Money and expertise are not mutually exclusive
08
Expertise can’t be solved with a single hire
07
Expertise is expensive — and sometimes saves the business
06
A funding round doesn’t solve the problem. It buys attempts
05
How to tell what a startup is missing
04
Unit economics: the most honest test
03
An idea is no substitute for the numbers
02
Plenty of apps. Few that make money
01
In this article
This observation from inside the agency business led me to a conclusion: finding a client with a budget is not enough. For a long-term partnership, the client needs a product whose economics hold up — and that is something an agency cannot influence.
Money has no value in itself. The real value is a product that users are willing to pay for, keep coming back to, and that can scale without endlessly burning through the budget.
Money has no value in itself. The real value is a product that users are willing to pay for, keep coming back to, and that can scale without endlessly burning through the budget.
Yet of every ten apps we worked with during that period, the unit economics added up for roughly one.
When we were building WakeApp, the mobile market was growing extremely fast. There seemed to be money everywhere: people raised investment, launched apps and came to us for traffic. Every week brought a new product, a new budget and a new conviction that this time it would take off.
Money or Expertise: What a Startup Really Needs
Column / Startups / Expertise
The most resilient entrepreneurs are not the ones who got everything right the first time, but those who can look at results without self-deception and rebuild their hypotheses.
Over the years I have seen apps in every mobile niche: digital wallets, expense trackers, language-learning and dating apps, flight booking and food delivery services, subscription products and games.
The niches differed, but the problem was often the same: reaching payback is hard and slow. Even strong companies cannot keep buying users indefinitely without regard to the numbers. A small startup has even less room for error. It cannot sustain a broken model for years simply because the team believes in the idea.
At the same time, entering the market looks easy. An app can be built quickly, and released just as fast. In theory, a mobile product gives you access to a vast global audience. This is where many start to believe that all it takes is an idea, an app and a little patience until it becomes a hit.
That is not how it works.
People spend years building products in the hope that growth is just around the corner. Sometimes it does come — usually after the second, third or fourth attempt.
The niches differed, but the problem was often the same: reaching payback is hard and slow. Even strong companies cannot keep buying users indefinitely without regard to the numbers. A small startup has even less room for error. It cannot sustain a broken model for years simply because the team believes in the idea.
At the same time, entering the market looks easy. An app can be built quickly, and released just as fast. In theory, a mobile product gives you access to a vast global audience. This is where many start to believe that all it takes is an idea, an app and a little patience until it becomes a hit.
That is not how it works.
People spend years building products in the hope that growth is just around the corner. Sometimes it does come — usually after the second, third or fourth attempt.
Plenty of apps. Few that make money
01 / Market
Believing in an idea is useful — until it turns into a refusal to look at the numbers.
We received requests like this two or three times a month.
I understand that excitement well. Every entrepreneur wants to believe they have spotted an opportunity before anyone else. But there is a vast distance between an idea and a working business: the product, the team, acquisition channels, retention, monetization, testing speed, and the willingness to admit that the first version did not work.
I understand that excitement well. Every entrepreneur wants to believe they have spotted an opportunity before anyone else. But there is a vast distance between an idea and a working business: the product, the team, acquisition channels, retention, monetization, testing speed, and the willingness to admit that the first version did not work.
— Give us a quote for an app like Facebook.
— What exactly should the app do?
— We can’t tell you. It’s a brilliant idea. Just quote us for Facebook.
— What exactly should the app do?
— We can’t tell you. It’s a brilliant idea. Just quote us for Facebook.
When we ran a development studio, people regularly came to us with a “brilliant idea”. Sometimes they would not even say what they wanted to build, afraid we would copy it.
The conversation usually went like this:
The conversation usually went like this:
An idea is no substitute for the numbers
02 / Idea
So teams have to keep searching for what else users are willing to pay for: improving the subscription model, testing pricing plans, adding value to the product, working on retention, exploring new channels and markets, rebuilding funnels, and sometimes moving part of the user journey to the web.
There is no universal solution. There is a continuous cycle: hypothesis, test, conclusion, next iteration.
There is no universal solution. There is a continuous cycle: hypothesis, test, conclusion, next iteration.
If traffic becomes more expensive while the product and monetization stay the same, the economics deteriorate on their own.
In the mobile business, everything comes down to one basic question: how much does it cost to acquire a user, and how much revenue does that user bring in?
If a user costs one dollar, they should bring in two. Or one and a half. That creates room for growth: you can increase budgets, test new channels, hire people and scale marketing.
More often, it is the other way round. A user was acquired for a dollar and a half and brought in one dollar. Or less. At this point, reassuring yourself that “we’ll find an investor and everything will work out” does not help.
It won’t.
If the economics do not work in small tests, a large budget usually just scales up the problem.
For global mobile projects, the Facebook ad auction long remained one of the key benchmarks. Acquisition costs there change constantly: competition grows, the auction gets more expensive, creatives wear out, algorithms change. The Russian market has different mechanics and a different set of channels, but the logic is the same: acquisition costs shift, and you cannot build a product as if marketing will stay cheap forever.
