A Brief Guide To Startup Pivots (4 Types Of Pivots)

This post is by Elad Gil from Elad Blog

Most of the times, startup don't work. At some point it may make sense to either (1) give up on your original product and to sell the company, (2) shut down what you are doing and return money to investors, or (3) to pivot. You can read more on making the decision to give up in a future article. This post focuses on pivoting for small, early stage companies (e.g. 10 or fewer people).

A. The Four Types Of Pivots

1. Pivot inside your existing market, without clear new signal.
The most common type of pivot is to change direction in a market you are already in, but without any new information on the market or a new customer segment. This is the most common type of pivot, and the most likely to end badly. In general founders worry too much about sunk cost and the industry knowledge they have built. So when they pivot, they pivot inside their market instead of considering new areas to work in. In general, startups tend to fail due to bad product/market fit (either the product is not differentiated or needed, or the go-to-market does not work, or both).
"When a great team meets a lousy market, market wins
When a lousy team meets a great market, market wins.
When a great team meets a great market, something special happens." 
- Andy Rachleff, founder of Benchmark Capital
By staying the same bad market, the company may be doomed despite the pivot.

2. Reposition (Read more...)