When a user pays us, it feels like a breakthrough. We’ve validated our MVP. We’re onto something real. Except… maybe not.
In early product development, revenue is often treated as the gold standard for validation. It’s easy to see a Stripe notification and assume we’ve crossed a meaningful threshold. It might feel like it’s time to go all in, hire, and raise. But money, especially in the early stages, is a noisy signal. It can mask deeper flaws in the model and lull us into a false sense of product-market fit.
Mistaking Early Traction for a Business Model
My first startup was called Domainsmith. It was designed to help brand designers and entrepreneurs discover unique, high-quality domain names.
We launched with a Concierge MVP. I built custom scripts to generate ideas and ran live naming sessions with over 100 users, guiding them through the process by hand. Eventually, some of them began paying ¥10,000 (around £55) for the experience. It felt like early traction. Users told us existing tools like ChatGPT were too generic or repetitive, and our approach felt refreshingly tailored. We felt like we were solving a real problem.
Based on that feedback, we built a platform MVP that curated polished, brandable domains and offered them on a subscription. We had finally got paying users for the concierge MVP and clear signals that we were doing something different from the rest of the market. But beneath that surface was a deeper issue. Most users only needed a domain once. Our early adopters were solo founders and first-time creators, and once they had their name, they had no reason to come back. It was also hard to find new users and wasn’t clear if enough people had the same problem and were willing to pay for it. Pricing was also an issue; after factoring in customer acquisition costs, our margins were too thin.
We had validated that at least some people were willing to pay for help with naming for a brand. What we hadn’t validated was the size of that specific market and whether they needed that help often enough to support our business. The pain was real, but the purchase was infrequent and low-value. We explored ways to create more ongoing value, such as becoming a domain registrar and handling renewals. But that path was out of reach given the cost, complexity, and regulatory barriers and didn’t solve the problem of finding new users. I took those early payments as a signal to move forward with the product. In hindsight, we had only proven that there was some demand for a one-time service. We didn’t need to build a new product to discover that there wasn’t a sustainable business behind it.
The Limits of Early Support
Early revenue can also be deceptive when it often comes from a small, non-representative group: friends, early adopters, and the startup-curious. Their willingness to pay doesn’t always map to future behaviour. We might be testing generosity, not demand.
I experienced this with a venue-booking platform I co-founded at Falmouth University’s incubator. We built a working MVP in 24 hours and quickly onboarded listings. Early bookings rolled in. It felt like another win. But many of those bookings came from friends who were experienced event organisers. Their support was helpful, but short-lived. They used the product once, gave feedback, and moved on.
These organisers weren’t struggling to find and book venues. Their real challenge was managing logistics more broadly, including catering, ticketing, vendor coordination, equipment, and scheduling. Our platform solved only one small part of that workflow. It wasn’t useful enough on its own to become part of their process. Eventually we found they had only booked to be supportive, not because they had a problem worth paying for.
Revenue is not a binary signal. It matters why someone paid, what problem they believed they were solving, and whether they would pay again without personal involvement or goodwill propping things up.
What Early Revenue Really Tells You
Early payments can feel like a breakthrough. After so much uncertainty, someone is finally willing to pay. On both occasions, the initial traction from the the MVP felt like validation. But in reality, that revenue only showed that people were willing to pay a small amount once. It didn’t mean we had validated a repeatable or scalable business.
Early revenue should lead to better questions:
- How often does this problem occur?
- Who experiences it repeatedly?
- What does the journey look like after the first payment?
- How many potential customers are out there?
- How realistic is it to make £10K MRR in 6 months?
Until those answers are clear, early revenue is just that: early.
Keep Validating, Always
Whether we’re testing the market with a Wizard-of-Oz prototype, stringing together no-code tools, or delivering services by hand, early revenue is just a signal. Money is important, but only if we understand what it means. And only if it keeps showing up when the magic curtain comes down.
The real startup magic isn’t building a product that people have paid for once. It’s building something that continues to deliver real value and keeps users paying as the business evolves.
Photo by Tim Mossholder on Unsplash. Updated 16th July 2025
