The Best Business Pivots in History
"Internet companies that can react will survive, but those that can’t, will die” Alibaba’s co-founder, Jack Ma
In recent weeks, we’ve seen the business models of even the most large, robust and technologically-advanced organisations become redundant in what seems like a millisecond. This sudden change has forced a number of proactive organisations to pivot their core offering- moving away from the familiar and diving headfirst into new, unchartered waters for their business in the search of new customers and further profitability. In light of recent events, we’ve put together a list of some of the most influential business pivots to inspire you, in case your business is in need of a massive shake-up to its core offerings.
A lesser-known fact about the video streaming giant is that Youtube was originally conceived to be a video-dating platform with the slogan “tune in, hook up.” Co-founder, Steve Chen told the audience at the South By South-West festival that “We always thought there was something with video there, but what would be the actual practical application? We thought dating would be the obvious choice.” Back in 2005, the Youtube team were offering $20 to women that were willing to upload a video of themselves to the site. Jawed Karim, another co-founder of the ever-popular video streaming service said that “the whole thing didn’t make any sense. We were so desperate for some actual dating videos, whatever that even means, that we turned to the website any desperate person would turn to, Craigslist.” The co-founders have said that they went back to the drawing board and expanded the scope of what Youtube could be, opening it up as a platform for anyone to upload a video. Fast-forward just over a decade, and Youtube’s co-founders were bought out by Google in a $1.65 billion acquisition deal.
The Starbucks that you know and recognise is vastly different from when the company was first founded- and not just in terms of its sheer size. Howard Shultz founded a company that was primarily focused on shifting high-priced coffee machines and exotically-sourced coffee beans. It wasn’t until Shultz took a trip to Italy when he recognised first-hand just how infectious the coffee culture in the country was, and saw that he could capitalise on this back in the States. He pivoted the company’s core business offering: from putting coffee machines and beans into the houses of Americans to getting those same Americans in the door at a Starbucks for a sit-down with their friends and family in a safe, comfortable and welcoming environment.
One lesser-known fact about the social media giant, Twitter, is that it started out as a podcasting platform called Odeo. The problem for Odeo, that soon became an existential crisis, however, is that Apple’s launch of its own podcasting platform swallowed up any chance of Odeo gaining significant market share, and the project had to be reevaluated. At that time, Jack Dorsey, Twitter’s CEO was running marathon brainstorming sessions to come up with new ideas that the business could pivot to, and he came up with the concept of sharing exactly what you were doing at that time with a wider online community.
“To improve is to change; to be perfect is to change often” - Winston Churchill.
Groupon today is a company worth an estimated USD $2.4 billion, but just over a decade ago, it was a struggling company with a bold vision: to bring people together behind charitable causes or for disaster relief. Founders Andrew Mason and Brad Keywell were managing a site called The Point, which was very slowly building up momentum as crowdfunding project launched in Chicago, but it was losing its edge. With funding from Eric Lefkofsky, The Point launched a subdomain known as Groupon, which was designed to negotiate group discounts with restaurants, sporting and entertainment events. Groupon’s innovative approach to finding discounts was so popular, that it overtook the company’s main arm - the charitable donations site - almost overnight, and became the household name that we recognise today.
The entertainment giant Netflix first started out as a mail-order DVD service and is now a barely recognisable business from where it started. Less of a pivot, and more of a constant stream of evolution and market anticipation, Netflix has managed to transform itself - a number of times, now. Netflix’s origins in posting out DVDs to consumers moved with the technological tides, and when there was adequate bandwidth for it to capitalise on, the company moved to downloadable content and eventually a fully-fledged online streaming entertainment platform. The pivot to minimise its costly licensing fees to other production companies to show their content on its service saw Netflix launching a number of films and series produced entirely in-house, radically shaking up the entertainment and production industries.
Paypal’s founders, Max Levchin and Peter Thiel had relatively modest ambitions compared to the global financial behemoth that it has become today. The company is famous for a number of pivots, at least five key pivots that have ensured it would stand the test of time in a rapidly changing technological landscape. The two met at Stanford University in 1998, where Levchin pitched a number of ideas that involved cryptography, finances and personal handheld devices that were in the extremely early stages of their development. After 12 months, the pair’s idea had taken them nowhere, and they rebranded the company to Confinity, pivoting the strategy and core offering to transfer IOU notes between Palm Pilots. After months, this idea failed to take off, too. Their next idea, a payment system designed specifically for web-driven financial payments - which were almost unheard of at the time - was called PayPal. It was soon after the launch of PayPal that eBay discovered the company, and opted-in to make it the default means of payment on its site.
Entrepreneur's Jayson DeMers writes that we can learn from these in the following ways. “If some aspect of your business isn’t working, there might be another aspect that’s doing extraordinarily well-- like the one in which Groupon performed so well under The Point’s brand. Focus on the wins, and try to expand them. Even if you’re in love with your business idea, you can’t keep pursuing it if it’s not striking a profit. Ultimately, your business needs to be profitable if it’s going to survive. Throw hypotheticals and ideals out the window, and instead focus on where you can generate the most revenue.”