Pulling Off a Successful Pivot
Realizing your idea isn’t working isn’t the end of the world: in fact, it’s a normal part of the early-stage startup journey. Deciding to pivot might initially feel disheartening and frustrating, but if you approach it the right way, it can be a great opportunity to take what you’ve learned from running your business and create something even bolder and better.
To learn more about how founders can tell it’s time to change course, and tips for making the process go as smoothly as possible, we spoke to Sam Steyer. Sam is the founder and CEO of Greenwork, a startup which connects climate companies with construction contractors, and shared the lessons he learned from performing a successful pivot.
When it’s time to pivot
There will always be times when running a business, gaining customers, and attracting investment feels like an uphill battle, but this doesn’t necessarily mean you need to pivot. You might need to keep working on your product before you start seeing the results you want, but as long as you see strong signs of demand, you should keep going.
The call to pivot involves more than just a gap between your expectations and reality. That might be the first clue, but pivoting should come only when you have concrete knowledge that there’s an insurmountable barrier between you and success. You’ve learned something new and unavoidable about the market that tells you you’re on the wrong path, and the fundamental core of your business needs to change.
Crucially, the decision to pivot should be driven by your customers, not investors. Don’t pivot because investors don’t like your idea or you can’t raise capital - take that as a sign you’re approaching the wrong people, or need to work on your pitch. When the well of customer demand is completely dry, or customers have signed up, but when you tried to carry out your process you found you couldn’t deliver real value, that’s when you should pivot.
The pillars of a great pivot
1. Make sure your whole team is still on board
Pivoting is a big decision and shouldn’t be rushed. Bring your whole company together, in person, to talk over the next steps. As you work together to figure out what the future of your business looks like, it’ll also become apparent who isn’t aligned with the new vision and will need to move on. If anyone stays at the company despite their lack of belief in the pivot, it will only breed resentment in the long term.
Take some time to make the hard choices about who’s moving forward with the company and who isn't, and be empathetic and generous with the people who’re leaving, perhaps allowing them to retain some equity. They likely played an important role in getting your company to where it is now, and by extension where it’ll end up.
2. Keep it light!
Pivoting might be intense and stressful, but it’s not a tragedy - most early stage companies aren’t going to get everything right the first time. You’re not a giant company who’s shutting down the world's most popular service, you’re a startup who’s trying something new. Try to stay positive and go easy on yourself.
3. Don’t settle
It’s normal to feel reluctant to let go of your initial plans for your company. But pivoting doesn’t mean you need to take a step down from your dream idea and embark on an unambitious, less exciting strategy. A sign you’re starting a successful pivot is that you feel equally as bold and optimistic as you did with your initial idea, if not more so. Don’t lose your ambition and idealism - think of pivoting as an opportunity to build something even greater than what you set out to do in the first place. For more on this topic, watch Dalton Caldwell on pivoting.
4.Build on what you know
You might be changing tracks, but you’re not going back to square one. You've been on a journey, and gained hard-earned knowledge and expertise. Don’t tear everything up and start from scratch - use your insight to transition to something new, but relevant to your previous work.
When you look back at the time you’ve spent running your company, what was the one thing you kept knocking up against? Take the friction you're seeing in the market that’s prohibiting your solution from existing, and rather than seeing it as an obstacle, view it as an opportunity you can lean into and build another product around.
5. Show customers your new product ASAP
The downside to pivoting is that, while you know you’re moving away from an unsuccessful idea, you can’t count on your new direction being perfect either. To quickly conquer this uncertainty, put the first version of your new product out in the world as rapidly as possible. You won’t know whether you’re on the right track until you start showing it to customers and getting feedback you can build from.
Breaking the news to external parties
Don’t worry too much about how your investors, advisors, and other stakeholders will react to the news that you’re pivoting. People who work with startups know that it happens all the time, and that sometimes the only other option is failure. Your investors will be well aware that your company hasn’t been doing well, so it’s likely they’ll have seen it coming.
It’s a good idea to call and explain personally to stakeholders who have invested time and money into making your company what it is. Be clear that you’re not opening up a negotiation or opportunity for discussion - you’re simply outlining the context which led you to the decision and expressing your gratitude for their support. Briefly explain the changes that you’re making and how you see their role moving forward.
Far from making you look like a failure, giving your stakeholders an informed and thoughtful argument about why you’re pivoting will actually cast you in a good light. It shows you understand the market and are adapting based on what you’ve learned, rather than blindly pushing through. But don’t act like you have all the answers, or try to compensate for the news that you're pivoting with an overly rosy update on your new direction. Make it clear that while you’re hopeful about your new ideas, you still need to test them out.
Sam Steyer is co-founder and CEO of Greenwork. Greenwork allows clean energy and electrification companies to build and manage networks of construction contractors (electrical, HVAC, etc.) anywhere in the US. Sam was previously a co-founder and Head of Analytics at Station A. Sam worked as a surrogate speaker on his dad Tom Steyer’s 2020 presidential campaign. Sam holds an A.B. in Applied Math from Harvard and an M.S. in Computational Math from Stanford, where he was a Co-President of the Stanford Energy Club. Sam lives in San Francisco with his wife and children and serves as a Lieutenant in the San Francisco Fire Reserve.