In an earlier article, we have already outlined why pivoting is such an essential element for companies operating in a variety of industries. This method makes it possible to better adapt to the needs of the modern market and respond to the dynamically changing needs of customers on an ongoing basis. Today we present examples of the most famous startups that have succeeded on a global scale precisely because of clever pivoting.
Famous startups that pivoted – table of contents:
Can everyone pivot?
Matching the products offered to the real needs of consumers is beneficial for the development of any type of business. We have already emphasized how important it is to maintain a high level of flexibility in business operations. Still, you should remember that while pivoting brings many benefits for both customers and the business, at the same time it also involves a certain amount of risk.
There is no one-size-fits-all recipe to guarantee pivot success. For each startups in the market, there’s a different suitable pivot plan. When deciding to pivot, companies must therefore initially have a good understanding of the goal they wish to achieve with this type of practice, as well as the very nature of the target market and the buyers operating in it.
The basis of an effective pivot is the proper and thoughtful alignment of activities with specific, clearly defined goals while taking into account all detected inconsistencies between the product vision created by the company and its customers.
The following are some of today’s most popular “pivot startups,” which were originally intended to stand out with a slightly different business model compared to that of today’s global market.
The company is by far one of the most recognizable brands in the movie and series streaming platform community. However, Netflix’s business model has not always been based on the same original assumptions.
The company started in the market in 1997 as an online DVD rental service. Initially, the business revolved around a virtual catalog of available discs that customers could borrow via traditional mail. Ordered titles were then delivered to homes in a recognizable red envelope.
However, Netflix was not the only company of its kind startups in the market. Although the brand tried to distinguish itself from the competition by delivering the biggest blockbuster movies in large numbers or by additionally introducing the “Like it – keep it” option, i.e., the ability for customers who initially only rented individual discs to purchase them permanently, Netflix still needed improvements that would allow it to make a permanent mark in the history and memory of its customers.
In 1999, Netflix was the first to start providing movies in a subscription model. At the same time, one of the most common problems reported by customers concerned penalties for holding on to particular titles. That’s why Netflix decided to turn to a new business model, which focused on providing users with a certain number of discs without specific time limits.
Over the years, the company has introduced new features, taking advantage of the potential of emerging modern technological solutions. The apparent increase in demand for services provided exclusively in a virtual way motivated Netflix to start streaming movies, as well as series on the Internet. Admittedly, the company did not abandon its previous form of business right from the start.
Even after moving much of their business to the Internet, more traditional customers were still able to take advantage of a combined subscription option that allowed them to rent movies through the mail. Such thoughtful pivoting provided an opportunity to gradually accustom consumers to the progressive change, minimizing the risk of losing regular customers. On the one hand, those hitherto attached to the brand and the way it operates in the market were more gently introduced to the rapidly evolving virtual world, while on the other hand, customers desiring change were given a helpful tool to meet their new needs.
A global giant, often identified as a supplier of top-quality coffee, while caring about strengthening the idea of sustainability. But has Starbucks always looked exactly as it is perceived today by millions of loyal customers?
The company was founded in 1971 by Jerry Baldwin, Gordon Bowker and Zev Siegel. The entrepreneurs initially based their business solely on the sale of coffee beans and coffee-making machines. In its early years, Starbucks, more than a trendy coffee shop, resembled a coffee roaster.
Everything changed under the vision of Howard Schultz, who began serving as president and CEO of the entire brand. While traveling in Italy, Schultz fell in love with Italian coffee culture. Fascinated by the taste of the beverage and the accompanying ritual of proper preparation and consumption, he decided to bring this tradition to the United States.
Starbucks began to center its strategy not solely around the coffee itself but also around the entire ambiance associated with its consumption. The company designed all locations in such a way that customers could enjoy the taste of the coffee prepared for them in complete comfort while having a nice time with their loved ones.
The introduction of all these changes in Starbucks’ business model has become a kind of response to the growing needs of customers. A hedonistic society is constantly looking for new forms of entertainment. By pivoting, Starbucks has added a new dimension to ordinary coffee drinking, for many becoming an icon for combining mundane activities with greater pleasure.
The company is a perfect example of a zoom-in pivot that focuses mainly on one well-defined product functionality. Currently, PayPal is one of the largest processors of various types of online payments. The aspects that set this brand apart in the market are the ability to make payments and receive transfers without the requirement to share your personal or financial information.
PayPal began its presence in the market as a platform responsible for sending money. Over the next few years, eBay took over, expanding its reach to an international scale.
However, even with the subsequent discontinuation of the cooperation it had established with eBay, PayPal did not slow down the pace of its development, continuing to conquer new markets. As a result, it became an independent brand, successfully adapting to the emerging virtual world of apps and online banking. The company, which debuted as a business specialist in digital security, has now moved away from general services, focusing all its resources on providing the most secure transactions possible.
Today, YouTube is the most popular platform where millions of users from around the world share short videos. However, the brand’s original business model targeted completely different areas of customer interest. “Tune In, Hook Up” was the first unofficial slogan to promote the YouTube dating service, which launched on Valentine’s Day 2005.
Despite efforts and the introduction of many user incentives, the brand was not successful as a dating site. The service had few visitors, which was affected by the lack of free video selection. Despite the initial assumptions of the creators, users began to insert videos about everything en masse. They published footage of themselves, their talents, friends, and family, those depicting both happy and sad moments, leading to a sense of strong virtual community among users.
Such a response motivated YouTube’s originators to move away from the idea of a dating portal and create an open platform where anyone could share anything they felt at any given moment. Thus, it can be said that the users themselves ultimately decided the structure of the entire platform.
However, this is not the only pivot the brand has decided on. Recently, another twist in the overall business strategy was noticeable. In addition to previously completely free access to published content, YouTube has additionally introduced a paid subscription option, where, for a set monthly fee, users can enjoy additional premium features.
The business world provides us with many examples of startups that avoided total failure through pivoting. Netflix, Starbucks, PayPal, or YouTube – each of these businesses pursued different strategic objectives as a startups than they do today. A rational assessment of the situation and the needs of customers allows one to take a broader perspective and adjust actions in such a way as to simultaneously effectively achieve one’s goals and bring consumers maximum satisfaction with the product or service provided.
Read also: 5 proven business models for startups
The most important questions
What do you need to keep in mind when pivoting?
When deciding to pivot, companies must initially have a good understanding of the goal they wish to achieve with this type of practice, as well as the very nature of the target market and the buyers operating in it.
How did Netflix decide to use pivoting?
Thoughtful pivoting provided an opportunity to gradually familiarize consumers with the progressive change, minimizing the risk of losing regular customers.
How has the pivot changed Starbucks?
Starbucks has become known as an icon for combining mundane activities with added pleasure, adding a whole new dimension to ordinary coffee drinking.
What motivated YouTube to pivot?
The apparent departure of users from the structure of the portal, which the founders initially saw as a guarantee of success and giving it a completely different functionality, made YouTube decide to make a concrete turnaround in its previous efforts.