Revenue Redistribution, Part 2

The last two years have been interesting ones for companies. Founders who were well positioned for the revenue redistribution did extremely well. Revenue skyrocketed for some of these businesses as customers sought solutions to new challenges. I’ve been chatting with some of these founders. Some of them are starting to see early signs of their customers’ habits changing again. The customers they acquired in the last few years are beginning to redistribute their revenue again.

This poses an interesting problem. These founders scaled up their companies around this new customer segment, which became a large percentage of their overall revenue. Sales, marketing, etc. are all optimized for this segment. They thought their ideal customer profile was made up of these customers because so many of them willingly and rapidly paid for their solutions. Now, they’re starting to see these customers churn as life trends toward historical norms.

These founders have a dilemma. It’s beginning to look like the house they thought they were building on a concrete foundation was built on slow-moving sand. They have significant expenses for the scaled-up organization. Do they redirect their teams to go after a different customer profile? What does the ideal customer profile now look like? How long will it take to redirect the team? These and many other questions will need to be answered by many founders in the next year to eighteen months. I’m curious to see how founders handle this dilemma—I suspect that many will shrink their teams to reduce burn until they have more clarity on these questions.