The pattern · Reinvention
How to pivot a business without losing direction
Startups that changed course once or twice raised 2.5 times more money, says Startup Genome. How to pivot without abandoning what matters.
Pivoting is changing a business's route without abandoning the destination. The product changes, the customer changes, the model changes; the problem you want to solve and what you've learned stay. Almost every company that made history went through at least one of these changes. Research suggests that changing once or twice helps. Changing all the time, or never, gets in the way.
What the research shows
In 2011, the Startup Genome Project analyzed more than 3,000 tech startups to understand what separated those that grew from those that died. One finding drew attention: startups that pivoted once or twice raised 2.5 times more money, had 3.6 times better user growth and were 52% less likely to scale prematurely than those that pivoted more than twice or never pivoted (Startup Genome Report, 2011).
It's an applied research report, not a peer-reviewed academic study, and it shows association, not cause. But the message matches what many founders say: stubborn about the destination, flexible about the path.
Who lived it
Stewart Butterfield wanted to make an online game. With the team spread across North America, the engineers created an internal messaging tool to talk all day while they developed the game, called Glitch.
The game didn't work out. In 2012, Butterfield decided to shut it down. But the team was sure of one thing: they no longer wanted to work without that tool, and other companies probably didn't either. In 2013, the tool became a product and got a name: Slack (Slate). What had been the backstage of a failure became the main business.
In Bairo's journey
The professional life of Bairo Leandro Gonzalez Martinez is a sequence of changes of course.
It began with a salon, opened with his partner when their daughter was born. From the salon came a hair treatment course. Then came his own brand of natural-based cosmetics. When his partners pushed him out of a technology project, he reinvented himself with events and digital printing. He saved capital and switched positions: from founder to investor. When that investment didn't hold up, he moved into terrain he didn't know: currencies, banks and digital networks.
Later, while building the foundation of the CEASA Bank platform, he heard another no: banks refused to integrate his solution. He changed course again. He focused on the technology he could build on his own: artificial intelligence, financial messaging in the international ISO 20022 standard, blockchain and tokenization of real assets. The banks that didn't want to integrate the idea ended up teaching him to build his own infrastructure.
Through every change, one thing remained: the drive to create something new that solved a real problem.
How to develop this trait
- Write down your destination. Before changing route, know what doesn't change: the problem you want to solve or the people you want to serve.
- Measure before you change. Pivoting out of anxiety is different from pivoting on data. Define clear signals: sales, retention, customer feedback.
- Look at what already works by accident. Slack was born from an internal tool. Sometimes the answer is in a detail customers praise.
- Change one thing at a time. Swapping product, customer and model at once keeps you from knowing what worked.
- Take what you learned with you. Every abandoned route leaves skills, contacts and lessons. List what goes with you.
- Don't confuse pivoting with running away. Changing every time it gets hard is giving up in installments.