If a user costs one dollar, they should bring in two. Or one and a half. That creates room for growth: you can increase budgets, test new channels, hire people and scale marketing.
More often, it is the other way round. A user was acquired for a dollar and a half and brought in one dollar. Or less. At this point, reassuring yourself that “we’ll find an investor and everything will work out” does not help.
It won’t.
If the economics do not work in small tests, a large budget usually just scales up the problem.
For global mobile projects, the Facebook ad auction long remained one of the key benchmarks. Acquisition costs there change constantly: competition grows, the auction gets more expensive, creatives wear out, algorithms change. The Russian market has different mechanics and a different set of channels, but the logic is the same: acquisition costs shift, and you cannot build a product as if marketing will stay cheap forever.
next iteration
04
conclusion
03
test
02
hypothesis
01
Unit economics: the most honest test
03 / Economics
Most often, the problem lies in one of them or where several of them intersect.
There is a simple, practical diagnostic.
If user acquisition pays back with a comfortable margin, you can increase budgets, build the team and look for new traffic sources.
If, however, acquisition costs exceed the revenue a user generates, the product must come first: its value, retention and monetization. Scaling marketing in that situation only means spending money faster.
In most cases, the situation lies somewhere between these extremes. Say you spent a dollar and got 50 cents back. That is not nothing: it means there is demand, but you need to understand what exactly is keeping the economics from adding up — the product, the price, the funnel, the creatives, the segmentation, the channel or retention.
Sometimes the solution turns out to be surprisingly simple: changing the subscription model, testing a different billing period, adjusting the price, removing an unnecessary step from the funnel, or framing a clearer offer for the user.
There is a simple, practical diagnostic.
If user acquisition pays back with a comfortable margin, you can increase budgets, build the team and look for new traffic sources.
If, however, acquisition costs exceed the revenue a user generates, the product must come first: its value, retention and monetization. Scaling marketing in that situation only means spending money faster.
In most cases, the situation lies somewhere between these extremes. Say you spent a dollar and got 50 cents back. That is not nothing: it means there is demand, but you need to understand what exactly is keeping the economics from adding up — the product, the price, the funnel, the creatives, the segmentation, the channel or retention.
Sometimes the solution turns out to be surprisingly simple: changing the subscription model, testing a different billing period, adjusting the price, removing an unnecessary step from the funnel, or framing a clearer offer for the user.
03
people
02
marketing
product
01
An entrepreneur usually senses where it hurts, even if they cannot immediately pinpoint the cause: the product isn’t growing, marketing doesn’t pay back, the team can’t keep up, sales are too slow, there is never enough money.
The first question I would ask a founder is: “Where do you think the main problem is?”
If they answer in detail and honestly, that is already good material for analysis. From there you can check the numbers, review the product, metrics, funnels and processes, and draw your own conclusions.
For me, every project rests on three main pillars:
The first question I would ask a founder is: “Where do you think the main problem is?”
If they answer in detail and honestly, that is already good material for analysis. From there you can check the numbers, review the product, metrics, funnels and processes, and draw your own conclusions.
For me, every project rests on three main pillars:
How to tell what a startup is missing
04 / Diagnosis
A budget creates opportunities. People build the business.
I see it differently: money in itself does not solve the problem — it adds responsibility.
A high salary does not guarantee a strong professional.
There is a common belief: “Once we find an investor and close the round, everything will fall into place.”
It won’t.
Money makes it possible to test hypotheses for longer, build a bigger team, run more experiments and survive the first mistake. But if the product does not work, it still has to be made to work. If the founder cannot find strong people, a bigger budget may simply help them hire expensive but not necessarily suitable employees faster.
Finding someone who combines competence, motivation and a fit with your team is far more difficult.
Money should be seen not as a solution but as a resource for a series of well-executed attempts. If the founder has a clear vision, the ability to learn, strong people around them and a willingness to quickly replace what isn’t working, that resource can accelerate the business. Without these, money will only postpone the moment when the problem has to be acknowledged.
It won’t.
Money makes it possible to test hypotheses for longer, build a bigger team, run more experiments and survive the first mistake. But if the product does not work, it still has to be made to work. If the founder cannot find strong people, a bigger budget may simply help them hire expensive but not necessarily suitable employees faster.
Finding someone who combines competence, motivation and a fit with your team is far more difficult.
Money should be seen not as a solution but as a resource for a series of well-executed attempts. If the founder has a clear vision, the ability to learn, strong people around them and a willingness to quickly replace what isn’t working, that resource can accelerate the business. Without these, money will only postpone the moment when the problem has to be acknowledged.
A funding round doesn’t solve the problem. It buys attempts
05 / Funding round
One of the first and, at the time, the most expensive hire on my team was the CTO. As far as I remember, his salary was around 150,000 rubles. Back then that was a huge amount of money for me: most other employees earned 30,000–40,000.
