Stop Chasing Sunk Costs: Founder Lessons That Hurt

Every founder faces a moment when the numbers don’t add up. But emotions push you forward. You think you're almost there. You believe one more hire or feature will change everything. The problem is that’s how most founders end up stuck, chasing what’s already gone.

I’ve been there. Admitting this is tough: the effort, time, and money you invested may not pay off. But letting go early is often the most valuable decision you can make.

This week, I learned some tough but key lessons from founders. They shared real stories about sunk costs and tough choices. They also discussed how to reset when the data says “stop.”

The Cost Fallacy Trap

One founder put it perfectly: “I realized I was throwing good money after bad. Two million dollars in, and nobody wanted the product.”

That struck me deeply. I’ve felt just like that, thinking I was one small change away from a breakthrough. But there’s a fine line between persistence and denial.

Reassess your investments often. It's that simple. If something isn’t working, adding more money or time rarely fixes it. Cut fast, learn faster, and redeploy energy where you can still win.

Momentum feels fantastic, but wasting it can drag you down.

Margin Over Revenue

Most founders chase top-line revenue. It feels like progress, and it looks impressive in updates. At times, opting for lower revenue with higher margins is smarter.

I heard someone once say, “What if your revenue dropped 50 percent but your margins went up 40 points?” They thought about it and said, “I’d take that every day.”

That’s the mindset shift we all need. More revenue doesn’t always mean more success. Profitability gives you freedom. Cutting your revenue in half might feel like a loss. But if it helps you breathe, it’s not a setback. It’s a reset that gives you control.

Selling Tech to the Skeptical

In many legacy industries, tech adoption isn’t just slow, it’s painful. The people you’re selling to have scars. They bought overhyped software. It promised a lot but didn’t deliver.

When they hear “AI” or “automation,” they get ready for letdowns.

Winning here isn’t about dazzling them with buzzwords. It’s about patience and proof. Show results first, talk about technology later. People trust outcomes, not acronyms.

If your customers have been let down before, regain their trust slowly. Focus on small wins.

The Promise-Delivery Gap

It's easy to over-promise for attention. This often occurs when you raise funds or close your first deals. Missing expectations can lead to a hangover that lasts for years.

Once you lose credibility, it’s nearly impossible to earn it back.

The solution is radical honesty. Set expectations you can exceed, not barely meet. A product that delivers 90 percent of what you claim builds trust. One that delivers 60 percent destroys it.

When your promises and results line up, you don’t just win business, you build belief.

Transforming Legacy Industries

Trying to change a legacy industry from the outside is like pushing a boulder uphill. The systems, incentives, and politics all work to keep things the same.

Sometimes the only way to drive real change is to own the space. That means becoming the operator, not the vendor. You can't change an industry that won't listen. But you can create a new version from within.

It’s the harder path, but it’s the only one that creates lasting transformation.

5 Key Takeaways

Reassess often. Don’t double down on bad bets out of pride or habit.
Prioritize margins. Profitability gives you leverage and control.
Lead with proof. Skeptical buyers trust outcomes, not promises.
Underpromise and overdeliver. Credibility compounds faster than hype.
Own the change. To transform legacy industries, build from within.

Final Thoughts

Every founder learns these lessons the hard way. The trick is to learn them before they cost you everything.

Letting go of sunk costs doesn’t make you a quitter; it makes you a strategist. Real growth isn’t about pushing harder on what’s broken. It’s about having the insight and bravery to begin again when something isn’t right.

We all want to believe the next dollar, hire, or feature will fix it. The real power is knowing when to walk away. Then, you can invest your energy where it matters most.

See you on Friday,

-kevin

Recent Social Posts

Kevin Henrikson

@KevinHenrikson

Most founders think leverage is about money or headcount.
But the real leverage compounds quietly.
It's in systems that scale without you.
Here's what winning founders are doing differently 👇

2:12 PM • Oct 28, 2025

Retweets

Likes

Read 2 replies

Kevin Henrikson

@kevindegods

The most realistic future isn't AI replacing doctors.
It's AI becoming the best assistant they ever had.
Human-in-the-loop systems will scale care faster than full automation.

5:30 PM • Oct 27, 2025

Retweets

Likes

Read 4 replies