Startup Pivoting 101: A Complete Guide for Founders

Starting a new venture is a thrilling experience. However, it’s not uncommon for entrepreneurs to face challenges that require them to pivot their business model. Whether it’s a shift in the market, unforeseen obstacles, or a need to explore new opportunities, pivoting can be a daunting task that requires careful planning and execution. 

As an entrepreneur, it’s crucial to understand when and how to pivot your startup to ensure its long-term success. In this comprehensive guide, we’ll explore the pain points that come with pivoting, offer practical tips on how to identify the right time to pivot, and provide valuable insights on how to pivot your business in the most effective way possible. So whether you’re a seasoned entrepreneur looking to take your startup to the next level or a first-time founder looking to make the right moves, this guide is for you.

What is a Startup Pivot?

A startup pivot happens when a company shifts focus to address a market, industry, or demand-based evolution. It is essential that all founders take time to assess their model as they grow to understand if and when a pivot may be needed to keep their business on track. 

Recognizing, planning for, and implementing a pivot takes time and dedication. Due to this, many founders often have a misconception that they will be better off without investing time into a pivot. This is not the case.

Less than half of founders enter into a pivot optimistic about the process. When all is said and done, around 75 percent of founders report success on the other side of their pivot. 

A startup pivot, or business pivot, can help a business shift its strategy to adjust to changes in customer needs, industry disruption, or any other factor that could set a business off track. 

Startups undergoing a pivot don’t need to completely reinvent themselves. It’s common that a pivot will take form when addressing and reimagining a single facet or product under a company’s umbrella. 

A powerful way to approach a company pivot is by looking at the shift as feedback from the market or consumers. By responding to the shifts, you are simply adjusting to solving a need – as all good companies do.

And remember, if you are here for advice on pivoting, it’s likely that the reason is one outside of your control, and not an indication that you are failing at your business.

Types of Startup Pivots

Pivots come in all shapes and sizes from changing a product all the way to changing an entire business model. To best understand what type of shift you may want to implement, let’s break down the different pivot categories:

Product pivot

Instagram is a classic example of a product pivot. The company started as an app called Burbn that was focused on allowing users to check in at certain locations and share photos. After a short time on the market, leadership noticed that the photo-sharing aspect was extraordinarily popular. This led the app to implement a product pivot to re-shape the app from a location-based social media platform to a photo-sharing app.

A pivot in a product like this example usually means shifting a single business unit to sharpen a product in response to customer feedback. Typically, when a product management team implements a product shift it is in response to competitors, the market, or a mismatch in the product-market fit.

Business model pivot

One of the most impressive business model pivots of the modern day is that of Amazon. Starting as an online bookstore, Amazon has shifted  to become the largest global online retailer. While this shift came over decades of growth, Amazon’s responsiveness to its customers has allowed the company to disrupt and shape the global markets of today.

When a company shifts its business model it is undergoing a major pivot. Pivots of this scale can mean changing strategy, target customers, distribution networks, or revenue models. Making a pivot to your business model should be a strategic move that allows a company to best meet the demands of its customers and market.

Target market pivot

Target market pivots occur as markets shift. Pivoting to meet the needs of a new market can be done to expand a customer segment, respond to low customer demand, or simply tap into a new market that is showing ready for your product. 

Mountain Dew is a great example of a company that has successfully pivoted its target market. The drink was originally marketed as an alternative to moonshine. Over the years, Mountain Dew has shifted markets from backcountry to extreme sports – now focusing on gamers with 40% of its annual marketing spend.

The main purpose of pivoting your target market is to help your business prevail in the market or to grow your business revenue. Great companies don’t let their markets grow stale. When the time is right, pivoting your target market is a smart move for startups who are looking to position themselves for long-term success.

To learn more about how to pivot your startup, see if you qualify for membership to join Founders Network.

When to Pivot a Startup

One of the most crucial jobs of a startup founder is to have a plan to continuously evaluate the performance and direction of the startup idea – while remaining open to the possibility of pivoting, if necessary. A few signs help founders identify that it’s time for a pivot. For example, it may be time  if one product is outpacing all others, sales are not meeting their targets, or when product development has fallen behind competitors’ advances.

The success of a single product feature

When a single product has garnered significant attention and success, it may be a good time for a startup to consider pivoting to double down on a particular feature. A great example of this responsiveness is Nike’s ability to outpace its competitors or break into a new niche.

Nike saw the success of a single product feature when reviewing their golf market sales. Instead of trying to outpace the leaders and founders of the golf club market, they saw their excellence in the apparel and footwear side of the sport. With this knowledge in hand, the company made a pivot away from golf clubs and back into their sweet spot: apparel and shoes. 