Before him, I had gone through two or three CTOs. At some point I realized that trying to save money on a key competence costs far more than hiring a strong professional. We took the risk and invested in expertise. It was the right decision.
Later the business went through a difficult period. He saw how hard things were and came to me himself: “I’m the most expensive person in the company. If necessary, I’m ready to leave.”
We took a hit back then, but we survived.
Before him, I had gone through two or three CTOs. At some point I realized that trying to save money on a key competence costs far more than hiring a strong professional. We took the risk and invested in expertise. It was the right decision.
Later the business went through a difficult period. He saw how hard things were and came to me himself: “I’m the most expensive person in the company. If necessary, I’m ready to leave.”
We took a hit back then, but we survived.
Expertise is expensive — and sometimes saves the business
06 / Competence
Expertise should come from multiple sources — and be judged by the quality of the results.
Founders often have an understandable wish: to find one ideal leader who will assemble a strong team and solve the problem. Sometimes this really works.
But the odds of finding someone who has already managed large budgets, is willing to join an early-stage startup, accepts its risks and is the right fit for your particular team are low. Such a professional is expensive. So is their team. And two or three months later you may find that you got the hire, the context or the hypothesis itself wrong.
That is why I would not bet on a single option.
You can look for a strong in-house hire. You can work with external experts. You can bring in agencies, accelerators, mentors and remote teams. You can test several approaches in parallel and judge them not by people’s status in a pitch deck, but by measurable results.
This is especially important in performance marketing. You don’t need to wait a year to see whether there is potential. In two weeks you can run a test, look at the numbers and draw initial conclusions. That doesn’t mean a large business can be built in two weeks. But it does mean you don’t have to spend a year investing in a compelling story with no evidence behind it.
But the odds of finding someone who has already managed large budgets, is willing to join an early-stage startup, accepts its risks and is the right fit for your particular team are low. Such a professional is expensive. So is their team. And two or three months later you may find that you got the hire, the context or the hypothesis itself wrong.
That is why I would not bet on a single option.
You can look for a strong in-house hire. You can work with external experts. You can bring in agencies, accelerators, mentors and remote teams. You can test several approaches in parallel and judge them not by people’s status in a pitch deck, but by measurable results.
This is especially important in performance marketing. You don’t need to wait a year to see whether there is potential. In two weeks you can run a test, look at the numbers and draw initial conclusions. That doesn’t mean a large business can be built in two weeks. But it does mean you don’t have to spend a year investing in a compelling story with no evidence behind it.
Expertise can’t be solved with a single hire
07 / People
If you stand still, the market will notice before you do.
Money and expertise are not mutually exclusive. Money gives a startup time and the chance to make more attempts. Expertise helps ensure those attempts are not wasted.
I am always glad to learn from someone who has already reached the next level. If you have built a team of ten, it pays to talk to someone who has built a team of fifty. If you manage fifty people, learn from someone who has managed five hundred. At every new level, the challenges, processes, risks and cost of mistakes change.
I relate less to abstract experts than to people who have built something themselves. When someone creates a large company from scratch, goes through crises, hires hundreds or thousands of people, makes tough decisions and keeps growing the business, they gain experience that no presentation or book can provide.
That doesn’t mean you should accept every piece of advice. You may meet a strong expert who simply doesn’t understand your particular market. That’s fine. But in my view, an “I already know everything” attitude is not an option for an entrepreneur.
The market changes too fast. A product that works today may stop working tomorrow. A creative that delivers low acquisition costs today may burn out within a week. A funnel that converts today may fail tomorrow because an algorithm changes, a negative review appears or a strong competitor arrives.
Neither product nor marketing can be “solved” once and for all. Neither capital nor strong advisors can replace the founder’s own work.
You need to keep watching the numbers, talking to users, learning from those who have gone further, and testing ideas.
I am always glad to learn from someone who has already reached the next level. If you have built a team of ten, it pays to talk to someone who has built a team of fifty. If you manage fifty people, learn from someone who has managed five hundred. At every new level, the challenges, processes, risks and cost of mistakes change.
I relate less to abstract experts than to people who have built something themselves. When someone creates a large company from scratch, goes through crises, hires hundreds or thousands of people, makes tough decisions and keeps growing the business, they gain experience that no presentation or book can provide.
That doesn’t mean you should accept every piece of advice. You may meet a strong expert who simply doesn’t understand your particular market. That’s fine. But in my view, an “I already know everything” attitude is not an option for an entrepreneur.
The market changes too fast. A product that works today may stop working tomorrow. A creative that delivers low acquisition costs today may burn out within a week. A funnel that converts today may fail tomorrow because an algorithm changes, a negative review appears or a strong competitor arrives.
Neither product nor marketing can be “solved” once and for all. Neither capital nor strong advisors can replace the founder’s own work.
You need to keep watching the numbers, talking to users, learning from those who have gone further, and testing ideas.
Money and expertise are not mutually exclusive
08 / Conclusion