Pivoting: When Startups Change Their Mission or Focus

The term “pivot” has become a common word in the startup vocabulary in recent years, describing the process of changing a startup’s mission or focus. Pivots can range from minor changes, such as switching the target customer from enterprise to mid-market, to major changes like Slack, which shut down the game they were developing and instead focused on the internal messaging system they had created for game development.

Startup success is rarely a straightforward path. Along the way, entrepreneurs will inevitably question whether they should continue down the same path or not. To help make this decision, here are some key points to consider when deciding whether a pivot is the right move for your business.

1. Reconfirm Your Vision

Take a step back and revisit your long-term vision. Without considering the current challenges you face, do you still believe in your vision? Does it still excite you? Is there evidence to support that your vision can become a reality?

2. Set Aside Sunk Costs

No matter how much time and money you have invested in your current direction, it’s important to set those aside when assessing whether to continue down the same path. Ask yourself, if you knew everything you know now about the current direction, would you start down this path today? If not, then it’s time to change direction, regardless of the investments made so far.

3. Consider External Input

Even if you still have faith in your vision, it’s important to look for evidence from the market that your vision is in demand. What are customers, partners, competitors, the press, and industry analysts saying about your vision? This can be a difficult task, but it’s important to assess the signals the market is sending you.

4. What Can Be Accomplished Within Your Runway?

The reason many startups fail is that they run out of money. Therefore, if you’re considering a pivot, it’s crucial to make sure that sufficient progress can be made in the new direction to secure additional funding or reach profitability. It’s no use building a 10-foot bridge if the chasm is 100 feet long. This is especially true for growth-stage companies with over $5 million in revenue. Early-stage investors may take a leap of faith, but growth-stage investors won’t.

In conclusion, pivoting can be a difficult but necessary decision for startups to make. By considering your long-term vision, setting aside sunk costs, considering external input, and ensuring that progress can be made within your runway, you can make an informed decision about whether a pivot is the right move for your business.