Asher's Blog

One question I was asked recently was how a founder should think about growth when the market is difficult and the business has to balance its ambition with the realities of cash flow and profitability. It is an important question because ambition sounds beautiful when it is discussed on a stage, but the founder still has to return to the office, make payroll, meet customers’ expectations, protect shareholders’ capital and ensure that the company is alive long enough to fulfil that ambition.

We often use companies such as Amazon and SpaceX as examples of businesses that endured years of losses or came very close to failure before becoming successful. Those stories are useful, but founders must interpret them carefully. The lesson is not that losing money is a strategy, nor is it that running out of cash is evidence of courage. The more useful lesson is that a company can survive a difficult period when there is meaningful evidence that it is solving an important problem, its milestones are becoming more valuable, and the people providing capital can understand how today’s investment creates tomorrow’s advantage.

SpaceX’s first three Falcon 1 launches failed before its fourth attempt reached orbit in September 2008, and the company subsequently won a major NASA resupply contract. That was an extraordinary period of risk, but it was not a story of repeatedly spending money without learning anything. Each attempt produced technical knowledge, and the successful fourth launch proved a capability that had enormous value. Amazon also spent a long period prioritising scale, customer experience and infrastructure over near-term profit, but underneath its reported losses were growing sales, growing customer adoption and capabilities that could support a much larger company. In both cases, there was evidence beneath the ambition.

That is where I would start: a difficult market does not remove the need for traction. It makes the quality of traction even more important.

Traction is not a story you invent

Founders are storytellers because we are asking employees, customers and investors to believe in something that is not yet complete. However, storytelling becomes dangerous when it is used to disguise the absence of evidence. A beautiful presentation cannot turn curiosity into demand, and publicity cannot turn an unprofitable transaction into a durable business.

Meaningful traction is evidence that the market is pulling something from you. It may appear as customers who pay and renew, users who return without being chased, clients who expand their contracts, referrals that reduce your acquisition cost, or customers who complain intensely when a feature is unavailable because the product has become important to their work. It may also appear in improving gross margins, shorter sales cycles, faster collections or a particular customer segment adopting the product much more readily than everyone else.

Not every company will display all these signals at once, especially in its early years, but there must be something consequential that is becoming stronger. Downloads without repeated use are not enough. Meetings without signed contracts are not enough. Letters of intent that never become revenue are not enough. A pipeline can be encouraging, but cash collected from a satisfied customer is stronger evidence than interest expressed by a prospect.

When sales are slow, therefore, the founder’s first responsibility is not to become more eloquent about why the market is difficult. The responsibility is to identify exactly what is working. Which customers buy most quickly? What urgent event causes them to buy? Which feature do they value? Who renews? Why do customers refer other customers? Where does the sales process stop, and what objection appears repeatedly? If one segment is showing genuine love for the product while another is merely being polite, the company should direct more attention towards the segment showing love.

A good growth story has four parts. It shows what is already working, explains the constraint slowing it down, describes the intervention that should remove that constraint, and identifies the number that will demonstrate whether the intervention succeeded. If a founder cannot explain these four things, more capital may simply make the confusion more expensive.

A difficult market and an unready market are different

Founders also need the humility to distinguish a difficult market from a market that is not ready. A difficult market may have genuine demand that is being suppressed by a temporary economic shock, currency depreciation, regulation, limited distribution or a slow enterprise procurement cycle. Customers still recognise the problem, allocate money to it and search for a solution, even if closing them requires more patience.

An unready market behaves differently. People may praise the idea, but they do not change their behaviour. The problem is too low on their list of priorities, the necessary infrastructure does not exist, or the cost of adoption is greater than the value they currently perceive. In that case, perseverance can gradually become denial.

This distinction matters greatly in Nigeria and across Africa, where a large population can be mistaken for a large addressable market. Millions of people may experience a problem while only a small percentage can presently afford the proposed solution. Purchasing power, access to credit, unreliable infrastructure, foreign-exchange exposure and the cost of distribution can all turn theoretical demand into a much smaller commercial opportunity.

