You think you're crushing it. Revenue explodes. Your product is everywhere. But underneath that growth, your actual product-market fit is disintegrating. You won't notice until it's too late to fix without blowing up the company.
Livestorm grew from $2 million to $9 million in ARR in one year during COVID. Sounds incredible, right. Except the growth was masking something fragile. Eighty-five percent of their customers were on monthly self-serve plans. One button click and that revenue disappears overnight. There was this huge thing hanging above our heads, Gilles Bertaux remembers. They had built something that felt successful but wasn't actually defensible.
The mistake isn't the growth. It's not seeing what's underneath it.
Why Founders Make It
Most founders confuse adoption with product-market fit. If people are using it, if the numbers are growing, you assume the product is right and the market is right. But explosive growth can hide a customer base that's paper-thin.
The second pressure is obvious: success breeds ambition. After COVID demand exploded, Livestorm had real capital, real traction, real validation. So they started building. A meetings product. A sales demo product. If webinars work, maybe we can build the whole communication stack, the thinking goes. Instead, they built a smaller version of Zoom with no reason for customers to choose them.
The third mistake is ignoring the warning signs hiding in plain sight. Support tickets jumped from 200 to 20,000 per month. Servers crashed for a full day. Their gross margin collapsed from 90 percent to 20 percent. But these were infrastructure problems, not signals that something was wrong with the product strategy. Except they were. The infrastructure chaos masked a bigger problem: they'd diluted their positioning so much that customers had no compelling reason to pick them instead of Zoom.
How Livestorm Lost Traction Without Knowing It
Here's the timeline. In 2020, they rode COVID demand to $9 million ARR. The infrastructure chaos convinced them to become operational adults. That was healthy. But they also started exploring meetings, sales demos, building feature parity with Zoom. The longer the sales conversations got about all these new capabilities, the lower their conversion rates became. That should have been the signal.
It wasn't until 2022 when they tried to raise Series C that reality hit. Investors said no. Not because the growth was bad, but because the business model was fragile. Eighty-five percent monthly churn risk. A product so broad it competed with the biggest company on earth. No differentiation.
They lost product-market fit by trying to win a game they could never win. The cost: two years of confused strategy, team members who didn't know what they were building, and a forced reset that could have killed the company.
The Fix (If You're Making It Now)
First: measure your churn rate by cohort and plan type. If more than 50 percent of your revenue is on month-to-month plans, you have a retention problem masquerading as growth. Fix this immediately.
Second: get ruthless about what you're not building. Livestorm eventually won by narrowing to European marketers in specific industries. Not broader. Narrower. The features you say no to are more important than the features you build.
Third: track customer acquisition cost by segment. If your enterprise deals take twice as long to close as your self-serve deals, and you're adding both equally, you're diluting your go-to-market. Pick one.
The Signal to Watch
Check this weekly: How many features are you explaining to customers who don't ask for them?
If you're spending more time explaining what your product does than listening to what customers need, your positioning is too broad. That's the earliest warning sign that you're about to lose the fit you thought you had.
Fix it before growth blinds you.