Somewhere between a hockey-stick growth curve and a hit-the-wall failure lives "the pivot." A deceptively sunny term, the pivot typically involves equal parts bug-eyed fear, rapid rereading of the market, hard-nosed assessment of resources, and the torturous trick of killing the idea that captured your heart in the first place. "Everyone has a plan until they get punched in the mouth," pigeon-keeper-turned-pugilist Mike Tyson once said. And while Tyson wasn't addressing business startups, he could have been. Here, five cases in which companies that were on the ropes used quick-and-desperate strategic overhauls to become champions.
Twitter: Sometimes, Employees Know Best
Podcasting is white-hot. But 15 years ago, when Ev Williams, Biz Stone, and Noah Glass started Odeo as a podcasting platform, they were ahead of the curve. Way too far ahead. In 2005, Odeo had 14 employees banging away when, suddenly, the earth buckled: A little company named Apple announced it would be including a podcasting platform in the bazillions of iPods it sold. Williams quickly grasped that Odeo was poised for a Wile E. Coyote free fall, and he didn't have a Plan B. What he did have was something that almost maybe sort of could have been called a strategy: a series of now-what? employee hackathons. It was in one of these that Glass and a web designer named Jack Dorsey developed a wildly divergent idea: a micro-blogging platform for status updates. In early 2006, they cobbled together a prototype (calling it Twttr). Adoption was ho-hum. But in March 2007, Twitter landed at South by Southwest and took the influencer-filled festival by storm; today, the company has some 330 million monthly users and revenue of nearly $3.5 billion.
Slack: Game Over
Few founders have proved more proficient at the pivot than Stewart Butterfield. First, he famously shape-shifted his idea for a multiplayer game (called Game Neverending) into Flickr, the photo-sharing site he co-founded that augured Instagram and Pinterest. His aha! moment came while he was crouched over a toilet, violently ill with food poisoning. His second pivot started with another interactive game he devised called Glitch, which, despite four years of development, couldn't keep users engaged. It flopped, but when the remaining staff were sifting through the rubble, they realized that the chat-based tool they'd created to share ideas between their U.S. and Canadian offices was pretty compelling. Yes, Slack has replaced the office water cooler. Yes, it scooped up $400 million in revenue last year. But even more impressive: It's become a verb.
YouTube: Losing at Love
Steve Chen, Chad Hurley, and Jawed Karin, the three former PayPal lads who founded YouTube, may not have been Kenny Rogers fans, but they certainly followed his advice--"You've got to know when to hold 'em, know when to fold 'em, know when to walk away, and know when to run"--executing what is likely the most successful pivot in modern business history. They launched their video-dating business in 2005--on February 14, natch. But after five lonely days, not a single video had been uploaded. So the founders decided to expand their focus: And just like that, anyone could upload any video of anything. That caught fire, and 18 months later, YouTube was hitting 100 million views per day. It didn't take long for Google to propose.
Avon: Getting Book Smart About Selling
Reid Hoffman, the founder of LinkedIn, said that the moment you find the thing your users cannot stop doing, you need to slash and burn the rest of your business. That advice would have rung true to Avon founder David McConnell, whose first pivot came in 1878, when the 20-year-old son of Irish immigrants sidelined plans to become a math teacher for the wild life of a door-to-door book salesman. Initially, he had little success. So McConnell cooked up an incentive: As his customers were mostly stay-at-home women, he offered a small sample of his homebrewed perfume to those who merely listened to his pitch. They listened. And McConnell listened back. Realizing that his customers were far more attracted to scents than to literature, McConnell pivoted again: He kept the door-to-door delivery and the perfume, but lost the books. He also realized that women would rather buy from women, and that his customers could be his workforce. All of which led to the "Avon calling" juggernaut: When McConnell died in 1937, Avon had some 30,000 part-time sales agents and millions of units of sales.
Play-Doh: The Writing's on the Wall
The post-WWII trend of converting furnaces away from soot-spewing coal to cleaner-burning oil and gas was a disaster for the wallpaper-cleaning industry. Kutol Products, purveyor of fine wallpaper-cleaning supplies, was not immune. To keep the doors open, Kutol's Joseph McVicker needed to pivot--and fast. Enter his schoolteacher sister-in-law, Kay Zufall, who in 1955 tried using Kutol's salty-doughy-malleable cleaner as modeling clay in her classroom, with sparkling results. After McVicker saw the kids at play, he kept the factory cranking and reimagined Kutol as Rainbow Crafts. Spinoffs and accessories followed (from the early Fun Factory to the recent--and rather niche--Pinkfong Baby Shark Set), and have helped sell some two billion cans of Play-Doh. Hasbro now owns the brand.