A startup has a channel driving lots of signups, but each customer costs $90 to acquire and generates only $40 over their lifetime. What does this signal?

It's leaking money — the channel costs more than customers are worth

It's working — high signup volume proves the channel is a winner

It's leaking money — the channel costs more than customers are worth

📣 Most startups don't die from bad products — they die unnoticed

Founders obsess over building. But a superior product with no way to reach customers loses to a mediocre product that everyone hears about. This is why distribution — how you reliably get your product in front of the people who'll pay for it — is often the real bottleneck, not engineering. As investor Peter Thiel put it: "Poor sales rather than bad product is the most common cause of failure."

The trap is assuming a great product will "go viral" on its own. In reality, most companies win by owning one channel exceptionally well — paid ads, SEO/content, sales calls, partnerships, or word-of-mouth — rather than dabbling in all of them. Early on, your job is to run cheap experiments to find which single channel actually moves the needle, then pour effort there.

A useful gut-check is CAC vs. LTV: if it costs more to acquire a customer (Customer Acquisition Cost) than that customer is worth over their lifetime (Lifetime Value), the channel is a leak, no matter how much traffic it brings. Distribution isn't an afterthought you bolt on at launch — it's a core part of the product decision from day one.