Mike Maples Jr. once said that 90% of Floodgate’s exit profits come from pivots. Hell, 50% of my angel investments have pivoted from the idea I first invested in. Pivoting is a constant norm of the entrepreneurial ecosystem. Many investors know it’ll happen. Great founders instinctually prepare for that possibility. Being married to the problem, not the solution is the direct reflection of what it means to prepare for pivots. By definition, Meriam Webster defines the word as:
pivot (n) – a usually marked change, especially an adjustment or modification made (as to a product, service, or strategy) in order to adapt or improve
As such, small feature improvements, changes and additions, even omissions rarely count as one. But a large product shift, where the core product is no longer the product you once sold, is one. In general, the common advice on the street is that you should embrace pivots, until you find product-market fit. But also knowing that you can always lose product-market fit, even after you obtain it. A pivot should either help you catch lightning in a bottle, or help you keep lightning in the bottle.
But that’s not the purpose of me writing this piece. It’s about the opposite. The quiet thing no one explicitly talks about when it comes to pivot. The TL;DR version is each time you pivot, you lose trust. You lose trust because you didn’t have conviction in your product. You lose trust because you didn’t have conviction on where the market will go. Hell, you lose trust because you didn’t do what you said you were going to do. You were not a person of your word. You lose trust because you made someone else lose trust. Because of you, they looked stupid. To their peers. To their bosses. Sometimes to their friends.
Once you lose trust, it’s really, really hard to get it back, if at all. In the age of information excess and product surplus, you won’t have the time or the attention from your customers to rebuild that trust. They’ll just move on to the next solution.
Slow Ventures’ Yoni also recently tweeted:
“Pivots almost never work:
- You need an actually good idea. These are rare and hard to come up with in real time.
- You need resources sufficient to test it. You’ve already spent much of the money you raised.
- You need the energy and excitement to keep going RIGHT NOW. Struggling is exhausting and you’ve been struggling for a long time.”
All of which are true. But many truly great companies, as we know them today, have gone through their pivots. The idea that put them on the billboard was not the idea that was first funded. Instagram. Google (not their initial business model). Slack. Twitch. Lyft. Shopify. The list goes on.
That said, if you want investors who haven’t funded you to fund you after the pivot, you need a damn good reason as to why you’re doing so. And why it makes sense.
If you’ve known these investors for a while, great! You already have the pre-requisite of trust. You need it. The age of AI wrappers getting thrown left and right and startups going through their 28th pivot destroys trust. How do I know this is the one? How can I believe you when you say this is the one? Why should I have faith when you say this is the last time? There’s a great recent Hiten Shah tweet on this I really like, albeit from the customer perspective, but the analogy holds.
“Once belief slips, no amount of capability wins it back.
“What makes this worse is how often teams move on. A new demo. A new integration. A new pitch. But the scar tissue remains. Users carry it forward. They stop expecting the product to help them. And eventually, they stop expecting anything at all. This is the hidden cost of broken AI. Beyond failing to deliver, it inevitably also subtracts confidence. And that subtraction compounds.
“You’re shaping expectation, whether you know it or not. Every moment it works, belief grows. Every moment it doesn’t, belief drains out.
“That’s the real game.”
Just as with customers, it is with investors. Although investors can be more forgiving, knowing that this is part of the game. But no amount of faith is infinite, so choose how you voice your actions intentionally. Choose your interactions carefully. And if you do choose to interact, communicate proactively and deliberately. Notice how many withdrawals you’re taking from the bank of social capital, from your karmic bank account. And don’t forget to regularly deposit.
Photo by Bambi Corro on Unsplash
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The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.