How do founders pull off successful pivots and go on to build unicorns?
Normally when you ask people this, they tell you about Slack or Netflix. But it’s actually surprising how many of the most successful startups had to pivot at some point.
This week I analyzed over 25 massively successful startups who pivoted early on and wrote about my takeaways from 8 of the most unique ones.
Some were unexpected discoveries (did you know YouTube was originally a dating app?) and all are worth learning from. 👇
Lessons from 8 Successful Pivots
Twitch
The lesson: Niche down to win
Twitch started as Justin.tv, a website where founder Justin Kan would livestream his day 24/7. The next logical step was to allow others to host their own livestreams as channels.
The site attracted millions of viewers and grew to over 30,000 channels, which sounds pretty good, right?
The problem was that gaming content had clearly become the most successful type of content on the platform, yet the platform had to support many different types of content. This made it impossible for it to double down on what was working and add gaming-specific features.
The founders believed in the gaming approach so much that they created an entirely separate platform for the gaming content, Twitch, which allowed them to create the best possible experience for game streams, specifically.
Their gaming community loved it and the platform grew even faster than before, eventually being acquired by Amazon for $970 million.
YouTube
The lesson: Go broad to win (if you’re a first mover)
YouTube started as a video dating app called “Tune In Hook Up” (Yes, really).
But online video sharing was so new in 2005 that the founders realized there was an opportunity to become the dominant place where videos get shared online in general.
Interestingly, this is the exact opposite path that Twitch took. YouTube went more broad, while Twitch niched-down. There are no absolutes in startups.
Why did it work? Opportunities like what YouTube found themselves with are extremely rare, you simply have to be an early mover to a new technology or concept (like video sharing). It also must be mentioned that they were acquired by Google a year later and were able to leverage Google’s considerable resources.
Nintendo
The lesson: Build a culture of innovation and experimentation
What hasn’t Nintendo tried?
Since being founded in 1889(!), they’ve been (at different times):
A manufacturer of traditional Japanese card games
A taxi company
A “love hotel” chain
A food company
Eventually they got around to video games.
They’ve honed their DNA for over 100 years to embrace bold bets into new areas. Even now, they’re trying their hand at movies. It’s a trait all startups should have.
Brex
The lesson: You’re only as good as your market
Brex was supposed to be a VR company. I actually didn’t know this story until this week, but it’s true.
There’s not a ton of info out there about what their original VR idea was exactly, but when they first joined Y Combinator’s Winter 2017 batch they were exploring the VR space.
The VR market is still a tough one today, but back then it was even smaller. The founders quickly realized that the expensive hardware and small market made it an unattractive opportunity.
As Marc Andreessen says, market is the only thing that matters.
The lesson: Build what your users want
Pinterest was originally a location-based mobile shopping app where you could browse and save items from stores near you.
The founders mainly wanted users to make purchases through the app (to drive revenue) but they found that when people used the app, they seemed more interested in saving the items they liked rather than purchasing them.
Like Instagram when it transitioned from a location-based check-in app to a photo sharing platform, Pinterest’s founders observed and listened to what their users were loving about their app and then doubled down on it.
The lesson: Don’t fight a losing battle
It’s 2005. Twitter’s founders are building a platform for podcasters to host and share their podcast, called Odeo.
But that June, Apple released iTunes 4.9 which added ways for users to find and subscribe to podcasts… in the same app they already listened to music in.
Twitter’s founders recognized this was a check-mate move, for what was then still a pretty nascent startup, due to network effects. If they wanted to survive, they needed to find an entirely new idea.
During a brainstorming session, Jack Dorsey suggested the idea that became Twitter and now almost 20 years later we all still spend way too much time on it.
Waze
The lesson: New technologies = opportunity
Waze’s original idea, in 2006, was not venture scalable. They were originally called “FreeMap Israel” and it was, you guessed it, a digital map of Israel that was free to access.
The unique thing, though, was that they were creating it entirely with user-generated content.
As smartphones gained popularity, the founders realized that they could take the user-generated mapping ethos of their original idea but apply it to a more real-time problem area by using the GPS coordinates in people’s phones. The technological shift opened up opportunities that had never existed before, and they jumped on it.
After some brainstorming, they came up with Waze.
Shopify
The lesson: If you have a problem, chances are others do too
Shopify exists because it didn’t already exist.
That’s an odd way to think about it, but it’s true. Shopify’s founders just wanted to launch an online store to sell snowboarding gear called Snowdevil.
But when they were running it, they got frustrated because it didn’t offer the functionality and customization that they felt they needed to merchandise and manage their business easily.
They basically built the Shopify MVP just to solve their own problem, but they quickly realized that other online stores would likely benefit from using it too.
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