When you’re kicking off a business, it’s essential to have a solid startup strategy. This strategy is like your roadmap, outlining your vision, goals, what makes you unique, who your customers are, how you’ll reach them, how you’ll make money, and how you’ll measure success.  In fact, statistics show that about 90% of startups fail¹, highlighting the importance of a well-thought-out strategy.

But just having a startup strategy isn’t enough. You also need to be ready to change it when things don’t go as planned. As a business owner, you’ll face many challenges and unknowns. You might learn new things about your customers, face new competitors, or have to deal with changes in the world around you. When this happens, you might need to tweak your strategy.  Interestingly, 19% of startup leaders agree that competition is the greatest challenge when starting a business¹

So, how do you know when to change your strategy? And how do you decide whether to stick with your original idea or try something new? This is where the idea of ‘pivot or persevere’ comes in. It’s a way of thinking that helps businesses decide whether to change their startup strategy based on what they’re learning.

In this blog post, we’re going to talk about what ‘pivot’ and ‘persevere’ mean, how to decide which one to do, and why it’s important for businesses to think this way.

What is a Pivot and What is a Persevere?

A ‘pivot’ is when you make a big change in your startup strategy. This could be your product, who your customers are, how you reach them, how you make money, or what makes you unique. A pivot means you’ve realized that your current strategy isn’t working as you thought it would, and you need to try a new way to make your product a hit. When your product is a hit, it means it’s something that a lot of people want and find valuable.

On the other hand, a ‘persevere’ is when you stick with your current startup strategy without making any big changes. A persevere means you’ve checked that your ideas are working, and you’re either already a hit or you’re close to it. You can then work on making your product better, getting more customers, and making more money.

Let’s look at some examples of successful pivots and perseveres by famous startups:

• X (formerly Twitter) started as a platform for podcasts called Odeo, but changed to a service for sharing short messages when Apple launched iTunes and shook up the podcast market. This was a significant change in their startup strategy. Twitter saw that their users were more into sharing short messages than listening to podcasts, and made a new product to meet this need.
• Instagram began as a social network based on location called Burbn, but changed to an app for sharing photos when they saw that their users were mostly using the photo feature of their app. Instagram made their product simpler and focused on making the photo experience better with filters and effects.
• Slack was originally a gaming company called Tiny Speck, but changed to a platform for team communication when they realized that their chat tool was more valuable than their game. Slack used their chat tool to make a new product that solved the problem of too many emails and made team collaboration better.
• Airbnb started as a platform for renting air mattresses in people’s homes, but stuck with their original idea even though they faced a lot of rejection and challenges. Airbnb confirmed their idea that there was a market for cheaper and different accommodation, and made something valuable for both hosts and guests.
• Dropbox started as a service for cloud storage, but stuck with their original strategy even though they faced a lot of competition and skeptics. Dropbox showed that people wanted a simple and reliable way to sync and access their files across devices, and made a product that was easy to use and share.
• Netflix started as a service for renting DVDs, but stuck with their original vision of becoming a streaming service. Netflix saw the shift from physical to digital media coming, and made a product that offered convenience, variety, and personalization to their customers.

As you can see, a pivot and a persevere are not opposites. They’re both part of the lean startup method, which is a process of building, measuring, and learning from your product. The lean startup method encourages startups to test their ideas with experiments, gather feedback and data from customers, and learn from their experiences.

How to Make a Pivot or Persevere Decision?

Deciding whether to change your startup strategy or stick with it can be a bit tricky. It needs a bunch of data, a good look at the numbers, and making a smart choice. Here are some steps and tips that can help you figure this out:

Kick-off with a clear plan and a way to measure success for your startup strategy. Before you bring your product to the market, you should know what problem you’re solving, who your customers are, the value you’re giving, and how you’re delivering and capturing that value. You should also have a way to measure success that shows how well you’re reaching your goals and proving your plan. For example, your success measure could be the number of sign-ups, conversions, customer retention, revenue, or referrals.

Run small tests and gather data to check your startup strategy and track your progress. Once you have your strategy and success measure, you should run small tests to check them with real customers. These tests are small and cheap and help you prove or disprove your guesses and learn from your results. For example, you can run tests like landing pages, surveys, interviews, prototypes, MVPs, or beta versions. You should gather data from your tests, like customer feedback, behavior, satisfaction, or loyalty.

