Pivot Case Studies

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Part
01

Zoom-in Pivot - Case Studies

Some inspiring case studies of companies/startups that successfully applied the zoom-in pivot include YouTube. Twitter, and Flickr. Additional information on the companies' websites, type of pivot and valuation has been compiled rows 3-5, column A-G of the attached spreadsheet.

YOUTUBE

  • YouTube started as a video dating site where members would upload their videos and attract the attention of followers.
  • Initially, the idea did not sell among users, to the point that the founders had to pay women $20 to upload their videos.
  • The founders, Chad Hurley, Steve Chen, and Jawed Karim, decided to open the platform to all types of videos, ushering new dawn for a concept that was about to fizzle out.
  • One of the events that inspired the developers was when Karim could not find the clip for Janet Jackson’s wardrobe malfunction during the 2004 Super Bowl halftime performance.
  • Another event was when Chen and Hurley could not upload a dinner video because emails had attachment limits.
  • YouTube was registered on 14th February 2005, uploaded the first video of “Me at the Zoo” in April 2005 and got the first video with 1,000,000 views (a Nike advert of Ronaldinho receiving his Golden Boots) in October 2005.
  • Google saw the potential of YouTube and bought it for $1.65 Billion and expanded its features gradually.
  • Today, YouTube is worth an estimated $90 billion from the original investment of $1.65 Billion in 2006.

FLICKR

TWITTER

  • Twitter started as Odeo, working on a podcasting platform in 2006. At the same time, one of the Odeo employees was working on an SMS based updating platform on the side called Twttr.
  • iTunes kicked out Odeo out of the market, prompting the CEO to give attention to this less favored SMS updating platform.
  • The CEO gave the team two ‘hackathon’ weeks to come up with another viable idea, and Twitter was born under Jack Dorsey and Biz Stone.
  • Old investors and even the originator of the concept were bought out by returning the $5 million received as seed capital, though the details of the transaction are fuzzy.
  • The micro blogging platform today has over 300 million active monthly users with 134 million logins daily.
  • Twitter has transformed into a news source as well as a corporate marketing platform, significantly raising its value.
  • Twitter is now estimated to be worth $32.85 billion based on share prices.
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Part
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Zoom-out Pivot - Case Studies

Some inspiring case studies of companies or startups that successfully applied the zoom-out pivot include Paypal, Airbnb, and Yelp. Detailed below is how each of these companies successfully applied the pivot. The same findings can also be found in the spreadsheet attached.

PAYPAL

  • Paypal started as Field Link in 1998 by Max Levchin and Peter Thiel, with the aim of creating a platform to send money using handheld devices, but the encryption software the pioneers were targeting did not materialize.
  • It then transformed into Confinity to provide a platform for sending money electronically using handheld devices.
  • The fortune of the company turned when they realized that there was no means to make electronic payments despite the fast-growing internet space that was opening the world to e-commerce.
  • eBay, one of the fastest-growing online auction sites at the time, required people to make payments using checks and money orders.
  • Paypal stepped in to bridge the gap. They provided a convenient email-based payment method using known currencies.
  • Paypal separated business and personal accounts to entice merchants trading online.
  • The platform then provided options for multiple currencies and easy deposits and withdrawals.
  • It has witnessed a series of acquisitions from the days of Max and Peter to today when it is owned by multiple entities like individuals and mutual funds, among others.
  • It is valued at $102.2 billion as of September 2019.

AIRBNB

YELP

Part
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Part
03

Customer Segment Pivot - Case Studies

Foursquare, Eden and Snapchat are examples of companies that have successfully applied the customer segment pivot. All relevant information has been documented in rows 9-11 of the attached spreadsheet.

Foursquare

  • Type of pivot: Customer segment pivot.
  • Foursquare app initially was launched to provide users the ability to check into various locations such as restaurants and leave behind their reviews. This application was found to be popular over a decade ago but lost its favor with the customers later on.
  • The company then "pivoted to cater to enterprise customers and developers" who could utilize the took of check-in information to power their applications or drive their business analytics.
  • Foursquare now provides retailers, brands, and ad companies a platform to obtain precise, location-based information about their clients and their conversion rates.
  • The company is currently valuated at $390 million, according to Forbes.

