Why Nobody Understands Startup Growth

Startups don’t grow like businesses. Not in the traditional sense. They don’t scale by adding headcount, expanding inventory, or renting more retail space. They grow by discovering, and then systematically proving, a revenue-generating system that works before it collapses. And yet, here we are, in 2025, with startup advisors, development organizations, investors, and even policymakers still trying to shoehorn startup growth into the same frame we use for laundromats and law firms.

This misunderstanding isn’t just a mild inconvenience. It’s the single biggest reason startup ecosystems flounder, public-private partnerships waste money, and cities fail to compete globally. It’s why I’ve spent years hammering the drum of marketing – not advertising, not branding, not demand gen, but real marketing: the discipline of understanding the customer so thoroughly that you can deliver growth by design, not luck. Startups don’t fail because they can’t build; they fail because they don’t know how to grow in a way that sells.

And the people helping them don’t know how to teach them.

That image is a joke by the way, hopefully that wasn’t lost on you

Founders seek funding too soon, have misplaced expectations, and drive their venture to the ground

That’s been my battle cry in the startup world. But lately, in working through legislation and economic development I’ve realized this problem is even bigger than startups. Our government doesn’t understand growth either. Just look at how we confuse small businesses and startups in virtually every statute, tax code, and subsidy structure. It’s not just unproductive, it’s actively harmful to innovation. If we want to build a durable economy, one rooted in sustainability rather than symbolism, we have to reframe how we understand growth at every level.

Thankfully, I’ve had the chance these past few weeks to talk with some of the smartest minds I’ve met on the subject: David, Daniel, and Nick at ThriveSide (they have a program here to consider) because they have an intriguing take that frames growth in stages, tied to reality, revenue, and risk, rather than vanity metrics and vibes.

The Growth Delusion

Too many founders think growth is a goal, when in fact, it’s a symptom.

Growth is a result; something that emerges when the right system meets the right market. But instead of building systems, we chase leads and scale (more users, more funding, more headcount) without a blueprint. I recently that you ALL screw up your Go To Market Slide and the fact that every single one of you does so, is the evidence you’re clearly not going to grow – if you can’t even position your blueprint in one slide, obviously you don’t even have one. Advisors push revenue targets without regard to model maturity. Investors write checks for traction that hasn’t been validated. And economic developers hand out grants based on job counts, not business viability.

We’re measuring the wrong things. And as we all know, what gets measured gets managed. But if you’re managing headcount instead of customer conversion, or capital raised instead of capital deployed effectively, you’re building the illusion of momentum while burning cash and time.

It’s what ThriveSide calls the Growth Problem; an absence of a clear frame of reference for how to define and design the path to success. I like it.

Growth as a Stage-Driven System

Think of your growth architecture it as a map that charts a startup’s progress; not from founding to IPO, but from idea to revenue-sustained success, on through saturation and political influence. One of the deeper conversations we’ve had is that while I’m trying to divide society’s blending of small business and startup, they pointed out that there is a point in growth (sustainability) where that divide really occurs because everyone needs to at least get to sustainability – they’re not wrong, I know you have no idea how, and so here we are.

It’s built on one core truth: revenue is the only objective reality in business. Everything else is a hypothesis.

From that premise, we have seven stages of maturity, each with clear objectives, transition points, and required work. Here’s a take on what they’re delivering, with my own color commentary:

1. Existential Stage – You have an idea. Nobody cares. Your job is to define a value hypothesis so tight it could cut glass. Identify a real audience on a critical path, define what your offer solves, and articulate a value proposition that could be tested tomorrow.
2. Discovery Stage – Now prove it. Validate that your audience cares, and that your solution works. No scale. No fluff. Just prove that your offer delivers a Guaranteed Outcome: something repeatable, controllable, and worth paying for.
3. Adoption Stage – Shift from proving value to building the infrastructure that delivers it consistently. This is where monetization programming replaces brute force selling. Nick shared what they call the A.C.E.S. model (Awareness, Consideration, Engagement, Sold) to guide customers through a journey that mirrors the internal process of the business.
4. Sustainability Stage – Here’s where the real startups emerge from the crowd. Profitability becomes predictable here (and this is why I’ve pointed out that investors asking you about customers or revenue metrics, before you reach this point, is problematic). Here, customers become a community. You stop thinking like a founder and start thinking like an owner. Your venture becomes sellable (and therefore fundable) not just functional.
5. Scalability Stage – Want to dominate? Good. But don’t break your model in the process. Retention, recruitment, and resource management become your new religion in what is called “controlled chaos” – the eye of the storm between product-market fit and market ownership.
   Pause here – NOW I mention product-market fit?? Yes! How many times have I written that there is a ton of marketing work to do BEFORE product-market fit and that PMF does not mean you have customers. It exists around here, after you are sustainable, not before.
6. Saturation Stage – You own the space. Congrats. Now it gets political. Your success depends on navigating market forces, community stewardship, and keeping your model fresh before entropy sets in. This is the Netflix-trying-to-stay-relevant phase.
7. Event Stage – A wild card that can happen anytime. A disruption, an acquisition, a collapse, a crisis. The test here is adaptability. What do you do when the game changes?

What makes this different from the usual startup lifecycle slides is that it’s revenue-centric, risk-responsive, and founder-controlled. No fluffy stages like “early stage” or “growth.” Instead, each level has a graduation point tied to validated business performance, not vibes, not headlines. They visualize it like this, and I love it because it’s very consistent with my push to get you off the mindset of exponential curves, or even the startup sector’s famously overused S-Curves, to instead think about building a flywheel – this is the curve of a cycle that you need to start spinning.

Why This Matters to More Than Startups

Here’s where I pivot back to the policymakers. This model doesn’t just fix how founders think, it rewrites how governments should support innovation.

If fully understanding innovation, by all accounts, every city should be experiencing explosive growth; but even tax reform, pushing for affordability, supporting a local incubator, or even startup-friendly rhetoric, we’re failing to distinguish between businesses that sustain jobs and startups that create jobs, opportunities, and industries. Startups that reach scalability or saturation are fundamentally different economic agents than mom-and-pop shops, and yet we lump them together in legislation, incentives, and tax code.

By the same token, it’s regulation and policy that actually handicaps and prevents entrepreneurs from breaking out beyond that Discovery – Adoption phase, because those that appreciate marketing and prioritize it can grow, it’s that policy now, more than market, prevents scale. Consider for example that if you’re an entrepreneur in HealthTech, Energy, Transportation, or even Real Estate, you will likely reach a point where you hit a wall because policymakers have put in place decisions that say, “you can’t.” Understanding these stages, collectively, can help us all steer ecosystems that are open to innovation, that draw venture capital investment, instead of killing the potential of growth.

Grow Up About Growth

We need to get serious about what growth really means, because vague aspirations won’t build thriving businesses, resilient economies, or sustainable communities. Showing me that S-Curve in your pitch deck and asserting that that’s how it will look for your startup, is merely pandering to people who don’t know better.

And yet having had some wonderful talks with these guys, I also now want to advise that you stop chasing scale before sustainability, and that’s a pivot for me because I’m always advising “scale.” Advisors and incubators: stop pushing pitch decks before product-market fit – which means figuring out the blueprint for growth at least to sustainability. Investors: stop treating pre-revenue companies like lottery tickets. And legislators? For the love of impact, start distinguishing between high-growth startups and corner stores. They’re both valuable, but they’re not the same.

We need shared language, actionable diagnostics, and policy frameworks that understand growth as stages — not a straight line.

There are few things I promote but just as I got behind Founder Institute when I found that most programs were failing to capably teach founders to launch, since you all keep asking me about sales, growth, and validation, at least talk to these guys about what they’re doing – they will solve that for you, here.

Talk to me, what stage is your company really in? Are your policies built to support growth, or just to say you support business? Maybe it’s time we all stopped pretending we understand growth and startup building systems that actually do.