This is not an uncommon trend for growing and multifaceted businesses. It may be that a single feature of your service, product, or business model outpaces those around it. If that’s the case for your startup, explore the possibility of pivoting to support your success as a single stream of business.

To be successful as a business owner it’s best to focus on what works and do it well. This will ensure you can focus on what makes your customers keep coming back for more, and help you build around your own success.

The company’s financial performance is not meeting expectations

Another critical moment that may trigger a business to pivot is recognizing where performance is not being met. At this point, it’s time to assess the financial health of the startup and determine the best course of action.

Startup founders have a personal connection to their business. Despite this, all founders are bound by the capital they have to invest in their startup. Making a pivot when a startup enters into financial turmoil can be a way to get back on track.

To start, enlist a team to work with you to take an objective lens over your business model to understand what is working and what is not. Look at what you can reshape, where your cash flow is being taxed the most, and how you may be able to operate in a more lean structure. Then, define a new image of what the future could look like. From here, implement changes that support a path to regain financial traction. 

The target market has not embraced the product or service as expected

When a startup launches a product or offering that does not get the response expected, it can be tough. It is also an opportunity to quickly assess your business model and convey the value to your target audience.

Taking a product to market is an exciting feat. It also helps you determine whether your marketing has hit the mark, your product offers the features consumers want, or if your pricing model needs to be reassessed.

In this scenario, work with your team and your loyal customers to understand what you do well. Also, use this opportunity to get clear and actionable feedback. At the end of the process, you may need to develop a new feature, change your target market, or refresh the strategy for how to reach your target market.

Other businesses in the industry are consistently outpacing your startup in terms of growth and success

Competition makes us better. Operating in markets that are ripe for growth helps us to develop and launch products that make an impact. But no one likes being consistently outperformed by our competitors.

To understand the landscape, it’s important to keep stock of your competition and analyze your position in relation to your competitors. Do you have a niche where you can grow more quickly? Are you constantly charging to the same finish line? Or, alternatively, are you not sure where you land in the market landscape?

Studying the competition and determining the best course of action for your startup will help you to stay one step ahead.

You may find that a pivot is in order if the market is over-saturated, the competition is outpacing you at your same game, or you consistently find yourself searching for your winning niche.

In many scenarios, outpacing your competitors may mean the need to drastically reimagine your company and how it operates. This may look like developing a new product or service, catering your messaging to a new audience, or switching up your sales strategy.

You are seeking a change in direction to pursue a new passion or opportunity

Possibly the most redeeming pivot is one that will allow a founder to change direction to pursue a new passion or opportunity. While pursuing a passion is rewarding, it’s critical to do it with a calculated approach.

A great time for a founder to pivot to pursue a passion is when the market offers an opening. Let’s say you’re looking for a social impact edge to shift to – first, be sure it’s one that aligns with your company’s mission and vision. If it does not, you may be stepping into a major re-envisioning of your business.

Alternatively, if you are several years into your startup and find that your business is not taking the shape you imagined, goals have shifted, or ideas have become stagnant – the infusion of new energy may be the winning answer to your woes.

When approaching a personal shift, consult advisors and like-minded founders who can help you to seek clarity and congruence with your initiative. If done correctly, you will develop a plan that will allow you to reach new highs in growth, revenue, and personal fulfillment without risking the health of your company.  

5 Steps for Executing a Successful Pivot

It’s important to develop a plan before you begin a pivot of any size. To guarantee success, be sure to formulate a plan for prioritization, communicate upcoming changes, and hire experts where you need extra support. Below is a framework to follow in order to set yourself up for success.

Identify and prioritize key focus areas

It can be easy to experience scope creep when beginning a pivot. To stay on track, develop a clear and concrete plan and timeline for your pivot. A common strategy to implement is starting with a SWOT to clearly analyze what’s going well, where you have room to improve, and where you are already doing well. Companies may also choose to implement market or customer research to get a deep understanding of the full market profile.

Once landed, synthesize your findings and develop a plan to implement your shift. 

Communicate and collaborate with stakeholders

Communicating effectively and collaborating with your key stakeholders is an essential piece of executing a pivot. Create a plan for informaing stakeholders of upcoming changes and provide a forum for questions and feedback.

For most organizations, core stakeholders for communications include investors, leadership and board members, staff, customers, and sometimes even important partner companies.

Your goal with communicating your pivot is to explain the why, generate buy-in for your shift, and create momentum to get your company through the journey.

Take swift and decisive action

Once your plan is set and communicated, execute it. Don’t wait to lose the momentum and buy-in that you’ve spent time to secure. Start by activating department leaders as accountability partners for different facets of the pivot to help move forward.

