Why Startup Pivots Almost Never Work

Larry Kim

Published in

Mission.org

5 min readMar 12, 2018

When things go south, you can only pivot once. Here are four reasons why.

Failure happens. To everyone.

Every year we hear new tales about how entrepreneurs made mistakes that killed promising startups. Few companies will become unicorns — most will be donkeys.

Perhaps it’s for this reason that, in the startup world, failure is often celebrated.

But here’s the thing about startup failure. When things start going south, you can only really fail — or pivot — once.

A pivot is a glorified way of saying “oops.” Your vision didn’t match reality.

Whatever you thought you knew about your target market, customer, or product turned out to be ridiculously wrong. Now you need to make a dramatic change to your strategy — or your startup is going to die.

In reality, however, startup pivots usually never work. Here are four reasons why.

1. Your Investors Will Lose Confidence in You

Pivot once? Shame on you.

Pivot twice? You’ve lost me.

Third pivot’s the charm? No! No! No!

Pivoting is a big deal. You are no longer doing whatever it is that made your investors invest in your startup. However, at this point your investors will likely view a pivot as a sign that you are learning and adapting.

But if you try to pivot a second time? They will reach the “enough is enough” stage. After all, your startup is now twice removed from what they initially invested in.

They’ll fire you and bring in a turnaround management team. Or they’ll just decide to cut their losses and bring in a new CEO to manage the liquidation of your company.

2. Your Sales Team Will Leave

Your sales team needs to make sales to make their quotas and commissions. They need new features and functions to make their numbers (if they’re selling software products).

When your salespeople learn about your startup pivot, they will probably quickly realize that it’s going to be another year until the company gets things right. There’s nothing worse than selling something that is going away and waiting a year for the next thing to appear.

In the meantime, your top salespeople won’t feel jazzed about working at your startup. Selling a dying product with no new features is super hard!

When they fail to hit their numbers in the next quarter, and realize it may be like this for at least another nine months, they will start looking elsewhere — and you’ll have to start looking for new salespeople.

3. Your Engineering Team Will Leave You

Your software engineers have been busting their asses writing code to meet your deadlines. Then, all of a sudden, a pivot happens. Now they’re told they have to start building something else.

None of that code they wrote over the past year (or however long) will ship. The project they were working on so hard is suddenly just dead. It’s incredibly demoralizing.

If you have to tell your engineering team that you’re pivoting a second time? Forget about it! They’re gone.

4. Your Entire Team Will Tune You Out

People need a bold vision to believe in, especially at startups. Your team will follow you into battle if they believe in your vision.

But once you pivot and say, “Here’s another bold vision we should go after,” you’re also admitting that your prior bold vision was completely wrong.

People will start thinking you aren’t quite as visionary as they thought. You’ve lost half the company at this point.

When you pivot, your team starts tuning you out. Even if you finally discover the correct business model, it won’t matter. Your people will no longer believe you anymore.

Is There a Good Way to Pivot?

Pivots CAN work.

One smart way to pivot is by downplaying the changes when you talk to your team. Even though, in your mind, you clearly know what needs to be done, don’t make your pivot feel like a dramatic change.

Rather than saying you’re going to blow up your existing product, sell it to your team more like you want to add a new product — it’s just one that will be completely different from your current product.

Ultimately, a pivot is about shifting strategy, not tactics. It’s not about whether you should use Facebook Ads, Google AdWords, or content marketing to reach your target market. Tactical changes happen all the time and aren’t a big deal.

You’re changing what you’re selling and to whom you’re selling it. This definitely is a big deal. And you can only miss your market once.

Yes, Pivoting Can Actually Work!

Pivots HAVE worked.

My company, WordStream, started out providing keyword research tools (we offered one tiny feature that allowed you to upload keywords to Google AdWords). We later found out that keyword research had a customer lifetime of five months.

So we radically changed our offer. WordStream become a PPC marketing platform instead, helping marketers manage Facebook Ads, Bing Ads, reporting, call tracking, landing page hosting, etc.

The customer lifetime was suddenly much longer (many, many times longer and more valuable). So pivoting actually worked for us (and we’re one of the fastest growing private companies in America for the last 4 years)

Conclusion

Celebrate failure if you want — but don’t celebrate too much failure.

If you find yourself needing to pivot a second time, you’re better off cutting your losses and starting fresh. Walk away from your startup like it’s a house with an underwater mortgage.

Just end the business. Start a different company from scratch, using your second pivot idea as your new bold vision.