Everyone Blames the Cash. The Cash Was the Last Domino.

“We ran out of cash.”

That’s how a lot of startup post-mortems end.

But running out of cash is often the last domino—not the first.

The decisions that actually put the company in trouble may have happened 6, 12, or 18 months earlier: scaling customer acquisition before retention was proven, entering another market before the economics worked, adding headcount ahead of repeatable demand, or committing capital against assumptions that hadn’t been sufficiently tested.

The research is striking. A recent analysis of 431 VC-backed companies that shut down found that running out of capital was a factor in 70% of the failures. But the underlying problems started earlier.

In this article, I break down the four-step operating approach I use to diagnose the problem, identify the real constraint, and determine what—if anything—the company should scale next.