Investing in Sales and Marketing Too Early

Abstract

Many companies move to a high burn rate too quickly, and it’s hard to go back. Sometimes even frugal entrepreneurs wind up spending too much either because they don’t manage the money or are tempted by having money in the bank. This often happens when a startup raises too much money too early. It also happens with entrepreneurs who are accustomed to having lots of resources— for example, if they’ve spent time at big companies. Frequently it happens when entrepreneurs haven’t found product-market fit and believe that it’s just a matter of spending money to reach the right customers or users.