Sharing the workload and vision will also help teams feel valued and included as part of the pivot. This will help to quell fears of teams becoming obsolete and help them see how they fit into the future strategy.

Bring in the necessary skills and resources

As you begin your pivot, or even during the planning phase, you may have discovered that your team is lacking expertise or capacity for a shift. In order to not strain high-performing teams, it may be necessary to hire a consultant or expert to help you pivot. 

Here are some questions to ask yourself if you are unclear about whether or not you may benefit from an external resource:

• Do we have the subject matter expertise to move this pivot forward?
• What are our weaknesses and strengths?
• What new skill sets could we benefit from during this transition?
• Do we have enough staff capacity to implement these changes?
• Would additional staff help us to bridge this gap of capacity or expertise?

If the answer to any of these questions above is yes, it’s important to consider how you will move forward to bring in additional support. 

Embrace and adapt to the change

Once all is set into motion, stick to your plan and believe in yourself. In fact, when a San Francisco-based startup studio surveyed 150 founders they found that 55 percent reported that pivoting their business helped them to avoid failure. 

Pivoting your business mode in a major way can feel like a large risk. However, when you embrace the understanding that great risk often comes with great reward, you can recalibrate your thinking to a growth mindset. This will help you to embrace the change, buckle up for the ride, and remember that pivoting has helped 1 in 4 businesses avoid failure.

3 Famous and Successful Startups That Pivot Examples

Some of the most successful startups on the market have reached new heights after undergoing a  pivot. When looking for inspiration for how to get started on a large shift, start by looking at the road paved by some of the most well-known startups from Silicon Valley and the world. 

1. Netflix

Netflix started during the DVD age when they catered to a moviegoer’s appetite for being able to order a film directly to their mailbox, without leaving their home. As time changed, the Netflix model began to fall behind.

With the rise in users wanting content on-demand, Netflix decided to pivot into an online streaming model. Initially, this was an add-on to their already well-faring order model. As the pivot progressed, the boom of the streaming market eclipsed the speed and ease of their physical rental market.

The company took a full dive into streaming. As the success became more apparent, the company grew. This led to their latest venture of moving from purchasing content to building out their own full-fledged production arms.

The success of Netflix’s pivot shows the value of a business pivot that allows a startup to meet the market of the day to stay relevant and reach new levels of expansion. 

2. Shopify

Over 4.4 million websites globally are hosted on Shopify. The platform’s virtual storefront offers a solution for small to large businesses to thrive. While the business is well-known for its easy-to-use platform that predominantly supports small businesses, it was not always the successful company it is today.

Shopify launched in 2004 as an online store with a mission to sell snowboarding gear. The platform had strong infrastructure, but the store itself never took to the market.

The founders behind the business saw that the snowboarding shop lacked potential, but from this found promise in the strength of their online shop model. From here, the company pivoted to offer its online storefront model to other retailers looking to sell online. In a few years, the idea proved to gain traction, and 10 years later found enough success to reach its IPO.

3. Mathematics of War

Mathematics of War was founded by Founder’s Network Member Sean Gourley who experienced a major pivot in his business by breaking it into two separate startups, each with a distinct focus.

Sean’s path into the startup world came by way of scientific research. Before moving to Silicon Valley, he spent years at Oxford University studying complex systems and the mathematics of war, first as a Ph.D. student and later as a research fellow.

Initially, his mission was to create one company around his research learnings. But as he attempted to move his idea forward, the market presented two different niches. It was from here that his two companies were founded: Quid and Primer AI.

Both Quid and Primer AI operate in deep technology spaces. Primer develops AI that analysts and operators can use to understand vast amounts of unstructured data in real-time. Quid, on the other hand, is AI-powered consumer and market intelligence.

The success of Sean’s pivot was understanding that his idea was best broken out, and offered to customers in different segments. By creating two separate companies that support unique use cases, his company shift was able to create multi-million dollar companies.

Common Pitfalls to Avoid when Pivoting

Focusing on what not to do is the first step to getting it right. There are several common mistakes that founders who are pivoting tend to make. By understanding these pitfalls, and creating a plan to work through them, founders can increase their chances of success.

Failing to fully commit to the pivot

Once a founder has announced their pivot it is essential to fully commit to the plan. When founders falter, they lose respect, trust, and buy-in from their valued stakeholders.

