What is a pivot, and what makes them succeed or fail? Skyflow is a data privacy company that started with the simple premise that your personal information shouldn’t end up on the dark web.
At SaaStr Europa, Skyflow’s CEO, Anshu Sharma, and COS, Rajsi Rana, shared examples of what does and doesn’t qualify as a pivot and the biggest lessons learned from over 50 investments for making a pivot successful.
Here’s the truth: most pivots fail. And many companies that you think were successful pivots weren’t actually pivots at all.
What Does it Mean to Pivot
If a company changes strategy, was it a pivot? No. Usually, it’s just a change in strategy. A pivot is about finding somewhere you can place your foot and pivoting around that. In basketball, if you don’t have your foot planted and start moving, you’re traveling.
Most companies that you think are pivoting are really just traveling. Let’s look at some examples many folks view as the most successful pivots and see where they land.
Slack: The Gaming Company
Slack started as a gaming company that had chat functionality that everyone loved. The game company didn’t quite work out, but they took the chat feature, and here we are with Slack.
Is that a pivot success? Actually, it’s not a pivot. It was something completely new. Imagine it as one company shutting down and another starting, which is traveling. There was nothing in common between the two companies. The product, the customers, and the GTM were completely different.
Segment: Pivot or Not?
Segment is a successful pivot. They started trying to build a competitor for Google Analytics. To do that, they built an SDK that could stream the data to everyone, and you could plug Segment’s backend into it.
Customers never logged into the backend application. So, their analytics product ultimately failed, but they found something that was working. In the case of Slack, they kept nothing from the gaming side of things.
With Segment, they took the SDK, the thing that was working and the only thing you can successfully pivot around and build a business with. At a high level, think about what you’re pivoting around. Is it:
- Customers
- Technology
- Go to market
For example, some companies start in healthcare to build an EHR. You enter the market and discover nobody is looking to buy a new EHR. Now that you’ve spent two years hanging out in hospital systems, you can figure out what else you can build.
You may learn that admins have an email phishing problem, which becomes your pivot. The customers stay the same, so you’re pivoting around what’s working.
Anshu cautions against the sunk cost fallacy. You may think you should keep the thing you’ve worked on the most: your product. But you need to pivot around what’s working and is the most valuable.
MongoDB: Not a Pivot
They started as documentDB, then NoSQL, and then they added SQL. That’s an evolution of a strategy. They began with the ability to store large amounts of unstructured data in a narrow space, and calling it NoSQL attracted a certain class of people.
PayPal: Their Market Stayed the Same
PayPal started as a payment encryption service, and now they’re a web-based payment processor. While they did change their direction, the market they sold into remained exactly the same. They knew where to plant that foot, so they were a successful pivot.
Was HubSpot a Pivot?
Nope! They kept the same customer base of SMBs over the years. That is an evolution of strategy. They never gave up on their core inbound marketing platform. They found a niche and expanded it.
An Actual Pivot: Yelp
Yelp started as a service where they solicited reviews by email. You could send your friends an email to review different places. They realized that aggregation was more valuable than one person’s review, so it changed from a solicited review by email to an unsolicited review company.
They kept the customer the same and pivoted the strategy.
Key Takeaways
Pivots are not about change. They’re about what to keep the same. What are you pivoting around? If you have an early-stage startup with 15 different ideas, you’re not pivoting. You’re traveling, looking, and searching to find a new area to work. But that’s not a pivot.
A pivot has a few key factors.
- Pick what you’re not changing. What is your foot planted on, and what will it pivot around?
- Pick what you are changing: technology, customers, or GTM. As engineers, you’re entirely focused on the thing you built. Many try to keep and sell it to someone else, which is why most pivots fail.
- Most great companies have never pivoted. They evolved in strategy and added new S-curves.
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via https://www.aiupnow.com
Amelia Ibarra, Khareem Sudlow
