To pivot or to not? 🦞

There’s a concept that lives rent-free in my mind: the explore-exploit tradeoff.

I stumbled on it seven or eight years ago while studying machine learning, and I haven’t been able to shake it since—it shows up everywhere.

It’s a simple idea, but it drove the most important decision I’ve made in years—making a hard pivot after nine months of building our first concept. And in this post, I’ll share how this went down and what you can takeaway.

A bit about the tradeoff first.

For those not familiar, it describes the dilemma you face in every decision: to exploit the known information and maximize your reward, or risk exploring the unknown to learn more about your environment—and potentially unlock a higher upside in the future. You’ll see this everywhere, from choosing between Starbucks or a new café to rewatching Friends or trying a new TV show.

When you start a company, doubt is inevitable. It’s often your first time, everything seems foreign, and you keep hearing that 99% of startups fail.

No matter what you see on LinkedIn, success doesn’t happen overnight, and it’s rarely linear. In those early, blurry stages—when it’s hard to tell the difference between a one-time fluke and real validation—a pivot will inevitably cross your mind.

In the context of this tradeoff, exploring means pivoting, while exploiting means staying the course. Push exploration too far, and you might never go deep enough to make a meaningful impact. Only exploit, and you risk climbing the wrong hill. (Good article on the topic)

So how do you decide? It’s likely one of the hardest calls you’ll make as a founder, and there’s no single “right” answer. But I’ll share how it played out for us—and what I’d do differently if I started from zero today.

A short trip down memory lane: back in 2022, my good friend Youssef and I were working at Palantir. After four years there, we were itching for something more—so we decided to pursue Moonshot and were lucky enough to get into Y Combinator.

We were both deeply passionate about the topic. I was so excited in those first few months that I saw no downside and never looked back. Meanwhile, Youssef was more grounded and rational (still is) and, after digging into the project, he kept spotting all the reasons it might not work.

Pivoting wasn’t an option for me. So when Youssef brought it up for the third time in those first two or three months, we argued—because from my all-in perspective, it felt deflating. You might think I’m paranoid, but as a first-time founder, there’s always some sign you can latch onto that convinces you everything’s going great.

I asked Youssef not to bring it up again, but we agreed to set a calendar invite for six months down the road, complete with specific milestones. If we hadn’t made enough progress by then, we’d reassess.

So off we went into the daily grind, pulling off all sorts of hacks to make it work (I’ll share those later). As the calendar date approached, I had two external shocks that forced me to revisit the tradeoff.

The first was a US roadshow where we met several prospects, including “the Whale,” who—though polite—basically laughed us out of dinner. The second came when I returned to London and met one of my best friends. He’d started his own company just a few months before me, and his numbers were already taking off. I was happy and proud, but it also made me reflect.

As the calendar invite was approaching, Youssef and I sat down for a three-hour conversation. By the end, we shut down all Moonshot work on the spot and documented everything we’d done wrong—and how we’d tackle the new business differently.

We gave ourselves a few days to think and evaluate our next pursuit, bringing in another good friend to join the founding team. After plenty of whiteboarding, we fairly quickly landed on the concept of Wondercraft and got straight to work.

I won’t go into too much detail about the evaluation phase, but from the start, we saw strong signals—like landing around 100 paying customers in just a few weeks. Wondercraft already had more momentum than Moonshot ever had. We’d found the right hill to climb: exploring was worth it, and now it was time to exploit.

So that’s our pivot story. My biggest takeaway is that you should structure your pivot framework:

1. Timebox your efforts. Don’t doubt yourself daily. Go all in until your set deadline.

2. Force some shocks. Talk to people on the outside. Let them tell you exactly how badly (or well) you’re doing.

This framework can help you cope with and navigate the explore-exploit tradeoff.

If I were starting over, here’s how I’d decide whether to keep exploring or start exploiting:

1. Find the one (or ten) customer(s).

   You don’t need thousands right away. Be patient. Find that customer who can’t imagine life without your service—and make them happy.

2. Can you reproduce this case?

   Are there more customers like this one? How many? Would winning 20% of that market be enough for your goals?

3. Are you enjoying learning about this space?

   Whether you like it or not, to make this work, you’ll become an expert in the field. Do you want that?

If those boxes are ticked, you’re off to the races. Keep hammering—you’ve got this. And don’t sweat over other things, like competition; if you’re a killer, they won’t see you coming.

So, are you exploring or exploiting right now, and why?

Dimi

Workplace of the week

Think you have a better work set up? Reply with your submissions 📨.

Hot tip - listen to this playlist to enter the wonder zone.