Anatomy of a successful startup “pivot “: Step 1: Spotting a pivot point

Its the hottest trending buzzword of 2010. Pivoting is not new for most startup entrepreneurs. Most successful founders have an innate gut feel for markets, customer needs and opportunities. 

Spotting trends is the key to pivoting. You have to be able to take a lot of data (from the market, blogs, conferences, customer conversations, etc.) to understand and have a sense for if what you are doing aligns with what people will want in a few weeks / months / years.
The thing about trend spotting is that is not even close to a science. 
Most entrepreneurs either know their market very well and understand the ecosystem or they are rank outsiders trying to disrupt (link). We were the later. While most startup advisors tend to advocate “blinders on” approach towards solving the problem that your company set out to solve, I tend to ask entrepreneurs to keep looking outside. Spend a good 80% of your time on building what you set out to build, but keep talking to customers, industry folks, etc.
At BuzzGain, most recently we went through a pivot exactly 8 months after our incorporation, 3 months after our alpha and 2 months after our beta launch. We started as a DIY PR web service and ended up being a social media monitoring solution. It was not a 180 degree turn, but a significant enough change from our initial vision. So I thought I’d share the insights I had learned from that experience.
In a customer conversation (as a follow up to our beta launch), I asked the user what he thought, what value he got from using our product, and what we can do to improve it. He was mostly complimentary (since he was a old friend) and suggested a few small, minor changes. At that point we were excited. Finally after 6 months of intense work, we had something customers would pay for. Or so we thought.
Exactly 6 days after the conversation with the customer, he had posted a blog article about a new product he was trying out in a adjacent area. His blog post was a lot more complimentary, since it solved a problem that was a big issue for him. I read the post with great interest, and recalled that his conversation with us was a lot less effusive about what we were doing. Luckily for us, our product could do about 50% of what the other product could do and the work we had done was the base for a lot of their functionality.
Still I did not think it was a reason to pivot yet. In fact at that time, I had no idea what Pivot even was.
Since I was new to the PR space overall, I was following over 50 key bloggers in the space. A day later I spent 11 and 1/2 hours going over 218 blog posts over 3 months, manually trying to find out what excited them, what disappointed them and what they were looking for.
Social media monitoring was all the rage among the PR folks I was following.
I did not notice it even though I read their posts daily. Turns out its hard to spot the forest from the trees when you have your blinders on.
Data point #2 was available, but we were still not completely convinced.
So we decided to do an experiment. We developed the top 3 features quickly with our current capability an in a week put it in our product. We did make sure that those were prominently available to every customer.
Our Google Analytics data showed in a week, customer interaction was up 133%.
Pivot? Hell yeah! 
We removed 25% of the current features, and focused on getting more data sources, ranking social media expertise based on 3-5 factors and started working towards a 1.0 launch with a target of 2 months.
What I learned while going through our pivoting exercise:
1. Most initial customers for startups tend to be friends, family or old acquaintances. They wont always tell you that what your are building is awful or that does not solve their problem. Its in their DNA to encourage you. 
Suggestion: Get at least 2-3 rank outsiders to test and use your product. Preferably people who you have met only once (or never) at a conference.
2. Take some time every 3 months to reflect. Blinders on approach rarely helps you spot pivot points.
Suggestion: Write a summary blog post (or prepare an internal presentation to share with your team) every 3 months of all the key things people in your industry talked about. Look for what they are saying, who they are linking to and what events they are attending.
3. Look for multiple data points before you pivot. Most times you may get a head fake. These could be the most challenging for your company to recover from.
Suggestion: Read the book 6 hats thinking – By Edward Bono. Learn how to get multiple data points (but dont take too long) and analyze them to make a more informed decision. 
But realize, its never going to be 100% right so I suggest you make risk taking a discipline.