Boldstart’s Playbook: The Hidden Risks of Early Traction in Enterprise Software
Success comes with its own set of risks. In a recent Category Visionaries episode, Boldstart Ventures partner Shomik Ghosh revealed how early wins in enterprise software can trigger decisions that ultimately undermine sustainable growth.
The Early Success Trap
The scenario plays out predictably: “What happens though sometimes is people find the first ten users and then they say, you know what, this is product Market Fit, we’ve found it, we know everyone loves this,” Shomik explains. This early enthusiasm often triggers a series of well-intentioned but potentially dangerous decisions.
The Sales Acceleration Trap
The most common response to early traction is to double down on sales. According to Shomik, companies “go out and they hire three sales reps and they hire a VP of sales.” While this might seem logical, it often creates a dangerous dynamic: “What you may not be able to know is the product being sold ahead of where it actually is. So once users start using it, they may actually be like, you know what, I was sold a basket of coal or something, right? And they then start to churn.”
The Burn Rate Spiral
This premature scaling creates a vicious cycle through increased burn rate. As Shomik notes, “The larger your burn, the more you need to generate revenue to make sure that you can satisfy that burn right, and build a profitable business. And so, frankly, the larger your team is, the more you have to grow.”
Market Pressure vs. Market Reality
In today’s market environment, founders face intense pressure to show revenue growth. However, Shomik suggests that current conditions actually favor a more measured approach: “Right now it’s like, frankly, one of the best times to be a Founder.” The reason? Companies are forced to stay lean longer, allowing for deeper customer relationships and more thoughtful product development.
The Real Signals to Watch
Instead of focusing purely on sales metrics, Boldstart looks for specific indicators of genuine market pull. Shomik describes the key signal: “Your early customers are all saying, hey, here’s a product that we love your product. Here’s three other product ideas. If you build these, we will pay you more money.”
Building for Long-Term Success
Shomik advocates for a methodical approach to growth: “Do not prematurely scale. It is something where you need to focus on again, the first user, the first ten users, the first 50 users, build it out very slowly and thoughtfully and then start to say, okay, now can I layer on someone to help me with sales?”
The Hidden Benefits of Staying Small
There’s an often-overlooked advantage to this measured approach. As Shomik explains, “The most fun of a job, right, is when you’re in the early days with your tight team working together and just discovering new things and working with your early customers hand in hand to figure out what to build.”
A Framework for Sustainable Growth
Based on Boldstart’s experience with numerous enterprise software companies, here’s how to navigate early success:
- Validate depth of customer engagement before scaling
- Look for organic product expansion requests
- Build sales capacity in response to demand, not anticipation of it
- Maintain direct founder involvement with early customers
- Keep burn rate low even when growth looks promising
As Shomik concludes, “That’s the sort of lockstep growth that you want to do and not get ahead of it. Because if you get ahead of it, your burn gets too big, the expectations for how quickly you’re going to grow also get bigger because you need to satisfy that burn and then you get into this cycle.”
The key lesson for enterprise software founders is clear: early traction is a signal to dig deeper, not to accelerate. Success comes from building a sustainable foundation that can support long-term growth, not from rushing to scale at the first sign of market interest.
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