My Hunch cofounders and I frequently ask ourselves: “If we were to start over today, would we build our product the same way we had so far?” This exercise is meant to counter a number of common cognitive biases, such as:
1. The sunk costs trap. People tend to overvalue past investments when making forward-looking investment decisions. From the rumors I’ve heard, Joost was a company that fell into the sunk costs trap. In the beginning, their p2p architecture was their main differentiator. Thus they invested a lot in building p2p infrastructure and required users to download a software client. When browser-based web video companies like Hulu and YouTube surpassed them, Joost switched to a browser-based client but still required a special plugin so they could maintain their p2p architecture. In fact, the problem the p2p architecture was solving – reducing bandwidth costs – had, in the meantime, become a secondary basis of competition. By the time Joost finally discarded the p2p model, it was too late.
2. The Bridge on the River Kwai syndrome. This is when entrepreneurs fall so in love with their engineering project qua engineering project that they lose site of the larger mission. Former engineers (like me) are particularly susceptible to this as we often get excited about technology for its own sake. Many products can be built much more quickly and cheaply by settling for good technology plus a bunch of hacks – human editing, partnerships, using 3rd party software – versus creating a perfect technology from scratch. At my last company, SiteAdvisor, we made the decision up front to build a non-perfect system that did 99% of what a much more expensive, “perfect” technological solution would have done. The software wasn’t always pretty – to the annoyance of some of our engineers – but it worked.
3. Solving the wrong problem. Location-based social networks have been around for years. Foursquare came along just a year ago and has seemingly surpassed its predecessors. The other companies built elaborate infrastructures: e.g they partnered with wireless carriers so that users’ locations could be tracked in the background without having to “check-in”. Foursquare built a relatively simple app that added some entertaining features like badges and mayorships. It turned out that requiring users to manually check in was not only easier to build but also appealing as users got more control over their privacy. Foursquare’s competitors were solving the wrong problem.
Ask yourself: if you started over today, would you build the same product? If not, consider significant changes to what you are building. The popular word for this today is “pivoting” and I think it is apropos. You aren’t throwing away what you’ve learned or the good things you’ve built. You are keeping your strong leg grounded and adjusting your weak leg to move in a new direction.
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Looking at the companies I have done… pivoting as modus operandi would have been so very appropriate at times. We pivoted, but after too much hand-wringing, sometimes too late.
To quote Bob Dylan… “but I was so much older then, I'm younger than that now.”
Thanks for making the point. Hope more investors and entrepreneurs read this.
Thanks, Kirill. Very useful to hear that coming from a person with your incredible level of success.
[...] Pivoting cdixon.org – chris dixon's blog [...]
This seems to be very popular advice, but do you think a lot of people take the advice too seriously too soon? I feel like I've been hearing people who haven't developed anything talking about pivoting a lot lately. Maybe I'm just listening more, but how can one warn against pivoting for the sake of pivoting?
In my experience people probably tend to under-pivot, but I could certainly imagine someone over-pivoting. I don't think there is any easy formula. You just need to be willing to do a brutally honest assessment of where you are each day and try to maintain core beliefs without becoming dogmatic.
When Bill Warner gives his “Building Startups from the Heart” talk, he tells entrepreneurs that when they pivot, they should always do so in a way that better fulfills their original intention. Do you agree with that? Or are there times when it's better to shift markets entirely and work on a different problem than the one they began solving?
hmm, interesting. seems to me “fulfilling your original intentions” and staying in the same market are pretty different. I'm skeptical of the former but generally agree with the latter. if you are going to completely switch markets, you might be better off shutting down and restarting with fresh investors etc.
flickr is a text-book example of successful pivoting.
web based game pivots to flash based photo-chat app pivots to hugely successful photosharing website.
with each pivot throwing out massive amounts of work. even chopping years worth of sunk costs practically overnight.
Great advice Chris.
So I have to ask, is there anything that you would now change about Hunch that you don't mind sharing here? Or is there a current feature at Hunch that was the result of a successful pivot?
Wow, I love the case studies. Thanks for this. It gives one a great frame of reference for a lot of important and difficult (to live) concepts.
Side stepping the sunk cost problem is a learned skill in my opinion, applicable to many facets of one's life. I have experienced and learned about it trading (shares), writing presentations, startups etc. For me it was about developing a tolerance for pain, accepting losses (earlier than later) and forming a sense of fatalism… you need to focus on the upside of making a change right now rather than hoping to recuperate losses.