That does not necessarily mean the founder should abandon the mission. It may mean changing the customer, the price, the delivery model, the route to market or the sequence in which the company builds. A product intended eventually for small businesses might begin with enterprises that can pay enough to fund its development. A company may replace a large upfront fee with a structure that matches the customer’s cash cycle. It may partner with an organisation that already possesses distribution rather than spending scarce capital to recreate it. It may enter a different geography where the same problem is more urgent and the purchasing power is stronger.

Sometimes, however, the honest answer is that this is not the product to pursue now. Timing is part of strategy. A founder does not betray a great idea by recognising that the market, infrastructure or business is not yet ready for it. The idea can be preserved while the company builds something customers need today.

Study the alternative, not only the competitor

When a customer refuses to buy, the company is still competing with something. The alternative may be a spreadsheet, a junior employee, a paper process, a bank transfer performed manually, an external consultant, or the customer’s decision to tolerate the problem. These alternatives are often more important than the polished startup that appears to be your direct competitor.

The founder should ask why customers continue to use the alternative. Is it cheaper? Is it familiar? Does it fit an existing approval process? Does it allow the customer to maintain control? Is the perceived risk of changing greater than the pain of remaining where they are? Growth becomes easier when the product does not merely offer more features but removes the strongest reason the customer resists change.

Pricing can also be a barrier, but lowering the price is not always the correct response. A price objection may mean that the product is being sold to the wrong customer, that its value has not been demonstrated, or that the company is solving an inconvenience rather than an urgent problem. Reducing the price of a weak proposition can attract customers who are expensive to serve and quick to leave. It is better to discover the customer for whom the problem is costly enough that a reliable solution produces an obvious return.

Cash is time, and time creates options

Ambition requires time. Cash flow gives the company that time, which is why a founder must treat cash as more than the balance visible in a bank account. Cash represents the number of experiments the company can still run, the people it can retain, the obligations it can honour and the negotiating power it has when investors or partners approach.

In a difficult market, I would want to know the company’s monthly burn, the timing of its receivables and liabilities, the concentration of revenue among customers, its gross margin by product, and what happens under several downside scenarios. I would also want to know which expenses protect the company’s ability to serve customers and which ones exist mainly because they were approved during a more optimistic period.

This is not an argument for cutting indiscriminately. A company can save itself to death by removing the engineers, salespeople or customer-success capacity responsible for creating its future. The point is to preserve productive capacity while eliminating expenditure that does not produce learning, customer value, revenue or a necessary strategic asset.

Founders should also be careful about the mismatch between currencies and timelines. An African software company may earn most of its revenue in naira while paying important infrastructure costs in dollars. A logistics business may pay for fuel immediately while an enterprise customer settles an invoice sixty or ninety days later. A fast-growing company can therefore report impressive revenue and still run out of cash because working capital is moving in the wrong direction. Growth that deepens a liquidity problem is not healthy growth.

Some practical responses include collecting implementation fees, requesting deposits, offering an incentive for annual prepayment, shortening payment terms, renegotiating supplier timelines and reviewing unprofitable contracts before renewing them. None of these actions is glamorous, but business continuity is built through many disciplined decisions that protect the company’s ability to keep its promises.

Adjacent revenue can help, but it can also distract you

I remember encountering a story that Amazon once performed consulting work to generate cash, although I have not found sufficient evidence to repeat that as an established fact. The broader principle, however, is valid: a young company can sometimes use adjacent services to generate cash while continuing to build its core product.

The important word is adjacent. Good bridge revenue comes from work that uses the company’s existing knowledge, technology, customer relationship or distribution. An enterprise software company might charge for implementation, migration, training or a carefully defined advisory service. The engagement can provide cash, deepen customer understanding and reveal features that deserve to become part of the product.

Bad bridge revenue pulls the team into unrelated bespoke work, makes every customer a separate project and leaves the core product weaker. It may keep the bank account alive while quietly transforming a scalable company into an exhausted agency. Before accepting such work, the founder should ask whether it serves the same customer, strengthens a capability the company will continue to need, generates cash quickly, and can be delivered without surrendering the product roadmap.

The objective is not to make revenue by any means available. It is to finance the journey without losing the reason for the journey.

Profitability is not the opposite of ambition

There is a false choice that sometimes appears in startup conversations: either a company is ambitious and willing to lose money, or it is profitable and therefore thinking too small. That is not a useful way to think. Profitability, growth and ambition are different variables, and the correct balance depends on the stage, economics and opportunity of the business.

