Pivoting toward success: Knowing when and how to pivot


Knowing when and how to pivot is essential for any startup. This guide offers a look at how to use customer feedback and competitive benchmarks to figure out when a strategic shift could be your next best move.
Pivoting in the startup world is an art more than a science — but doing it right can be the make-or-break factor between success and fading away. I’ve experienced this firsthand as the founder of Nimble Storage. 

In “The Lean Startup”, investor Eric Ries recommends embracing pivoting as a way of life when you’re a founder. Don’t just think of a pivot as a backup plan — it’s a strategy for growth. Your startup product, messaging and targeting are all a series of experiments that your leaders and investors should be engaged with.  If your first big idea struggles to find traction, everybody knows there is a Plan B and a Plan C.

I’m going to walk you through the process of navigating the choppy waters of startup growth. We’ll explore when and how to pivot, and how you can read signs from your customers and competitors to confidently steer your ship.

Knowing when to pivot

Deciding when to pivot is a critical decision for startups. But as a founder, how can you recognize the right moment for a significant change? 

Here are some key indicators that it might be time for a shift:

You get negative or perfunctory customer feedback

Use customer feedback as your compass. Your prospects and customers will give you direct insight into how your product or service is perceived in the market. If you’re not getting enthusiastic feedback or if the product is not resonating with your target audience, it's a clear signal to reassess and realign.  You need more than “it’s a good idea.” Ideally your prospects recognize that your product will significantly improve an existing process and be willing to test it.

Beyond direct conversations, engagement metrics offer a quantitative view of how customers are interacting with your product. Low engagement scores and acquisition rates, under utilization, poor retention or high churn can all indicate that you’re not meeting customer needs. All of these issues might suggest the need for a pivot.

Pivot before Product

It is cheapest to pivot before you’ve invested significant time and energy in building a new product.  How can you decide to pivot even before you have a product? You have to check those engagement scores.  If you can’t build a community, if enough people are not visiting your website, reading your blogs or engaging with your posts, that’s a clear signal of a problem.

You fail to achieve a 10x advantage

In an existing market, launching a product that is marginally better may not be enough to capture market attention and drive customer adoption. Customers face big switching costs and uncertainty when bringing on a potentially unreliable new supplier. According to the “10x advantage” rule, your product should be 10 times better than the competition in some significant and valued way — whether it’s speed, cost, user experience or another key factor. Customers need a big incentive to switch.

You struggle to create a new market

If your product is defining a new category with no existing competitors (think Uber), then monitor if enough people are buying your story and your messaging. In this case you don’t have to be 10x better than the competition since there is no direct competition, but you have to unearth a serious need that customers weren’t aware they had.

There is more than one way to pivot

When you're getting a startup off the ground, adaptability is crucial. 

That means staying nimble enough to make shifts in three potential areas:
  • Your product: Tweak the features, functionality or even the core idea to meet customer needs.
  • Your messaging: Refine how you talk about your product's value to make sure your message really resonates with your audience.
  • Your target customer: If the people you're targeting aren't biting, consider whether there's another segment that's a better fit.
As you define your market and get to know potential customers during product development, you're running live experiments. How customers respond — or don't — will show you if you're on the right track. If your engagement isn't what you expected, it's a sign to change course.

Iterate. Propose an idea, gauge the reaction, then refine and redirect as needed. Your goal is to find product-market fit, and pivoting is how you’ll navigate your way there. Most companies compete in existing markets, so keep an eye on your competitors.  If they have a feature that is catching on, you need to jump on it. Likewise, be aware that they will be considering copying you. You need to offer customers your own differentiation plus the best of what competitors are selling.

The road to success rarely goes in a straight line. It's dynamic — testing, learning and adjusting — with the customer's voice as your guide. Embracing pivoting as a way of life positions your startup to fluidly respond to the market, and it boosts your chances of finding a path to success.

A real-world pivot: Nimble Storage’s market entry strategy

In a current market, you have the advantage of being able to leverage an existing customer need - which in the case of enterprise storage is faster response times.  It makes everything including software development, email and databases go faster. That was the case with Nimble Storage. With years of experience in storage, we knew the landscape, the feature sets and the key players — including EMC, NetApp and Dell.

As is often the case we wanted to leverage a significant new technology: flash memory for storage systems.  We knew the incumbents would have to put in a lot of effort to change their existing systems to fully leverage flash.  So we proposed two products to our investors:
  • A flash based accelerator that would be complementary to and sit in front of an EMC or NetApp
  • A complete storage system that would directly compete with all the existing storage vendors
Our investors loved the first idea.  There would be no competition and the incumbents could even help sell our product.  They were quite wary of the second product.  Competing directly against multi-billion dollar companies was not for the faint of heart.

We got funded and started developing.  But six months in, our competitors announced that they would start incorporating flash into their existing products.  We knew these were hack jobs incapable of performing what a grounds up design like ours would achieve, but the incumbents could now muddy the waters and we certainly couldn’t rely on them to sell our product.

So our competition drove us to pivot.  We eventually got our cautious investors to abandon the first plan and move to the second.  Until we actually started selling we couldn’t be confident of the market research and community building we’d done, but when we beat our first quarter’s sales by more than 3x of our plan, we knew we were on to something. We eventually made our investors a lot of money.

When should you pivot, and when should you wind down?

Entrepreneurs are hardwired to resist failure, and let’s face it — many of us will push boundaries to keep our startup afloat. This tenacity is fundamental to the startup ethos, but it begs the question: How do you know when to pack it in?

According to Eric Ries, your initial capital determines the number of pivots you can make. This reframes the way founders should think about their resources, and it can help you put the focus on agile, thoughtful experimentation.

Keep in mind that the earlier in the startup journey you choose to pivot, the less expensive it will be. Early pivots prevent the deep investments that come with scaling an unproven product. That helps you preserve your capital for more iterations down the road. 

The most common reason to force a startup to shut down is running out of money. You can only pivot as long as your financial runway allows. Once the capital dries up, if you still haven't found a viable product-market fit, it may be time to think about winding down.

The pivot point: How to course-correct your startup

The road to success usually requires some detours, and knowing when to pivot can get your startup on the right track. This post looked at how key turns shaped Nimble Storage and provided tips for navigating these critical junctions.

Here are the main things to take away:
  • Pivoting is not a sign of failure. It’s a strategic response to market feedback.
  • Look for lack of early and enthusiastic engagement as a sign you might need to pivot
  • Aiming for a 10x advantage over competitors is ambitious — but it’s necessary if you want to stand out.
  • Effective use of capital is about maximizing the number of strategic pivots you can make.
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