Becoming a successful entrepreneur requires many skills, including the ability to make critical decisions when the need arises. Every startup is launched with a certain goal in mind. However, due to factors beyond control, the goal may have to be tweaked in order for the startup to survive. This is where an entrepreneur’s decision-making skills are put to the test. A ‘pivot’ may seem like a bold step to take, but quite often it is the landmark moment that can truly help a startup establish itself.
Pivoting In Its Many Forms
There can be a number of reasons why a startup is failing to achieve its promised potential. No matter what the reason, the decision to pivot primarily aims to lead the startup in a direction which promises a greater degree of success.
Depending upon the root cause, there are various types of pivots that can be enforced. From considering customer’s needs, to keeping up with competing technology, pivoting is more than just a tool for survival; it can give a startup an edge that helps it break the glass ceiling.
Few people remember that YouTube actually began as “Tune In Hook Up”, a video dating site. The site never really caught on and the three founders had no qualms about moving away from the ‘online video dating’ model. While building on the existing technology already in place, the subsequent pivot saw the startup turn itself into YouTube. In 2005, the video sharing website became rapidly popular within months of launching and turned into one of Silicon Valley’s biggest success stories.
Indian startup Voylla also had to pivot in order to grow, but unlike YouTube, they did not have to make a major change in their business plan. Voylla started off as online retailers for women’s apparel, jewellery, and accessories. After securing funding from angel investors, Voylla pivoted to solely concentrate on jewellery and accessories.
By getting rid of the apparel section, Voylla streamlined itself to focus on the part of their business that brought in the vast majority of their customers. By contrast, Amazon expanded beyond books to become a full-fledged online retailer; a move designed partly in response to customer demand. There are a number of ways in which an entrepreneur can pivot a startup. The key lies in realizing when the right moment is and to pivot before it’s too late.
“There’s a time for all things.” – William Shakespeare, The Comedy of Errors
When it comes to pivoting, timing is crucial. Startups are constantly facing off against each other to secure funding and, with capital at a premium, a startup needs to pivot well before the funding dries up. For YouTube and Voylla, pivoting actually helped them attract more investors. A smart entrepreneur will always be on the lookout for signs that indicate the need for a pivot.
The most obvious sign is the unwillingness of customers or investors to buy into what your startup is offering; there isn’t a better time to contemplate a pivot. Beta testing is crucial for many startups and the feedback received can act as a catalyst for a pivot. If the initial feedback is not good and no viable solution is in sight, pivoting the startup is a better option than to continue on the present trajectory. While pivoting may seem like a bailout, it is definitely more preferable than crashing and burning. The same goes for startups that have overreached too early and are constantly having to educate consumers and investors.
Live To Fight Another Day
Lean startup pioneer Eric Ries defines a pivot as a change of direction, rather than a complete change in vision. In its early days, ‘pivot’ was a bit of a dirty word; if your startup was pivoting, you were seen as someone who had failed to achieve your original goals. However, pivoting has become much more common in the present day and entrepreneurs realize that a pivot is far more effective and efficient than going down a different path altogether. Consider the example of ThePoint.com and its pivot spin-off, Groupon.
Although ThePoint was drawing users, monetizing a site where people got together for causes was proving to be difficult. However, one of its subsets was doing very well: group buying. A pivot to focus on that subset resulted in Groupon, one of the most successful startup stories (at least for a time). The simple fact is that a pivot is nothing more than adapting and evolving your business in order to survive. Facebook is one of the rare examples where a startup didn’t have to pivot at all and sadly, not all of us can have it easy like Mark Zuckerburg. A startup that does not pivot when needed is doomed to failure, or mediocrity at best.
Pivoting is not a failure, but a very clever and enterprising way to beat failure.
Tell us about your favorite pivoting story?
[Guest article by Jitendra Agrawal, CTO at WebSmith Technologies Pvt. Ltd. You can follow him on twitter @jiten]