The Wrong Client Can Kill Your Startup: Lessons from a Costly Mistake
- Nimantha Baranasuriya
- Feb 2
- 4 min read
Updated: Feb 3
TL;DR
In the early days of a startup, choosing the right clients is crucial. Larger companies expect polished products, while smaller, innovative companies are more willing to test startup products that are still not refined and provide valuable feedback. Targeting the wrong clients too soon can backfire, as they may dismiss your product before it matures. Focus on early adopters first, refine your product, and then scale to larger clients when you're ready.
A Multinational Mistake
It was a warm summer day in Australia in 2018. I had traveled to Sydney to meet with the Managing Director (MD) of a large geotechnical monitoring company, hoping to sell Ackcio products for their projects.
As I stood outside the Queen Victoria Building waiting for the MD, I had no idea that this company wasn’t just large in Australia—it was a multinational with offices worldwide. Clearly, I hadn’t done enough market research.
The MD arrived dressed sharply in a business suit, greeted me warmly, and we hit it off over cappuccinos. He was impressed by my polished sales deck and the sleek look of our demo devices. Then, he said the magic words every startup founder dreams of:
"I’d like to get some devices to test on a real project. If they work well, we’d consider using this technology in more projects."
I left the Queen Victoria Building with a spring in my step, convinced I had scored a major win. But what followed in the coming months was far from the ideal outcome I had imagined.
Why Early-Stage Startups Need the Right Clients
Early-Stage Products Are Not Great
Back in 2018, our products were still in their infancy. On paper, the technology looked groundbreaking, but in reality, it had a long way to go to meet those specifications. This is a common challenge for any startup in its early days.
There is a well-known saying in the startup world, often attributed to Reid Hoffman: “If you are not embarrassed by your first release, you launched too late.” This philosophy is key—founders should release a basic version, get real-world feedback, and iterate quickly.
Most founders understand this process well. However, the real challenge isn’t just launching early—it’s finding the right clients who understand what an early-stage product is and are willing to provide constructive feedback.
Not All Clients Are Created Equal
A crucial step in product iteration is getting feedback from early customers. But if you approach the wrong clients, the entire process collapses. This is why selecting the right early adopters is essential.
The technology adoption curve illustrates how different client groups adopt new technology. It may look complex, but the key takeaway is simple: smaller companies are more likely to embrace new technologies, whereas larger companies wait until those technologies are proven.
✅ As a founder, you should seek out innovators and early adopters—smaller companies that actively look for new solutions to their pressing problems. These clients are open to trying imperfect products because they believe in the long-term value of the innovation.
❌ Conversely, approaching a large company too soon can backfire. Larger organisations expect mature, polished technologies. If they test an early-stage product and find it lacking, they will not only reject it but may also form a lasting negative impression—making it even harder to win them over once your product is truly ready.
Back to the Story…
After returning to Singapore, we shipped a set of Ackcio devices to the Australian company. They assigned an engineer to test them, and a few weeks later, we received a detailed test report. Their verdict?
🚨 "Your products don’t meet our requirements."
It was disappointing but unsurprising. In hindsight, we should never have approached them at that stage. The good news is that years later, once our technology had matured, we were able to sell to them successfully. But that initial misstep cost us time, effort, and credibility. Had we waited until our product was truly ready, we could have had a much smoother sales process and potentially done even more business with them.
Lessons Learned: How to Choose the Right Early Clients
Mistakes Made:
❌ Not differentiating between client types and assuming all clients welcome early-stage products.
❌ Trying to scale too soon, before proving the product with smaller, innovation-driven clients.
What Founders Should Do Instead:
✅ Do your market research. Map out your industry’s client landscape and identify the innovators and early adopters who will be more receptive to new technology.
✅ Focus on the right early clients. Work with smaller companies first, and perfect your product with their feedback.
✅ Refine your product before scaling. Work closely with early adopters to refine your solution before pitching it to larger clients.
Final Thoughts
Choosing the right early-stage clients is not just about making a sale—it’s about setting your startup up for success. The right early adopters will help you refine your product, build credibility, and create momentum for future growth.
Landing a big-name client early may feel like a win, but if your product isn’t mature enough, it can do more harm than good. Instead, take a strategic approach: validate your product with the right clients first, iterate based on real-world feedback, and scale at the right time.
Early-stage success isn’t just about selling—it’s about learning, improving, and building something truly valuable.
🚀 Have you ever faced challenges finding the right early adopters for your startup? Share your experience in the comments!
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Onwards and upwards...
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