The most valuable question a VC can ask a founder is, "Why are customers churning?" According to G2's Godard Abel, investigating what's not working provides the most critical insights for improvement. While founders naturally market successes, the real opportunity for growth and learning comes from understanding and addressing failures.
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When your first users sign up but never return, it's a clear signal of a problem-solution mismatch. Before abandoning the idea, you must interview these users to understand why. Their feedback is crucial data needed to decide whether to iterate or pivot.
Even a seemingly acceptable 4% monthly churn will eventually cap your growth, as acquiring new customers becomes a treadmill to replace lost ones. Reducing churn to 2.5-3% is a more powerful growth lever than finding new marketing channels once you hit a plateau.
The true indicator of Product-Market Fit isn't how fast you can sign up new users, but how effectively you can retain them. High growth with high churn is a false signal that leads to a plateau, not compounding growth.
While customer feedback is vital for identifying problems (e.g., 40% of 911 calls are non-urgent), customers rarely envision the best solution (e.g., an AI voice agent). A founder's role is to absorb the problem, then push for the technologically superior solution, even if it initially faces resistance.
Most marketing avoids negativity, but proactively addressing your product's flaws or top churn reasons is a powerful strategy. It disarms skeptical buyers who are used to perfect marketing narratives. This transparency builds trust and attracts best-fit customers who won't be surprised by your product's limitations.
Many founders operate on flawed assumptions about how they acquire customers. Analyzing marketing data often shatters these myths, revealing that sales and traffic come from unexpected sources. This discovery points to untapped growth opportunities and where marketing energy is best spent.
After a startup fails or you exit, dedicate time to writing a detailed, private postmortem. Critically analyze interactions, decisions, and outcomes. This exercise helps transform painful experiences into a concrete set of operating principles for your next venture.
Profound market insights come from rigorously analyzing why potential customers fail to convert, not just studying happy ones. Tripling down to understand why a prospect "dropped out" of the sales journey provides a more complete picture of product gaps and value proposition weaknesses than focusing only on successful closes.
As Drift grew to thousands of customers and hundreds of employees, Elias Torres found his time consumed by managing people, not talking to customers. He intimately felt the pain of losing that direct connection, realizing that by the time a CSM flags a churn risk, it's often too late. This pain directly inspired his next company.