A pivot should be seen as a fundamental change to business as usual. A ivot is not a new product launchi or developing a new income stream. It is certain to be a shift that will take a lot of work.
When thinking about committing to a pivot, some experts think of comparing it to committing to repairing a strained relationship. A few rules to follow on this are:

• Ask yourself if you are willing to fight to get through the tough pieces
• Ask yourself if you are in the right place to take a chance
• Commit unwaveringly to the path forward, and be willing to shift as hurdles arise

If you are ready to take on a pivot, focus on the plan, get support, and commit fully.

Not gathering enough data or feedback before making the pivot

Don’t start a pivot from a hunch. Before you start your pivot, do your research. While it may feel like the time or money is not there – it’s important to prioritize the resources you need to develop an informed plan. Not gathering enough data or feedback before making the pivot is a mistake that most founders make. Look for the low-hanging fruit when necessary –such as offering gift cards in exchange for customer surveys, conducting customer research, or even hosting focus groups.

Pivoting too frequently or without a clear strategy

A business pivot is not a quarterly or annual activity, it’s a tool to be used when all other avenues are pointing to failure. Startups that shift too frequently and without a clear strategy are much more likely to fail. 

Craft you plan with data and review it. Great pivot plans also go as far as developing a core advisory network of individuals with different levels of expertise who can provide feedback and help to track progress. A few core values to build into your planning are:

• Develop a pivot management and review committee
• Hold regular meetings to assess progress
• Develop core metrics and decision gates

When a strong structure is put into place, founders can catch when they are getting off track early on. From here, you can develop early warning systems to help you identify when you’re off track and implement changes to reorient your approach.

FAQs About Pivoting A Startup

Still have questions about your pivot? Read the list below.

How many times do startups on average need to pivot before they are successful?

There is no right number of times to pivot. Understanding whether or not you need to pivot is part of understanding your business. A recent study finds that “startups that pivot once or twice raise 2.5x more money, have 3.6x better user growth, and are 52% less likely to scale prematurely than startups that pivot more than 2 times or not at all.”

When is it too late to pivot your startup?

It is too late to pivot a startup when you can no longer find a viable path forward. This generally looks like a point where the cost/benefit ratio is no longer positive, there is no clear path to market fit, and/or you are unable to find market traction. For every startup, this time looks different. Find some great tips for all founders to consider here.

How do startup founders know when to quit, stick or pivot?

Startup founders should consider market demand, customer feedback, competition, financial resources, team morale, and personal goals when deciding whether to quit, stick, or pivot. If there isn’t sufficient market demand or customer satisfaction, it may be time to pivot or quit. If the competition is too strong, financial resources are limited, or team morale is low, it may be time to pivot or quit. Ultimately, the decision will depend on a variety of unique factors for each startup, and founders must weigh these factors carefully to make the best decision for their business.

Before opening a startup is it normal to pivot or is this procrastination?

Pivots are not failures; pivots are normal. Procrastination is not the same. Founders should not procrastinate when they are looking to pivot. It is always best to start as soon as you notice a change is needed.  

If a startup solo founder wanted to pivot but the founder felt the next project idea is not a good fit for them what should they do?

If a founder who has started a business on their own is not interested in taking their pivot forward, there are two main options. The first option is to find another person who may be willing to lead the charge for you, or who would be willing to buy the company or idea from you. The second option is to step  away from the idea and accept it may not be in your best interest to bring the idea forward.

If a startup finds an opportunity to pivot even though the original plan is still viable should it do so?

As in the example of Mathematics of War above, it may be that your pivot is not a from-to but rather a new stream of business. If you are able to maintain two different business streams simultaneously, this may be a good pivot model for you. The most important thing to do in this scenario is to develop a plan to ensure the funding, skills, and path forward for both are viable. If you have to choose one focus, use data to inform which idea to take forward. 

What factors are considered by an investor when a startup is raising funds during a pivot?

Investors will consider all of the core variables when assessing if a company is a worthwhile investment. During a pivot, this will include additional variables such as proof of concept, the track record of the founder and team, and market or portfolio competition.

How do you handle self-doubt, uncertainty and the pressure to make sure the startup can pivot and adapt to make it successful?

The first thing to remember when you are a founder approaching a pivot is that you are not alone. A pivot does not mean failure. Our advice would be to look into the history of many successful startups to see just how common pivots are. The second piece of advice is to follow the seven steps for following self doubt as an entrepreneur.

Learn How To Pivot With Purpose

Being a founder does not mean creating a mediocre idea and sticking to it. Successful founders assess their progress, look at what’s working, and dive in head first when a pivot is needed. To be successful, make sure you plan, do your research, and trust yourself. From here, the pieces will fall into place.

Take the plunge and join the Founders Network’s community to learn more about how to successfully pivot your startup. Members get access to events on topics like product and sales to help you grow with confidence.