Eden

  • Type of pivot: Customer segment pivot.
  • Established in the year 2015, Eden was first launched to provide on-demand tech support services to homes, hiring professionals to directly perform their work. The company then realized that their revenue model was not effective since their customers seemed to be sensitive towards their prices.
  • Eden's founder also found that the company's primary revenue was mainly generated through its enterprise customers. Therefore, the company pivoted its customer segment to business. Eden was also found to shift its home business to office business and pivoted from providing just tech services to multiple types of services in the workplace.
  • As an early stage venture Eden is found to have post-money valuation of the range of $50M to $100 million.

Snapchat

  • Type of pivot: Customer segment pivot.
  • Snapchat was initially launched as Picaboo, a disappearing photos and messages sharing app in 2011. The company’s primary target was the general audience and the developers struggled to garner the attention of consumers of all ages.
  • The founders observed Snapchat's increased popularity with college students and decided to pivoted to the new customer segment to widen its user base by focusing on this generation. (Source 9).
  • The transition to younger users has enabled the company to explore new revenue opportunities to contribute to its growth, user base, and engagement.
  • During Snapchat's IPO in 2017, the company was valued at $31 billion. Snapchat is currently valued at $23.5 billion.

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Part
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Platform Pivot - Case Studies

The WWE underwent a huge platform pivot that critics around the world believed was a mistake but now view as an ingenious move on the company's part. Other examples of successful platform pivots are WebEngage and Fitbit. Descriptions of these platform pivots and the company's valuation are given below and included in rows 12-14 of the spreadsheet.

WWE

  • WWE abandoned their PPV platform and created the WWE Network to broadcast signature events and original programming. An analyst from Citi called the move a smart strategic pivot for the company to switch from a PPV model to a web-based subscription model.
  • Estimates put that the company would need 1.76 million paid subscribers to replace the revenue from the PPVs. In the second quarter 2019, they averaged 1.688 million paid subscribers, and the prior year quarter they averaged 1.8 million.
  • They successfully applied the pivot after a lot of research they opted for a direct to consumer platform and created the WWE Network. The initial reaction to their decision was that the company was disrupting its own business, but data showed digital consumption and subscription services were the wave of the future so the company pivoted away from paid PPVs to the direct-to-consumer platform.
  • Michelle Wilson, the company VP, states that they knew the platform was a success on the day of the launch for Wrestlemania 30 event they had 700,000 subscribers, and hit 1 million by the following January.
  • In 2019, the company pivoted again and parted ways with Disney and built a division with two other companies, Endeavor Streaming and Massive Interactive, that revamped the Network and app experiences with superior streaming technology and content delivery, transcoding, and billing.
  • Their app has 295,094 downloads in the last 30 days and a monthly download growth of 35.09%. The website has over 15.5 million monthly visits and a monthly visit growth rate of 10.71%.
  • WWE's market valuation as of September 2019 was $5.603 billion.

WebEngage

Fitbit

  • After the release of the Apple Watch, Fitbit saw a 50% drop in their sales. In 2017, Fitbit decided to make a hard pivot from being a consumer brand to become a B2B digital health platform to improve people's health and that would integrate into the health ecosystem. The pivot took Fitbit from being a hardware supplier to a platform that integrates with healthcare providers to give personalized tips, aid in preventative care, and decrease insurance premiums.
  • To accomplish this platform pivot Fitbit had to seek partnerships with healthcare providers like their integration with Qualcomm’s Life’s 2Net Platform and invest heavily in R&D. The company has flourished and is gaining large volumes of users through their enterprise partners, and they credited by some to be transforming healthcare by transforming their business. Partnerships such as with Solera and the Army's purchase of 540 fitness trackers, among others, speak to their growth within the healthcare sector.
  • Market cap is $989 million.
Part
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Part
05

Business Architecture Pivot - Case Studies

IBM, Adobe, and Microsoft are examples of companies which have successfully applied a "Business Architecture" Pivot, by radically changing their business and service structure. The details of these pivots and these companies' current valuation can be found in this spreadsheet.

IBM

Adobe

Microsoft

RESEARCH STRATEGY

For this research, we dived deep into the definition of business architecture pivot. After understanding the pivot and finding the names of companies that have successfully applied this pivot, we studied each company's history in detail. This helped us find the exact nature of their business architecture pivot. It also helped us gauge the success of these pivots.
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Part
06

Value Capture Pivot - Case Studies

Google, Apple, and Napster successfully pulled off value capture pivots.

