Standing out or Fitting in, Business Pitch and Pivot: Institutional Isomorphism and Differentiation Strategy

The game of “standing out” or “fitting in” is pervasive in the social world. A game faced by individuals and organizations alike, navigating between these two ends and finding a balance become important to the survival and prosperity of the social entity. This reification is especially true for business organizations. While innovation emerges from “standing out” from the rest of the industry, such novelty could also alienate the company from the rest of the pack. On the other hand, fitting into the industry also prevents the company from capturing additional market share and becoming the industry leader. How do companies find this balance? Given the height of U.S. venture capital funding at the moment, at an all time high in 20 years mirroring the funding level of the dot-com boom in the 2000s, the question of standing out or fitting in becomes increasingly important to early-stage companies. To partake and benefit from the venture capital carnival, companies often pivot their products and business models to generate more value to attract investors. Though the startup and venture capital community disagree on the key value drivers of a company, there is consensus on the importance of pivots. What are patterns of pivots and companies that pivot, and do they stand out or fit in overtime with these pivots? In this paper, I investigate this central question through analyzing company description text from Crunchbase (early-stage companies) and annual 10-K’s (mature, public companies). There are three dimensions to this analysis. First, how do companies change their pitches overtime? Second, what drives and results from pivoting? Third, how do companies fit in with the rest of the industry they find themselves in – and how is this different between early-stage v.s. mature, public companies? We hypothesize that pitches become more professional overtime, and that early-stage companies are more likely to pivot and disrupt the industry because pivoting is beneficial