The growth tradeoff: How serving core customers too well can limit scale

Why the customers who got you to $3M ARR may prevent you from reaching $30M

The Paradox Every Successful Startup Faces

There’s a cruel irony in startup growth: the customers who validate your vision can become the very reason others won’t buy from you.

Watch any AI startup’s customer evolution and you’ll see the pattern. Cursor’s early users were developers at OpenAI and cutting-edge startups, exactly the kind of customers any founder would celebrate. But when Cursor pitched to Fortune 500 companies, those same reference customers became a liability. Enterprise buyers saw risk where early adopters saw innovation.

This is what Geoffrey Moore identified 30 years ago as the chasm, a fundamental disconnect between early adopters and mainstream buyers that kills 900% of startups between $1M and $10M ARR. The pattern repeats across every successful AI company today. Jasper started with individual creators and small agencies who loved experimenting with AI. To reach enterprise marketing departments, they had to completely reinvent their positioning. Perplexity launched as a tool for AI researchers and tech enthusiasts. Their enterprise product barely mentions AI at all.

Here’s what makes this particularly cruel: the better you serve your early customers, the harder it becomes to attract mainstream ones. Your visionary customers want cutting-edge features. Your…