From Millions in Funding to Just Another Victim in the Valley

The Silicon Valley startup dream begins with getting funded, moving to an extravagant office space overlooking the skyscrapers, and going on a hiring spree. Very soon you have something that is starting to look a lot like a “real company.”

As much of a struggle as it was to get the backing and find the right people…founders have another thing coming when it comes time to turn a profit.

This is where most founders get stuck. Not because they don’t know where to start – they just don’t know how to prioritize and organize in order to maximize potential revenue growth.

There are two main paths they try; either they take the product-driven path or they opt for a complete sales driven path. There are pros and cons to both. Let’s take a deeper dive.

The Product-Driven Path

The product-driven path focuses on perfecting your craft, be it a product, service, or experience. This route supports the development of a solid product and ensuring that it will be a viable, revenue-driving machine. However, can you be sure before securing actual paying customers?

A thousand questions arise. How much will your customer consider paying for the product that you just created? What is the marketing roadmap built on? Why is the company making random deployments? Who are they deploying for?


This was the case for a startup I once consulted with in the FinTech industry. The product was set out to help millennials budget better and invest at an early age. Their vision was to build a community around millennials who worked at large tech companies. At the end of the day, they wanted to get into large companies and provide this app as a benefit.

The problem they ran into was that the visibility for these “benefits” was poor. Employees at large tech companies were so caught up in the weeds of working that their engagement levels with different apps and benefits was low.

The company wanted to sell to the enterprise but all of their resources were so deeply embedded into product development that they had no focus left for the strategy and process of selling. Despite the data, they felt as though their product was so desirable that it would literally sell itself without the need of a sales team.

We didn’t end up getting acquired and with a burn rate of $500K a month – we went downhill fast and nothing could save us from becoming just another victim in the valley.

The truth was that the product wasn’t as solid as they thought it was and it wasn’t a “need” for their target audience. If they would have done some sales research, they could have found out that the audience did not find that their product solved any of their major desires or challenges.

The key takeaway here is to listen to your audience and find that product market fit before you focus on taking a product driven path. If the product isn’t a “need” for your target audience then recognize that the education curve will be longer (meaning it’s not going to sell like hot cakes right away). It will take time before you see any traction. It’s important that founders take the time to understand their true top buyers and ensure they are real buyers rather than friends, family, and fools.

The Sales-Driven Path

The other path is a sales driven path where sales and marketing have great alignment but the product has some issues. The product may have a low barrier to entry which isn’t entirely a bad thing. Competition is great for a product, but if you don’t innovate fast enough, you may just become another MSN or Blackberry. Sales and marketing can be strong within an organization but if the product isn’t cutting-edge or only provides instantaneous gratification, then engagement will be tough.

After the sale, engagement (follow up communication) is just as important as acquisition. How will you build loyalty with your customers if they don’t like the product after its first use? Sales and marketing can work harder and harder but no amount of pipeline volume can save your startup when the product doesn’t perform and get stellar reviews.

I remember working with a highly sales-and-marketing driven startup in the technology SaaS industry. This product produced amazing reports for marketers and CMOs – but the drawback was the technology. The technology was so complex that marketers didn’t feel as though the value was present.


The organization was thriving…until their customers realized how complex the product was. First off, it took about six months to deploy the product, meaning the customers paid for the product for six months and didn’t receive anything. Then, once everything was set up, the value wasn’t there. Most of their customers just didn’t find the product to be user friendly and they were losing business continuously.

As a marketer, your biggest concern is growing revenue and ensuring that your campaigns convert into revenue. Reporting on that revenue is important as well, but it doesn’t take precedence over actually generating revenue. This is where there was a huge gap between the “need” and the “nice to have.” Sometimes organizations want to believe their product produces this “need” when it’s really a “nice to have.”

Once the buyer purchases the product- they begin to realize that it isn’t really the need they thought it was. They still want to focus on generating revenue for the organization. They end up not renewing the product. Once the renewal rates get lower and lower – the acquisition of new customers becomes tougher.

The key takeaway here is to build a product that your buyers will find valuable even after the dopamine buy. They must understand how the product works, see the value right away, and believe in the team who built the product. Once you have a product market fit, that doesn’t necessarily mean you will succeed. The product must be desirable by the customer at every stage of the cycle. This doesn’t mean start adding new features to the road map without validation. It means that you must speak to your buyers and collect qualitative data for fast innovation.

These were two big lessons from companies that were making millions in revenue but lost all of their business due to dysfunctional organization. The CEO was not able to recover fast enough in both cases and although they built it – no one ever came.

Founders' Growth Exclusive

Share this article

Related Posts

Why Startup Profits Are Like U2

Wait…what?! I can feel as the thought races through your mind. It starts to spin and you have one burning question: ‘How the hell are […]

16 Sep 2017