I recently wrote a piece about the importance of finding Product-Market Fit (PMF) in the journey of a company. It ran through the steps to achieving PMF; starting at the ideation phase, moving into customer testing, building, analysing and iterating until you hit it. But what happens when, iteration after iteration, you are still unable to cut-through noise and confidently state (read: feel the pull) that PMF has been achieved? It might be time to pivot.
Although pivots may sometimes be indicative of a business in a spot of bother, they are absolutely not a sign of failure, but rather a business making a proactive and strategic decision to increase its chances of success. Indeed, sometimes competitors will force a company’s hand to pivot, and sometimes a change may be forced by a myriad of internal factors. Often changing market conditions, particularly the technological capabilities of the time, may serve as the catalyst for a pivot. Of course, pivoting does not always result in a happy ending, but when it does, it can be a beautiful thing. Types of pivots can include:
They can be subtle, like expanding the target market for a product or service (that may even go unnoticed to users at first). Obvious, like changing the way users pay for a product or service. Or downright extreme, like changing the fundamental product or service around which the business exists to provide.
Whether the pivot is subtle or obvious, its objective is to speed up the revolution through the PMF cycle. And so, while the extremity of the pivot is of secondary importance to its success in helping achieve a desired outcome…this list is dedicated to the brave folks who threw caution to the wind and pulled off some truly momentous pivots!
Original member of the FAANG cartel, now Magnificent Seven, Amazon’s early days featured Jeff and a few employees walking books to the post office to fulfil the small number of orders they received online. From there, they moved into the selling of CDs and DVDs before a more serious pivot that saw the launch of the third-party marketplace. Now, the company—worldwide one-stop shop for every product under the sun, logistics giant, web services behemoth and more—under incredible and ambitious leadership has woven the humble pivot into the very fabric of its DNA.
As the world’s most popular app for photo sharing and used by more than 2.5B people, it would be easy to assume that it was developed for that specific purpose. However, Instagram actually began life as a location-based social network called Burbn. Admittedly, there was a photo sharing element within the platform, but the founders thought it wasn’t differentiated from a competitor, Foursquare, and so pivoted to focus solely on photo-sharing and rebranded as Instagram—a portmanteau of ‘instant camera’ and ‘telegram’’. The trimmed down product quickly resonated with users, leading to an acquisition by Facebook for USD1B in 2012 (which now sounds cheap but was 27% of Facebook’s revenue at the time).
Originally inspired by FAANG colleague Amazon, the Netflix founders set out to dominate a large category of portable items sold over the internet. They initially started as a DVD rental-by-mail service, testing out a few different revenue models before settling on a flat-fee/unlimited rentals set-up. However, when data speeds and bandwidth costs in the mid 2000s allowed it, the Blockbuster killer was able to realise its long-term vision and pivoted to a subscription-based streaming platform that would completely revolutionise the entertainment industry and the way people consume media.
Nokia hasn’t always been the consumer electronics company that we know and love (more so in the late ’90s and early ’00s when it dominated the mobile phone market producing legendary devices like the 3210 and the 8210). Before this, it was founded as a pulp mill producing items including toilet paper before moving into rubber and cabling. Nokia pulled off a second pivot (one likely made out of desperation) through the exit of its mobile phone business and into its current business model, which predominantly consists of a networks and technologies division. Today, despite being relatively unknown to modern day consumers, Nokia still generates c.USD30B in revenue through its endeavours.
There is no question that the DNA of Nintendo is in gaming, but way back when the company was founded it the late 1800s, it produced and distributed Japanese playing cards — popular at the time in gaming parlours run by the friendly men of the Yakuza. Hard to imagine Mario and Luigi resonating with this crowd. A partnership with Walt Disney in 1959 enabled Nintendo to incorporate well-known characters into its card games, which opened the children’s market. It wasn’t until the late 1960s that Nintendo entered the electronic game industry. Since then, it has become one of the worlds most beloved gaming companies, continually innovating and inspiring gamers all over the globe to a market cap of around USD60B.
Anyone heard of Confinity? Didn’t think so. The small company developed security software for handheld devices back in the late ’90s but after little success pivoted to become a digital wallet. After merging with a financial services company called X.com (Elon creation and recent deposer of Twitter), the business was renamed PayPal and became the preferred online payment system for eBay (after they acquired it), which propelled its name into payment processing fame. It spun out from eBay in 2014 into a separate publicly traded company and now processes more than USD1T in payments per annum.
