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I've always been sort of leery of the idea of pivots, because a pivot for a company really doesn't make a lot of sense to me unless it's more of a course correc

I've always been sort of leery of the idea of pivots, because a pivot for a company really doesn't make a lot of sense to me unless it's more of a course correction, and/or heavily utilizes the company's built-up IP (eg Slack, the famous pivot from a gaming company to a productivity tool that they made for themselves). What would make more sense for everyone is for the company "pivoting" to simply shut down, return the unused money to the investors, and reincorporate to do the new thing. That new thing would then go get investment for itself from investors who are more aligned with the new mission.

Lerc 3y ago
I can see pivots being worthwhile for existing investors if the business needs more investment. If the pre-pivot is a worthless thing you own 7% of, it would be better to inject another bundle to own 14% for a new thing instead of starting afresh and owning 7% of nothing plus 7% of a new thing.
- pclmulqdq 3y ago
  The thing is that usually pivots are pre-vesting for the founders, and usually the company has less in the bank when they initially raised. In those conditions, the entirety of the company's assets will be returned to the investors when the company dissolves. It is a good point that it can get you a larger share of a success, though.
lupire 3y ago
YC has always said they invest in founders not their products.
nurple 3y ago
To me, pivot feels like YC saying: hey, we thought you were above the cut, that's why you're here. We know the low likelihood of an idea exploding, let's just get you focusing on other promising blocks as soon as we hit bedrock. I'm assuming this isn't terribly uncommon, considering the hitrate and actual sunk cost. I see the author's viewpoint from a milder formula: learn, earn, or quit. YC seems to be a perfectly fine place to learn a certain kind of methodology. It can be difficult to balance the value flow, especially when goodwill is involved, but there aren't many places that will give you half a mill and a chance at a dream.

Lerc 3y ago

I can see pivots being worthwhile for existing investors if the business needs more investment. If the pre-pivot is a worthless thing you own 7% of, it would be better to inject another bundle to own 14% for a new thing instead of starting afresh and owning 7% of nothing plus 7% of a new thing.

pclmulqdq 3y ago
The thing is that usually pivots are pre-vesting for the founders, and usually the company has less in the bank when they initially raised. In those conditions, the entirety of the company's assets will be returned to the investors when the company dissolves. It is a good point that it can get you a larger share of a success, though.

lupire 3y ago

YC has always said they invest in founders not their products.

nurple 3y ago

To me, pivot feels like YC saying: hey, we thought you were above the cut, that's why you're here. We know the low likelihood of an idea exploding, let's just get you focusing on other promising blocks as soon as we hit bedrock. I'm assuming this isn't terribly uncommon, considering the hitrate and actual sunk cost. I see the author's viewpoint from a milder formula: learn, earn, or quit. YC seems to be a perfectly fine place to learn a certain kind of methodology. It can be difficult to balance the value flow, especially when goodwill is involved, but there aren't many places that will give you half a mill and a chance at a dream.