What Abraham Wald can teach us about winning deals—and growing them.
During World War II, analysts studied returning aircraft to decide where to reinforce armor. They mapped where the planes had the most bullet holes and proposed adding protection there. Abraham Wald pointed out the flaw: those planes survived, they didn’t need more armor where the bullet holes were. Areas on the planes with few bullet holes didn’t imply planes weren’t hit in those spots, they implied planes hit there didn’t make it back.
The same bias shows up in private equity due diligence.
In most due diligence, we talk to:
- reference customers
- active users
- accounts the company is proud to showcase
In other words, we study the customers who “made it back.” That’s useful—but incomplete.
Churned customers don’t just reveal risk. They reveal upside.
The typical framing is that churn equals something broken:
- poor onboarding
- product gaps
- weak fit
That’s true. But more importantly, churn shows you where the business fails to scale efficiently.
When you talk to recently lost customers, you can identify:
- friction points that delay time-to-value or materially impair value
- features that block expansion, not just adoption
- gaps between what sales promises and what the product delivers
- ways marketing may be targeting the wrong ICP
These often represent risks, things a seller doesn’t want you to see. But, they are growth levers as well.
This is where most diligence falls short.
Traditional diligence answers: “Is this a good business?”
Churn analysis answers: “Where can this business grow faster than expected?”
That distinction matters in competitive deals.
If every bidder sees the same growth rate, retention metrics, and product demo, then the edge goes to those who see what others don’t.
Tightening the ICP can improve win rates and lower CAC.
Fixing onboarding can accelerate activation and expansion.
Addressing specific product gaps can unlock entirely new revenue paths.
These are not incremental improvements—they can materially change a portfolio company’s growth trajectory, what the company is truly worth, and how much you can justify paying.
So why isn’t this done more often?
Because most processes are optimized to confirm quality, not discover hidden upside.
- Time is limited (4–6 weeks)
- Access is controlled by the seller
- Metrics create a sense of comfort
- And deeper analysis can introduce uncertainty late in the deal
It’s easier to validate the story than challenge it.
A simple way to close the gap
This doesn’t require a massive workstream.
- Ask for a list of customers who churned in the last 6–12 months
- Have a handful of targeted conversations (5–10 is often enough)
- Look for consistent patterns—not anecdotes
Done right, this adds signal without slowing the process.
If you only study the customers who stayed, you validate the business you’re buying.
If you study the ones who left, you uncover the business it could become.
In my experience, that gap is where both post-close surprises—and the most actionable growth levers—tend to live.
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Anthony Faulise is an operator with a background in product, technology, and growth at SaaS and tech-enabled companies. He has served as CTO and product leader in businesses ranging from early-stage through scale, and now works with leadership teams and investors to turn product strategy and execution into a driver of revenue growth. His work typically focuses on companies in the $5–50M ARR range where growth has begun to stall or become less predictable.
Image Credit: Vector image by Martin Grandjean, used under Creative Commons Attribution-Share Alike License 4.0 (https://creativecommons.org/licenses/by-sa/4.0/deed.en)
