If the passion is gone...

By Jacob Montoya

As an entrepreneur following the lean startup philosophy, how do you know when to stop pivoting and pull the plug on your venture? Is this decision easier or harder in a lean startup?

Deciding when to stop pivoting and pull the plug can be a difficult decision, but it is easier for those pursuing the lean startup philosophy.  While in our Launching Tech Ventures course, we learned how important it is for an entrepreneur to be extremely passionate about their idea. The lean startup philosophy encourages entrepreneurs to balance their passion for an idea with logic by running tests to combat such factors as optimism biases, confirmation biases, and sunk cost fallacies.  Without this lean startup philosophy entrepreneurs tend to pivot later and invest more in their ideas overall, leading to a strong sense of attachment to a particular idea.  The same things that make it so hard to pivot for these entrepreneurs also make it extremely hard to pull the plug even after their passion has waned and their financing capital has diminished. 

While lean startup methods improve the ability of entrepreneurs to identify pivot vs. pulling the plug situations, it can still be a difficult decision.  There is always the risk that an entrepreneur will spin their wheels pivoting around a bad central theme for far too long.  At the same time, there is the risk of leaving a market and throwing away considerable knowledge when a break-through could have been just around the corner.  MVP tests are extremely helpful in deciding whether to continue to pursue a pivot so long as they are designed correctly with actionable, falsifiable hypotheses.  However, how do you decide when to pull the plug and stop pivoting?  While the entrepreneur has responsibility to its investors if they were funded, I believe the central deciding factor should be around their continued passion for the startup.  If they have the passion for continuing forward they should (with approval from investors.)

We have learned how important passion is, from both our guests in Launching Tech Ventures and from Professor Bussgang, in facing the steep difficult odds of turning a startup into a successful business.  It almost takes an irrational passion to pursue the NPV path of a particular startup.  Even after a few pivots, as long as this passion remains, the startup should move forward in pursuit of new pivots.  While the startup will obviously need to ensure that their new pivots can be relatively quickly tested through the lean model, after a few pivot failures they will likely be even better prepared to pursue their passion because they will have become better at formulating and executing pivot evaluations/tests.  They will also likely have a significant amount of relatable knowledge from their previous pivot ideas.  

As long as the passion is there, a startup will likely become increasingly better at identifying, pursuing, and testing new pivots so it makes sense to continue.  Passion can bolster a lot of the factors that affect a startup’s success (team enthusiasm, investor support, etc.) and working with a startup that has been through a few pivots is often easier than starting from scratch.  If the passion is gone, it should be an easy decision for the entrepreneur to move on (whether that means returning investor money or finding new leadership).