Startup for Dummies // to pivot or not to pivot

Working at a startup sounds great. But it can get confusing, too, especially at the beginning. If you feel like at some times you don’t have a clue of what you’re colleagues are talking about; you’re not alone. From now on, don’t just nod friendly when terms like ‘unicorn’ or ‘disruptive technology’ come up. Every week we’ll explain a common startup-expression in our Startup For Dummies. This week: Pivot.

To pivot or not to pivot? That could be the question if your business model isn’t completely going the way you expected. You probably heard people talk about it before. In one of the other Startup For Dummies we gave you a crash course Lean Startup. Pivoting is a big part of this famous method. Remember the build, measure, learn mantra? Well, after this process of measuring and learning you could be either going in the right direction or you might have to change things up a little: in other words, you need to pivot. According to Eric Ries a pivot is a ‘structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth.’

So basically ‘pivot’ means to change direction as a company. This is usually used to describe going after a different market segment or using an established technology for an entirely new purpose. This change might prove necessary after testing the product and getting feedback from your customers. For some really successful companies, pivoting has meant they ended selling an entirely different product than the one they initially started with.

two examples

  • Groupon – The founder of global e-commerce marketplace Groupon started a fundraising website called The Point in 2007. On the side he ran Groupon. When Groupon became bigger and bigger, at some point, main project The Point didn’t survive its pivot.
  • Starbucks – Before Starbucks was on every street corner they sold espresso machines and coffee beans. After CEO Howard Schultz paid a visit to Italy he decided to sell coffee instead.

Changing the plans of your business might be difficult and scary. It can even feel like you’re failing. But sometimes, it really is the best option. Not only Groupon and Starbucks but also Paypal, Twitter, Nokia, Flickr, Instagram, Nintendo and many others had to pivot a lot before they became as big as they are now.

Want to read more startup for dummies?

// pitch deck
// vaporware
// freemium
// disruptive technology
// market penetration
// growth hacking
// HR Tech

Blog by: Alma