Overview

  • Google's value capture pivot involved switching pivoting to advertisements from search.
  • While Google generated revenue from searches and its algorithm, AdWords would be what helped the company grow to where it is today by focusing on new customers and sources of revenue.
  • Apple was failing in the nineties because it focused on innovative products that were not entirely viable during that era.
  • Apple's value capture pivot was to focus on beautiful and modern hardware and software, which allowed it to capture the value on a new consumer group. The value capture pivot here was to shift focus away from technophiles who loved new and advanced hardware by instead innovating for people who wanted sleek, modern hardware.
  • Napster's value capture pivot was forced after their old method of revenue was essentially destroyed due to a court case.

Research Strategy:

Some small notes

The spreadsheet says startups, but the RC notes that companies are okay. Other requests used companies too, such as PayPal. PayPal is clearly not a startup.

Second, one of the sources is a bit older than two years. This was because it was the best source for the information on AdWords and the information doesn't "expire" or anything.

Update!

I vastly added to the Apple section on the spreadsheet so the value capture pivot is more clear as per the review. I also added a sentence to my brief to clarify it as well.
Part
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Part
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Engine Of Growth Pivot - Case Studies

Eric Ries' book, the lean startup, provides a business strategy for startups growth through the engine of growth pivot. He identifies three engines of growth: paid engine, sticky engine, and viral engine. Companies that have applied the engine of growth pivot include Zendesk that applied the paid engine, Dropbox that applied the sticky engine, and Facebook that applied the viral engine. The research insights were presented in row 21 to 23, column A to E of the attached spreadsheet.

DROPBOX

FACEBOOK

ZENDESK



Part
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Part
08

Channel Pivot - Case Studies

Walmart, Target and Costco and three inspiring case studies of companies that have successfully applied the channel pivot.

CHANNEL PIVOT CASE STUDIES

  • Walmart, Target and Costco are three examples of a major retailers that have successfully applied the channel pivot to grow their market share and stabilize their businesses in a changing competitive landscape.
  • All three companies have historically been anchored in physical store sales, but managed to successfully adapt their business model by expanding their online platforms to support the new omni-channel capability of buy online, pick up in store, or BOPIS.
  • Notably, these channel pivots to BOPIS occurred at a time when the rise of digital shopping was shifting retail sales online and leaving a vacuum of shoppers in physical channels, such as major brick and mortar stores.
  • While many physical retailers who failed to complete a channel pivot in the last five years have gone bankrupt, Walmart, Target and Costco managed to stabilize their businesses and increase their stock valuation by making a channel pivot to BOPIS, among other changes.
  • As a sign of Walmart’s and Target's particular success with this channel pivot, Walmart currently has half of the US BOPIS market, while Target currently has one third of the US BOPIS market.
  • Meanwhile, Costco has claimed that its BOPIS strategy has increased member awareness of Costco’s online channel, as well as improved sales both online as well as in the company’s physical warehouses.
Part
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Part
09

Technology Pivot - Case Studies

Wix, Android, and Wealthfront are companies/startups that successfully applied the technology pivot.

The link to the spreadsheet is here.

1. Wix

  • Website
  • Type of pivot: Technology
  • Brief description of how the company successfully applied the pivot: Wix began flash-based website builder. The flash editor launched in 2008 for website development
  • The company then pivoted towards an all-inclusive HTML5 platform for building websites. The pivot was triggered by technology challenges of the flash editor.
  • The drag and drop website editor with HTML5 capabilities was launched in 2012 and aided the growth of its user base.
  • Company's latest valuation in USD: $7 billion

2. Android

  • Website
  • Type of pivot: Technology
  • Brief description of how the company successfully applied the pivot: Android was founded in 2003 to develop an operating system for cameras connected to personal computers and the provision of photo cloud storage.
  • Development of smartphones and mobile device industry led to shrinkage of standalone smart camera market. This led to Android pivoting and changing their key focus on an operating system for mobiles.
  • The company developed an open-sourcing Android OS for phones capable of operating a variety of mobile devices.
  • Android Inc. was acquired by Google in 2005 for $50 million.
  • Company's latest valuation in USD: $167.7 billion

3. Wealthfront

  • Website
  • Type of pivot: Technology
  • Brief description of how the company successfully applied the pivot: Wealthfront's initial mission was to provide a virtual stock trading/gaming platform where amateur traders could be identified using virtual portfolios by investors and also find access to financial advice. After the company experienced some failures, it pivoted to build a platform for professional managers to an investment management company for consumers on the internet and also automatic investing using ‘robo-traders’.
  • The fintech start-up now provides automated software-based financial advice related to investment management and advisory services and financial planning tools.
  • Company's latest valuation in USD: $500 million
Part
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Part
10

Customer Need Pivot - Case Studies

Pinterest and Uber are two companies that successfully applied the customer need pivot. While Pinterest pivoted from a mobile commerce app to a website for building and sharing collections due to its users' interest in the later, Uber pivoted from a members-only luxury car service for professionals in America to a low-cost transportation solution competing with public transportation in several cities around the world, following complaints from users about price surges. Details on these two companies have been provided below and in rows 30-31 in the attached spreadsheet.

