
Pivot or Fail? - petethomas
https://avc.com/2018/11/pivot-or-fail/
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smacktoward
I feel like this misses an obvious source of the appeal of the pivot for the
founders, namely that _actual_ money in your hands today beats _potential_
money in your hands tomorrow.

If you shut down and start over around the new idea, maybe you’ll be able to
raise money around that idea, but then again, maybe you won’t. Nothing’s
guaranteed; and if you find you _can’t_ raise the money again, you end up with
nothing at all.

Meanwhile, in the existing business, there’s a big pot of money _already
raised_ just sitting there for you to use. Using it could mean problems down
the road, of course. But _not_ using it means problems _right now_ , so it’s
not hard to see the appeal of just grabbing it and figuring you’ll cross those
bridges if and when you ever actually come to them.

~~~
sturadnidge
> If you shut down and start over around the new idea, maybe you’ll be able to
> raise money around that idea, but then again, maybe you won’t.

Is someone who chooses failure over pivoting likely to get some kind of
negative association in the investor community at large? A perception that
they don't do enough to protect investment or something like that? No
judgement on whether that is right or wrong, just curious.

~~~
scarejunba
No, it’s just that they have to prove the new thing. This way they go with the
existing pot.

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nostrademons
I thought the point of a pivot is that you take _something_ of value in the
old company - whether it be the codebase, team, data, customer list, internal
tool, employee's random side project, or just some key algorithm or insight
that has some utility - and apply it to a new market or new product. Hard to
do this legally without keeping the old corporate structure.

If you're actually changing all of product|market|team all at once, I wouldn't
call that a pivot, I'd call that a failure. Like Fred, I don't see the appeal
of keeping the existing corporate structure and cap table in that case. But
I'm surprised that that's now what "pivot" means - he obviously sees more
startups I do, but it sounds like the term has been diluted pretty heavily.

~~~
tptacek
You could be doing that, scavenging value out of the existing (doomed)
company, or you could be kidding yourself, continuing on with the baggage of
that company because it seems easier than starting over from scratch.

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ttul
If I could go back in time, I would have chosen to fail rather than pivot. At
the time (of the pivot) what made the choice to fail difficult was that we had
_some_ success aka revenue, and so could just carry on. What I see now is that
I could have still shut that thing down, paid back investors with the trickle
of remaining revenue, and in parallel started a new thing.

Hindsight is always 20/20, but I think the article is broadly right. If you
need to pivot, it’s probably better to fail gracefully instead.

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mbesto
> But the bigger issue is the dilution you take into your next startup. I have
> never understood why entrepreneurs would want to use a company and a cap
> table that they no longer own 100% of to do a new startup. They are just
> carrying baggage that they don’t have to and probably should not carry.

This happens WAY more than people realize.

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arsalanb
Agree with Fred.

I left one of my past companies because of something similar. It wasn't even a
"hard pivot", we were an EdTech company catering to higher ed, and then
switched to a complete different product, now selling to parents of kids under
the age of 8.

Two months later I realised I just wasn't excited enough about building apps
for kids (this is a great market and has a lot of potential, it just wasn't my
thing)

The company is still doing sort of okay, but I couldn't picture myself
spending 6-8 months there. It felt like taking a formula 1 car and putting it
in Dubai traffic. I even felt slightly guilty of not caring enough about
"making the buttons bigger so kids can tap them and feel playful".

I'm currently working on something entirely different in the productivity
space as a one man team with no funding but the process already feels more
rewarding. So while I'm still working on something entirely different,
starting from scratch and failing (personally atleast) was an important step
along the way.

I'm solving a problem that I really care about and often tell myself that I
would build/use this product for myself anyways. I do have some promising
feedback from potential users but what's more important to me is the sense of
fulfilment which leads to motivation which then leads to discipline, and this
would just not be possible if I was working on something I'm not excited about
or felt I didn't sign up for.

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hguhghuff
TrafOData pivot to become Microsoft was a pretty hard pivot.

[https://en.m.wikipedia.org/wiki/Traf-O-
Data](https://en.m.wikipedia.org/wiki/Traf-O-Data)

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cabaalis
Is there not a risk of tremendous legal battles with investors when you start
a new, legally separate business that it could be argued you should have
pivoted into?

~~~
mooreds
I wonder how much time needs to elapse between failure and a new startup?

~~~
tptacek
No time at all. If you're misuse IPR (or violating contractual obligations)
from your previous company, no amount of time will cure that. If you aren't,
you don't even need to wait a millisecond.

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tramGG
Spoken like someone who hasn't built an entire company from scratch multiple
times. It takes a lot to build and share the vision, get buy-in from
believers, build up an audience, distribution, marketing channels, the "right"
team, right product, the list goes on -- and all of this is both physically,
mentally, and emotionally exhausting.

It's REALLY hard to just reboot into something else you pour yourself into.

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andrewstuart
This advice is targetted at those who have taken funding. It doesn't apply to
bootstrappers of course, who can do anything they think is right.

~~~
charlesism
I think it depends on what your drive is. It might be a desire to just run a
business. Or it might be some concept that inspires you. It could be a desire
to work with a specific group of people. Or just to make money. Or to serve a
particular community.

I don't think there's one "correct" answer for everyone.

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flexie
What he says about dilution is right. But there are other considerations:

\- The founders are not sure they can raise money for the new idea and they
might use the money left in the failed company.

\- The failed company may have users that are useful to the new idea.

\- The failed company may own the IPR necessary for the new idea.

\- There is often transaction cost connected with starting all over and almost
always time.

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philip1209
I did this with Staffjoy two years ago [1]. I'm thankful that we shut down
promptly when things were failing - instead of dragging them out. I knew that
we had picked great investors (e.g., Caffeinated Capital) when I brought bad
acquisition offers to them, and they told me just to shut down and move onto
my next project.

[1]
[https://news.ycombinator.com/item?id=13647382](https://news.ycombinator.com/item?id=13647382)

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nowarninglabel
"And I am not sure hard pivots are good for anyone"

Except, it was good for Slack and its investors and all of its users. Slack is
oddly acknowledged in the first paragraph and then quickly forgotten about.
There's a good "Masters of Scale" podcast about the Slack pivot and the Flickr
pivot (which was also a hard pivot).

~~~
jgh
Discord came out of a game studio as well (Hammer & Chisel)

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Animats
Paypal was a pivot. Paypal's original product was a security token.

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exogeny
I like Fred a lot, and I know it's not his fault, but the sycophantic comments
on his posts make me sick.