Solving the wrong problem has always been an issue for me in pursuit of quasi-Kwai-perfection. The 80/20 rule really does hold here. Normally (read always) I want to make the Philips head screwdriver (i.e. be a bit smarter). It's a pretty much the same as a regular screwdriver, just easier to use and I would imagine about as much work to manufacture. but that's just the problem. You don't always know if that the slight change (hey, wouldn't it be cool to not have to log in all the time!) will set you off in the wrong direction (auto log in). But then I have a lot to learn, and maybe you get that with experience?
Great advice, It seems that we have pivoted a lot through the process, just recently doing an alpha launch. Our mantra was keep it simple, but we've found ourselves going down different paths as we were building the site…Dave McClure says it best in his Startup Metrics for Pirates: “KILL a FEATURE . Something Sucks. Find It. Kill it. NOW.” Its so easy to want to add new apps/features, etc. But, we kept going back to original intent…The way I look at it, pivoting is an opportunity. The challenge is to know when to stick to your guns or make the pivot to a new “better” direction.
Chris, I totally agree that we're not throwing away what we've learned; were just adjusting our weak leg to move in a new “potentially better” direction.
On #2, I took a similar approach while neglecting the importance of visual appearance for quite some time, even after a valedictorian claimed the appearance/looks of a piece of software is very important in new user impression. Now after I've beefed it up and actually with less effort than I thought… I seem to think she had a valid point…
On #3, I would like to think the core value that a product provides or fails to provide to its target customers should be the thing that leads to success or failure …
Thanks.
in response to your foursquare comment, what problem do you see them solving? Its not like we all NEEDED to share our locations w/everyone. Is the problem more for the consumer or the vendor (stores)?
Very interesting post.
I would add one bias, a cousin of wishful thinking: the confirmation bias (http://en.wikipedia.org/wiki/Confirmation_bias)
I think it's every entrepreneur's number one risk: we're so excited about our ideas that we look for supporting data only and ignore the other signals
Great one. Should have had that in my post.
You founded Hunch in 2007.
I think a very interesting and practical post would be a discussion of the “pivots” you've made with your product as well as the rationale behind them. i.e. Were you solving the wrong problem? Were you leaning in the direction of sunk costs? etc.
Thanks for the insights thus far.
Someone in my section said something I've not forgotten…”Sunk costs are sunk…unless you sunk them!” How true. The challenge is to simultaneously advocate for something but be open to walking. Reminds me from that scene from Heat, one of my favorite movies when DeNiro's character explains why he'd walk from something he's spent his life pursuing. http://www.youtube.com/watch?v=7oTNNjRuqbE&feat...
Although in some ways this whole post is about the confirmation bias,
in the sense that I attempt to offer some guidelines to counter it.
I see what you mean: the confirmation bias is the main force at stake, so in a sense yes your whole post is about it.
I'm sure you've seen first time entrepreneurs as I have, who ignore every negative sign. You can ask them the question “if you started over today, would you build the same product?” and they will still say yes.
I don't know what guidelines could help them, but it would take a deeper shock.
They remind me of a friend of mine whom we were trying to convince to dump his evil girlfriend. At some stage it appeared she had cheated on him with a surfer (they lived in Santa Cruz), but he believed that they “just had dinner together in [his] house while [he[ was traveling”. Then I asked: if I could prove to you that she slept with him, would you leave her?
to which he answered: definitely. Now if she wanted to follow me, I'd let her, but I'd leave
I agree with #2 here. It doesn't have to be the most perfect product before launching it. Just keep creating what you got and reiterate from bugs, user feedback, and hunches
Aardvark.com had the same principle.
Regarding #1, the best company management see possible sunk cost routes before they even reach it. These are the folks you'd like to seek advice and stick with.
Solving the wrong problem also has a lot to do with user sentiment. If the problem you thought does not really draw much user feedback, then you should keep re-engineering that solution until you create an impact. We are always on a quest to maintain the frequency of mass-user traffic.
Awesome post. It is always good to re-adjust our sails.
i've seen this more in businesses that sell to enterprises. one-offs are justified as pivots and you end up with a bunch of one-offs that don't build to the core mission.
3 : Thats why it is called the million dollar question, find one and you may have 1 million dollars.
Nice post – your examples helped illustrate the syndromes. As engineers we manage many times to combine all three to keep complicating our products.
Despite being part of one of the most successful MVP built within a large corporation (Physical Compiler at Synopsys) – it barely had anything but one core feature at beta – practically no UI (command line) it kicked butt and evolved to be >100M$ product, yet the next several products I worked on in two subsequent startups was character-building to say the least. In the first one, we both struggled with sunk costs and wrong problem solving before pivoting to market success and M&A. And now in our current startup Zebu, we are on the verge of our first major pivot while trying to build our own Kwai bridge.
