A pivot can change the trajectory of a company or product. In this guest post, Senior Product Manager at Carta, Shubhi Nigam, makes a case for how pivots are essential for successful businesses, and how you can follow a methodical framework to consider and implement one.
Airbnb today is as ubiquitous as hotels. But when it first launched it was called Air Bed and Breakfast. Its founders set up air mattresses in their San Francisco apartment to host visitors to a conference being held close by. They repeated their success in Washington, DC in the days around President Obama’s 2008 inauguration. But they soon realized that following conferences wasn’t a good business; they needed sustained demand. So they pivoted from air mattresses to providing stays with locals: Air-BnB. Twelve years later, it’s a great example of how useful a pivot can be to take a slow business to a large company.
When I first started as a product manager, I would shudder whenever I heard the “P word.” Silicon Valley lore dictates that companies pivot when their product is in trouble—that a pivot is synonymous with failure. But when my startup went through YCombinator, I quickly grew amazed at how untrue that actually was. When speakers came to talk about how they’d built their companies, conversations about pivots were pretty common. An organic step in the evolution of a business. During one talk at YC, Henrique Dubugras, a cofounder at Brex, described how they joined YC as a VR startup. “I think three weeks in we gave it up,” Dubugras later told TechCrunch. “We realized we aren’t the right founders to start this business.” So Dubgras instead pivoted their company to a credit card for entrepreneurs. A problem they personally faced, and a space they had experience in.
What I learned as a startup founder has informed how I now build products. There was no secret sauce to finding “product-market fit.” The ability to adapt and evolve is perhaps the most important skill a founder can have. That can mean adjusting your customer segment or zooming in on that one popular feature.
So, let’s break down what a pivot really is. Eric Reis, author of The Lean Startup, defined a pivot as a “structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth.” Let’s pivot (excuse my pun) this concept, then. When should you consider pivoting a product?
Questions to ask yourself if you’re thinking of pivoting
- Usage: Take a good, hard look at your metrics. What is your acquisition cost? Do you have low active usage? Do you have high churn?
- Vision: Does the product not align with your vision anymore? Are there specific features that are outperforming the rest?
- Viability: Can you ever make money on this product? Or is the market too crowded for you to run a successful business?
- And the most important: exhausted options: Have you done what you can for the above? My favorite quote comes from Dalton Caldwell, during his pivot talk at Startup School: “Do not run away from doing the hard work. Sometimes you see people where they build a product, and right when it gets to sales time, they pivot, and they do that over and over again.”
If based on those criteria, you do decide to pivot, it’s important to understand that a pivot is not a straight-line process—it’s not one step to success. Let’s go back to Ries’ explanation: “structured course correction designed to test a new fundamental hypothesis.” Which essentially means it’s an art, not a science. You need to think of a pivot as a series of experiments to help evolve your product.
A pivot framework
1. Do a post-mortem
If your current product or strategy is failing, it’s important to understand why. Product post-mortems or retrospectives are critical in understanding what you’ve already done and where the problems are.
- What was your original hypothesis for your product? And what was your result?
- What do the metrics look like?
- What has your user feedback been?
- What is everything you’ve tried?
- What are the things you did well, and what are the things you could improve?
Ben Yoskovitz, in his blog, writes: “To pivot, you need to have learned something through your previous efforts that gives you clues as to where you should focus. You can’t pivot without some form of validated learning and new assumptions. If you don’t have new insight that gives you even a hint of a direction, you need to really question whether it’s worth continuing.”
In the case of Retool, they clearly understood that they were in a crowded space and that their transaction costs were too high. According to founder David Hsu, “Fintech was a challenging business. We were processing payments for other people and losing money for every payment processed. It was a pretty dire situation.”
2. Start the discovery
Once you’ve learned from your current product, go back to the drawing board and restart your discovery. Discovery, as Marty Cagan describes in his book Inspired, is looking for features or approaches to develop that realize the product’s vision. Discovery means starting afresh, going back to existing users to understand feedback, and new users with ideas on pain points.
But it’s important to set rules for your discovery:
- Be flexible: During discovery do not be bound by the limits of your current product. Sometimes the best ideas discovered during this period are those you would never have considered at the beginning.
- Consider problems your team faces: Some of the most successful companies were born out of tools they built for themselves because of issues their own team faced.
- Only problems, no solutions: Have you ever had a supervisor say, “Don’t bring me problems unless you have a solution”? The only rule of product discovery according to Marty Cagan is to do the exact opposite. It’s critical that we not be wedded to particular solutions or features or approaches. This is not the time for building solutions; it’s the time for understanding user needs and potential problems.
Read here about how Slack pivoted from a gaming app to the internal chat system they had built for themselves.
3. Choose pivot options
Once you have your lessons—and your new research—you can consider your options for pivoting. There are many ways to pivot. To give you a start, Eric Reis provides ten clear strategies for pivots:
- Zoom-in pivot: Hone in on a specific feature that’s outperforming others in your product.
- Zoom-out pivot: Your product may become one piece in a larger platform strategy. Think of Stripe, which went from being a payment API to a full financial platform.
- Product value pivot: Positioning pivot to better serve your customers
- Value capture pivot: Pivot to a new revenue model.
- Channel pivot: Change your go-to-market strategy, for example from B2B to B2C.
- Technology pivot: Change the way the solution delivers results by using a completely different technology.
- Customer need pivot: Give your customers a solution to a different problem.
- Customer segment pivot: You have an especially loyal segment of customers, so hone in on that segment.
- Platform pivot: Does your platform hold more power than the app you built for it?
- Business architecture pivot: When you start off designing products for B2B, and realize they have more mass market appeal
You may have one idea for your pivot, or you may have a few. In either case, don’t move forward until you have data. In order to follow an evidence-based approach for selecting your new direction, experiment and get feedback on your proposals. Some quick ways to experiment:
- Go back to your current users with the new offerings
- Go to 10 new users with the new offerings
- Run painted-door tests online where you set up a fake landing page, or run a Facebook ad to build a waitlist
You can use these channels to run experiments on different features, revenue models, strategies, etc.
5. Decide: abandon or pivot
After all this work, take an objective look at what your experiments showed you. Did you unlock new insight or find a new viable opportunity? With this new idea (or ideas), can you build a repeatable and scalable business?
You would be remiss to not consider quitting as an option. Do not pivot for the sake of pivoting or to delay an inevitable option. Fred Wilson, a partner at Union Square Ventures, makes the case that if you must make a hard pivot it may be better to let the failing startup fail, get rid of the baggage and start over again from scratch.
The goal of following this framework is not to just come to a desired outcome, but to come to one that is supported with data and real learnings. Irrespective of how difficult your decision is, you can rest in the knowledge that you didn’t “spin the wheel” with this decision, you actually made continuous progress that led to it.
There’s more where that came from! Access more insights on product pivoting
- All About Pivoting
- The Startup Pivot
- Accelerated product pivot—a pandemic lesson by Cinthia Assali
- 5 hurdles in the shift to the digital workplace (and how to solve them)