When early traction becomes a straightjacket.
A while back, I was hired as a GTM consultant for a series A start-up.
On paper, things looked promising.
But within several days of working together, I arrived at 2 conclusions:
There was no real demand for their product.
Engineering was building features based on intuition (not customer demand).
Meanwhile, the internally held view was that the start-up's challenges were down to a "sales and marketing" issue..
....rather than something structural related to the business model itself.
Hence, the reason for my hiring. 🤦
At the time, when I suggested product changes (rooted in customer discovery), and tweaks to website messaging, to better align with market demand, I was advised that:
"We can’t make these changes. Our investors have given us a mandate to build what’s on the site."
Over the years, I've noticed this sequence of events occurs more often than I would have originally expected.
A new start-up raises capital after some early traction.
But as the team dive deeper into customer discovery, and product development, it transpires that something in the model doesn't work.
This could be that the customer segment is wrong, or that the product isn’t solving a real pain point...or that there's no real demand.
But rather than pivot, the team sticks to the original plan, as the narrative that was "sold" to raise that initial round of capital, becomes a binding constraint.
Sometimes, this constraint is explicit - the capital came with strings.
But other times, the constraint could be internalised - the team mistakes investor belief for product-market fit.
But notably - markets, not fundraising, defines PMF.
So in this case, the start-up continues, even potentially raising another round of funding.
But eventually the business is not able to escape its structural challenges, and breaks down.
WHAT ARE SOME IDEAS TO MITIGATE THE ABOVE?
→ Independent thought
Establishing independent advisors who can provide fresh perspective to the internal narrative.
Creating space for a diverse range of opinions.
Trying to avoid "groupthink".
→ Run small, parallel tests.
Rather than pivoting abruptly, layering in controlled experiments can be helpful.
If traction then appears in any of those parallel tests, this can be used to secure investor buy-in on any new direction.
Investors are ultimately aligned with value creation.
→ Delay raising, if possible.
Early capital can bring pressure, and another stakeholder to manage.
With modern tools and channels, it’s often possible to validate demand without external funding - or with far less.
→ Define what counts as real traction.
MOUs, soft interest, or friends supporting?
It can be dangerous to count these as market demand.
Paying customers, engagement, usage?
These are more real.