Good Pivot Bad Pivot

It’s March 18th 2020. San Francisco is going under lockdown in a few hours. The last flight to Orange County has 3 passengers on it--I’m one of them. I’m moving in with my fiancee for however long this pandemic thing is going to last.


I’m thinking about the coming layoffs, our employees who are anxiously working from home, and mostly about the fact that I have no idea what I’m doing.


I wish to tell you how I heroically led my team through a successful pivot during a raging pandemic. That would be a nice fiction story.


Instead, I’d like to tell you the real story. How that pivot failed. And how we recovered and pivoted once more, this time successfully.


The pivot is an integral part of the product-market-fit journey, and every successful startup experiences it sooner or later. As such, we must be publicly sharing our failed pivot experiences.


Guess I’ll go first.


A Tale of Two Pivots


My startup started off as an innovation management platform for cities. We helped our customers find technology solutions for their problems and test them on a small scale. We weren’t quite succeeding and weren’t quite failing – an entrepreneur's worst nightmare.


As covid-19 hit, innovation became our customers' last priority. Within weeks we launched a new product called UrbanLeague that helped public servants share their pandemic-related challenges and solutions in one safe space. UrbanLeague got good press and a lot of interest, we were onto something. We quickly realized that that something was FOMO. Our users didn’t want to miss out but didn’t want to engage either. It was like Facebook except that nobody was posting.


After the UrbanLeague craze we took a step back. We spent 3 months researching, and eventually started building a procurement platform for cities. Things started clicking from there, and today we are helping dozens of cities spend millions of dollars more effectively and responsibly.


While I’m tempted to tell you every detail about these experiences, it is more useful to highlight the key differences between a failed and a successful pivot, which is what I’ll be doing in the remainder of this article.


I’ll be referring to UrbanLeague as the bad pivot and the procurement platform as the good pivot.


Acknowledge the Pivot, Then Go All In


Even before the two pivots, we had “silent” pivot attempts. By silent I mean that we were pivoting without realizing it.


The product team and I worked on a new product direction. The new product had a very different value proposition, it allowed our customers to learn from what other cities have tried before them. I said, and believed, that “it is just a big new feature.”


My co-founder and the business team worked on selling to a new type of customer. Instead of selling to cities, they were now selling to associations of cities. He said that “it is just a way to get cities faster.”


The reality was that both efforts were fundamental changes to our business, but we treated them not as pivots but as side projects. We ended up spending a whole year juggling two pivots and failing on both.


The worst part? We will never know how big either of these pivots could’ve become.


A pivot that is not recognized as such is doomed for failure. Pulling off a pivot is beyond hard and requires everyone's full attention. Don’t treat it as a side project. And please don’t do two simultaneously.


Calibrate Your Speed


Our bad pivot was scoped and defined in one week. It was so rushed that we based the trajectory of the company on 3 conversations with customers who were kind of busy dealing with a pandemic. The good pivot was based on 3 months of research and nearly a hundred conversations.


To calibrate your speed, it is critical to break down a pivot into two steps:


  • Defining the direction. This step can and should take time, and leverage lots of research. A timeline of 1-3 months is reasonable, and it’s better to err on the side of taking more time than needed than less, because you’re going to put a lot into this

  • Execution. Once executing, you must move as fast as possible. Launch the smallest thing possible and iterate rapidly, lean startup style


In both pivots we executed super fast, which I’m proud of. But with the bad pivot, we hadn’t taken the time to define the direction based on research and good fundamentals. It was like buying an expensive lottery ticket.


I strongly believe that slow startups will never win, but going too fast is also a thing. Do proper research and press the gas once you’re on the highway and facing the right direction.


Less Building, More Validating


I know that you think you know this and I know that you are wrong.


With the bad pivot we essentially built an exclusive and well-moderated Facebook group for public servants. Guess what? We could’ve provided the same value by starting a Facebook group and building nothing.


Because we came from a mature product mindset, we didn’t balance validating against building well. When you’ve got no validation, the only thing to do is validate.


With the good pivot we did better. First, we had initial validation from the research period. Then we launched the smallest thing possible by stitching the existing product with a Google spreadsheet and human work in the background. That Frankenstein of a product was definitely a monster, but it allowed us to quickly put something in the hands of users.


Focus on validation and build as little as possible to get it.


Change Exactly One Fundamental Thing


When you pivot, you want to change exactly one fundamental thing about your business.


Why?

  • Changing 0 fundamental things is not a pivot

  • Changing 2 fundamental things will lead to inconclusive results. A pivot is ultimately an experiment so run it as such

  • Changing as little as possible ensures that you can leverage as many strengths, capabilities, and assets that you’ve accumulated. You don’t want to start a new company from zero

I missed this point with the bad pivot. The only thing that didn’t change was the word government. We changed the problem, solution, business model, go-to-market, and the nature of the product from B2B to B2C. Good example of what not to do, unless you are optimizing for sheer fun.


