Pivoting in Software Startups

To be able to handle intense time pressure and survive in dynamic markets, software startups make critical decision constantly on whether to change directions or stay on chosen path. This is known as to pivot or to persevere in terms of lean startup. Pivot is an essential and crucial activity for software startups to initially survive, and then grow and eventually obtain a sustainable business model. We find several examples of software startups (Twitter, Instagram, etc.) that successfully pivoted during their entrepreneurial journey and became successful software companies. There is a lack of empirical evidences on why and how software startups make pivots. This chapter provides reader a better understanding on pivots, different types of pivots, and factors that trigger pivots. We employ case study and case survey methods. The results show that customer need, customer segment, product zoom-in, and technology pivots are the major types of pivots software startups have made. We also identify several new pivot types including market zoom-in, market zoom-out, complete, and side project pivots. Negative customer reaction and flawed business model are the prominent factors triggering pivots. The findings provide practical knowledge to software startups and practitioners, which they can utilize to better understand and perform pivots.