As far as buzzwords go, to “pivot” is a term that many Australian start-ups would still respond blankly to. But the concept, now established in Silicon Valley, is starting to gain traction Down Under.
New businesses are going to ground, seemingly having failed, only to rise from the ashes under a new iteration.
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Previously, this would be called a “radical overhaul” or, less kindly, an “entrepreneurial disaster.” But pivoting is becoming a badge of honour for Aussie start-ups, especially in the tech space, that can nimbly extricate themselves from early mistakes in order to flourish.
Just witness the example of Nikki Durkin, who has already had an eventful career as an entrepreneur, despite being just 21 years old.
Durkin’s much-hyped clothing business, 99dresses, shut up shop earlier this year citing numerous difficulties, such as its rather arcane payment system.
Rather than this being the end of the road for Durkin, however, she has since been lavishly praised by blue chip US accelerator YCombinator and is in the process of getting the business back on track via an invitation-only process for customers.
It’s a story that is becoming increasingly familiar to Pollenizer, the Sydney-based incubator that first helped 99dresses get off the ground back in 2010.
“(Pivoting) is certainly something that we encourage at Pollenizer and that we observe more and more in the various start-up events,” says Pierre Sauvignon, who is product director at the start-up hub.
“Pivoting, when done right, is definitely a healthy thing for start-ups. You could fight the market to try to impose your vision, but that’s going to cost you a lot of money and still doesn’t give you any guarantee of success.”
“Start-ups don’t generally have that kind of money so should rather pivot as they go and learn what the market really wants.”
But isn’t pivoting just a more polite way of saying that you’ve stuffed up?
“That’s exactly right,” Sauvignon concurs.
“Pivoting is recognising – through validated learnings – that there is a better way to spend the business time and money than previously envisaged. Not recognising this would be the mistake.”
“I can’t actually think of many successful web-businesses that haven’t pivoted from their original premise.”
“To give you some recent examples, Instagram started as a location-based app called Burbn and Fab.com was initially called Fabulis and meant to be a social network for gay men.”
“Premises are generally flawed by definition. To quote German military strategist Helmuth von Moltk: ‘No battle plan survives contact with the enemy.’”
Brad Lindenberg has a less favourable view of the rise in pivoting. Lindenberg, who blogs for StartupSmart, founded Lind Golf in 2007, an online service that allows golfers to build their equipment via the internet.
“I understand that things don’t work out sometimes, but you should be able to build a business without pivoting,” he says.
“Some people see it as their right to do, but if you can pivot so easily early on in your business’s life, how big can your idea really be? If you look at the best businesses out there, they have founders who stuck with it and believed in themselves.”
“You have to keep the long-term in mind. It comes down to the business model too – if you’re trying to build the next Instagram for example, and you have no revenue, you can keep pivoting, but all you’ll be doing is pivoting in circles.”
Lindenberg concedes: “Pivoting can work if you pick up on a trend while you’re building your business. Groupon is a good example of this – they picked up on a trend and changed the business’s direction. But pivoting out of failure is questionable.”