Chapter 5: System Diagnostics & Failure Modes

Symptoms

• High burn rate but flat retention
• Large team with unclear roles
• Marketing spend but no organic growth
• Unit economics are "we'll figure it out later"

Diagnosis

You skipped the validation phase and jumped straight to scaling. You're pouring water into a leaky bucket—hiring salespeople for a product nobody wants to keep.

Fix

Enforce strict IRL stage gates. No VP of Sales until IRL 5. No marketing spend until IRL 4. Scale only AFTER you've proven the product works.

Symptoms

• Long feature list, low engagement
• "We just need one more feature"
• Customers use 5% of functionality
• Engineering velocity is high, retention is flat

Diagnosis

You've misunderstood the core problem. You're creating value (features) but not capturing it (engagement). More features won't fix a fundamentally misaligned product.

Fix

Mandatory Feature Freeze. Go back to IRL 2 (Problem Validation). Re-interview customers. Find out why existing features don't solve their real problem.

Symptoms

• Impressive "total" metrics
• Can't explain the revenue gap
• Press coverage but no conversions
• Big launch numbers, quick dropoff

Diagnosis

You're optimizing for ego, not economics. The metrics you track make you feel good but don't correlate with actual business health.

Fix

Metrics Audit. Strip all vanity metrics from dashboards. Force reporting only on the One Metric That Matters (retention, activation, or revenue).

Symptoms

• Multiple pivots with no progress
• Can't articulate why previous ideas failed
• Each new idea feels like "starting over"
• No documented learning from past experiments

Diagnosis

You're pivoting on emotion, not evidence. A real pivot preserves the validated learning and changes one element. You're just abandoning ship repeatedly.

Fix

Before any pivot, complete a "Pivot Postmortem." Document exactly what you learned. Identify what you're keeping vs. changing. Make it auditable.

Symptoms

• Flat metrics for 6+ months
• No new experiments running
• "We're fine, just need more time"
• Founder is doing consulting on the side

Diagnosis

Sunk cost fallacy combined with fear of failure. You're continuing out of inertia, not evidence. Your time and energy are being wasted on a path that won't work.

Fix

Force a Pivot/Persevere meeting with external accountability. Set a "kill criteria"—if X doesn't happen by Y date, you either pivot or shut down.

Symptoms

• Can't get meetings with target customers
• Don't understand customer language/culture
• Building tech you know, not tech they need
• No unfair advantage in this market

Diagnosis

You're building in a market where you have no competitive advantage, no access, and no deep understanding. It's an uphill battle you're unlikely to win.

Fix

Customer Segment Pivot. Find a market where you have access, understanding, and credibility. Your second-best idea in the right market beats your best idea in the wrong one.

Symptoms

• Working 80+ hours with no progress
• No one to challenge your assumptions
• Decision quality declining
• Health and relationships suffering

Diagnosis

You've fallen into the trap of "working harder" instead of "working smarter." Without external perspective, your biases go unchecked and your energy depletes.

Fix

Find an accountability partner, mentor, or co-founder. Join a startup community. The Founder Foundation works better with external input and forced reflection.