The good pivot is better to learn from. We kept everything constant except for the problem. The problem changed from “helping cities innovate” to “helping cities buy new things”. Luckily, these are very similar processes: defining the challenge, finding solutions, vetting those solutions, and then deploying the best one.


By changing only the problem variable, we were able to leverage most of our technology, customers, and knowledge to quickly build a great product. And by changing this variable in a fundamental way, we were able to finally become a must-have solution and change the trajectory of the company.


Two side notes:

  • It is okay to make more fundamental changes as a consequence of the core one. But you should always start from one fundamental thesis change

  • Slack has pivoted from gaming to work communications. Pivoting into something completely new is possible, but that’s playing the startup lottery

Make Sure You're Not in the Desert


Your pivot will quickly give you negative or positive signs. Be open to seeing them the way they are, set clear goals and theses and don’t fall in love with your solution yet. Make sure you’re not in the PMF desert. Your goals should have numbers and dates to prevent your brain from playing tricks on you.


We did this remarkably well with our bad pivot. We did not allow the positive PR, the impressive signup rate, and seeming excitement blind us. We knew that this product's real measure of success was public servants sharing their challenges and solutions. We set goals around that, worked hard on improving engagement, and when engagement remained flat we called it quits after 3 months.


We could have kept going for 6 months or a year longer. It was very tempting because there was still hope for a breakthrough, and the concept seemed so valuable. If we did, we would have wasted our final chance at a pivot on something that wasn’t working.


Escape the PMF desert as fast as you can.


Don’t Neglect Morale and Anxiety


This is the most important lesson.


A pivot is a period of intense uncertainty combined with intense hard work. Don’t neglect your own and your team’s wellbeing and sanity. How?


Start with yourself. This sounds selfish, but anxiety is infectious, and tranquility is too. I wrote before on how I’ve been managing my own anxiety and here’s a nice tweet about it.


Then move to your team. I’m fortunate to have a strong resilient team that is motivated by the mission, so that helped a lot. Here’s what worked on top of that:


  • Assume that there’s more anxiety and fear than you think. This will help you make it a priority

  • Check in often and check in genuinely. Think about questions in advance and be better than “how are you doing?”

  • Be more transparent and honest than comfortable. Good smart people respond better to the truth than to fuzzy and incomplete stories

  • Create enough slack for casual bonding and hanging out together. One of my best memories are the Zoom meditation sessions that one engineer got us into


I plan to study and write more about this topic in the future as it is hugely important.


Never Waste a Good Crisis


These two pivots have been the most incredible experiences in my startup journey. I went into the trenches with the best people I know, and we came out stronger, and a bit scarred, on the other side.


Here’s what I’ve experienced during these two pivots:

  • The team become stronger and more cohesive than it had ever been

  • We learned how to move twice as fast both with execution and hard decisions

  • I learned so much about myself, startups, and my team. This article doesn’t even scratch the surface

  • We worked endlessly because it was so incredibly exciting. Plus we were stuck at home with nothing else to do

The only guarantee is that the pivot will be burned into your shared memories. Make it count.


Use Your Brain, and Ears


For every single lesson that I’ve shared here, there is someone on my team who would disrespectfully disagree. This is because product-market fit is not an exact science.


Don’t try to fit some mold and don’t be afraid to break the rules. Take a step back often to think and assess the situation. Go back to first principles.


When nothing makes sense anymore, remember that creating immense value to your users is above anything else. Get closer to your users and listen. It is that simple.


Conclusion


Pivoting is like becoming an adult startup. You’ve accepted the fact that something fundamental is not working, and you’re putting your focus on fixing that fundamental flaw. It's an intense period that will strengthen you, your team, and your startup chance of success.


If you’re pivoting, you’ve earned my respect.


But for your pivot to succeed you need more than my respect. You must do the following:


  • Acknowledge the pivot, then go all in. Successful pivots are not side projects and require everyone's full attention

  • Calibrate your speed. Don’t rush the research but definitely rush the execution

  • Less building, more validating. Remember that even though you’re used to building, now it’s all about validating

  • Change exactly one fundamental thing. You’re running an experiment, not gambling

  • Make sure you’re not in the PMF desert. A well-executed pivot can still put you too far away from PMF. Use goals with numbers and dates to fight your human bias

  • Don’t neglect morale and anxiety. Start with your own and then focus on your team’s morale and anxiety. This is the most important thing

  • Never Waste a Good Crisis. The pivot will likely be the most vivid memory of your startup journey

  • Use your brain, and ears. Think from first principles and listen to your users. There is no playbook


See you on the other side.