Friday Forward - Pivot Points (#508)

The practice of pivoting applies far beyond startups

In the early 2010s, entrepreneur Stewart Butterfield and his team of developers were building an online game called Glitch. Butterfield’s team eventually decided to shut Glitch down after it struggled to gain traction with users over years of effort.

But amid that failure, the team noticed something interesting: the internal messaging system they had built to collaborate on Glitch was really effective. In fact, it solved many of the communication problems they had experienced in other professional roles. So, the Glitch team pivoted.

They took the bones of that tool, reimagined it as a standalone product, and launched what would become Slack. After growing a subscriber base of millions of users, Slack was acquired by Salesforce for over $27 billion in 2020.

The Slack pivot is now startup lore. It’s frequently discussed in business schools, celebrated in venture capital circles, and cited as proof that persistence and adaptability pay off.

And, as with all things, pivoting can be very effective when executed properly, and for the right reasons. The ability to adapt in response to market feedback is crucial, because product-market fit is everything in business. If no one is buying what you are selling, or they aren’t willing to pay a sustainable price for your offering, you can either adapt or die.

But we need to make a distinction between thoughtful reinvention and flailing transformation. Because here’s the catch: for every Slack, there are thousands of failed pivots no one ever hears about.

I have seen talented people get stuck in a loop of constant pivoting, chasing a new idea or model every time the market rejects their product. But a pivot is not a magic reset button. It’s a gamble that forces you to start over with less momentum, a shorter runway, and fewer resources. Having burned through some of your financial, emotional and reputational capital, your next failure may cause more long-lasting damage.

Despite those risks, many people convince themselves their initiative or business is one pivot away from breaking through. This is a lot like the kids who drop out of school because they believe they will be the next Mark Zuckerberg. It’s dangerous to overlook the clear survivorship bias at play: we celebrate rare success stories and ignore the thousands who tried something similar and failed.

The key to making an effective pivot is to understand exactly what is not working and why. Sometimes, a tweak in messaging or targeting can unlock demand. Other times, the business has the wrong team, or the market is just not mature enough. But more often, the product simply doesn’t address a problem painful enough that people are willing to pay a premium for a solution.

While I don’t have a clear cut rule to share for when a pivot makes sense, my experience is that you need to quickly find real signs of traction in order for this type of change to be viable. Traction does not mean likes, compliments, free trials, downloads, or vague expressions of interest. It means open checkbooks, raving fans and revenue.

That was true with Slack, which drew 60,000 users within months of being released to the public. It grew rapidly not because of clever marketing or repositioning, but because it solved a paint point so effectively that people were willing to pay for that solution. If the same isn’t true for your product or service, the odds are very much against you.

The practice of pivoting applies far beyond startups. In our personal and professional lives, we sometimes realize our current path is not delivering the outcomes we want. To make the tough call between a small adjustment or a full reset, we must reflect honestly and have the courage to walk away from sunk costs.

Adaptability is a strength, but successful pivots like Slack are uncommon and almost never born from panic or desperation. They come from clarity and a deep understanding of a solution that is truly needed in the moment.

Quote of The Week

“The hardest thing to learn in life is which bridge to cross and which to burn.” – David Russell

Have a great weekend!

-Bob
robertglazer.com