When Should a Startup Pivot

Pivoting is changing direction, and knowing when to do it is critical to your startup’s longevity and success. Our first startup, Pick it App, evolved out of a recognition that social media sells, and certain people love to share their lifestyle with others. The premise was people create a “lookbook” online, with pages of fashions and brands they loved that captured their individual, unique lifestyle. The individual users were a sales channel — once they promoted brands and styles through social sharing, they received a cut of the profits.

What caused the decision to pivot was acquisition cost.  After carefully analyzing the return on investment, the acquisition cost was $5 per customer, and only 10% would be retained over the first 3 months. The business model was not completely flawed — but it needed a change in direction — a pivot. The goal was to attract the consumer using a different approach, and do a better job of keeping the consumer engaged. Through this realization Modera was born. Engagement is encouraged through competition and visual stimulation with pictures that stream continuously past us on the web. Modera provides an amazing platform where people can post their stylish pictures, share the post to get their family and friends to vote for them and ultimately win prizes! We will be incorporating Pick It Up in phase 2, also known as our monetization stage.

Companies That Pivoted to Success

Some of the most successful companies have had to pivot to achieve the success they have today.

  • You Tube was founded in 2005 as an online dating site called “Tune in Hook Up”.  When the website didn’t gain the user acceptance necessary for survival, it took a broader view of sharing all kinds of videos online.
  • PayPal originated with a narrow focus of helping Palm Pilot users exchange money electronically.  The key in the PayPal pivot was partnering with eBay to broaden to handle all kinds of online monetary exchanges.
  • Flickr evolved rapidly from an online  role-playing game from the gaming startup Luciorp.  Flickr found success in scrapping the gaming model and just sharing photos online.  Who knows how the role-playing game would have fared, because the pivot happened before Flickr got a chance to release a game.
  • Turntable certainly turned a corner when it went from a mobile barcode scanning startup called Stickybits, to a customizable music sharing website.

Five Ways That Entrepreneurs Pivot

  • Channel Pivot Perhaps your product or service is just not being accepted by users because it is not being communicated through the right channel.  Achieve a channel pivot by offering specific features and unique pricing.
  • Technology Pivot Achieve the same end result and serve the same customer, but change the type of technology you’re using.  A great example of this is moving a desktop application to a mobile App.
  • Customer Feedback Pivot Get early user feedback to determine if you are really solving the customer’s problems.  Pivot by offering a new product, or focusing on a specific element of an existing product.
  • Focus Pivot Choose one or more aspects of the startup to focus on and do them well, rather than trying to meet every perceived customer need.
  • Zoom Out Pivot  Sometimes a startup has focused too much too soon, and users do not adopt the business model.  The zoom out pivot takes the product or service and makes it one of many features in a larger scheme.

Some Parting Words of Pivot Wisdom

Of course, all companies naturally evolve. Whether or not your startup has a definable pivot, or just evolves organically through time is something you will need to learn with practice (and luck).  Just remember that the audience is fickle, user adoption is just as much an art as a science, and nothing goes with hard work better than flexibility!

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