“Our initial strategy was to identify high-potential talent on the African continent, train them in software development and then place them as full-time distributed engineers. We saw an opportunity to build a business while investing in talent creation across Africa, and that’s exactly what we did,” said Jeremy Johnson, co-founder and CEO of Andela when the company pivoted from training junior talent development to recruiting senior talent.
Startups may pivot when they see that they are not making enough revenue or cannot survive in the market with their current model.
A number of startups pivoted due to the pandemic as the ensuing lockdown limited their current market but also opened up a new one.
IntiGo, a bike-hailing company based in Tunisia decided to focus on delivery services by launching a service that allows customers to request a driver to run their errands and another that handles deliveries for grocery stores.
Startups can also pivot due to unfavourable regulation. After a ban that stopped bikes from plying the roads of Lagos, Nigeria, GoKada, a ride-hailing company, started to provide logistics and delivery services. Although the pivot resulted in 80% of the workforce being laid off, it soon started to pay off.
Furthermore, pivots help companies chart a clear profit-making path. Sokowatch, the Kenya-headquartered e-commerce company focused on delivering fast-moving consumer goods to informal retailers in small communities across Africa was initially ReliefWatch, an inventory management system connecting rural health centers to sources of medical supplies.
Pivots can also be the go-to solution when a company struggles due to economic downturns, as was the case with Gloopro, a Nigerian e-commerce startup turned e-procurement platform.
However, pivots don’t always mean completely switching business models. It can be just making a product a feature in a large suite of products, or scaling up a feature to become the main product.
While there is no right or wrong way to approach a pivot, one thing that must be considered in all scenarios is the requirements of the new terrain - regulatory, operational etc. Globally, a number of startups have closed up post-pivot because they didn’t have a clear understanding of all it took to operate within their new space.
Although pivots can be an urgently-needed fix to save a dying business, they should not be done prematurely, and should happen only when absolutely necessary. Failing to pivot can lead to the early death of a startup, but pivoting wrong or too early can be a faster way to die.