The Stagnation Trap: Why Slow Growth is Riskier than Fast Failure

We talk about Product-Market Fit (PMF) like it’s a binary switch—you either have it, or you don’t. But if you’ve been in the trenches long enough, you know that’s a lie. PMF isn’t a toggle; it’s a spectrum. And where you land on that spectrum determines whether you’re building a rocket ship, a lifestyle business, or—most dangerously—a stagnant venture trap.

The Two Faces of PMF

When we look at companies that actually find traction, they generally fall into two camps: Strong PMF and Weak PMF.

Strong Product-Market Fit is born from a burning problem. It’s the “hair on fire” scenario. Your product isn’t just a choice; it’s a necessity. The market is practically pulling the product out of your hands. You aren’t “selling” as much as you are trying to keep up with the demand.

Weak Product-Market Fit, on the other hand, is built on “nice-to-haves.” It’s what happens when you have a world-class, resilient, and incredibly talented team. They’re smart enough to build a great tool and gritty enough to force it into the hands of customers. They get traction through sheer force of will.

Here’s the reality: the vast majority of products on the market today have either no PMF or Weak PMF. And let’s be clear—Weak PMF is perfectly fine if you’re running a bootstrapped business, a small agency, or a steady lifestyle company. But if you’ve signed up for the venture-backed path? Weak PMF is a death sentence.

The Stagnation Cycle

One of the most common failure modes I see among seed-stage founders is what I call Stagnation. It starts with a “good” idea. The product works. The customers like it. The company makes money and might even be profitable. But—and this is the crucial part—it doesn’t grow at the rate necessary to sustain a venture-backed trajectory.

These founders get trapped. Because the business isn’t “failing” in the traditional sense, they spend decades working on it. They keep the team lean. They stay small. They grind for ten, fifteen years only to eventually exit for a modest amount that barely clears the liquidation preference.

They never get that runaway success they set out for. They spent their most productive years tending a garden when they meant to build an empire.

The Misalignment Nightmare

The real tragedy of stagnation isn’t just the slow growth—it’s the misalignment.

When you raise venture capital, you are making a pact. You are promising a specific type of return in exchange for fuel. When you stagnate, you end up with a cap table full of investors, board members, and stakeholders who are unhappy with the outcome.

You’re profitable enough to stay alive, but too slow to ever provide a venture-scale exit. You’re stuck in no-man’s-land. The founders end up building something that no one is truly happy with—not the investors, and eventually, not even the founders themselves. It usually ends one of two ways: the company is eventually shut down out of exhaustion, or it’s sold for scraps just to get it off the books.

Why It’s Better to Fail Fast

This might sound counterintuitive, but in the world of startups, it is actually better to fail fast than to stagnate slowly.

When you fail fast, the lesson is sharp and immediate. You realize the market isn’t there, or the problem isn’t burning enough, and you move on. You preserve your most valuable asset: your time. Failing fast gives you the opportunity to take more “shots on goal.”

Stagnation, however, steals your time. It’s a “slow-motion” failure that tricks you into thinking you’re winning because the lights are still on. It leads people to spend years of their lives building something they don’t quite believe in, or something they know, deep down, won’t ever truly “work” at scale.

The Bottom Line

If you’re raising venture capital, you have to be brutally honest with yourself about the type of PMF you’re chasing.

Don’t get caught in the trap of “good enough.” Don’t let a talented team mask a weak market. If you find yourself stagnating, have the courage to pivot or walk away. Because the only thing worse than a startup that fails in a year is a startup that takes ten years to tell you it was never going to make it.