Nimble Entrepreneurship - Why It’s Okay to Pivot
“Move fast and break things.” It’s arguably Mark Zuckerburg’s most famous quote. In some ways, this phrase has come to encapsulate the ethos of the Silicon Valley startup, and it has become the personal motto of thousands of entrepreneurs around the world. It’s an attitude that asks businesses to fail fast and pivot if customer data supports a shift in strategy. For many small business owners, a pivot can be scary, “but it's an effective business strategy that thousands of entrepreneurs have used to turn their near-failures into massive successes.” Below are three companies that fully embraced the “move fast and break things” mantra and pivoted their business model in response to customer feedback:
It's hard to picture a world without YouTube. In 2021, the company posted $28.8 billion in revenue. YouTube is the second most visited website on the internet with 34.6 billion monthly visitors. “In some ways, it was always a video streaming service, but when it started, it was meant as a kind of video-based dating service, where users could upload short videos describing their ideal partner, and browse for potential matches.” The slogan was “Tune in, Hook up.” Unfortunately, YouTube simply couldn’t find an audience. “Despite offering to pay women $20 to upload videos of themselves to YouTube, nobody came forward, forcing Chen Karim and co-founder Chad Hurley to adopt a different strategy.” They pivoted by leaning into the video sharing aspect of their business and ditched the dating angle. The first official video on this new version of YouTube was “Me at the Zoo” in early 2005. The site exploded in popularity, and one year later, the company was purchased by Google for $1.65 billion.
In 2021, Slack generated $902.6 million in revenue. Over 100,000 businesses use the messaging platform, including 77% of Fortune 100 companies. The company is known as one of the biggest players in the business communication space, which makes the company’s true origin so surprising. Slack originally began as a video game development tool. It was designed to facilitate clear internal communication for the company while it developed Glitch, an online video game. When the game was shut down after lackluster sales in 2012, the company was forced to pivot and find another source of revenue. “The scrappy studio…took a hard look at what they could turn into a product.” The team realized they had unintentionally built a “customized, turbocharged team communication platform” during the video game development cycle. They decided to pivot and start a new company called Slack. “If you look closely at Slack, you can still see its video game roots in Slackbot, a helpful bot that guides users through the Slack experience.” In 2020, Slack was bought by SalesForce for $27.7 billion.
Yelp bills themselves as “a one-stop local platform for consumers to discover, connect and transact with local businesses of all sizes.” In 2021, the company generated $1.03 billion in revenue. “Yelp began as an automated system for emailing recommendation requests to friends.” In 2004, Jeremy Stoppelman, the co-founder of Yelp, “was looking for a doctor but had no clue how to find a good one…that gave him and [Russel] Simmons an idea for an…automated system in which people could email friends asking for recommendations.” Unsurprisingly, this complex system “fell flat with audiences,” which forced Stoppelman and Simmons to reevaluate their business model. They noticed that many of their early customers were leaving reviews themselves, without any prompting. They took this information and pivoted to create a platform where anyone could leave a review. By the end of 2021, users have left a total of 244 million reviews of local businesses. Yelp’s story illustrates the importance of listening to customers and pivoting accordingly.
At CASTUS, we understand that business pivots can be challenging. As business development experts, we come alongside companies and entrepreneurs as a trusted advisor to help your business sustainably expand without losing sight of your core business identity. If your company is contemplating a business pivot, we would love to talk with you.
For more on entrepreneurship, check out our article on how to nurture a business idea into a successful startup.