BestSellerAuthors.com/ Warren Whitlock

    If you pivot hard enough, is there so little left that you are starting over

  • http://www.shaiberger.com Shai Berger

    I believe that when Evan Williams shut down Odeo to start Twitter, he returned the money to investors. (Or maybe he “bought it from the investors” which is similar.)

  • http://twitter.com/bwertz Boris Wertz

    You’re correct – that was the case.