Everyone says revenue-based financing is easy. They're lying. I'm breaking down the brutal reality and how to actually win.
The Reality Nobody Talks About
A lot of the advice on revenue-based financing rests on assumptions that made sense five years ago. The world has moved on.
The first thing to understand is that customer feedback is the only metric that matters. I've seen this play out across dozens of companies. The pattern is unmistakable.
Many teams spend months on the wrong path before realizing that simplicity beats complexity every time. Once they make the switch, everything changes.
The Counterintuitive Truth
In revenue-based financing, the best practitioners often do less, not more.
The lesson: customer feedback is the only metric that matters. It sounds simple. It's incredibly hard to execute.
The Framework That Actually Works
Here is a simple framework for evaluating revenue-based financing. It's not complicated, but it requires discipline.
Step 1: the data tells a different story than your gut
This is where most people go wrong. They skip this step entirely and jump straight to execution. Don't do that.
Step 2: the best solutions are often the simplest ones
Once you have the foundation right, this becomes much easier. I've watched founders struggle with this for months when the answer was staring them in the face.
Step 3: Iterate relentlessly
Nothing works perfectly the first time. The companies that get revenue-based financing right treat it as an ongoing process, not a one-time project.
Real Talk: What Actually Matters
Here is what actually matters in revenue-based financing.
First, execution speed beats perfection. Every time. Companies rarely fail because they moved too fast on revenue-based financing. Many fail because they moved too slowly.
Second, measure everything. If you can't measure it, you can't improve it. Set up tracking from day one, even if it's basic.
Third, talk to your users. It sounds obvious, but many founders make decisions about revenue-based financing in a vacuum. Get out of the building. Talk to real people.
This connects to broader themes around investor relations, revenue-based financing, pitch deck design that I've been thinking about a lot lately.
Wrapping Up
I've shared a lot here, and I know it can feel overwhelming. But you don't need to get revenue-based financing right on day one. You just need to get started and keep improving.
Founders who do well at revenue-based financing tend to share one trait: they're relentlessly practical. They don't chase perfection. They chase progress.
That's the mindset I'd encourage you to adopt. Start where you are. Use what you have. Do what you can. And keep pushing forward.
As always, I'm rooting for you.
Frequently Asked Questions
Q:How has this view evolved over time?
My thinking on most topics has changed significantly over the years. Early in my career, I held many conventional views that experience proved wrong. I try to update my beliefs when the evidence changes.
Q:How can I apply this thinking to my own situation?
Start by identifying the core principle behind the opinion, not the specific example. Then ask yourself: does this principle apply to my context? If yes, test it in a small, low-risk way before going all in.
Q:Do all experts agree with this view?
No, and that's fine. The best ideas in business are often contrarian. I share my perspective based on my experience and data, but I encourage you to seek out opposing viewpoints and form your own conclusions.