Respected venture capitalist Bill Gurley is seeing far more entrepreneurial pivots than he used to.
Pivots – which borrow their phraseology from basketball – occur when entrepreneurs drop an idea or business model that isn't working and switch to a new one with more promise.
There are a few variations to that definition but it is essentially a mark of an entrepreneur's ability to adapt.
While the buzz on entrepreneurial pivots seemed to peak in the news media in 2011 and 2012, it seems the hype is returning.
"We're [invested in a pivot] that I'm super excited about called Nextdoor.com that is a social network for your neighbourhood," Gurley told this year's South by Southwest (SXSW) festival.
"The team headed down one path, just stopped and then started down another path and was very successful."
Another recent example of a pivot – albeit one Gurley wishes he had invested in – is the team messaging app, Slack. Started by Flickr co-founder Stewart Butterfield, it is now said to be worth over US$2 billion.
"Slack was a game company [when it started] – it wasn't even an enterprise [focused] company," Gurley said.
"Now, if you believe what everyone's saying, [Slack] has so much enormous viral growth [potential] in the enterprise that it's something that's kind of [become] a once-in-a-decade thing that happens in Silicon Valley."
Slack and Nextdoor join an illustrious list of former start-ups that owe their success to a pivot. Others on the list include Instagram (which started as a virtual check-in site) and Twitter, which was born from the ashes of a podcasting platform.
Australian start-ups are also open to pivots. A survey called Start-up Muster that had 521 responses earlier this year found 47 percent of Australian start-ups had had at least one pivot, and 14 percent of respondents had pivoted three times or more.
People who pivot
Gurley sees some common ground in the types of companies and people that pivot – and do so successfully.
Firstly, he said, they tend to be run by what he calls "repeat entrepreneurs who ... have the confidence to admit defeat, and the confidence to try something new without giving up along the way."
"I think for a first-time entrepreneur those kind of things are horroring (sic)," Gurley said.
"If what you set out to do looks like it's going to fail, [first-time entrepreneurs] usually use up every last penny trying to prove it will work, and just hit the wall."
According to Gurley, successful pivots also seem to come more from entrepreneurs whocreate enterprise products rather than products targeted at consumers.
"In the enterprise, [pivoting] is ten times more effective than on the consumer side," Gurley said.
"Repeat entrepreneurs in the enterprise will typically just stand up and be successful again, but in the consumer space we've seen a lot of high profile repeat entrepreneurs try and launch something and it just be a dud."
Academics from Stanford University's Hasso Plattner Institute of Design wrote in the Harvard Business Review that one of the keys to deciding whether or not to pivot is to rule out "surviving mediocrity" as an option.
"The key is confronting the fact that it's time to re-evaluate," they wrote.
"If you don't have a single die-hard fan of your product — let alone the thousands you'd need to take off — it's time to pivot into something your customers are passionate about."