The Pivot Mindset: What It Is & How To Use It

Eric Ries, whose team at Lean Startup Company we featured last week, coined the term “pivot” with a blog post he wrote back in 2009. In the article, Pivot, don’t jump to a new vision, Ries makes a bold declaration:

The hardest part of entrepreneurship is to develop the judgment to know when it’s time to change direction and when it’s time to stay the course.”

To develop this judgment, one must have the sensitivity to distinguish between what is progress and what is wasted effort. One way to flex this muscle, Ries says, is through the concept of the pivot:

…the idea that successful startups change directions but stay grounded in what they’ve learned. They keep one foot in the past and place one foot in a new possible future.”

Rather than throw your hands up and altogether abandon your vision, you take your learning with you as you pivot to where feedback and market signals are telling you to go.

At some point in their trajectory, all successful startups will to some degree pivot — and pivoting is as much a mindset as it is a concept. The pivot mindset allows startups to dismantle the fear of objectively collecting feedback, because they’re able to realize this fear is based on the underlying fear of having to act on that feedback.

Acting on this feedback means doing the difficult work of admitting past mistakes, and it may mean relegating huge amounts of hard work to the scrap bin. But it always means having a frame of mind that views the hard work of the past not as something to cling to but as something to spring from.

In basketball, a pivot is where a player keeps one foot grounded and allows the other to move where they need it to go. When a player abandons their pivot foot, it means they are either up in the air (where they must make a decision before landing), or they’ve traveled — a violation of the rules that means the other team gets the ball.

Similarly, when a startup abandons its pivot foot, they enter dangerous terrain. As Ries put it:

…many unsuccessful startups simply jump outright from one vision to something completely different. These jumps are extremely risky, because they don’t leverage the validated learning about customers that came before.”

The story of Instagram, formerly named Burbn, is often the go-to story of what it means for a company to pivot.

Kevin Systrom, CEO and co-founder of Instagram, wrote about the pivot from Burbn to Instagram over at Quora:

…we took a step back and looked at the product as it stood. By this time, we had built Burbn into a (private) really neat HTML5 mobile web app that let you: Check in to locations, Make plans (future check-ins), Earn points for hanging out with friends, post pictures, and much more.”

When Systrom and his team combed through the data, they found that Burbn users were posting pictures way more than they were using any other feature. So, while keeping one foot grounded in what they had already accomplished, they pivoted and began the process of going all-in on developing the best photo sharing experience on the market.

To make this kind of pivot, Systrom and his team had to view the data not merely as a glimpse into what they were doing wrong, but as a beacon pointing to where they needed to go. This demanded a mindset.

The pivot mindset: one that’s grounded by and confident in a vision, constantly learning from but not tethered to past work in pursuit of that vision, and open enough to let feedback forge what the vision becomes.

A relatively unheralded pivot, one that I think startups will increasingly turn to as perhaps a more practical example, comes from Jesse Mecham and his team at You Need a Budget.

In February 2005, Mecham was tweaking some of his company sales copy. What he uncovered in the process would triple sales over the next six weeks, and set the company on a path to shake up a financial budgeting industry that typically catered to people who already had a ton of money.

As I was playing around with the words I realized a core part of YNAB was some rules I’d had in my head from the very beginning,” Mecham began. “I started framing our copy through these rules, and immediately noticed that this small move could give us a tremendous advantage from a marketing and competitive niche standpoint.”

YNAB (“why-nab”) started as a basic spreadsheet template that Mecham was using to help him and his wife (both university students at the time) establish some sense of control over their limited budget.

It was ugly as sin, but it allowed us to at least record what we were spending so we could have a bird’s eye view and from there try to make better financial decisions.”

Just six months earlier, in September 2004, Mecham was trying to sell this spreadsheet to anybody he possibly could. He was blanketing his apartment complex with fliers, and buying Google Adwords, but his efforts were only netting him a few hundred dollars a month.

When that breakthrough happened in 2005, it paved the way for so many others,” Mecham said. “I started teaching the rules, and pairing it with the spreadsheet, and people were finding this so much more valuable.”

By November 2006, when YNAB officially launched, they had completed the pivot. They’d carved out their four rules, and now had slick software rather than a sloppy spreadsheet. In a competitive new budgeting software industry, YNAB, through this pivot, had effectively created a point of separation between themselves and all other competitors.

This pivot is now completely intertwined with their company vision. Here’s their current homepage copy, followed by the rules:

YNAB combines a simple, effective methodology with award-winning software to turn you into a finance superhero. You can’t be a superhero without superpowers (obviously), and that’s where the rules come in”: