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Pivoting January 10, 2011

Posted by jeremyliew in pivoting.
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Late last year, Aaron Batalion (one of the co-founders of Living Social, a Lightspeed Portfolio company) gave a talk about the many pivots that led Living Social to their current business of local deals.

(You can see the accompanying slides here).

I think this is a fascinating topic. I had dinner with some terrific entrepreneurs recently, including the CEOs of Slide, SayNow (videoegg), Triggit, all companies that made at least two major pivots before getting to where they ended up, and we discussed the topic of pivoting at some length. Here are my notes from the discussion:

  1. Pivoting has two components, knowing when to quit plan A, and taking on plan B. It’s easy to pivot towards doing more of something that is working and users like. It’s also easy to stop doing something that gets no traction. What’s hard is stopping doing something that is just doing OK, but that is usually the right thing to do.
  2. Some entrepreneurs want to build companies, not products. They drive their satisfaction purely from the fact that they are making a lot of customers happy, regardless of what the product is. Removing the emotional investment in the original product, and relying on the data, makes pivoting much easier.
  3. Pivot fast. Once you’ve decided to make the change, run with it right away, and with commitment.
  4. It’s easiest to pivot when your team is small.
  5. If your team is large, spend a lot of time over-communicating to employees and give them ways to share information about the pivot…allow room for them to explore the new business
  6. Expect some employees to leave and don’t try to save them — you want people who are excited by the new focus
  7. Most pivots are towards solving a smaller/easier problem or sub-problem of what people thought was the “real” problem. E.g. at Paypal and at Slide, the online demo of the product became the product. At VideoEgg/Say Media, one of the three parts of the problem became the sole focus.
  8. Throughout the life of the company you should be continuously looking at various paths, evaluating alternatives, testing the waters in different directions. You’ll explore a lot of dead end paths along the way, but it is through always keeping several options open that you’ll be able to adapt. It’s unlikely that your first or second idea is right, so always keep your eye out for promising pivots.

What lessons have you learned from pivoting?

Comments»

1. Andy Monfried - January 11, 2011

Jeremy,

Awesome post. Super insightful, and spot on. One important “pivoting” lesson I’ve had to learn is how important the complete support of your investors, and advisors is during this process of pivoting. It’s almost as if you need 100% guidance, hand holding and encouragement from your partners — or, it wont be nearly as successful….

Pivoting is arguably the hardest of skills to pull off….but, when you know YOU HAVE TO DO IT — you lose sleep, you lose hair, and you “overquestion” yourself — in the search for the answer to, “am i doing the right thing, at the right time…?”

timely, important, and the most often overlooked characteristic of companies that exist in digital today….the PIVOT.

You hit the nail on the head…

Thanks,

Andy Monfried

2. Francisco - January 11, 2011

Can you elaborate on point 7. Didn’t quite get what it meant.

> Most pivots are towards solving a smaller/easier problem or sub-problem of what people thought was the “real” problem. E.g. at Paypal and at Slide, the online demo of the product became the product. At VideoEgg/Say Media, one of the three parts of the problem became the sole focus.

jeremyliew - January 11, 2011

@Francisco, I just mean that of three possible types of pivot:
– Solve a more general problem
– Solve a more specific/simpler problem
– Solve a completely different problem
Many pivots end up being of type #2. THis is often because a simpler/more specific problem shows more traction more quickly

3. Cox Folds Adify Brand; Google Display In China; Interclick Boards Wise - January 11, 2011

[...] On the Lightspeed Venture Partners blog shares notes about "pivoting" from a recent discussion with CEOs of Slide, SayNow (videoegg), Triggit, "all companies that made at least two major pivots before getting to where they ended up, and we discussed the topic of pivoting at some length." To begin, according to LSVP, "Pivoting has two components, knowing when to quit plan A, and taking on plan B." Read more. [...]

4. Joe G - January 15, 2011

Good points. I would just add that there is an important continuum between the “pivot” and the “start over”. The more of the assets of the company (team, learnings, audience, product/technology, existing customers, etc) that you continue to leverage in the new direction, the more it is a pivot versus a start-over.

There is definitely a time and place for the full start-over. But it should be recognized as such because it carries with it a different level of risk.

5. Michael Barton - January 19, 2011

I think one of the most important developments I read into this is that the VC funds are now understanding and supportive of “pivoting”. Of course, it’s a good thing. I have to assume that almost all successful startups have done at least one pivot. Do you think the VCs have further embraced pivoting due to the lack of/extension of exits?

6. Margaret Wallace - January 20, 2011

Love this piece.

In my previous 30+ person start-up, I had the unfortunate experience of knowing that we needed to pivot, but the “ship” that was my company had, by that time, become so entrenched in a certain course of action (employees, board members, investors alike) that it became impossible to change directions. We would have had enough runway to pivot at that time, with some radical changes to the staffing and org structure — however, the buy-in was impossible to achieve. Now that I am at the helm of a boot-strapped company, essentially more of a “master” of my own fate, it would be considerably easier to change course if need be.

7. Weekend Reading - January 21, 2011

[...] Pivoting: by Jeremy Liew writing about startups changing direction. “Pivoting has two components, knowing when to quit plan A, and taking on plan B. It’s easy to pivot towards doing more of something that is working and users like. It’s also easy to stop doing something that gets no traction. What’s hard is stopping doing something that is just doing OK, but that is usually the right thing to do.” [...]

8. Rajesh Jain’s Recommended Reading – 9 | CEOMAG - January 23, 2011

[...] Pivoting: by Jeremy Liew writing about startups changing direction. “Pivoting has two components, knowing when to quit plan A, and taking on plan B. It’s easy to pivot towards doing more of something that is working and users like. It’s also easy to stop doing something that gets no traction. What’s hard is stopping doing something that is just doing OK, but that is usually the right thing to do.” [...]


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