Fragility of Startups Over $1 Million in Revenue

Startups under $1 million in revenue are the definition of fragility. Everything is scary while you start.

After a startup hits $1 million in annual revenue, things start to feel more stable. Product market fit has been achieved and the startup has enough cash to look for ways to grow and expand without penny pinching so tightly.

Today I was talking with an entrepreneur who was a key employee in a $5 million startup. He is leaving that company to start his own company. His departure set off a series of dominoes that is causing that $5 million startup to crater and buckle.

That made me think about the fragility of startups over $1 million in revenue. Here are two ways to think about the fragility of your startup:

• What is the minimum number of key employees that would have to leave before your startup dies (including yourself and other co-founders)?
• What is the minimum number of key customers that would need to leave before your startup falls below $1 million in revenue?

Other items that could be explored are:  1) does your startup depend on regulations or FDA clearances to succeed, 2) do you have a large platform risk, 3) are you at risk of being sued?

These questions are introspective and useful in helping entrepreneurs quantify the fragility of their startup. Shoring up weak spots can provide everyone with peace of mind knowing that the startup is not fragile.

What are your thoughts on the fragility of startups over $1 million in revenue?