Why Startups Fail to Generate Revenue Quickly — And What to Do Instead
The more revenue you have coming in, the better the chances you can raise (and not waste) investor funds
At startups, the difference between survival and running out of runway always comes down to taking our eyes off revenue.
We don’t want to do this, and we certainly don’t do it on purpose. But when we’re in the middle of the startup run, it’s pretty easy to fall into a trap of wasting time on feel-good tasks that feel like progress but don’t bring in any money.
No entrepreneur is immune to this trap, myself included. It’s part of the drive that makes the successful entrepreneurs successful.
I’ve founded, worked at, and advised a ton of startups, and each one tends to make the same mistakes where revenue is concerned. Whether a founder is launching their first company or their fifth, there’s one universal fact they can’t ignore: The path to success starts with survival.
The odds of survival depend on how fast you can generate revenue. The key to getting to revenue fast is to do nothing else but seek it out. Here are the easiest traps to fall into and how to sidestep them.
“Remember: Raising money is not the same as generating revenue.”
Mistake #1: Raising money before you’re ready
No one joins a startup to do something ordinary. But if you want to do something extraordinary, you’ll need a shitload of money to get it all done.
That doesn’t happen overnight. It happens in stages — sometimes long, mostly boring, often very scary stages. The problem is that we usually see, hear, and read about startups as overnight successes: Some kid genius has a great idea, drops out of college, works on it for a couple months, and then raises a few million dollars at a $1 billion valuation.
This is the trap: Like the lure of the lottery but with pitch decks and spreadsheets instead of Powerball tickets.
Before you try to raise money, you need to establish that what you want to build will generate revenue. And remember: Raising…