Your funnel never lies

For most founders, thinking about their funnel is an afterthought.

That’s an expensive mistake!

Understanding your funnel can save you from building a business that won’t ever get you to scale.

Here’s how to do it:

When you know what you’re building and who pays, sketch the journey from first cold email to renewal.

1. Outbound touches (cold emails, calls, LI pings, etc)

2. Replies / positive responses

3. Qualified demos / discovery calls

4. Proposal stage

5. Legal / procurement

6. Closed - won

7. Renewal / expansion

Then do the following:

• Step 1: Assign numbers to each stage: 500 emails → 5 % reply → 30 % demo → etc

• Step 2: Start top‑down. Pick your top down ARR number, divide by deal size, and walk it backward. Need 10 % of the whole market for $2 M ARR? Your ambition - or your price tag - is too small.

• Step 3: Go bottom up. Assume a rep can close 5× their salary in net‑new ARR at scale. Then layer head‑count, salaries, ramp time, etc along a timeline.

Do your funnel (close rate + sales cycles + deal size) + hiring / burn + targeted raise add up?

If not, time to rethink. If yes, time to go full steam ahead.

Where it gets interesting is when you start to sell and track early GTM signals against the funnel.

E.g.: You get 20 prospects with 500 emails but only get to 17. Re‑forecast instantly - while you still have runway.

Run this exercise WEEKLY: Dig deep into the funnel - reply rates, demo‑to‑opportunity, legal drag, etc

Each variance from assumptions rewrites the operating model so burn, hiring, and roadmap stay honest.

Funnel discipline surfaces trouble months before the P&L screams, giving you cash and time to pivot if needed.

A funnel isn’t a forecast; it’s a lie detector. Use it, or let optimism burn your runway.

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Enjoyed reading this?

Then check out my conversation on the focal podcast with Basile Senesi, founding CRO of Arc (>$180M raised in debt and equity from YC, Bain, NFX, and Left Lane)

Youtube | Apple Podcast | Spotify

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