The Hard Truth About Hard Tech: Losing Before You Win
Why Moonshots Bleed Cash Before They Print It
Every founder wants the same thing: product-market fit. That magical moment when customers stop ignoring you, start throwing money at you, and the whole world suddenly makes sense.
Marc Andreessen calls it “being in a good market with a product that can satisfy that market.” For most people, product-market fit is the promised land. Investors start nodding along, customers stop unsubscribing, and for a fleeting second, you feel like you’re running a real business.
But here’s the twist no one tells you: product-market fit doesn’t mean you’re making money.
And in hard tech, it almost always happens while you’re losing money on every unit.
This isn’t just a weird startup quirk. It’s the hard truth about moonshots.
The Cost Curve That Built the World
Hard tech—the kind of companies that invent new materials, new rockets, new energy sources—follows a very different playbook than your typical SaaS company. In software, product-market fit and profitability usually come hand in hand. You build a good product, customers subscribe, and suddenly you’re printing money at 80% margins.
Hard tech? Not so much. In hard tech, you hit product-market fit before the math works. You prove customers want what you’re building, and then you fight like hell to make the economics work.
This is how every moonshot starts.
Amazon sold books online at a loss for years. Jeff Bezos knew scale would fix the economics. Investors called him insane, and now they call him a genius.
Intel spent billions developing new semiconductor nodes. The first chips always cost a fortune, but they knew Moore’s Law would bring costs down.
Solar energy was 10x more expensive than traditional power just 20 years ago. Companies like First Solar pushed costs down by 90%—and now solar is cheaper than coal.
Tesla and SpaceX: Tesla’s first car, the Roadster, was a proof of concept that cost far more to produce than they could charge for it. Customers wanted the car, but profitability only came years later after scaling production, solving battery costs, and introducing the Model 3. Meanwhile, SpaceX’s early rockets were wildly expensive, and each launch burned through cash. But reusability changed everything—what started as a financial black hole turned into a company that slashed the cost of spaceflight by 90%. Both companies proved that big demand can show up before the economics make sense—and that solving the cost curve unlocks industries no one else could touch.
In each of these stories, the cost curve was the real hero. First, you lose money on every unit. Then you invent the processes, scale the production, and drive costs down until the math works.
And if you do it right? You don’t just build a business. You change the world.
The SRTX Story: Losing Before We Win
At SRTX, we’re living this story right now.
When we launched Sheertex tights, we knew we’d solved a universal problem. Nylons that don’t rip aren’t just a nice-to-have—they’re the answer to a shared frustration for millions of people.
The product worked. Customers loved it. But the costs? Let’s just say I wasn’t putting “great margins” on any investor slide decks.
The first pair of tights cost us over $50 per unit to produce. That was before shipping, taxes, customer returns, and Meta (Facebook) stepping in to siphon off all the margin we didn’t have. It’s funny how Meta keeps your customer acquisition costs nice and consistent—consistently ruinous.
So we charged $145 per pair. Not because we wanted to be a luxury brand, but because we had no choice.
Here’s where things got interesting. Every time we found a way to lower our costs, we dropped our prices. From $145 to $99, then $69, $49, $35, and now $19.99.
At every step, we were losing money. Still.
And then this quarter, at $19.99, something extraordinary happened. Demand didn’t just grow—it exploded. Millions of units. More demand than we could possibly fill. Retailers begging for more.
This was true product-market fit. The kind where people want what you’re making so badly that you feel like a toddler at Costco handing out free samples—except the crowd never stops.
And yet, at $19.99, we’re still not profitable. Production costs are now $12 per unit. Add in shipping (another $5 for direct-to-consumer sales), returns, taxes, and logistics, and the math still isn’t pretty. When we sell to retailers for $10 or less, we’re basically paying customers to wear the product.
But that’s the thing about hard tech: it’s not supposed to look pretty in the beginning.
The Three Questions That Separate Progress from Problems
This is where skeptics show up. “You’re losing money—how is this real product-market fit?”
It’s a fair question.
Not every business that loses money is on its way to changing the world. Just ask WeWork. Product-market fit alone wasn’t enough for them because the business model itself was broken. Renting long-term and subleasing short-term was never going to scale profitably.
So how do you know if you’re on the right track? Ben Horowitz and others have pointed out three key questions every founder needs to ask:
Are the costs fixable?
For us, the answer is yes. We’ve already driven costs from $50 to $12 per unit. By 2025, we’ll cross $5, with a path to under $2.50 as we scale, and that’s before the savings introduced by circularity.
Do customers value the product?
People paid $145, $99, and $69 for Sheertex tights because the value was obvious. Lowering the price just made the product accessible to everyone.
Is the cost curve improving?
Every year, we’re solving more of the cost problem. Fiber production moved in-house. Processes were automated. Waste was reduced. The curve keeps moving, and it’s moving in the right direction.
If the answer to these questions is yes, you don’t have a business model problem—you have a cost curve problem. And cost curves are solvable.
Why This Matters
Moonshots don’t start with perfect economics. They start with big problems, real demand, and costs that look absurd until they don’t.
Tesla lost money on its first cars. Solar energy was prohibitively expensive until it wasn’t.
And now, at SRTX, we’re proving that tights that don’t rip aren’t just something people want—they’re something millions of people will buy.
The costs are catching up. We started at $50, we’re at $12, and we’re on track for $5. The demand is here, and the math is following.
Hard tech takes patience. The cost curve is relentless. But when you solve it, you don’t just build a profitable business—you change what’s possible.
For us, tights are just the beginning. What we’ve built at SRTX isn’t just a better pair of tights—it’s a blueprint for the future of Western manufacturing.
By combining vertical integration and automation, we’re proving that advanced manufacturing can deliver better products, at lower costs, and with far greater sustainability than traditional overseas production.
This isn’t just about tights. It’s about tackling the apparel industry’s trillion-dollar sustainability problem—a system built on fast fashion, outsourced labor, and enormous waste.
The SRTX platform shows that manufacturing can happen closer to home, with far less environmental impact, and at prices that compete with overseas options. A future where “affordable” and “sustainable” aren’t at odds, but inseparable.
Final Thoughts
If you’re building something new, and you’ve hit product-market fit but the math isn’t pretty yet, don’t panic. Ask yourself:
Are your costs fixable?
Do customers value what you’re making?
Is your cost curve improving?
If the answers are yes, then the next step is clear: you fight.
You fight to drive down costs—every cent, every inefficiency, every wasted input. You fight to invent processes no one has thought of before and scale production until the math works. And most importantly, you fight for the money to get there.
Because here’s the truth about hard tech: you can’t stop halfway down the cost curve. Getting part of the way there isn’t enough. If you run out of cash before costs drop far enough to hit business model fit, it won’t matter how much the market loves your product—it’ll still look broken.
It’s about finding the right investors—partners who don’t just see the endgame but understand the value of what’s being built along the way. The prototypes, the breakthroughs, the intrinsic value of the systems you’re creating. It’s about helping them de-risk the journey by proving that every step down the cost curve has tangible, lasting value.
Because when you have the capital to go all the way, something magical happens. The cost curve catches up to demand. The math works. The losses stop. And the business you’ve been fighting to build doesn’t just succeed—it transforms everything.
The hard tech cost curve rewards those who are stubborn enough to fight for it, smart enough to secure the resources to go the distance, and bold enough to show investors why the journey is worth the bet.