Lean Startup Chapter 8 - "Pivot"
What is a pivot, and when should you do it?

Key to the chapter Deciding whether and when to pivot is the critical decision, and it takes courage

Chapter Summary

  • About Pivots
    • Pivoting is not a scientific decision, it’s a judgement call
    • However that judgement should be informed by data
    • Pivot faster is the key metric
      • Number of pivots left in runway
    • Reasons why pivots are hard
      • Easy to shave a false sense of security due to vanity metric
      • Unclear/vague hypotheses means the signal from the metrics is not clearcut
      • Scary. It feels like failure. It’s kind of a failure.
  • Votizen case case study
    • “Leap of faith” assumptions are funnel steps
      • Register -> Activate -> Retain -> Refer (Where was revenue?)
      • Register -> Activate -> Retain -> Refer -> Pay (platform for lobbyists etc.)
      • Register -> Activate -> Retain -> Refer - Pay (self-service transactional service)
  • Pivot or Persevere meeting
    • He recommends scheduling one periodically (1-2 months)
  • IMVU
    • Even though # of users and paying users were at records (vanity metrics)
    • Engine of growth metrics were not being met.
    • Diminishing returns would eventually peter out
    • Pivot is hard: To decide what to do about that
Discussion Questions
  • Is a pivot a ‘failure’?
    • Why did pivoting not hurt so much when we did it in these projects?
    • Why would they hurt a lot more for a company like Votizen?s
  • Types of Pivot - which kinds happened to you all?
    • Zoom-in pivot: Subset of product is what matters
    • Zoom-out pivot: Product is too narrow - generalize it
    • Customer segment pivot: Product solves a real problem but there’s a different much bigger market.
    • Customer need pivot: Market has strong needs, but the problem we are solving is not the biggest
    • Platform pivot: Go from a point product to a platform, or vice versa.
    • Business model pivot: from low cost high volume to high cost low volume
    • Value capture pivot: basic change in how the business is financed
    • Channel Pivot: Change in how you get product to customer. Change from a product to a service.
    • Technology Pivot: Change in core technology
  • Whats the point of enumerating all the kinds of pivot?
  • How is Votizen doing now?
  • What were their original set of four leaps of faith?
    • Register -> Activate -> Retain -> Refer
    • How would you measure the effectiveness of the MVP and the stages?
    • How does “cohort analysis” apply here?
  • How would this work for a hardware product?
  • What tuning did they do before they pivoted? What did they try?
  • Causes acquired Votizen. What do you think Votizen’s biggest asset was?
  • Was Votizen a success or not?
  • How many pivots can be done in remaining runway
    • What is “runway”?
    • Why does it matter?
  • Talk about Path
    • What was a key hypothesis?
    • How might they have judged whether they were succeeding or needed to pivot?
  • Talk about Wealthfront
    • What was the original leap of faith hypothesis?
      • Model portfolio “game” to discover talented money managers
      • Platform to let clients invest with those great money managers
    • How did it go?
      • Many signups, not many great managers
      • Pivot
        • What to pivot to is a very hard question
        • Informed by qualitative findings from all the research being done.
        • A platform for professional money managers
        • A tool to allow clients to evaluate who they wanted.
      • Even though signups were high (vanity metrics) the basic hypotheses were not being confirmed
  • IMVU
    • Do you see how they could have record numbers of new users and paying users and still not on a path to success?
      • Vanity metrics
      • Engine of growth
      • Change of markets
    • Decision to pivot here is very confusing
      • Even once you realize the problem
      • Not at all clear what to do about it/