PINTEREST:

  • Pinterest began as Tote, a mobile app designed for users to window-shop using their phones, in 2009.
  • The app allowed users to save their preferred items offered by retailers and share them with their friends. It would notify users, directing them to the nearest stores whenever the items went on sale.
  • However, because mobile commerce was not as evolved as it is today, it was difficult to make purchases through mobile phones. As a result, users were mostly saving collections of their favorite items and sharing them with friends.
  • Due to this growing interest in building and sharing collections among Tote's users, in 2010, the app's creators a new website called Pinterest, which offered a visually appealing way for users to display and share their collections of favorite items.
  • Latest Valuation: $12.7 billion

UBER:

  • Uber began as UberCab, a fast and efficient members-only luxury car (Mercedes sedans) service for professionals in America. The black-car service was rebranded to Uber in 2010 to avoid marketing itself too much like a taxi service.
  • However, in January 2012, users slammed the company for price surges, which were three-six times higher than the cost of a regular ride.
  • Later that year, the company launched UberX, slashing its prices to be able to compete with taxi prices, a shift from its original chauffeur experience model. It accomplished this by expanding the kind of cars that could drive on its platform, thereby increasing the number of its drivers — "any qualified driver with an appropriate vehicle."
  • Since then, although it is has faced numerous legal challenges, Uber has positioned itself as an affordable transportation solution competing with public transportation in several cities across the world.
  • Latest Valuation: $82.4 billion

RESEARCH STRATEGY

We initially searched for case studies of companies/startups that successfully applied the customer need pivot. While we found case studies of successful companies that pivoted in their early stages, we did not find any case studies that explicitly stated that companies used the customer need pivot. We then analyzed the available case studies to identify those that fit the definition of the customer need pivot. Note that in compiling these case studies, we had to use some sources that are older than two years, since events related to the pivots happened more than two years ago.
Sources
Sources

From Part 03
Quotes
  • "Customer segment pivot: Five startups, Eden, Groupize, Keas Socrata and Zealyst, are classified under this category, and each pivot is triggered by a different factor except Socrata and Zealyst, who have the same triggering factor."
  • "Eden initially started with providing technical support to consumers to solve their information technology related issues – similar to geek squad. The startup was mainly focused on providing services to end consumers to generate revenue. However, they soon realized that their revenue model was not working as they expected, because the consumers were more sensitive to price than they expected. "
Quotes
  • "Eden has a post-money valuation in the range of $50M to $100M as of Sep 27, 2017 according to PrivCo."
Quotes
  • "One of the finest examples of customer segment pivot is Snapchat. The app developers were struggling to add new users as it was targeted towards a general audience. However, the app became popular in college students and went viral. The app founders were able to identify a new customer segment that they had never thought of."
From Part 09
Quotes
  • "In the case of Wix, it started as a Flash-based website builder when Flash was the best option available for website development before 2011. With the advent of smartphones, mobile devices and introduction of HTML5, Flash was not anymore a viable option for their business because of its performance problem with the smartphones. "
  • "The combination of the new emergent smartphone technology and narrowing camera market triggered Android to pivot from an operating system for cameras to provide mobile platform (operating system) focusing on handsets."
Quotes
  • "When Avishai Abrahami, co-founder and CEO of Wix, decided his company would go from being a Flash website builder to an all-inclusive HTML5 platform, the move was considered controversial by some members of his team. But he held transparent conversations about the new direction and explained why the company would pursue it."
Quotes
  • "Rubin departed Danger in 2003 to help form Android, along with the other co-founders Rich Miner, Nick Sears, and Chris White. The original idea for the company was to create an operating system for digital cameras."
Quotes
  • " Wealthfront started as a virtual trading league for amateur investors. The idea was to identify the best traders through their virtual portfolios, and get customers to invest in those traders. After failures on both fronts, Wealthfront pivoted to build a platform for professional managers instead of amateurs. "