Our new series examines the "do-overs" of today's most successful startups.
Before Twitter became a microblogging sensation it was a podcasting business. YouTube's founders were convinced they'd hit the jackpot with a video-dating site. PayPal's original mission was to beam IOUs from Palm Pilot to Palm Pilot. Flickr grew out of a massive multiplayer online game as a way for players to drop photos into text messages. Groupon emerged from a community promoting political action while online flash retailer Fab.com came out of a failed gay social network called Fabulis. Instagram's founders created a check-in technology called Blurbn before settling on photos. Pandora was a B2B music recommendation service. Yelp transitioned from email recommendations from friends to a local search and user review website.
About This Series
The speed of today's well-funded startups is brutal.
But it does allow for change in direction. This series explores those destiny-altering decisions made by companies that have gone on to great success. Read more about their course corrections--and alternate endings--here.
These companies, like many others, are examples of startups that "pivoted" from their original visions. First articulated by Eric Ries, a Silicon Valley entrepreneur and author of The Lean Startup, "pivoting" has become part of the business and technology lexicon, the Moore's Law of startupology. Only a soothsayer can know what will happen before it happens, and only the savviest (or luckiest) entrepreneur can take an idea from the initial inspiration to market and beyond without a few hiccups along the way. So perhaps it shouldn't be surprising that pivoting isn't just common, it's become the rule more than the exception. History shows that it's more likely a tech company will undergo a steep course correction at one point or another than stay true to their founders' original vision. Pivots are rooted in learning what works and what doesn't, keeping "one foot in in the past" and "one foot in a new possible future," Ries says. Boiled down to its essence: It's all about survival.
Throughout business history companies have pivoted--we just didn't think of it that way. Nokia once manufactured paper and rubber boots, Nintendo sold playing cards, and the Gap was a Bay-Area record store that peddled Levis jeans. Forty years ago Richard Branson published an indie music magazine and Virgin Records was a modest record store with one London location. The Marriot began as a root beer stand in Washington, DC. And startups aren't the only enterprises to amend strategy to avoid their own creative destruction. There was a time not long ago that Apple Inc. earned most of its revenues from computers and not music players and phones, while no one would accuse Microsoft of whimsy until it created Xbox. IBM used to be a billion-dollar computer maker and now it is a billion-dollar seller of business services.
Ries has neatly categorized types of pivots. To name a few, there's the "zoom-in pivot" when a single feature becomes the whole product; the "zoom-out pivot" when the product becomes a single feature in a different product; the "value capture pivot," which deals with how revenue is generated; the "engine of growth" pivot that identifies how a business attracts users, and many more. It reminds me of the way one journalism textbook teaches leads, listing everything from "descriptive leads" to "impact leads" to "narrative leads," "teaser leads," "mystery leads," "build-on-a-quote leads," and scads of others. Of course, most journalists never use these terms and, I assume, most entrepreneurs don't stay up at night pondering what classification of pivot their startup should stress test.
Not that everyone agrees on what exactly constitutes a pivot. A couple of months ago I interviewed Ries for my Entrepreneurial Journalism class at NYU and he said that Facebook has pivoted several times: Initially Mark Zuckerberg was content with his social man child remain solely on college campuses before eventually spanning the globe, then it introduced the news feed, advertising, Facebook credits, etc. Zuckerberg, however, would likely refer to this as an "iterative" process. When I contacted James Hong, cofounder of HotorNot, to schedule an interview, he said his company never pivoted. Sure it did, I replied. It went from a model based on advertising to a dating service and community. Recently TechCrunch referred to an incremental change in the way that Bump, a mobile sharing app, would let users upload a photo as a "mini pivot" (whatever that means).
"Pivoting" has become part of the business and technology lexicon, the Moore's Law of startupology.
Despite its slippery definition, the term has gone through the usual cycle of acceptance. First it was absorbed into the entrepreneur-startup world with gimlet-eyed embrace, which quickly swelled into widespread acceptance. Now there's the predictable backlash. It's "the most overused word" in the startup community and it really means "your start-up plan sucks, but we'll ﬁgure out a better plan later." It's "prototyping without vision." Or it's "exactly the wrong approach to launching a new company."
On one hand it's so hyped it's become a cliché, worthy of being lampooned in the video "Sh*t Entrepreneurs Say." Click to the :26 mark, when the main character says things like "AB test, then pivot, and if you still don't know, pivot again!" along with other gems like, "Dude, you're saying it's a social network for toddlers?" "My team is powered by Red Bull and pizzas" and "Health Insurance? That's for wimps." It also became fodder for a New Yorker cartoon: A man and woman are sitting at a café when the woman says, "I'm not leaving you. I'm pivoting to another man." It's gotten to the point that Sarah Lacy once suggested that TechCrunch "implement an online ‘swear jar' for press releases, pitches and Tweets containing the word ‘pivot.'" On the other hand, there's no Wikipedia entry for "pivot" as it relates to startups, and it's an immutable fact that lean and agile companies will continue to pivot or face the consequences.
We at Fast Company will be exploring the concept of pivots in the coming months through a series of blog posts and videos produced by two-time Sundance award-winning director Ondi Timoner. Hyped or not, we believe exploring the point when a startup realizes it has to change course or die will reveal a great deal about entrepreneurs, startups, and the world we live in.
Adam L. Penenberg is a journalism professor at NYU and a contributing writer to Fast Company. Follow him on Twitter: @penenberg
[Image: Eric Fischer]
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