That colourful, gooey stuff, almost called ‘Rainbow Modelling Compound’ actually lived a previous life as a cleaning agent to remove coal residue from depression-era wallpapers. But following World War II—with the transition from coal-based home heating to natural gas — demand for the modelling clay waned leading the company to the verge of bankruptcy. As luck would have it, the founder was made aware of a newspaper article containing a picture of a nursery school using the putty in their art projects. The children had spoken, and the founder listened. The company pivoted its operations and began manufacturing the child’s toy shortly after, adding some additional colours in for good measure. Over three billion containers of the good stuff have since been sold.
The team at Tiny Speck had been busy developing an online game called Glitch. As it turns out, they were better at developing internal messaging tools than games. Glitch never got out of beta and was shortly shutdown, but the team made the brave and ultimately brilliant decision in 2013 to focus on commercialising the team’s communication platform formerly known as Linefeed and rereleased as Slack (Searchable Log of all Conversation and Knowledge). Slack has gained widespread adoption in the business world and after entering a partnership to collaborate with Atlassian in 2018, it listed as a public company and was then acquired by Salesforce for USD30B in 2021.
The future of X (nee Twitter) is uncertain at the moment but if the business was to pivot, it would not be for the first time in the company’s history. Back in 2005, a small podcast directory and search destination business called Odeo held a daylong brainstorming session and saw merit in exploring the idea of a young Jack Dorsey, which was ‘one to many’ SMS communications. Dorsey published the first tweet in 2006; ‘just setting up my twittr’ and the microblogging social media platform soon took off. Although Odeo continued to pursue its audio and video search model in a few different formats, it has since been retired while Twitter became one of the most influential platforms of a generation and was recently taken private by Elon for USD46.5B.
Mr. William Wrigley Jr., back in the late 1800s, was looking for ways to incentive customers to buy his scouring soap of which free baking powder was one such option. After seeing some promise in the ancillary product, he pivoted into the baking powder business. Ever the salesman, old Willy was looking for a new way to supercharge his baking powder sales, which is where chewy comes into the story. Two packs of chewing gum were given away with each tin of baking powder purchased and (again) after realising that the gift was in fact more popular than his actual product, he made another, and this time final, decisive pivot into the chewing gum game. Wrigley’s became one of the most prominent chewing gum players on the planet and was acquired by Mars International for USD23B in 2008.
The greatest platform of all time (IMHO) wasn’t always the default destination to stream everything from obscure music, funny cat or how-to videos but rather a video version of an online dating service inspired by the website Hot or Not. After struggling to attract users, ads on Craigslist were posted offering women $100 to upload clips of themselves. Clearly an unscalable model, the strategy was abandoned and the team pivoted to one where any videos could be uploaded. From there, amateur broadcasters and voyeurs did the rest. It was acquired by Google in 2006 for USD1.65m in stock in what was clearly an incredible deal for Google with the company doing more than USD30B in revenue and reaching 2.5B monthly active users.
What outrageous manoeuvres these are! All accomplished by superb founders with bold visions and excellent execution. Theo list is obviously non-exhaustive and there will be countless other examples of companies, both public and private, that have pulled off outstanding pivots. But you would be hard pressed to find more extravagant shifts in business strategy.
How satisfying it must have felt for these founders, sometimes on the brink of oblivion, to look back and see the fruits of the new directions they took — even if the pivots were the product of companies evolving to take advantage of new technologies. It’s never easy to decide to pivot and I imagine in the above examples there was uncertainty, heated debate and obviously a huge amount of risk involved.
So, to the founders out there, struggling to rotate through the PMF cycle — and seemingly fighting an uphill battle either internally or against external factors. Don’t forget — you have a pivot(s) up your sleeve. Exactly what you change and to what extent you change it, is up to you. There is absolutely no need to go extreme if it is not required. Sometimes a simple shift in the way a product is sold or priced for example will enable you to operate more efficiently, profitably and capture additional upside. The point of this piece was to highlight that anything, regardless of how uncurbed it may seem at the time, is possible.
This article was written by Tristan Terry of Aura Ventures. Read more about venture capital.