Both these also brought home the point, that pivoting is not only about your product but could easily be about the market segment (are we solving the problem for the right folks) or even the right partners (are we doing it with the right people). Guess if its only our product we have to pivot, that's a good sign. Thanks again for a great post.
Great post that got me thinking, in order to pivot you need to let go of the old and focus on the new, no one knows if the new is better then the old, and its hard making a decision that may turn bad on you…innovator's dilemma talk about this issue, this is why a good advice of customer development plan is to first find a repeatable and scalable businesses model and only then build the company around it and grow…
[...] via Pivoting – chris dixon’s blog. [...]
[...] via Pivoting – chris dixon’s blog. [...]
I like Vinod's question: “How would you compete against yourself?”
The whole article is refreshing, but the last phrase is genius!
You assume (that you have a bias to forget) that your tech is less of an asset then your expected market…
You need your tech(or what have you) to get to your expected market(which is a term I thoroughly hate).
I might have misread the post, but it seemed to say that you should feel free to change the tech at anytime to reach the result, instead of clinging to sunk costs. That sounds contradictory to your statement.
I simply had in mind many cases of start-up who clung to what they learnt from their tech, and solved a different problem from there.
See? This is the pitfall.
Do not disregard your skill, but don't start a romance with it either. Know it's a means of attaining what you want.
Well… “skill” is not the right word here: my skills are to find & assert a market—not everyone in a start-up is a coder.
Still pretty convinced you missed my point, though.
Hi Chris. I would agree that analysing your product set (and being prepared to “pivot” if necessary) is a key attribute for any company. Otherwise you can end up in what I would call the “Black hole syndrome” where you are throwing good money after bad.
I like the Bridge on the river kwai example – I almost did that – but thankfully saner people won the argument. I challenge myself each day to see if there are ways to do it more cost effectively and “almost as well” rather than re-engineering from scratch.
Thanks for sharing – an enjoyable article.
[...] Dixon has written a great post about pivoting: Ask yourself: if you started over today, would you build the same product? If not, [...]
[...] Chris Dixon’s blog post today is about Pivoting and starts with urging you to ask the question, “if you had it all to do [...]
Being susceptible to falling in love with Tech is a problem I face. Fortunately I love shipping something that is needed more, but it's always there in the background.
Put another way, how is less important than what you're building.
[...] Pivoting cdixon.org – chris dixon’s blog mathewi: RT @chrismessina: Great advice from @cdixon that applies equally well to OAuth and OpenID: http://bit.ly/bbUV7f [...]
Before “pivoting” which is a nice way to say “recognise failure and rebound from it”, one has to know what business is he/she really in? Should the new idea be based on the market the firm is servicing (new product) or on the technology it has created (new market). That for me is the real question which forces to figure the ADN of your team.
I think “If we were to start over today, would we build our product the same way we had so far?” is a great question. It's great because it focuses on what you've learned/accomplished with the context of your progress/reality.
Could you expand on solving the wrong problem? Do you use any tools for this? Survey.io comes to mind…
For me, being very honest with myself and talking to lots of other people helps a lot.
@NicolasVDB you bring up a really important point. This confirmation bias is rooted in the 37 Signals idea of build something for yourself.
Building something for yourself can be very useful because you're part of your target market. On the other hand, if you only look for positive signs, you're in trouble.
You have to be extremely honest with yourself. Also it helps to have a few other people who are similar to give you quality feedback.
Another issue I've run into is the need to be consistent. That is, society punishes people for saying one thing and doing another (think of politicians and flip-flopping). In the startup world, you've told your team, investors and friends that you are working on X but then realize you need to switch to Y. The urge to be consistent can slow down and even prevent you from switching to Y.
Also, the question of “If you started over today, would you build the same product?” is exactly the reason why we pivoted Yipit.
“KILL a FEATURE”, I like that! And have actually done that.
Great way to think about it.
good point. with enterprises it's easy to rationalize doing a one off when they are writing a big check, even if long term you end up acting more like an service provider vs product company.
I think one way to handle this is to always tell people about the big goal you are aiming for while saying the actual implementation might vary greatly. At Hunch we have always wanted to create “taste profiles” for everyone on the web. We recently pivoted (today actually http://blog.hunch.com/?p=19044) but the core goal remains the same.
I think a lot of the core principles of the Lean Startup Movement such as releasing a Minimum Viable Product are meant to figure out what the right problem is as quickly as possible and pivot accordingly.
I don't think pivot = recognizing failure. I think there are situations when you should just shut down the company and other situations where you should pivot.
That's really good advice. Will keep it in mind.
You're right – with consumer apps you often not “solving a problem” but making something people like etc.
love that movie and scene!
Yea, getting out of the building and talking to potential customers/users is
a big part too.