It can be rational for a company to invest ahead of revenue when it has strong retention, attractive unit economics and a credible opportunity to acquire a large market. It can also be rational to pursue profitability early when capital is expensive, the market is volatile or the company can compound using customer revenue. What is irrational is spending without knowing what the spending is intended to prove.

Every major investment should be attached to a hypothesis. If the company hires more salespeople, what has it learned about the productivity of one salesperson? If it enters another country, what evidence suggests that customers there have the same urgent problem? If it subsidises customer acquisition, what retention and margin will recover the subsidy? Growth capital should accelerate a system that has begun to work; it should not be used indefinitely to avoid discovering whether the system works.

Jim Collins, in Good to Great, popularised what he called the Stockdale Paradox: retaining faith that one will prevail while confronting the brutal facts of the current reality. That is an excellent discipline for founders in difficult markets. Ambition without facts becomes delusion, but facts without faith can make a capable team surrender too early.

Protect capital and preserve trust

A founder is a steward of more than an idea. Employees have organised part of their lives around the company, customers may have entrusted it with critical work or funds, and investors have provided capital with the expectation that it will be used intelligently. Difficult conditions do not cancel those obligations.

This is why I believe founders should avoid putting shareholder funds, customer funds or the continuity of the business at unnecessary risk. Debt should not be taken merely because equity is unavailable; there must be a credible repayment source and sufficient room for conditions to worsen. Customer money should not be used as if it were company revenue. Financial reporting should reveal the truth early enough for management to act, rather than being prepared only when an investor requests it.

If the company needs to change direction, investors and important stakeholders should understand why. A thoughtful pivot is not failure when it arises from evidence and preserves the company’s remaining advantages. Concealing deteriorating performance until there are no options left destroys the trust that a founder may need for the next attempt.

Build the minimum survivable company

During a difficult period, the founder should define the minimum version of the company that can continue serving customers well, learning from the market and pursuing its strongest opportunity. This is not necessarily the smallest headcount imaginable. It is the smallest coherent system that can still create and capture value.

That system needs capable people, reliable delivery, honest financial information, a route to customers and enough product development to keep improving the proposition. Everything else should justify its place. The founder can then decide what must remain excellent, what can temporarily remain manual, what can be paused and what should disappear completely.

The company should also set milestones that buy new options. Reaching a particular retention level might justify more sales investment. Securing a certain number of enterprise customers might support a fundraise. Improving gross margin may make debt safer. Achieving positive operating cash flow in one business line may finance experimentation in another. Each milestone should leave the business stronger, not merely busier.

Growth in a difficult market is an exercise in sequencing

The central challenge is not choosing between ambition and cash flow as though one must be abandoned. It is sequencing them intelligently. You protect the company so that it can keep learning; you concentrate on the customers who demonstrate genuine demand; you generate revenue without surrendering the core opportunity; you invest more heavily only after evidence improves; and you remain willing to change direction when the market refuses to confirm your assumptions.

Founders must be optimistic, but optimism should appear in the quality of the work. It should appear in the alternatives you create when one source of capital fails, the conversations you have with customers, the speed with which you confront a weak metric, and the discipline with which you preserve cash for the opportunity that matters most.

If there is meaningful traction, even when it is slower than you want, there may still be a very good company to build. Your responsibility is to understand the pattern, strengthen it and tell the story with evidence. If there is no meaningful traction, more ambition cannot substitute for the market, and more capital may only postpone the necessary decision.

The goal is not simply to survive, because survival without progress eventually becomes stagnation. The goal is to survive in a way that increases knowledge, improves the product, earns trust and creates better choices. That is how a founder balances the future they can see with the cash that exists today, and that is how ambition becomes a company rather than merely an inspiring idea.

Further reading

• Jim Collins, Good to Great, particularly the discussion of the Stockdale Paradox.
• Jeff Bezos, Amazon’s 1997 shareholder letter, on prioritising long-term market leadership while measuring the effectiveness of investments.
• Eric Ries, The Lean Startup, on validated learning and testing the assumptions beneath growth.

• • Clayton M. Christensen, The Innovator’s Dilemma, on market timing, customer demand and the difficulty of evaluating emerging opportunities.