Bootstrapped Founder #102: Pivoting in Public: Risks and Opportunities

Dear founder,

Pivoting a business is scary. Changing what you offer is like switching lanes on a busy motorway: there are many things to consider, and steering anywhere too quickly can create accidents. You need to understand where you come from and where you are going with your business when you pivot to something else.

Pivoting in public adds a whole other level of complexity. Now, you're not just making changes to your business. You're also communicating them with your audience, involving them, and putting yourself out there. But it's worth it.

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I believe that if you are doing a soft pivot, preferably with an existing audience of early adopters, pivoting in public is the way to go. Let me explain what that means and how to get it right.

There are quite a few opportunities when pivoting in public. But there are also several risks.

Let's talk about those risks first.

When you pivot in public, you run the risk that you endanger several aspects of your current customer base. The public part if "pivoting in public" is to blame for that: you don't just communicate what you change, but you communicate the whole process, which can often be a bit messy.

Any existing insecurities that your customer base might feel towards your product will likely be amplified when they see you reason about it in public.

If your customers are picky or have a lot of choice in the market and can quickly and easily navigate to a different product, then sharing everything in public might be risky. It could expose some of your customers to enough information to cancel their subscription to your service prematurely.

Some people want to have an extremely solid service, and if you talk about it as if it was something that isn't as solid or permanent as it could be, they consider your business a subpar service that is not as good as it could be. Those people are usually laggards, late adopters, or mainstream customers. To them, sharing your reasoning in public looks like you don't know what you're doing, and they will only buy from people who really know what they're doing.

I don't think that's the same problem for early adopters or innovators who know there's always entrepreneurial risk in building a new product. They also understand that sometimes, the experiment of changing the product makes the product the best product that can be.

So if you have a customer base that is mostly innovators or early adopters, pivoting in public shouldn't be a problem in terms of their expectations. But if you have bigger customers, large companies, or late-stage adopters, then pivoting in public might introduce some uncertainty into your communication with your customers, which might lead to them canceling the service.

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The second risk is that people who have very high expectations of products in the market might think that if you execute this pivot now, you will pivot away from the product again in the future. And these people are likely the exact same people that would stop buying a product because you're pivoting away from it.

Late-stage adopters, larger companies, and institutions have more complex processes for the adoption of products. They also have more intense requirements for the longevity of products. If your market consists of these kinds of customers, you will have the issue that people might perceive you as not sufficiently committed to the product you're building.

This flexibility is perfectly fine for somebody exploring a new space, building something in a market that isn't yet established — a blue ocean. But if you are in a red ocean full of established competitors, pivoting from one product to another might be perceived as weakness, where in a blue ocean, it's perceived as innovation and agility.

Finally, there is another risk, and it's all about cash flow. By pivoting, you risk losing any finances that you currently have in the business. If the pivot is so strong that your current customers will not purchase your product anymore, your bank account might run dry before you finish the pivot. If you have a pivot that has a high chance of retaining customers even though the product is different — usually called a soft pivot — then a pivot in itself isn't a problem, and pivoting in public will not be a problem because that's an opportunity.

I've seen this kind of pivot before, and it happened in public, too. Jon Yongfook pivoted Bannerbear from a fully-fledged web application for creating banner images into an API to generate those images from JSON data. In doing so, Jon changed who in the companies he served would use his solution to solve their problem. Before the pivot, anybody could use this product. Afterward, it became a more technical product that was much easier to use once integrated by a technically competent person.

You would think that this pivot is a bit strange, as Jon's initial audience of non-tech-savvy users seems to be much bigger and fruitful than his new developer-only audience. But this act of niching down actually expanded Jon's audience. His initial product had a lot of requirements that needed to be true for a non-technical person to be able to use his product. They needed several software products to be installed; they needed to have a certain amount of content and understand several SEO concepts. That, in fact, reduced the amount of compatible non-technical customers significantly. Pivoting increased the potential size of Jon's target market as his more straightforward tech-centric product could be used by anyone with some technical knowledge as it had way fewer requirements.

Jon's pivot provided him with the opportunity to keep some of his customers — the ones that were already somewhat technical — and find new customers that he understood better. If you have a chance to relate better with your customers, like Jon did when he — as a developer — built a tool for other developers, you should go for it. If your pivot can better help people serve the needs of many others, then it's a win-win situation. In Jon's case, it made building the product even more fun, as it was closer to his developer preferences. A win-win-win situation, even. Unsurprisingly, the number of paid customers picked up significantly for Jon after he pivoted Bannerbear to an API.

There is another huge opportunity when pivoting in public. There is the potential benefit of getting insights and feedback much earlier than if you would pivot behind closed doors. You can get feedback on the potential direction of the business the moment you start talking about it. You can get feedback on what you should be changing first before you change it. You don't even have to run an experiment: you can talk it through with your community with your audience.

So the feedback cycle, in general, is much tighter. It allows you to iterate quicker. This is probably quite necessary because if you pivot and lose the existing customers you need to sustain the business, then every day counts. Needing tighter feedback cycles is particularly true if you don't even have enough customers to sustain the business you're pivoting away from.

Getting more feedback about whether your intention to pivot is worth it and what steps you should take is extremely valuable feedback that you can gather from the community.

You can also conduct customer exploration by pivoting in public. Suppose you are currently embedded in your customers' community, and they already know that you're trying to help them solve their problems. In that case, pivoting into another problem-solution space that is maybe even more worthy of being solved allows you to understand what needs to be done quickly and very thoroughly.

You can do that with your community and your audience by involving people. Make sure to not just talk about what you're doing but instead talk to them about how you can help them. There will be a very interesting feedback cycle that will help you change the direction of your business in a validated fashion.

So there we have it: pivoting in public can be an incredible learning experience for a founder, but you have to do it in front of the right people. If a public course change would scare away your customers or cause you financial distress, it might not be the best course of action. But if you can leverage your audience to quickly shift your product towards an even better product-founder-market fit, then it certainly will be a public performance to behold.

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Warm Regards from Ontario,

Arvid