If I had a dollar every time someone explained to me why their company’s shift in priorities wasn’t a pivot, well, I might not be a millionaire, but I’d probably have enough to treat everyone at the bar that night.
“I wouldn’t say it’s a pivot so much as…”
An iteration. A new feature. A shift in priorities.
No company that pivots thinks it’s pivoting. Or at least, no company that pivots wants to admit it to a member of the press.
The word pivot’s use in startup land comes from the book The Lean Startup, where author Eric Ries defines it as, “Structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth.” Despite his clear definition, the term has subjective meanings that color it. It’s associated with failure.
I was thinking about this recently when reporting on BranchOut’s kind of-sort of pivot. BranchOut is a social networking site for professionals, a LinkedIn meets Facebook venture. It launched with a lot of fanfare but has been struggling for awhile. User acquisition slowed and people were only using the site occasionally.
Then a few weeks ago, the company started a new service under a completely different name called Talk.co. Talk.co is an enterprise chatting application where you can message your colleagues. BranchOut found that a lot of people were using the service for messaging, which is why it decided to break this feature out. However this feature has a totally new name and will be disconnected from BranchOut. A chunk of BranchOut’s employee base will be shifted to work on it.
Co-founder Rick Marini told me it’s not a pivot, it’s two separate products. Welcome to the club of people who aren’t pivoting.
Founders like to say that a pivot is not a pivot because the general mission of a given company — to connect people professionally or empower local freelancers or encourage carpooling — has remained the same. Oftentimes it’s the means of achieving this that has changed, an emphasis on a new way of doing it. Lyft started out as Zimride, connecting carpoolers for long distance trips. Now it’s a ridesharing company for shorter trips. The original mission — to cut back on pollution and connect communities through carpooling — has remained the same, it’s just the execution that has changed.
But newsflash, that’s a pivot. After all, Google and Ask Jeeves probably had similar missions — to help people find information — but there’s a reason one is a dominant company with a $335 billion market cap and the other is largely irrelevant. It’s the strategy for achieving the goal that mattered in the end, not the goal itself.
So is BranchOut pivoting? After all, the original product still exists. Marini says they’ll be refocusing on user acquisition and growth, now that they’ve launched Talk.co. But that might be a nice transition line as the company focuses more and more on Talk.co. Only time will tell.
So when is a pivot a pivot, and when is it just a new feature? The word pivot comes to mind when either the original company is struggling or people are getting fired or reoriented to work on the new venture (vs hiring more people to grow the company).
For example, TaskRabbit reportedly fired 20 percent of its staff to shift its focus to temp work for enterprises. That seems like a pivot to me, although TaskRabbit swears up and down it’s not. BranchOut spun out an entirely new company with a different name that will run under the same roof and shifted some staff to work on that venture. That also seems like a pivot. Again, BranchOut would swear it’s not.
Why is pivot such a dirty word? Perhaps because there’s a lot at stake when a company has to shift its focus and devote resources to a new approach. There’s ego in the valley and people’s reputations on the line. Founders want to be known as the guys/gals who nailed it on the first go round. Investors get nervous if a company seems to be flailing. That’s why it’s easier to consider a pivot a ‘shift in priorities’ or an ‘added feature.’ Then once that feature pays off, you can just say that was always the plan.
It doesn’t help that us peanut gallery press can get a bit snarky about pivots.
But I don’t think people should be so ashamed of the p-word. It would be nice if a company spent investors’ money effectively on the first shot, but it’s called venture capital for a reason. It’s risky, nothing is for sure. It’s better to adapt with the changing tide than stay resolute with a strategy that’s not working. That’s one of the upsides to startup land — you’re smallish and can shift to fit where you’re needed.
I spoke with Lana Volftsun at non-profit The One Percent Foundation, and she thought pivoting was very important. She was the first person I had ever interviewed who openly admitted “we pivoted.”
When I asked her why, she said, “I’m really involved in the non profit space and I can’t even count the number I’ve seen close their doors in the last three years. It’s because they aren’t remaining relevant.” That’s the purpose of the pivot after all — keeping up with the times and staying relevant.
At the end of the day plenty of the greats pivoted. Twitter was originally podcasting company Odeo. Instagram was check-in app Burbn. YouTube was originally a video dating site called Tune In Hook Up.
It’s a staple move in the startup world and it’s not necessarily a bad thing. It’s about flexibility, finding market fit, and staying open to other possibilities. All important values in Silicon Valley.