Did you build an MVP for Hunch? It would be cool to see it as an example,
or an early version would be good too.
I think the MVP is a good tool, but I haven't seen many examples and I would
be very interested in seeing some.
I would not “pivot” in my firm is bang on the sweet spot. I need to be miles away; if not, I would adapt my product before changing course. I would call that “not meeting my target” if the word Failure does not suit here. The real reason why we (and many other) pivoted, is that the investors would not bother collecting the little money left, and thought the team was able to create more value than what was left.
Not sure I got you: 37signals would be a counter-example, no? they're very successful *in spite* of (apparently) ignoring the world around them
I think 37 Signals is successful because they scratch their own itch and are honest with themselves.
My point was scratching your own itch is fine and can be useful, but if you do this you really need to be honest with yourself and you need to pay attention to negative feedback/experiences (even if that feedback comes from you.)
When I see problems like misuse of engineering resources, it's usually a lack of skilled business people who can work well with engineers.
so good chris. right on. as a non tech person in the web space, i think it has helpoed me use the cobble together tightly approach and go fast.
[...] Angel investor Chris Dixon shares an exercise he uses to make sure he and his startup team are developing a product that they really want and that will overcome any bias. Dixon concludes by asking the reader, "If you started over today, would you build the same product? If not, consider significant changes to what you are building." Read more. [...]
The Bridge on the River Kwai syndrome is definitely a hard one for me. I hate messy systems, but an expensive monolith isn't the answer either. Good food for thought.
[...] stuff here by C Dixon as tweeted by Tim Ferriss. It’s a piece all about the power of pivoting, and it’s [...]
Sometimes you have to redraw the target around where the arrow actually lands.
#3 Solving the wrong problem. That's the one that trips me up. Making it too complicated or attaching too many costly bells and whistles. But, I'm always asking myself what would I do different, what would I do better? Great questions to ask.
Thanks
[...] (via http://cdixon.org/2010/06/14/pivoting/) [...]
Great post Chris. Point 1) is especially valid in large orgs too, as the time to market can be longer for dev projects. This causes them to miss the opportunity in the market, yet they are unable to admit it is time to shelf the product and take the good pieces to use in a future product, as they have invested tens to hundreds of millions of dollars and need to get a return from it.
Great read… Analyzing what is working and what needs to be done over in a new light with a new perspective.
Thanks for the reminder!
Yeah, nice post indeed.
I would add “12 Angry Men” http://www.imdb.com/title/tt0050083/ as good addition. There is ratio 1/11 of NOT taking for granted some assumption. And that is one important asset for entrepreneurship.
[...] and others have proven that this is wrong, at least for geolocation (see Chris Dixon’s post on this [...]
History is happening faster (to steal from Kurzweil) – and so are markets. That's why its important for teams to ask themselves Chris' question and identify their cognitive biases. And not just small companies – big fellas too. I'm living and breathing the mobile enterprise space. First, I'm shocked to find so many players fail to detect that their basic market assumptions are being invalidated (rug from under feet). Second and less surprising, I'm watching people assume that market dominance today assures dominance tomorrow. Computing is undergoing fundamental changes, in part driven by mobility. Players like RIM and Nokia could collapse, along with their approaches and models for the market. The only challenge to Chris' exploration – how in the heck to you balance big forest-through-trees introspection with day-to-day execution? I've suffered too many companies where we were overly paranoid (or insecure) about our position in the market and never executed fully or bravely enough.
[...] Yesterday, I read a post by Chris Dixon, who posed the question: “If we were to start over today, would we build our product the same way we had so far?” and then went on to talk about pivots. [...]
[...] .:cdixon.org-> Share this: [...]
[...] may involve slight tweaks or it might mean major upheaval. As Chris Dixon writes on the subject of pivoting, “You aren’t throwing away what you’ve learned or the good things you’ve [...]
[...] may involve slight tweaks or it might mean major upheaval. As Chris Dixon writes on the subject of pivoting, “You aren’t throwing away what you’ve learned or the good things you’ve [...]
[...] Pivoting cdixon.org – chris dixon’s blog – [...]
I think sometimes we try to pivot too frequently. Often an idea or product will take time to get adopted.
[...] when it comes to your round. When you are able to show people that you know how to turn corners, pivot, and close gaps they identify in your strategy, they will trust you much more as an entrepreneur. [...]
[...] Dixon wrote a blog post six weeks ago on his personal site about how helpful it can be for a startup to pivot. “Ask yourself: if [...]
[...] Dixon wrote a blog post six weeks ago on his personal site about how helpful it can be for a startup to pivot. "Ask yourself: if you [...]
Nice post. THX for your insights again.
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