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Why Startups Pivot: A Simple Guide by Type

when and how to pivot startup

Pivoting, or changing direction, is a key strategy for startups when their initial plan doesn’t work out. Let’s explain why different types of startups might pivot and some real-life examples to illustrate these changes.

SaaS (Software as a Service)

Why Pivot?

  • Low User Engagement: Users aren’t using the software as much as expected, or they stop using it quickly.

  • Monetization Issues: Struggling to turn free users into paying customers.

  • Feature Overload: Too many features can confuse users and dilute the product's main value.

How to Get Customers on SaaS

  • Understand Your Market: Research and identify your target audience.

  • Offer Free Trials: Allow potential customers to experience your service without commitment.

  • Optimize Onboarding: Make the signup and initial use as seamless as possible.

  • Collect Feedback: Regularly gather and act on user feedback to improve the service.

Real Example

Slack: Originally a gaming company called Tiny Speck, Slack shifted to become a leading communication tool used by businesses worldwide.



Why Pivot?

  • Market Demand: Products are not selling well because there isn’t a strong demand.

  • Supply Chain Issues: Consistent problems with suppliers or logistics can make it hard to operate smoothly.

  • Scalability: Finding it difficult to grow the business or expand the product range.


How to Pivot a Startup in eCommerce

  • Identify Trends: Stay updated with market trends to adapt your product offerings.

  • Improve Logistics: Enhance your supply chain management to ensure timely delivery.

  • Expand Product Range: Introduce new products to meet diverse customer needs.

Real Example Initially a social network, it pivoted to become a design-focused flash sales site.

Consumer Apps

Why Pivot?

  • User Growth: Slow increase in user numbers despite marketing efforts.

  • Monetization: Difficulty in finding a way to make money from the app.

  • Engagement: Low daily active users or short usage times.


How to Pivot a Startup in Consumer Apps

  • Focus on Core Features: Streamline features to enhance user experience.

  • Improve Monetization Strategies: Experiment with different revenue models like in-app purchases or subscriptions.

  • Boost Engagement: Implement features that encourage daily use and longer sessions.

Real Example

Instagram: Started as a location-based check-in app called Burbn, but pivoted to focus on photo sharing.

B2B (Business to Business)

Why Pivot?

  • Sales Cycle: Extremely long and complex sales processes.

  • Customer Feedback: Indications that customers need something different than originally planned.

  • Market Size: The target market is smaller than initially thought.


How to Pivot a Startup in B2B

  • Shorten Sales Cycles: Simplify the sales process to close deals faster.

  • Listen to Customers: Use customer feedback to guide product development.

  • Reassess Market Potential: Ensure the market size is large enough to sustain growth.


Real Example

PayPal: Initially aimed at enabling payments for Palm Pilot devices but shifted to become a leading online payment platform.


Understanding why startups pivot can provide valuable lessons on how to pivot a startup effectively. Whether it’s about improving user engagement, finding the right market demand, or shortening sales cycles, these insights can help startups adapt and succeed in a competitive landscape. Pivoting isn’t a sign of failure but a step towards finding the right path for growth and success.


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