Pivot or Persist? Knowing When to Change Course in Your Business

At Starcycle, we have the privilege of meeting, and working with, repeat founders who understand first-hand the highs and lows of the entrepreneurial journey. We invite them to share their stories and the hard-earned lessons they've gathered along the way with the founder community at large.

Dave Rosen is the former CEO of WIMO Games, with 22 years of leadership experience in video games, media, and tech.

Many of the most successful companies have been born out of pivots. Paypal, Slack, Starbucks, Nintendo, and many more became multi-billion dollar businesses doing something other than what the founders originally planned.

But, no one launches a startup without deep passion for their original idea.

So how do you decide when it’s time to pivot?

Change of core assumptions: When you launched the business, you made certain critical assumptions about market size, customer interest, or foundational technologies. When you see evidence that one of those core assumptions has changed, you need to question whether the original idea can still succeed. If that change means a significant increase in risk, it’s time to pivot. 

Identify the point of no return: One of the critical indicators for when to consider a pivot is knowing when you will have gone so far down the original path, that you no longer have the option to make a change. The most tangible element to this is funding. Waiting until the end of your runway, or close to it, means having to pivot with limited resources or time to prove out the new direction. Spend time thinking about your possible pivots, as well as the team or time you would need to create a proof of concept, then work backward to your decision time. 

Validating an exit path: Every investor expects your startup to eventually find an exit. That could be an acquisition, an IPO, or a level of success that means ability to bring in more capital against future revenue. As you pursue your idea, you need to regularly assess if that idea is bringing you closer to one of those exit possibilities. As long as what you are building continues to align with growth in a way that will be attractive to buyers or investors, there is potential to persist. 

Trust your gut: In the end, this is your company. Rely on your conviction for direction. Even if none of the elements above are coming into play, if you feel deep down that you need to chart a different course, do it. You are far more likely to regret hesitating than acting decisively. The investors bet on you, not your idea, so go with what feels right to you.

The founder experience is often defined by the need to make big decisions with incomplete information. You can’t know for sure where a pivot will lead you. The best you can do is be clear on the considerations, aware of the timeline, conscious of your exit options, and honest with yourself about what you feel is right.

Disclaimer:
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Starcycle, Inc., nor does contributing as an author establish or imply a client relationship with Starcycle, Inc.