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Hazel initially built a marketplace to help businesses sell to government. They realized the core problem was not business tooling but government inefficiency. To truly bring businesses back, they had to empower government agencies directly, leading to a full product pivot.

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Cues' initial product was a specialized AI design agent. However, they observed that users were more frequently uploading files to use it as a knowledge base. Recognizing this emergent behavior, they pivoted to a more horizontal product, which was key to their rapid growth and product-market fit.

Datycs' initial product, a patient chart summarizer for physicians, faced slow adoption from health systems. The company found a more viable business model by pivoting to solve an urgent problem for payers: processing massive volumes of unstructured documents for back-office operations.

Selling to government is counterintuitive for impatient founders. Government can't fail or be disrupted in the same way. The winning strategy is to first solve an urgent, existing problem within their constraints, build trust, and then gradually introduce broader innovation.

Rather than making an abrupt turn, Sure managed its pivot from a B2C app to a B2B platform gradually. They kept the original mobile app running while they built and validated the new B2B distribution model, only sunsetting the app once the new strategy proved viable and began to ramp up.

Initially building a tool for ML teams, they discovered the true pain point was creating AI-powered workflows for business users. This insight came from observing how first customers struggled with the infrastructure *around* their tool, not the tool itself.

Hazel's founder frames their major business model change not as a failure, but as finding a better path to the same goal. Their mission was always to increase competition in government procurement. This missionary focus provided the stability and clarity needed to make a difficult but correct product pivot.

TeamBridge initially built a scheduling tool, but customers revealed the real problem was workflows and automations stuck in spreadsheets *surrounding* the schedule. Pivoting to solve this deeper, systemic pain led to making more money in one month than the previous two years combined.

Unlike many private sector roles, a state CPO serves two distinct customer bases. They build B2C digital services directly for constituents while also developing a B2B platform-as-a-service to be adopted by other state agencies, requiring separate strategies for product marketing and adoption.

When selling software to an industry with ineffective or slow-moving customers, it's a strong signal to pivot. Instead of serving them, it may be more lucrative to build a vertically integrated solution and compete with them directly.

By first helping government agencies craft regulations, a startup gains deep expertise and credibility. This naturally leads to high-value inbound interest from private sector firms needing help complying with those same regulations, creating a powerful two-sided market flywheel with built-in demand.

YC Startup Hazel Pivoted From B2B2G to Direct-to-Government (B2G) to Fix Procurement | RiffOn