What to do when investors give bad advice
I spoke with a builder the other day who's doing everything right.
She's built a hardware-software business in an old school, but massive market, out-innovating incumbents and landing customers that shouldn't be winnable for a startup. She's selling hardware with strong gross margins and high software content. Growth is solid. Customers love the product.
Then she goes out to raise capital.
Every investor tells her the same thing: switch to selling as-a-service. Build recurring revenue to at least 80%. Can you do software-only, no hardware? What if you bundled this as a subscription?
She left every meeting questioning herself. Not because the advice made sense for her business, but because it came from investors she respected.
Here's the thing: most investor advice is garbage.
Listen to the fans, sit with the fans
Buddy Ryan, the legendary NFL football coach, once said: "If you listen to the fans, you will be sitting up there with them."
Harsh? Maybe. But he had a point.
The fans see the scoreboard. They don't see the practice, the film study, the thousand small decisions that separate winning from losing. They see outcomes and assume they understand causes.
That's most investor advice on metrics.
Investors see patterns. They've watched SaaS companies scale to billions with 120% NRR. They've seen hardware businesses struggle with inventory and margins. So they pattern-match. They give advice based on what worked for other companies in other markets at other times.
But your business isn't a pattern. It's a specific solution to a specific problem for specific customers in a specific market.
Why metrics mislead
Here's what happens: investors get comfortable with certain patterns. High NRR means sticky product. High gross margins mean you can scale profitably. ARR growth means market pull.
All true. But they're effects, not causes.
Optimizing for the metric doesn't give you the underlying reality. You can engineer 120% NRR by bundling products customers don't want. You can boost ARR by discounting aggressively. You can improve gross margins by cutting support.
None of that builds a durable business.
Metrics matter for communicating progress to investors. You need to speak their language. But you can't let that language dictate your strategy.
The metrics are symptoms. They tell you if you're healthy, but they don't tell you how to get healthy.
When investors give advice based purely on the numbers, they're treating symptoms instead of causes.
The Verkada story
This reminds me of the early days of Verkada. We led their Series A. Filip and Hans had done deep work understanding the physical security market. They'd talked to customers, understood buying motions, and designed their product accordingly.
The insight was simple but crucial: customers budgeted for physical security as a capital purchase every 4-6 years. They wanted to buy cameras and cloud management software that fit their existing procurement process. Verkada built for that reality.
Then they went out to raise a Series B.
Every investor who wanted to follow our lead had brilliant suggestions. Sell the hardware as a subscription. Don't sell hardware at all. Go direct, skip the channel partners. On and on.
None of it made sense for their market, their customers, or the breakthrough product they'd built.
Thank goodness Filip and Hans stayed true to their convictions.
They understood something those investors didn't: the best business model isn't the one that produces the prettiest SaaS metrics. It's the one that aligns with how customers actually buy and use your product.
Today, Verkada is worth billions. And the investors who gave them that advice? They chased Verkada's success and invested in later rounds at much higher prices.
What to do when you get bad advice
1. Start with customer value
Does your product solve an urgent problem meaningfully better than alternatives? Not marginally better. Meaningfully better. If it does, people pay more and stay longer. Simple as that.
But value only converts to revenue when you can actually reach customers.
- Distribution fit matters just as much as product-market fit
Your channels, pricing, sales motion, and partnerships determine whether you turn demand into efficient growth or burn cash fighting friction.
Think about it: the builder I mentioned at the start understood her customers' buying process. They purchase physical security equipment as capex. Forcing them into an as-a-service model doesn't make her business better. It makes it harder for customers to buy.
- Stickiness multiplies everything
But real stickiness doesn't come from contracts. It comes from switching costs, embedded workflows, network effects, and data gravity. When your product becomes part of how customers operate, they don't just renew. They expand usage. They buy more modules. That's how you get NRR above 120% without gaming the metric.
- Tech differentiation sustains your lead
Proprietary advantages in data, performance, or security let you charge premium prices while lowering support costs. That's where gross margin actually comes from. Not from clever pricing, but from building something others can't replicate easily.
- Your operating architecture determines how you scale
Product-led onboarding, automation, and cloud efficiency free up resources for growth instead of operations. This shows up in your unit economics, but the real work is designing systems that scale without linear headcount growth.
- Learning loops compound everything else
Fast instrumentation and tight customer feedback help you allocate resources to the highest-impact problems. This is why learning velocity matters more than shipping velocity.
Put it all together: durable value in a reachable market, delivered through sticky products and defensible tech, scaled by efficient operations. That's the system behind elite outcomes.
The metrics follow.
More than anything, trust your instincts
If you're building something real, you've spent hundreds of hours understanding your market. You've talked to customers. You've shipped product. You've watched what works and what doesn't.
That knowledge is worth more than pattern-matching from investors who've never operated in your space.
Yes, listen to feedback. Ask hard questions. But distinguish between investors who've done the work to understand your business and those who are pattern-matching from their last successful investment.
The best investors don't give you a checklist. They ask questions that help you think more clearly about your own business. They bring domain expertise and customer access. They help you see around corners.
The worst ones give you a list of metrics to hit.
Conclusion
Your job isn't to build a business that looks good in a pitch deck. It's to build something customers love, can't live without, and will pay for sustainably.
Sometimes that means unconventional models. Sometimes it means lower NRR but higher customer lifetime value. Sometimes it means hardware when everyone wants software-only.
The builders who win aren't the ones who optimize for investor preferences. They're the ones who stay true to what their market actually needs.
So when an investor tells you to change your model to fit their pattern, ask yourself: Does this make my product better for customers? Does it align with how they actually buy? Does it strengthen my competitive position?
If the answer is no, you have your answer.
Trust the work you've done. Trust the signal from your customers. Trust your instincts.
And if investors don't get it? Let them sit in the stands.
