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Unit Economics

Why do pivots fail?

The "pivot" is part of startup lore. Most startups experience the need to pivot at least once, often early in their journey.

However, pivots often fail. Why?

1. Leaving it too late

Arguably the most common reason for a failed pivot is simply leaving it too late.

The data has been showing for a while that the current strategy is not working but founders fail to call out the elephant in the room or get mired in the sunk-cost fallacy.

This means the pivot is left too late, and the startup has insufficient runway to actually execute on the pivot.

2. The lure of the bright, shiny object

Many startups struggle with the initial market opportunity they are exploring. This is normal.

Along the way, they spot another, new opportunity that looks much more appealing.

This often results in swapping a market opportunity you understand really well, and know where the problems are, for one that simply has different problems; just ones you're not familiar with yet.

Out of the frying pan, into the fire.

Don't pivot until you have gathered enough data and conviction that the pivot is a net positive.

3. The incomplete pivot

Some pivots are larger than others but it is common for founders to misunderstand the degree to which things need to change. This leads them to fail to communicate to their team the full repercussions, resulting in a team which is partly carrying on as if nothing has changed.

It's important to understand the depth and breadth of the pivot and the implications for what everyone on the team is doing. Sometimes, pretty much everything changes as the result of a pivot.

4. Pivoting strategy but not the team

One aspect of the incomplete pivot is the tendency to change the strategy without also changing the size of the team, and the people on it. For example, changing from a B2C to a B2B2C model changes much about your go-to-market and the expertise you need.

5. Product mismatch

At the point of pivot, a startup will typically have an existing product into which many late nights, blood, sweat and tears have been invested. Given this, it's often hard for founders to accept that the pivot necessitates a quite different product.

The resulting attempt to force a square peg (existing product) into a round hole (new customers) results in a lot of confusion and thrash.

6. Failure to redo Customer Discovery

Finally, a pivot is also incomplete because founders fail to go back to the drawing board. The engineers want to keep building, the sellers want to keep selling.

What is actually needed is to take a pause and to restart thorough customer discovery to make sure that the unmet need and solution post-pivot are properly understood.


about 1 year ago

This is a great post Jeremy. Have some scars and stories to share too. 4 & 5 were things that we could done better with one of my past ventures. Either way, apparently that's why they say of all professions, entrepreneurship is the greatest test of self. :)

about 1 year ago

Founder & CEO @ 99.94 DM

This is a fantastic post and I wish I had read it a few months ago when I was driving my team to a pivot. Our problem closely fits with numbers 1 & 4 above. While we had some runway left I had evaluated that we needed to pivot rapidly and adapt to a changing market. Some of my co-founders were too much in love with what we built. I loved what we did too, but was more objective and data oriented around if enough customers loved it or not! By the time I had built some consensus towards a pivot we were dangerously close to the exhausting our runway. As a CEO this was a harsh learning process for me.

about 1 year ago

Founder @ Framed

Great post. Related but distinct is the pivot-as-placeholder. I had an experience where an XR company realized it was too early to market because dependent/enabling technologies were not mature but rather than an actual pivot, the founders decided to pivot to a market they had no passion for as a stopgap since they believed the real opportunity was just around the corner with the initial value prop. It was a slow painful slog through cash with no credible story for raising more as the dependent tech kept getting delayed.

Jeremy Burton core team
about 1 year ago

CEO | Founder | Managing Partner @ Platform Venture Studio

Thanks. Interesting case. I might categorize it as a special case of "incomplete pivot" but it has some unique attributes too.

about 1 year ago

Founder @ Community Centered Design

#2 is so common...

Of the successful pivots I've seen, most have been about scaling the mechanics that are really delivering value, not seeking new mechanics.

Nice post!

about 1 year ago

Founder & CEO @ Qwerkytoys, Inc

Great insights. I've experienced this first hand. :\