Look at the data and compare it with your success measure and your guesses. After running your tests and gathering your data, you should look at them and compare them with your success measure and your guesses. Search for patterns, trends, new understandings, and unexpected findings in your data, and see how they match or don’t match with what you thought would happen. You should also look for missing pieces, errors, or slants in your data, and see how they change your final thoughts. This analysis is a crucial part of refining your startup strategy.

But, how do you choose the right option for your Startup Strategy?

Based on your data analysis, you should decide what to do next with your product. You have four options: scale, kill, pivot, or persevere. You should choose the option that best aligns with your data and your vision. Here are some guidelines for choosing the right option:

• Scale your product if your data shows that you have achieved or are close to achieving product-market fit, and that you have a scalable and profitable business model. You can then focus on growing your customer base, increasing your revenue, and expanding your market.
• Kill your product if your data shows that you have no product-market fit, and that you have no viable or sustainable business model. You can then stop wasting your time, money, and resources on your product, and move on to a new idea or opportunity.
• Pivot your product if your data shows that you have some product-market fit, but not enough to scale or sustain your business, and that you have some potential or opportunity to improve your product or business model. You can then change one or more elements of your startup strategy, such as your product, customer segment, channel, revenue model, or value proposition, and test your new hypothesis and success metric with new experiments and data.
• Persevere with your product if your data shows that you have not yet achieved product-market fit, but that you’re on the right track and that you have a clear and realistic path to achieve it. You can then continue with your current startup strategy, without making any big changes, and run more experiments and collect more data to validate your hypothesis and success metric.

Remember, the success of your startup strategy doesn’t just rely on having a great idea. It’s also about being flexible and adaptable in the face of new information and changing market conditions.

Here are some friendly tips for deciding whether to pivot or perservere with the startup strategy:

• Avoid letting personal biases or feelings cloud judgment. As a startup founder, there might be biases or feelings that can sway the decision-making process. For example, confirmation bias might be present, which is when information is sought, interpreted, and remembered that backs up existing beliefs or plans. There might also be sunk cost fallacy, which is when there’s a tendency to keep investing in a project or product that has already cost a lot of time, money, or resources, even if it’s not working or making money. Being aware of these biases and feelings, and trying to overcome them with clear and rational thinking is super important for your startup strategy.
• Feedback and advice from customers, mentors, friends, and experts can be invaluable. Not all the answers or viewpoints needed to decide whether to pivot or persevere might be available. Getting feedback and advice from different sources, like customers, mentors, friends, and experts can be helpful. Listening to their thoughts, suggestions, and criticisms, and using them to improve the product and strategy is important. Being open to feedback and advice from sources that disagree or challenge can help to find new insights or opportunities, or to avoid mistakes or pitfalls.
• Embracing failures and mistakes as learning opportunities is key. Many failures and mistakes might be encountered along the journey. Instead of being scared or ashamed of them, they should be seen as chances to learn. Being open and ready to change the product and strategy based on what is learned from failures and mistakes is important.
• Acting quickly and making changes quickly is essential for your startup strategy. There might not be a lot of time or resources to waste on the product or strategy. Acting quickly and making changes quickly, and avoiding spending too much time or money on building or testing the product or strategy is crucial. Using the minimum viable product (MVP) approach, which is a version of the product that has the minimum features and functionality that allow testing the plan and success measure with real customers is a good startup strategy. Measuring the results, learning from them, and making changes accordingly is the way to go.

Conclusion

Having a startup strategy is crucial for entrepreneurs, but figuring out when to switch it up is just as key. The financial model is one of the most important tools needed to figure out whether the idea is working or not. It helps you to project the future performance and viability of your startup based on your assumptions, data, and scenarios. We offer Pre-Built and Custom Financial Models that will assist you in doing just that.

By using the pivot or persevere framework, along with a solid financial model, you can make data-driven and customer-focused decisions that help you in adapting your startup strategy to the market and achieving product-market fit. This also helps in avoiding wasting time, money, and resources on a product or strategy that isn’t working or profitable.

We hope you have found this blog post useful and informative. If you are an early stage founder who needs help with the business plan, pitch deck, or the financial model of your startup, feel free to book a free call to know more about how we can help you. We would love to hear from you!