Pivoting Startups: adapting for success… or better surviving
What if your SaaS based on LLM does not work but if you turn it into a specific something else it will
Credits: Pexels
Twitter started as a platform for podcasting but after Apple launched iTunes they realized the idea was not so novel anymore.
Youtube was meant as a dating website.
Nokia is still pivoting in many undershade, but it started as paper mill.
The list can actually be longer, and pivoting is actually something more common than people think.
A business pivot is a strategic move that makes significant adjustments to a company’s business plan in response to market conditions or other variables affecting its bottom line. A common thing, especially for startups, is to change quickly to avoid complete failure.
Why pivoting?
A startup pivot, also known as a business pivot, refers to the act of shifting a company’s business strategy to adapt to changes in its industry, customer preferences, or any other factor that affects its success. It requires breaking away from the core focus and changing direction in a fundamental way. In the world of technology companies, a pivot often involves making substantive changes to the product that alter how the company engages with its target market. These changes can be driven by shifts in market conditions, the emergence of new opportunities, or other factors.
Startups pivot for various reasons, including concerns about the product, target market, business strategy or model, or the need for a complete transformation of business focus. Founders or decision-makers often realize that something isn’t working as expected, prompting them to make a strategic shift. Lack of product-market fit, which hinders rapid scaling, is a common reason for startups to pivot.
Challenges of Pivoting a Startup
Pivoting a startup presents challenges that entrepreneurs must navigate.
One key problem is a lack of preparedness, because a pivot necessitates a well-planned strategy that takes into account numerous components of the firm, such as its mission, vision, resources, and potential influence on stakeholders. Another issue is a scarcity of resources. For startups, pivoting frequently means investing in new skills, tools, technology, or procedures, which can be costly and time-consuming. Making the decision to pivot a startup is difficult since it includes big adjustments that come with their own set of challenges and dangers. Vanity metrics can hinder the decision-making process and the team’s ability to pivot successfully. Differentiating from competitors and the existing business is also a challenge, as it requires developing a unique value proposition and standing out in the market.
Briefly, a good moment to pivot is after a considerable amount of time when return of investments is not happening. The issue can also be related to the fact that we are often bad judges to understand when the right moment to give up is. Maybe it was few weeks ago, maybe we should not give up. It is almost impossible to know. However, the general approach is don’t give up! Transform your business.
Strategies for a Successful Startup Pivot
To ensure a successful startup pivot, several strategies can be implemented. When pivoting, it is critical to select goals that are consistent with the startup’s broader vision and mission, ensuring that the new course is consistent with long-term goals. A successful pivot should generate chances for growth, which must be identified and capitalized on.
Pivoting happens when we admit that part of what we did is a failure, we do not want to repeat a failure again, or at least we should avoid it.
Exploring and considering alternative technologies that align with the new direction can enhance competitiveness and adaptability. Keeping investors informed and involved throughout the pivot process helps maintain trust and ensures their continued support. Analyzing competitors’ strategies and actions provides insights into the market landscape and competitive dynamics, informing the pivot strategy and ensuring a competitive advantage.
If we have spent time building a SaaS infrastructure with a lot of fine tuned LLMs, I don’t know, to summarize PDF for example. Probably we will be upset to drop this, but if there is no conversion rate, people are not subscribing despite all the advertisements… maybe it is time to give up on the original idea and see what we can save. The infrastructure? The trained model? Our expertise? and we do something different… e.g. an e-commerce selling something else assisted by a chatbot. (All these are fictionary examples, not real advice)
The decision to pivot a startup is a strategic one that needs careful planning, agility, and a willingness to make big adjustments. While difficult, a well-executed pivot can salvage a firm and lead to success. By understanding the reasons behind a pivot, the challenges involved, and implementing effective strategies, entrepreneurs can navigate the pivot process with confidence and increase their chances of achieving long-term success. There is no guarantee. We are making an adjustment, the game is still on and we can only keep playing, but better this than completely give up.