Investing In Pivots

Illustration by Pete Scully

Last week, I wandered through Noe Valley with a close friend & we talked about family, investing, and everything in between while drinking a coffee.

Our friendship began years ago on the back of a tour bus winding through the ancient landscapes of Israel in 2018. He is one of those seed investors who always seems to know what's happening in the industry. Every deal, every whisper, every trend. You probably know someone like him.

He mentioned one of his 2022 investments that's now become one of this year's biggest breakout success stories. The current product is much different from the original concept he supported as a seed investor.

I was curious what he was thinking when he invested in the company.

When writing the check, he actually suggested they consider pivoting. The founders' technical talent justified the investment regardless of their initial direction.

"I wasn't investing in their first idea," he said with conviction. "I was investing in the idea that they might pivot. They were just that good."

Early-stage venture investing is undergoing a profound shift and we are seeing more successful pivots.

With software becoming commoditized through AI-driven code-generation tools and platforms like Bolt, v0, and Lovable, the initial product idea matters less now than at any time in the past.

Instead, product velocity—the speed at which teams can build, iterate, and adapt — will define success at the seed stage going forward.

We romanticize visionaries who never waver, who push through resistance with stubborn certainty. But that narrative is increasingly obsolete.

Consider Captions, one of our portfolio's fastest growing companies. When we invested in 2021, they pitched a social network, but I suspected a pivot was inevitable.

Their founders' adaptability was the real asset I was betting on—not the product on their pitch deck. Today, they've become the category leading short-form video editor and are now building best-in-class voice-to-video models.

What made them so special? Founders Gaurav Misra and Dwight Churchill invented the now popular "design engineer" role while leading Snap's experimentation team. Their hybrid design and engineering skills allowed them to compress product development cycles that typically take months into days.

They were also comfortable discarding ideas and beginning anew, drawing from their experience building over 50 products at Snap.

Our Captions investment marked a significant philosophical shift in my approach to early-stage investing. For the first time, I deliberately prioritized the team's adaptive potential over the specific product they presented—investing not in what they'd built, but in their capacity to evolve beyond it.

That said, I've made my share of mistakes when underwriting potential pivots — it’s a difficult skill to master.

I met the Stackblitz team during their seed round while they were developing what was essentially "Figma for developers" - a browser-based IDE for collaborative development. Though impressed by both the founders and their technology, I believed they would eventually need to pivot, and questioned whether browser-native development tools could capture sufficient developer market share to generate venture-scale returns.

When their runway dwindled to just three weeks last year, they executed a remarkable pivot by launching Bolt, an AI-powered app builder that rapidly emerged as one of the year's standout products. Within months, they were generating eight-figure revenue and secured a $105M funding round in January.

The outcome reveals a nuanced truth about early-stage investing: sometimes the initial product direction matters less than the adaptive capacity of the founding team.

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Our investment thesis has evolved through both successful bets and missed opportunities, with a more nuanced understanding of founder potential. We've increasingly gravitated toward the Design Engineer archetype - founders who combine technical and design skills, like Gaurav and Dwight at Captions.

These types of founding teams seem to move with impossible velocity. While others debate, they build. While others plan, they ship. While others perfect, they iterate. They compress time itself.

What makes this profile particularly compelling in today's landscape is how it addresses a growing market inefficiency. As technical implementation becomes increasingly commoditized through AI, the competitive advantage shifts towards taste and iteration speed.

And in this moment of accelerating technological change, the founders who embrace creative destruction may be the only ones who survive long enough to win.