Pivot

A pivot is a deliberate change in direction based on what you have learned. You keep the vision and much of what you have built, but you change a core piece of the plan: who you serve, what you build, how you charge or how you grow. Eric Ries defines it in the Lean Startup method as a structural course correction to test a new fundamental hypothesis about the product, strategy or engine of growth.

When to pivot

In the lean startup loop you build, measure and learn, then decide whether to pivot or persevere. Pivot when the evidence says your current drivers are not producing the results you expected, and a few honest rounds of improvement have not changed it.

Signs it is time:

• Customers like the idea but do not pay or do not come back.
• Retention is flat or falling despite product changes.
• The market is much smaller than you assumed.
• The channel you counted on does not work, and you have tested several others.
• You keep hearing about a different problem in customer conversations than the one you are solving.

Common kinds of pivot

• Customer pivot. Same product, a different buyer. A tool built for marketers turns out to fit agencies better.
• Problem pivot. Same customer, a different problem. Your users keep asking for something adjacent.
• Feature pivot. One feature becomes the whole product.
• Pricing or model pivot. A one-time product becomes a subscription, or a free tool becomes paid.
• Channel pivot. You change how you reach customers, for example from outbound to SEO.

Example

You launch a $20 per month tool for restaurants to manage staff schedules. After six months you have 25 customers and 40 percent monthly churn, which is $500 in MRR. 25 times $20 equals $500. But you notice that 10 of your users run bars, and they have almost no churn and ask for tip pooling. You rebuild around bars at $49 per month. A year later you have 60 bars and $2,940 in MRR. 60 times $49 equals $2,940. That is a customer pivot.

A pivot is not

• Giving up. You are acting on evidence, not on a bad week.
• Random change. Each pivot should come from a specific hypothesis you can test.
• A fresh start. Reuse code, audience, learning and customers.

For small and bootstrapped teams

Your biggest limit is time and money, so pivot early, while you can still afford to. Check whether you are default alive, meaning on current revenue and costs you reach profit before cash runs out. If not, a pivot is a way to change the numbers. Aim to reach product-market fit in the new direction, and track it with a simple metric, such as retention after 90 days, so you know whether the pivot worked.

Related terms

• Lean startup
• Product-market fit
• Customer development
• MVP (Minimum viable product)
• Default alive
• Traction

Sources

• Lean Startup principles, Eric Ries
• Customer development articles, Steve Blank