Rethinking the Pivot: New Perspectives on Startup Gospel

Before Pokémon Go became a global sensation, Nintendo was peddling playing cards. Before Howard Schultz put a coffee shop on every corner, Starbucks was a storefront selling coffee beans at Pike Place Market in Seattle. Like their predecessors throughout history, many now-iconic companies have changed trajectories — or pivoted — before achieving success.

The term “pivot” entered the business lexicon relatively recently, popularized by entrepreneurs Steve Blank and Eric Ries in their blogs and in Ries’ 2011 best-selling book The Lean Startup1.  Ries has defined the pivot as “structured course correction,” made after customer feedback invalidates a firm’s business hypothesis2.  Unlike a simple iteration, a pivot is a substantive change to one or more components of the business model, such as the customer segment or value proposition.

“Pivots can be useful,” she has said, “but they can also mask a lot of things. What if you’re completely wrong as to who the customer is? What if the people you’re talking to aren’t really your customers? What if there are customers to whom you’re not talking?”

Expert entrepreneurs whom Sarasvathy has studied “talk to everybody and anybody,” she said. “They don’t assume they know who the customer will be or what the product will be. Instead, they co-create the product with self-selecting stakeholders.”

Although pivots have become commonplace, entrepreneurs should never underestimate their costs. Pivoting out of challenging situations can be similar to shutting down one business and starting a brand-new one.

Take Contraline, a company that launched with a novel “pet contraceptive.” A polymer hydrogel developed at the University of Virginia blocked the flow of sperm in the vas deferens, offering a reversible, nonsurgical alternative to neutering. “Pet owners  were interested in the humane aspects of our product,” said co-founder and CEO Kevin Eisenfrats, a graduate of UVA’s School of Engineering and Applied Science.